Hi Subhu,
You can use alternate labelling to label the functional locations appropriate to your client functional location, there is no harm. But this will be used, when you want to maintain multiple labels for the functional location.
When you re-label the functional location, Label A to Label B, Label B will be active but you can make use of Label A after you execute IL10 as re-usable.
Also open notification / work orders will be changed to new label, upon open and save.
On the user fields, refer this document ITOB0001, ITOB0003 : User-Fields in Equipment, Functional Location, Fleet Masters, might give good insight about it.
Alternatively you can create the functional location and make use of fields like Sort Field / Technical Identification Number / Inventory No / User fields to fill the old functional location, thus you can link it.
Once the new system inline, users can search the new functional location through IH06 using any of these fields and create the notification. Slowly i hope they will use the new functional location.
This can be done, if you are ready transfer the open notification / work order / Task list / maintenance plan etc which are referred to functional location needs to be revamped to the new one. I hope once the client is merged, they will be using only one SAP client.
Regards
Terence