Developing First-of-a-Kind (FOAK) plants is no small feat. It requires agility, innovation, and the ability to navigate uncharted territory. For infrastructure startups, those venturing into new process technologies the stakes are even higher. Unfortunately, many of these startups mistakenly adopt the traditional project development methodology known as Front-End Loading (FEL) without realizing that this approach could destine their projects to be a tragedy from the start.
As someone who has led teams in both successful and unsuccessful FOAK projects, I want to shed light on why the FEL approach doesn’t suit startups and what they should do instead. By examining two contrasting case studies, we’ll explore the key lessons learned and strategies that can make or break a FOAK endeavor.
The Problem with Front-End Loading for Startups
Front-End Loading (FEL) is a phased project development process widely used in capital intensive industries like oil & gas, petrochemicals, and mining. It involves progressive investments in defining the scope, assessing risks, and refining cost estimates before committing resources to execution. While it’s an excellent method for mature businesses managing competing projects and aiming for high confidence in their investment decisions, it’s a poor fit for startups developing FOAK projects. Here’s why:
• No Safety Net: For startups, if the first project fails, the business fails. Unlike established companies, startups cannot afford to spend excessive time and resources aligning multiple stakeholders and conducting exhaustive FEL reviews. • No Competing Projects: FEL is designed to select the most promising projects from a portfolio of options. Startups don’t have this luxury—they are betting their entire operation on one FOAK plant. • Time Sensitivity: Startups operate on tight timelines. Stage gates and phased reviews inherent in FEL can significantly slow down progress, leaving startups unable to meet investor and market expectations. • Capital Constraints: While skipping the FEL process doesn’t mean sacrificing financial discipline, startups must focus their resources on proving their technology and delivering results, not endless feasibility studies.
Instead of FEL, startups should embrace a "Plant as a Product" approach, where the plant itself is treated as the ultimate deliverable. This approach prioritizes speed, alignment across teams, and a shared vision, while still maintaining necessary capital controls to prevent budget overruns and track schedules effectively.
Case Study 1: Lessons from an Unsuccessful FOAK Project
Let’s start with a cautionary tale. I was part of a project team that intended to build a FOAK plant in Louisiana. The process worked theoretically, and a small demonstration plant was operating at HQ with mixed results. However, leadership decided to introduce significantly different process equipment compared to the demonstration plant—a decision fraught with risk.
To manage this risk, an Engineering, Procurement, and Construction (EPC) company was engaged to implement a traditional FEL process. By the end of FEL-1, the projected costs were 100% over the target budget. Leadership engaged a second EPC firm to perform an independent review, and their findings confirmed the original budget estimates.
This effort consumed nearly a year, cost $2 million in consultancy fees, and eroded investor and customer confidence. Ultimately, the project faced layoffs and stalled progress, illustrating how the FEL process can entangle startups in time-consuming and costly procedures, leaving them unable to act swiftly.
Key Takeaways: • Agility is crucial for startups; lengthy stage gates can drain resources and momentum. • While independent audits are critical, startups must balance due diligence with execution speed. • A misaligned vision can derail FOAK projects, making it imperative to focus on practical, scalable solutions rather than theoretical optimizations.
Case Study 2: A Success Story in FOAK Development
Contrast this with a FOAK project I led for a carbon capture plant in California. The team consisted of a skeletal crew of engineers who managed all aspects of the project in-house, supplemented by consultancy support as needed. While mistakes were made—and there were countless opportunities to optimize—the focus remained on speed and alignment.
Within just 11 months, we went from design to execution to commissioning a FOAK plant that was operational and delivering products to customers by the end of the year. This success was fueled by a shared vision, streamlined decision-making, and prioritizing progress over perfection.
Key Takeaways: • Speed is the lifeline of startup projects; execution trumps exhaustive analysis. • Lean teams with a unified vision can achieve remarkable outcomes, even with limited resources. • FOAK projects are learning-intensive; treat the plant as a prototype to refine processes and scale up later.
The Path Forward for FOAK Startups
Startups developing FOAK process plants must rethink their project development strategy. While the FEL approach has merits for established businesses, it simply doesn’t align with the realities of startup execution. Instead, startups should focus on agility, alignment, and rapid delivery, treating the plant as a product and prioritizing the proof of concept over theoretical perfection.
By learning from the mistakes of failed projects and embracing the strategies of successful ones, startups can navigate the risks of FOAK development and emerge stronger, with technology proven at scale. After all, in the world of startups, speed and adaptability are not just virtues, they’re necessary survival skills.
Thus the startup mantra – “Continuously improve to survive, or go slow and perish.”