After years of leading large CAPEX projects—including multiple First-of-a-Kind (FOAK) technologies — I’ve learned that RFP preparation and vendor engagement, selection, and management are some of the most underestimated challenges in scaling hardware-based startups. These steps often determine success or failure long before equipment is delivered. The lessons below are drawn directly from real projects and hands-on experience working with vendors across the supply chain.
Determining the “What”
Once a startup moves beyond a lab-scale prototype, the next critical milestone is typically a pilot plant. This is where many teams struggle to clearly define their actual needs—plant throughput, unit operations and capacities, utility requirements, physical footprint, operator staffing, and integration boundaries. An experienced Operations Project Manager or Engineer is invaluable at this stage: someone who can define these parameters early, align stakeholders, break the system into logical work packages, and develop clear, well-scoped RFPs with critical specifications, timelines, and minimum performance expectations.
At this stage perfection isn’t required—but speed, clarity, and well-defined baseline requirements are essential.
The Vendor Problem Startups Rarely Anticipate
Startups - particularly those developing first-of-a-kind (FOAK) technologies - often encounter significant challenges in engaging qualified vendors at the capital project stage. From a vendor standpoint, CAPEX projects inherently carry technical, schedule, and commercial risk. These risks are further amplified when working with startups that may have limited financial runway, no established project financing mechanisms, minimal operating history, evolving process and equipment designs, uncertain throughput and duty cycles, and compressed execution schedules. Collectively, these factors increase perceived execution and commercial exposure for vendors.
As a result: • Many technically capable vendors elect not to bid due to risk-return misalignment • Others submit bids incorporating significant contingency and risk premiums • Some vendors accept the scope but lack the project controls, engineering rigor, or manufacturing and commissioning discipline required for successful scale-up
My recommendation is to always reach out to MSME (Medium to Small Manufacturing Enterprises) at this stage even if there is no interest from industry leaders. Overseas vendors (in my experience) should be avoided at this stage to minimize operational complexities.
Why L1 Selection Fails in Capital Projects
When bids are received, startups frequently default to L1 selection (lowest initial cost)—a decision-making shortcut I have seen repeatedly, even among seasoned professionals. While price is an important factor, it is rarely the appropriate primary decision driver in capital projects, particularly for FOAK implementations where technical and execution risk is high.
A more robust approach is a weighted bid evaluation framework that considers not only commercial terms, but also the proposed technical solution, design maturity, engineering and consulting support throughout the project lifecycle, vendor responsiveness and communication effectiveness, and financial metrics such as CAPEX, OPEX, and total lifecycle cost (LCC).
In complex CAPEX environments, execution failures carry significant downstream cost implications, including: • Schedule delays and missed milestones • Design iterations and rework • Integration and interface failures • Extensive field modifications • Extended commissioning and performance stabilization periods
In practice, the lowest-cost bid frequently results in the highest total cost of ownership, making rigorous, risk-weighted vendor selection essential.
A Real Example: Material Conveyance Vendors
On a biomass to fuels-based project, I was evaluating broadly between two competing technologies: Pneumatic and Mechanical Conveyance. The size of the project scope was less than $2M. I reached out to vendors who are the leaders in this space as well as ag-equipment suppliers who barely have a website.
It was evident pretty early on that pneumatic conveyance would be challenging given the inconsistent particle size, density, material shape, incoming moisture content and energy requirements. Therefore I focused on the two competitive bids for a mechanical conveyance system:
Vendor A (L1)
• 15% lower upfront cost (CAPEX) • Vendor was a reseller for OEMs and it was a hodgepodge of individual pieces from different OEMs • Several technical clarifications outstanding • Aggressive delivery schedule with minimal contingency
Vendor B (L2)
• Higher capital cost • Vendor had its own R&D team that operated their own test lab • Clear design assumptions and risk register – overall far better communication • Strong factory acceptance testing (FAT) philosophy • In-house commissioning support
Rather than defaulting to L1, we conducted a structured bid evaluation, weighting: • Technical compliance • Relevant operating references • Design maturity • Risk allocation • Execution capability • FAT and SAT rigor • Long-term operability and maintainability
Vendor B scored significantly higher on execution confidence and risk reduction. While the initial CAPEX was higher, lifecycle risk—and total cost of ownership—was materially lower.
Vendor B won. The result? • On-time delivery • Minimal field rework • Smooth commissioning • Equipment that performed as designed from day one
The Key Takeaway for Startups
Vendor selection is not a procurement exercise—it is a core element of strategic risk management. Startups don’t simply need vendors that can fabricate equipment; they need execution partners who can: • Operate effectively in environments with incomplete data and evolving requirements • Collaborate through iterative design development and scale-up • Stand behind performance guarantees and contractual commitments • Execute reliably under real-world constraints of capital, schedule, and constructability
Achieving this requires experience, disciplined processes, and structured decision-making—particularly when capital is constrained and timelines are aggressive.
How I Help
This is exactly where I focus my work today.
I bring hands-on expertise in: • Capital project planning and delivery • Vendor qualification, selection, and performance management • RFP development and competitive bid evaluation • Factory Acceptance Testing (FAT) • Site Acceptance Testing (SAT) • Risk-based decision-making for first-of-a-kind technologies
I’m passionate about sharing this knowledge with startups, founders, and engineering teams who are trying to scale breakthrough ideas into operating assets.
If you’re navigating technology scale-up, vendor selection, capital deployment, or execution risk—and want to avoid costly, preventable mistakes—I’m always open to a conversation.
Let’s build it right the first time.