Biomanufacturing Commercialization Roadmap

As a new wave of government grants for early development of first-of-a-kind biorefineries rolls out, the subject of project engineering and what makes a “bankable” engineering package once again comes to the forefront.  Questions about the overall process and its individual stages, and the realization that an FEL-2 level feasibility study, which is counted on to secure a US federal loan guarantee, will not be enough to get applicants to the promised land. 

There are millions of dollars and nearly a year of work beyond FEL-2 to reach the necessary engineering package, a lesson that many biotechnology ventures have learned the hard way.   An understanding of the entire project development process is key for those heading down the commercialization path.  The following graphic outlines a concept to commercial operation project engineering roadmap, with detailed descriptions that follow.

Front-end loading (FEL) is the engineering development process to take a concept from the idea stage to the point that funding sources (banks or governmental agencies) and/or company boards of directors can make decisions to move forward on the project.   It is structured in a stage-gated process, with each step targeted at developing adequate information to make an informed go/no-go decision on the path forward. 

The process is typically broken into 3 phases (FEL-1, 2 and 3) that collectively represent what is referred to as Front End Engineering Design (FEED).  This process usually costs 2-3% of the total cost of the project and needs to be funded by the company before project financing can be secured.  Understanding engineering industry terminology and typical path forward is a key to ensuring the process meets time, quality and cost expectations. 

Reflecting on the characteristics of successful advanced biotechnology companies that have achieved commercial scale, and the longer list of companies that haven’t, the difference between success and failure is often not the core technology alone, rather the lack of knowledge and execution of navigating through the commercialization process.  

Specifically, the navigation from process concept and engineering stages, through construction and startup, to the pinnacle goal of a reliable and profitable manufacturing operation.  Reaching that reliable manufacturing operation is the goal our industry cannot lose sight of, to succeed as an advanced biotechnology community, we need more technologies to reach commercial scale and endure long-term manufacturing operations.

The overall commercialization process, from concept to commercial operation for a first-of-a-kind commercial scale biotechnology, as illustrated below:

The following summary is intended for anyone who is working to take a new technology from the bench/pilot stage to commercial operation.  This includes engineers, scientists, management and investors, anyone who will benefit from a detailed understanding of the process before they begin. 

Think of this way, if you are heading out on an 8-mile hike, wouldn’t it be good to know if there is a bridge washed out at the 6-mile mark?  The same can be true of commercialization. You do not want to spend significant resources to prepare a bank finance or federal loan guarantee application, to find out your technical package is insufficient. The process is outlined as follows:

Front End Loading (FEL) Stages

The purpose of the FEL process is to develop a process concept to the point of definition that a board or financing entity can give approval of funding to move into project execution.  Often alternatively referred to as Front End Engineering Design (FEED), is defined by three front-end loading steps (FEL 1, 2 and 3) defined below:

Front-End Loading (FEL) 1: Business Planning

The primary objective of the business-planning phase is to define the business opportunity.  After a proposed project has been identified, it must undergo a certain amount of definition. This includes a technical assessment, development of a milestone schedule, and an estimated cost range (typically a +40/-25 percent estimate). As the proposed project becomes better defined, a clearly formed business plan can be framed. Concurrently, economic models and business evaluations can assess the proposed project’s strategic importance and its business, production, and financial potential.                

Front-End Loading (FEL) 2: Scope Development

This stage is referred to as the scope development phase. The beginning of this phase is the formation of a project team that will start to develop both the business objectives and project scopes for a given business opportunity. A Project Manager will typically be assigned to manage the FEL 2 development and into later stages.  

During the FEL 2 stage, teams develop multiple alternatives that meet the business opportunities. However, it is important to understand that at the end of FEL 2, the project gatekeepers must identify and choose only one as a facility design basis of the alternatives to develop during FEL 3. In addition to selecting one alternative, it is important that the following are outlined for the final alternative chosen to allow the project to utilize the next stage effectively. 

Work products generated in FEL 2 are the project objectives and conceptual engineering package outlined as follows:

• Site assessment and selection
• Site ambient conditions, topography, soil conditions, design codes
• Site Plan
• Process flow diagrams containing basic control concepts with utility (average and design) loads 
• Process and long-lead component list
• Draft P&IDs for key systems
• Project schedule
• Budgetary estimates for major equipment obtained from vendors or based on historical data
• Total installed capital cost estimate (+25/-15 percent) “CAPEX”

Front-End Loading (FEL) 3: Project Planning

This stage is referred to as the project planning stage. The beginning of this phase is the point at which one alternative evaluated during FEL 2 has been selected for further definition, with the goal of taking it to an authorization board for funding. During this phase, most project teams grow in size due to the increased amount of engineering work to be completed prior to authorization.

The goal of FEL 3 is to develop a set of engineering documents (design basis package) that incorporate site-specific conditions and a plan for executing the project, such that reliable cost and schedule estimates can be established. The FEL 3 stage CAPEX typically reflects an accuracy of between ±10 percent accuracy. The work product of this phase will allow a detailed package to be presented at the authorization gate.

The specific deliverables for the FEL 3 stage are updated FEL 2 deliverables, plus the following:

• Complete P&IDs
• Process plant area equipment layouts (plan and elevation)
• Detailed equipment technical specifications for major process equipment, suitable for procurement
• Purchase ready bids for major equipment
• Project execution and procurement plan
• Detailed scope of work (including “bulk” quantities and material takeoffs)
• Valve, pipeline, instrument and cable list with quantity estimates
• Architectural layouts and plans, including labs, offices, control room and other buildings.
• Critical-path method, resource-loaded schedule
• Preliminary project commitment, cash-flow and budget
• Authorization-grade estimate (±10 percent accuracy)

The end of FEL 3 occurs when the project is authorized and the project team receives funding to move into detailed engineering. The table below summarizes the overall FEED process into its three components, describing the scope of each effort and providing a typical duration, cost and accuracy of capital estimate. 

The most common disparity that develops is ventures hoping an FEL-2 level feasibility study will be adequate to support project finance or federal loan guarantees, only to find out there is a significant level of additional effort to reach an FEL-3 level project definition, which is what is considered the “bankable” level of definition. Understanding the differences in work products and their ability to fill required milestones before the development process begins is key to avoiding unpleasant surprises.