EPC for Your FOAK: Make or Break Decision

In any large-scale construction project, your EPC (Engineering, Procurement, and Construction) contractor will either be your greatest asset or your biggest liability. When you're scaling from a Demo to a First-of-a-Kind (FOAK) facility - often a 10x jump - it is hard to expect your internal team to handle everything. This is where an experienced EPC partner comes in. Exceptions can be made, and I wrote about them last week.

A good EPC can make your project fly, while the wrong choice can sink it before it starts. Just look at ATOME, the UK-based green ammonia startup. They locked in Casale S.A., a century-old ammonia tech leader, as their EPC partner—ensuring expertise, credibility, and smooth execution.

Why the Cheapest EPC is Usually the Most Expensive

It's tempting to go for a contractor that offers the lowest bid. Don't. Instead, aim for a best-in-class EPC. A reputable contractor reassures investors and increases your chances of success.

Here’s why: The EPC business is cutthroat. Pipelines rarely extend beyond two years, cashflows are tight, and most firms survive on reputation. For an EPC, your FOAK isn’t just a project - it’s a portfolio opportunity. The right contractor might hesitate at first, but if they see the long-term value of adding a cutting-edge project like yours to their resume, they might be willing to work with you.

The contrast between two lithium-ion gigafactories in Russia is a case in point:

• In Kaliningrad, an unknown, low-cost EPC from Novosibirsk won the contract. Construction stalled for years.

• Near Moscow, a top-tier local EPC took charge, and the project is nearing completion ahead of schedule.

Due Diligence: More Than Just a Price Tag

Hiring an EPC is like hiring an artist—visit their previous projects, talk to their past clients, and assess their financial health. An EPC shutting down mid-project due to cash problems can be catastrophic.

When negotiating, aim for a fixed-price, full-wrap contract. Your EPC will push back—FOAK projects are full of unknowns—but stand firm. If you’re doing procurement yourself, negotiate pass-through pricing for key materials. Otherwise, anything under EPC's control should be their full responsibility. Exceptions? Only if there’s no alternative—and even then, with extreme caution.

Final Thought: EPC Selection for your FOAK is a strategic decision

Your FOAK project is already a massive challenge. Don’t gamble on your EPC. Choose wisely, negotiate hard, and set yourself up for success.