While an FEL I package is generally based upon preliminary
information, getting it right lays the foundation for subsequent
successful FEL phases. One factor that can significantly affect the
level of effort required is the accuracy and availability of documentation regarding existing conditions. If the information is
not available, it usually leads to simplifying assumptions (about
the adequacy of electrical power or other utilities, for example),
which may not be valid.
FEL II: Preliminary engineering / financial justification
Approval of the FEL I package allows for the project to proceed
through the first gate into the FEL II phase. The critical element
of the FEL II phase is to formalize the project scope. There may
still be some synchronous opportunities to evaluate, but very
limited alternatives to the design basis upon completion.
FEL II begins after the preliminary business case has been
presented to senior management, which will determine whether
to authorize funding to proceed into the next phase. Depending
upon the scope of the project, the FEL II phase may take
anywhere from one to three months.
The primary objective of the FEL II phase is to “freeze” the
project’s scope and eliminate many of the assumptions and risks
identified during FEL I. Other important activities in this phase
include the assignment of an overall project manager, assembly
of a project team, and the identification of key stakeholders who
should (but without a structured program, often don’t) participate in project development.
FEL II also moves the engineering design ahead to a point
where it becomes possible to validate the business case, identify
and quantify key risks, and forecast the necessary capital
commitment within a much narrower range. The cost estimate is
refined to an accuracy range of approximately +/- 25%.
In addition, the final FEL II package will typically include a
milestone schedule as well as a procurement strategy, specifications for long lead equipment, and a preliminary start-up plan to
establish requirements for commissioning, qualification, and
A well-executed FEL II can produce dramatic cost savings.
During a recent project for the design of a cereal production
line, the conceptual design of a complex dust collection system
included 10 stainless steel platforms for equipment access.
The 30–40 foot-long platforms would span over five conveyor
systems, and each one would require 10 handrail gates.
Determined to simplify the overall design before freezing the
scope, the engineering team modified the ductwork layout and
blast gate locations. This relatively simple change made it possible to eliminate seven of the platforms and cut $471,640 from
the construction budget.
FEL III: Basic engineering / financial budget
A completed FEL III concludes the capital appropriation request
process with the submission of supporting documentation to
senior management and approval committees.
During this phase, the level of engineering definition is generally between 30% and 50% complete. The overall time frame
for common process industry projects is two to five months,
depending heavily on project complexity. The overall project
execution plan should be well-defined at this point, including the
establishment of an overall project schedule with a critical path
logic worked out, a finalized cost estimate, and the associated
FIG. 3. The stage gate process
STAGE GATE PROCESS