Front-End Engineering Design: Understanding FEL1, 2, & 3

A Comprehensive Look at Front End Loading – FEL1, FEL2 and FEL3 

More than ever, industry must deploy capital with assurance that it meets or exceeds business objectives.  The Front-End Loading (FEL) process plays a pivotal role defining a capital project with a scope, schedule and budget that achieves those objectives. Three stages of FEL incorporating Front End Engineering Design (FEED) provide a structured approach to progressively develop projects.  Clients demand a highly efficient execution of the FEL process with value proportionate to the FEL investment. When performed properly, the FEL process arms project stakeholders with the information necessary to make sound business decisions before committing to full-scale execution, which can begin seamlessly based on the detailed planning developed in the FEL phases.  

ITAC was founded by project managers and built to conceptualize, plan and execute complex industrial projects.  Our engineers work alongside our construction tradesmen, led by our project and construction managers and supported by estimators, planners, and cost control specialists to deliver highly successful projects.  Our decades of expertise in delivering thousands of successful projects uniquely qualifies ITAC to bring the benefits of FEED and the FEL processes and develop high value solutions that meet business objectives.  We always recommend FEL and FEED as key steps in ensuring successful project outcomes.   

In this article, we provide additional insight into using the FEL process to ensure overall project success. 

Understanding Front-End Engineering Design (FEED) 

FEED is a crucial step in project development, bridging the gap between conceptual planning and detailed engineering. The objective of FEED is to establish technical requirements, assess potential risks, and provide a reliable cost estimate before moving into detailed design and construction. Effective FEED implementation ensures that project stakeholders understand the scope and feasibility, reducing the likelihood of costly design changes during later phases.  

The FEL methodology—FEL 1, FEL 2, and FEL 3—structures the FEED process to maximize project predictability and efficiency. Each phase has specific objectives, deliverables, and decision gates that progressively refine project details and prepare for execution. 

FEL 1: Conceptual Design & Feasibility Study 

FEL 1 focuses on evaluating the feasibility of a project. This phase provides an initial understanding of the project scope, potential costs, and risks. The goal is to determine whether the project is viable and aligns with business objectives. Clients find that engaging ITAC in FEL1 brings significant benefit and value versus attempting to do so independently. 

Typical FEL 1 Deliverables: 

• Business Case Development – Identifies project objectives, expected benefits, and strategic alignment with company goals and financial objectives/model.  
• Project Governance – Identify Sponsor, Steering Team, Project Charter 
• Target Site Selection – Either a specific site, or site location and attributes needed 
• Technology Selection – Evaluates available technologies including alternatives and their feasibility for the project. 
• Preliminary Cost Assessment  – Provides a rough order of magnitude (ROM) cost using factoring and historical benchmarking data. 
• Preliminary Risk Identification – Identifies major project risks, including technical, financial, and environmental factors. 
• Block Flow Diagrams (BFDs) – Outlines major process unit operations and design data 
• Preliminary Schedule Milestones and Timeline – Establishes estimated timelines and milestones for key phases and alignment with business objectives. 
• Legal, regulatory & environmental driver identification– Identify key factors that will impact project execution 
• FEL 1 Report – Executive Summary and narrative of FEL1 findings, including an assembly of all FEL 1 deliverables. 

Typical FEL 1 Outcome: 

At the end of FEL 1, stakeholders decide whether to fund and proceed to FEL 2 based on feasibility and strategic value. If approved, the project moves into more detailed analysis and refinement. 

FEL 2: Preliminary Engineering & Project Definition 

FEL 2 focuses on developing a more refined project scope and cost estimate. The goal is to reduce uncertainties, establish engineering parameters, and secure stakeholder alignment before making significant financial commitments.  

Typical FEL 2 Deliverables: 

• Evaluation of Alternatives – Technical, project and site alternatives should be considered and assessed in this phase, and a final direction chosen for FEL3 and execution. 
• Process Flow Diagrams (PFDs) with Heat and Material Balance (HMB) Initial Issuance – Depicts key processing equipment and flow streams, with design flows and heat/energy data . 
• Process and Instrumentation Diagrams (P&IDs) Initial Issuance – Develops more detailed process diagrams that define instrumentation and control strategies. 
• Initial Site Layout & Equipment General Arrangement Drawings Initial Issuance – Defines equipment locations, structural requirements, and spatial constraints. 
• Refined Cost Estimate – Improves cost accuracy, generally to within ±30%, developed using a combination of factoring, unit costs, historical data, and select preliminary material takeoffs. Value engineering occurs and findings are incorporated during the estimating effort. 
• Initial Project Scope of Work and/or Scope of Estimate – Written, initial scope document 
• Initial Project Level 1/2 Schedule – Schedule in MS Project, P6, etc. with predecessors/successors established, focused on understanding overall duration and critical patch utilizing key tasks 
• Initial Project Risk Assessment – Identifies potential challenges and mitigation strategies. 
• Preliminary Process Risk Assessment (HAZID) – Initial assessment using a structured approach to identify overall process hazards and risks associated with the project  
• Legal, Regulatory and Environmental Assessment – Evaluates project features needed to ensure compliance with environmental laws, industry and local codes/regulations and other legal statutes. 
• Preliminary Procurement Strategy – Outlines sourcing options for major equipment and materials. 
• Preliminary Project Execution Plan – Details the overall project strategy, including delivery method, construction sequencing and quality control measures. 
• FEL 2 Report – Executive Summary and narrative of FEL2 findings, including an assembly of all FEL 2 deliverables. 
• Initial, Outline Readiness Assessment – Using industry standard tools, coupled with ITAC and client historical data. 

 Typical FEL 2 Outcome: 

At the end of FEL 2, decision-makers assess the refined scope, cost, and risks to determine whether the project should advance to FEL 3. This phase ensures that all major engineering uncertainties are resolved before significant financial commitments are made 

FEL 3: Basic Engineering, Definitive Estimate & Execution Planning 

FEL 3 focuses on finalizing the project’s design, cost estimates, and execution plans before moving into the execution phase. This phase is crucial for ensuring a smooth transition to construction and minimizing risks.  

Typical FEL3 Deliverables: 

• Key Design Basis and Definition Documents – Includes PFD’s, P&IDs, Site Plan, Equipment General Arrangements, Electrical Single/One Line, Controls Architecture, along with  Equipment, Instrument, In line Specialty, Line and Tie in Lists. (ideally suitable and issued for detailed design) 
• Preliminary, Basic Engineering – Minimally includes the engineering work by discipline necessary to develop the key definition documents, to size and specify major equipment, and to allow for development of detailed material takeoffs and work scopes/narratives for estimating.  Select modelling is performed. Many deliverables ultimately needed for detailed design are started but not issued, while others associated with long lead, critical path activities may be progressed to a level suitable for purchase or construction. 
• Definitive, Baseline Cost Estimate – Quantities derived by developing material takeoffs utilizing key definition documents and preliminary, basic engineering, design and modelling are input using industry unit labor hours and quoted materials and equipment targets accuracy within ±10%.  Cost Risk Assessment may be performed to establish appropriate contingency for desired cost risk and probability. 
• Final Project Scope of Work and/or Scope of Estimate – Written, final scope document, frozen for execution. 
• Detailed, Baseline Project Schedule (Level 2/3) – Schedule in MSProject, P6, etc. with all major task included, predecessors/successors established, focused on providing a baseline for execution.  Schedule Risk Assessment may be performed to establish appropriate contingency for desired schedule risk and probability. 
• Final Project Risk Assessment and Mitigation Plan  – All identified risks and mitigation plans/actions are identified, quantified and agreed upon.  Risks are generally identified in collaborative session(s) with all stakeholders. 
• Final Process Risk Assessment (HAZOP) – Building on the HAZID, the HAZOP is a structured and systematic technique used to identify potential hazards and operability problems by breaking down a process into smaller sections and using guide words and methodology. ,  
• Legal, Regulatory and Environmental Assessment – Evaluates project features needed to ensure compliance with environmental laws, industry and local codes/regulations and other legal statutes. 
• Finalized Procurement Strategy – Outlines sourcing plan for all procurement major equipment, materials and subcontracts, including strategies for competitive testing and qualified/intended suppliers. 
• FEL 3 Report – Executive Summary and narrative of FEL3 findings, including an assembly of all FEL 3 deliverables 
• Final Investment Decision (FID) –  Other deliverables needed to prepare the project for approval by stakeholders or authorities.  
• Overall Project Execution Plan with detailed plans – Overall plan to be used for execution, outlining execution strategy, delivery method, and initial versions of detailed plans for quality assurance, safety, commissioning & startup, project controls. 
• Detailed Readiness Review – Formal assessments using tools such as PDRI quantify risks and items needing additional focus and development. 

Typical FEL3 Outcome: 

At the end of FEL 3, the project is fully defined, and final approvals are secured to move forward into the execution phase. Stakeholders have a clear understanding of scope, budget, and schedule, minimizing uncertainties during construction.  Deliverables are typically used for final appropriation request or FID. 

Why ITAC? 

ITAC brings decades of expertise in industrial engineering, construction, and project management, making us the ideal partner for executing FEED and FEL processes. We offer highly customized FEL solutions tailored to meet client needs and aligned with their internal business processes. We tightly integrate with our client to arm them with information needed to make sound business decisions and initiate project execution with high confidence in the outcome and full awareness of the risks and mitigations.    

Our team of employee owners specializes in: 

• Design-Build Solutions – Providing integrated services to streamline project delivery. 
• Risk Assessment and Mitigation Strategies – Identifying, quantifying and addressing potential risks early in the project lifecycle. 
• Cost Optimization – Evaluating project alternatives and utilizing value engineering to deliver a project with optimal investments.  Accurate cost estimates and procurement strategies maximize budget efficiency.   
• Regulatory Compliance – Ensuring all projects meet industry standards and environmental regulations. 
• Advanced Technology Implementation – Utilizing 3D laser scanning, digital modeling, and smart engineering, along with propriety Assured Project Management tools and processes for precision planning and flawless execution. 

By partnering with ITAC, clients gain access to a trusted team that prioritizes safety, quality, and efficiency. Our proven methodology ensures that projects are completed on time, within budget, and to the highest industry standards. 

Front-End Engineering Design (FEED) and the FEL 1, 2, and 3 phases are essential to the success of industrial engineering and construction projects. If you’re looking for a trusted partner to navigate FEED and FEL processes, ITAC is here to help. Contact us today to learn more about how we can support your next project.