First-of-a-Kind projects: why realism beats optimism

The first industrial application of a groundbreaking technology—a First-of-a-Kind (FOAK) project—is the crucial test of whether it can scale. Yet half of these projects fail not because of technical shortcomings, but because of unrealistic planning. An AFRY management analysis of 30 European FOAK projects shows that 48% experience start-up delays of 12 to 36 months, while business cases often assume six to twelve months. The lesson: optimism is the biggest risk factor.

FOAK projects are approved based on business cases that assume rapid start-up. Yet a significant proportion of these projects only reach stable operations after three years—a timeframe rarely built into the original plan. In reality, ramp-up is not linear but a learning journey, during which degradation, malfunctions, and complex system interactions only become apparent over time. The analysis shows that 26% of projects experience delays of six to twelve months, while 13% need more than 36 months. EPC contractors stress that FOAK plants do not underperform against what is realistically achievable, but against unrealistic assumptions.

External integration: the overlooked risk factor

The biggest challenges in FOAK projects lie not in the technology itself, but in its integration with existing systems. Around 60% of integration complexity stems from external factors, such as modifications to existing brownfield sites, regulatory changes or logistical constraints. Project teams often focus on what is visibly new while assuming that the surrounding systems will adapt smoothly. In practice, these systems tend to be rigid and managed by external parties with their own priorities. Uncertainty about responsibilities - such as who connects infrastructure or utilities - often leads to late-stage coordination problems and design changes during construction.

CAPEX overruns: a systemic problem

FOAK projects are often treated as linear investments, even though they are inherently characterised by high levels of uncertainty. The analysis shows that CAPEX overruns are structural: eleven projects reported overruns of 5–20%, six projects of 21–40%, and three projects of as much as 41–60%. EPC contractors warn that timelines and budgets for FOAK plants are consistently underestimated by at least a factor of two. Causes include inadequate assessment of equipment at scale, unforeseen integration complexity and an overestimation of technological maturity. Nevertheless, financial models often apply optimistic contingencies of 10–15%, because larger buffers could undermine a project’s feasibility and appeal to investors.

Financing: balancing public and private capital

Most FOAK projects rely on equity or balance-sheet financing, with public funding often providing a crucial addition. Private capital absorbs the early-stage risk, but it can also push projects forward too quickly, before their market potential has been fully validated. The analysis shows that projects with flexible business models and processes for revisiting assumptions are better able to withstand financing friction. Even so, reliance on single-point assumptions remains a structural risk. Around nine projects in the dataset made no public disclosure of potential overruns, increasing uncertainty for future investors.

In-house expertise as a success factor

Strong internal operational expertise is the most reliable predictor of success for FOAK projects. Projects with limited in-house capabilities often become overly dependent on EPC contractors, leading to underestimated timelines, budgets and integration challenges. Successful FOAK projects are characterised by multidisciplinary teams that can identify problems early, along with continuous feedback loops between operations, engineering, and leadership. One FOAK developer emphasises that project managers must act as “orchestra conductors”, coordinating all workstreams and adjusting them as new information becomes available.

Europe as a testing ground for clean technologies

FOAK projects play a key role in the transition to renewable energy, a circular economy and low-carbon solutions. They bridge proof of concept and industrial scale, testing technological assumptions under real-world conditions. For investors, FOAK projects offer a way to turn emerging business cases into investable assets. The operational data they generate provide benchmarks for future plants and technology licensing. For public policymakers, FOAK projects are essential for validating new regulatory frameworks, permitting procedures and support mechanisms.