To Meet Demand For Data Centers, We Need To Collaborate More

Dan Ayley, Global Head of Data Center Services, Turner & Townsend

Dan Ayley, Global Head of Data Center Services, Turner & Townsend

With consumer demand for data centers accelerating globally, the sector’s construction market is under tremendous pressure to rise to the occasion.

Turner & Townsend’s most recent Data Center Cost Index showed record levels of investment in both established and emerging markets but reported a widespread perception that the construction industry is failing to deliver the number of data centers we need.

A shortage of skilled labor, increasing lead times for key equipment, a squeezed supply chain, and limited power and land availability are threatening data center growth potential and driving construction cost inflation.

To ensure data center capacity can keep pace with end-user demand, how can investors and the wider construction industry overcome these challenges?

Alternative delivery models

The industry continues to demand increasing speed to market, with Design & Build from RIBA stage 3 or equivalent the default procurement method. But with a limited D&B contractor pool, an alternative solution is needed.

We’re seeing increased use of modular or offsite construction methods, but these only reduce the burden on the general contractor if the owner is prepared to alter their attitude to risk and contract directly with the wider supply chain.

“To truly improve performance, the industry needs to embrace a much more collaborative mentality”

A collaborative approach

At present, data on how built assets are delivered, operated and managed across their life cycle is not consistently collected or used effectively.

By opening up and sharing this data, we can identify and encourage best practice across regions so that developers can invest where demand is highest and returns are strongest. We need to get better at benchmarking and leveraging data to drive more effective decision-making and planning.

Turner & Townsend has seen great success with this approach in the oil and gas industry through the Performance Forum – an industry-approved independent assessment which benchmarks project performance on a range of standardized cost, schedule, technical and project complexity metrics.

Since it was established 25 years ago, it has been a respected advisor to the upstream oil and gas industry. The database currently contains data for almost 1,000 projects delivered by the world’s largest oil and gas companies.

Emulating this more transparent approach in the data center industry would enable us to understand construction costs and performance statistics to manage and inform better investment decisions.

Standardization

As an industry, there are very few metrics that are universally used. While the physical and technical structure of built assets may vary, we should be able to agree on consistent metrics to measure cost and schedule performance.

We need to start at the very beginning with how we collect, code and measure data. Only by getting these key cornerstones in place can we then begin to analyze and interrogate the data to inform investment strategies.

Importantly, we need a significant shift in cultural and organizational attitudes throughout the supply chain to be more transparent with data. Yes, we need to embrace innovative new construction methods and delivery models to get on site quicker, but it will be more effective to do this on strong foundations of measurement and performance benchmarking.

In this way, owners and developers can make more informed investment decisions, manage risk, and we can ultimately meet the demand for data centers in the right places, and at the right cost.

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