As the business world leans further into cloud and artificial intelligence solutions, demand for the data centers that power them continues to rise. Unfortunately, it is not as easy as simply building more data centers and selling or leasing them to the many companies that need them. The reality is that data center projects must overcome an increasingly challenging set of hurdles before they reach the finish line.
As a result, construction firms tasked with building data centers must not only have enough construction experience to complete complex industrial builds, but also the expertise and established infrastructure to manage the full scope of the project, from planning and site selection through construction and logistics. Organizations that lack holistic capabilities may succumb to the kinds of delays and budget overruns that threaten a build’s success.
Navigating the Demands of a Data Center Build
Data centers place extraordinary demands on construction crews. Once operational, data centers cannot afford to go offline; downtime costs can reach $9,000 per minute. As such, there is very little margin for error during the construction phase. Each system must be precisely installed and calibrated to ensure the data center can support continuous operations from day one.
However, it can be difficult for builders to stay on schedule, as data centers rely heavily on equipment with notoriously long lead times. Items such as transformers, generators, and switchgear can extend timelines by months or even years. As such, construction firms often build timelines around the delivery of these items, which makes the logistics risks within a data center build extremely high.
Water and cooling infrastructure add another layer of complexity that contractors typically don’t encounter in other industrial builds. Data centers use significant amounts of water in cooling towers and humidification systems to manage the heat generated by the facility. In regions with constrained water resources, builders should collaborate with civil engineers and local authorities during the preconstruction phase to ensure the facility’s cooling plans align with available resources.
Last, but certainly not least, power availability is a primary concern for data centers today. As U.S.-based utility providers struggle to upgrade their infrastructure, the influx of new data centers has placed additional strain on an already outdated power grid. As such, builders may also find themselves responsible for installing on-site power generation to reduce the new data center’s reliance on the grid.
“The biggest risks on data center projects usually come from those gaps between disciplines. When teams are aligned early and working from a shared plan, execution becomes far more predictable,” said Frank Crivello, founder and chairman of Milwaukee, Wisconsin-based industrial real estate broker Phoenix Investors.
Embedding collaboration on each of these requirements in early planning enables construction teams to sequence the build in the most logical way and avoid reactive workarounds and rework that could compromise the schedule and the quality of the final structure.
Coordinating a Complex Operation
Beyond those core regional and infrastructure elements, data centers are distinguished from other industrial projects by their sheer technical complexity. These facilities incorporate massive mechanical, electrical, and plumbing (MEP) systems, which can be difficult to build from the ground up. Even with a shift toward modular components that can improve quality and reduce on-site labor needs, builders still cannot escape two ongoing problems:
- The skilled labor shortage. As more data centers enter the pipeline, these projects will place an intense demand for skilled technical and trade labor, which is already hard to find for many contractors.
- Rising costs. Costs are up across the board for materials, labor, and other key project elements. Given that it can take years to complete a data center build, construction firms are left to take a lot on faith when submitting bids and designing budgets.
These persistent issues highlight the importance of selecting an experienced construction firm with a reliable partner network. Experienced builders know how to mitigate these challenges and the associated risks through comprehensive planning and industry best practices.
Creating a Competitive Advantage in Data Center Construction
Though building a data center is never easy, these projects offer significant rewards for owners and builders who can see them through as the enterprise world continues to pursue evolving technologies. Contractors who deliver the most to a data center project are those who bring experience, expertise, and a broad range of disciplines.
The Phoenix affiliate network of companies—including Phoenix Investors, Phoenix Construction, and Phoenix Logistics—offers the unique ability to manage data center projects from end-to-end, including site selection, construction, and project logistics. To see how we can help with your data center needs, please reach out to us.
About Phoenix Logistics
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistics competitors work to win 3PL contracts and then attempt to secure the real estate to support them. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.
