Data Center Delivery Transformed

February 24, 2012 2 Comments »

The delivery of data center projects has undergone a dramatic transformation over the last two decades or so; some might even say there has been a paradigm shift in the thinking about how these now ubiquitous facilities should be sited, designed and delivered to meet the needs of a rapidly changing marketplace.

Whereas once data center delivery adhered to a fairly rigid set of corporate criteria and guidelines requiring data centers to be built close to a company’s home base, with their design and construction details as well as their cost kept a closely guarded secret, the pendulum has now swung in the opposite direction. Today, owners more often focus on bringing together a collaborative team early in the process to help site, design, develop and construct highly efficient data centers. Many times they are built in locations that are far removed from corporate headquarters but which instead offer lower cost power, ample fiber, favorable environmental conditions and a positive economic and business climate. In addition, some owners, such as Facebook, are now throwing open the books on cost and freely sharing the design details of their data centers in an effort to create a pooled knowledge base that can be used to create facilities that are ever more cost effective and energy efficient.

To understand just how dramatically data center delivery has changed, it is important to look at the factors that have influenced the evolution of this market sector over the years.

Internet Revolution Spikes Demand

While there were so-called data processing facilities as far back as the 1960s, it was not really until the early 1990s that the modern data center demand spiked. This occurred with the advent of the internet revolution and the growing need of businesses to process an ever-increasing amount of data, ranging from online banking and financial transactions to email and video communications.

The lack of a clear cut and independent criteria for site selection for data centers in the 1990s meant that most of them continued to be viewed as simply another component of real estate. Consequently, owners focused on finding the cheapest site close to where they were headquartered to locate their data centers. This resulted in some large data centers being sited in flood plains, in the middle of Tornado Alley or in hurricane prone areas—places that would now be rejected for their excessive risk factors.

Tier Framework Introduced

The early 1990s also ushered in the first framework for classifying data centers based on their need for security and redundancy, ranging from Tier 1 through 4. This system was designed to provide a broad context in which owners could approach their data center design and programming. Even with this new framework, however, owners were often ending up with data centers that did not necessarily meet their long-term business objectives. There was often a misalignment in approach between the Facilities groups and the IT groups within corporations, both of whom had a say in the development of a company’s data center. As a result, during the early 2000s some data centers were already at maximum capacity the day they opened their doors, while others were completely oversized and underutilized.

The disconnect between data center capacity and actual utilization was just one factor that became apparent and helped drive a change in how owners started to rethink the data center delivery process. Another driver was the explosion in higher end applications coming to market, such as YouTube, Skype, Tango and Cloud technology. These data hungry applications required more servers in the data centers, and more servers consumed more power. In fact, a report issued by the Environmental Protection Agency a few years ago estimated that the consumption of power by data centers in the U.S. accounted for a full 1.5% of total electricity usage in the United States by 2006. It quickly became apparent that power was one of the leading drivers behind the cost of data centers, so technology companies that had the choice as to where they would site their facilities began looking for locations that offered cheaper and more reliable power sources.

Hand-in-hand with the increased focus on power availability and cost as a selection criteria was a growing emphasis on improving the energy efficiency as a way to reduce the overall power demand and, consequently, operating cost. Maximizing the efficiency of the data center became a priority for the entire project team. The focus on going green encompassed everything from the way in which the data center was cooled, utilizing both outside air and more efficient HVAC systems, to a growing emphasis in recent years on minimizing water consumption in the facilities as water has become recognized as a precious and, in many areas, an increasingly scarce resource.

Major Change in Project Delivery Approach

It is clear that owners have undergone an extensive learning curve over the last 20 years about what factors should take precedence in the site selection criteria for their data centers, ranging from power availability and cost to water availability and the regulatory and tax environment in a prospective area, among other things. This learning curve has been heavily influenced by another major trend in data center delivery: the movement to bring key team members on board early on to help drive the overall development of the data center project.

The push for a more collaborative, integrated team approach to data center design and construction sprang directly from owners’ need for more affordable, cost effective facilities.

Many of the internet-based companies such as Yahoo, Facebook and Google were able to shoulder more risk than financial institutions, which are subject to SEC oversight and restrictions. As a result, these companies could afford to be more innovative and aggressive in their approach. The linear approach to project delivery, in which designers and contractors were performing their portions of the project in separate and distinct silos, simply wasn’t producing the cost savings that the current market demanded. In addition to the internet companies, some of the wholesale data center suppliers also got out front and began leading the charge to create a more efficient end product by integrating the project team early on, frequently involving both the general contractor and designer from the site selection process all the way through project turnover.

The benefits of the design-build delivery method and other integrated project delivery approaches had already been widely demonstrated in other market sectors. Following along this model, data center owners began pushing for more of a collaborative team approach, with everyone encouraged to work together to set and achieve the same goals.

A clear cost objective was established from the outset and pursued by all of the team members. Information sharing and innovation was encouraged, often resulting in cost savings as the contractor began providing more input into constructability or new ways to achieve environmental efficiencies. The advantages of prefabrication of certain systems and components was explored and promoted as a way to speed construction and “right size” the facility for the owner’s current needs, with a growing emphasis on using modular construction components to allow ease of expansion in the future.

As this integrated approach took hold in data center delivery and continues to progress today, key designers and building trades have moved from what was once more of a hierarchical relationship (owner, then architect, then general contractor) to working more often as a truly collaborative team focused on shared project goals from the very early stages of a project through commissioning.

While this approach may seem straightforward, team organization across multiple companies is often one of the biggest challenges. Setting up a well-defined organizational workflow, establishing common objectives and working with team members who have experience with design-build or integrated project environments have proven to deliver the most effective outcomes.

Questions Asked – And Answered

Clearly, bringing together an integrated team early on gets the right people on board who are knowledgeable about what questions should be asked and how to get them answered when it comes to selecting the site, designing, and constructing the right size data center in the right location for a particular owner. This offers owners the ability to “vet” potential issues in the earliest stages, leading to faster delivery, more reliable cost and greater efficiency.

Some of the critical questions that team members may explore during the early stages of a data center project include the following:

  • Fiber: How much fiber is available on the site and what is the source? Is the fiber installed aerially or underground, and what route does it take to a prospective site? Latency, or the delay of network connection into a building, is another key consideration and may be driven in part by the route the fiber follows to the site; the team will often need to work closely with carriers in the area to uncover the details about fiber service there.
  • Power: Who is (are) the power supplier(s) in a given area, and what is the cost of power in the region? The integrated team can help an owner navigate the power market and to secure the lowest cost power from a given provider or, alternatively, help a data center facility get off grid or even bypass the utility entirely by developing its own power generation source.
  • Geographic Conditions on Site: The team will fully explore potential roadblocks such as the water table and flooding potential, frequency of lightning strikes in an area (the number one disrupter of power to a facility), earthquake potential, and a host of other risk factors. In addition, the team will also explore the areas for economization. Climate pays a critical role, and team members will look for sites where there is the potential for “free” cooling, using an area’s natural environmental conditions to help cool the data center in lieu of simply relying on a mechanical HVAC system.
  • Tax implications: What is the tax base in a given area and how will this factor into the overall cost of the project? Taxes can be viewed as the “hidden one-third cost” of ownership of data centers and clearly one of the least productive cost components. The integrated team involved early in site selection will help an owner determine what the sales and use tax, property tax and income tax implications are in a given area, and to select locations that minimize these costs. One example of such tax savings have been locating data center facilities for companies including Facebook, Adobe and others in enterprise zones or e-commerce zones in certain areas of Oregon or Washington states which offer tax savings and other economic advantages.
  • Owner’s Business Requirements: Many owners are restricted by the type of business they are in as to where they can locate their data center facilities. Bank data centers, for example, must be sited close to the company’s financial center and are closely regulated by the Securities and Exchange Commission. Health care data centers cannot be located outside the United States if they are going to hold medical records. Internet-based companies such as Google, Microsoft and Facebook must be located in specific regions to cover the U.S. metropolitan areas in which there users are located.

All of these factors, along with many others, collectively play a huge role in the cost of today’s data center projects. Savvy owners increasingly are starting with an integrated, collaborative project team to optimize their project’s efficiency and ultimately, lower their costs for both developing and operating their data center facilities throughout their lifespan.



Mark Thompson and David Ibarra lead the National Advanced Technology – Mission Critical Group for DPR Construction, one of the nation’s top technical builders and a leading data center contractor. With more than 80 mission critical facility projects, totaling more than $1.2 billion, in preconstruction and construction, DPR has completed data center projects for such customers as University of Texas at Austin, Facebook, Kaiser Permanente, Fortune Data Centers, Digital Realty Trust, Equinix and a leading global content provider. For more information, visit


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