Data Center Construction: Part 1

Anyone familiar with current news is likely aware that the development and construction of data centers is a controversial topic in many parts of the country and the world. Certain technologies rely on these data centers, but many people are resisting their introduction into their communities.

Data centers are specialized building facilities designed to house large numbers of computer systems, servers, storage, and networking equipment that store, process, and distribute enormous amounts of data. They facilitate cloud computing, media, streaming, and artificial intelligence.

At a basic level, data centers are buildings that house computer equipment. However, in actuality, data centers are closer to industrial infrastructure than commercial construction. These facilities require significant power to operate and subsequently generate massive amounts of heat by the computer systems. Therefore, cooling is also a significant factor in design and construction. In a way, data centers are similar to a process plant, but instead of producing a physical product, they facilitate the movement of data.

In this blog series, I explore how data center construction both parallels and differs from other commercial and industrial facility construction. I also discuss how data center construction management and scheduling are very similar to other large and complex construction projects. In the final post of the series, I will review several of the most common causes of delay claims and other disputes on data center projects, as well as best practices for avoiding them.

Planning, Scheduling, and Execution
A well-written contract is one of the most important success factors in any construction project. Rather than reusing a contract from a previous project, each contract should be tailored to the specific project, its unique requirements, and the risks involved. Taking the time to develop a project-specific contract helps establish clear expectations and reduces the potential for disputes.

Several parts of the contract deserve particular attention, including the project schedule, reporting requirements, notification procedures, change management, and document control. Clearly defining and properly managing these requirements prevents delays, cost increases, and disagreements among project stakeholders.

The construction of a data center should be carefully planned and scheduled. The contract should require the contractor to develop a detailed Critical Path Method (CPM) baseline schedule and provide regular schedule updates throughout construction. A well-developed baseline schedule establishes the planned sequence of work and serves as the benchmark for measuring progress. Regular updates allow the project team to monitor procurement and construction, identify potential delays, and evaluate the impact of changes as they occur. The critical path of the baseline schedule (as well as the near critical paths) should be documented in a baseline schedule narrative.

It is also important that all project stakeholders agree on the baseline schedule before construction begins. Because the baseline schedule reflects the contractor’s planned approach to completing the work, once it is accepted it effectively becomes part of the contract (the contract should define this requirement). Any significant changes to the contractor’s planned sequence, methods, or schedule should be formally documented and approved to maintain an accurate project record.

Developing a detailed construction schedule is essential for effective project planning. The schedule should clearly identify the entire scope of work, activity relationships, key milestones, and project completion requirements. A comprehensive schedule provides a roadmap for the project and helps all stakeholders understand how individual activities affect the overall timeline.

For a large project, development of site key plans or maps that correspond to the schedule is also helpful. For example, for a data center, key maps may show the different areas of the building(s) and include codes that can be used in the CPM schedule (via activity coding) that correspond to the area designations. This type of planning can greatly benefit construction projects, and key plans provide a good interface between project documents (namely design drawings) and the project schedule.

Additionally, crane management is another helpful item to include in the project schedule. A contractor’s sequencing and planning for construction may be based around the number and size of cranes. This should be reflected in the schedule and by assigning activities to a crane (via activity coding). With this coding, the schedule can be used to determine how long each crane will be on site.

Successful contract management depends on owner participation throughout a project. Owners should ensure they have enough qualified technical and project management staff available to review drawings, submittals, requests for information, change order requests, and other project documents in the time frames that the contract allows. The contract documents should specify that the project schedule includes all owner-responsible activities (and any other relevant party) such that the entire scope of work can be tracked and monitored against the baseline schedule.

Clear communication throughout the project is another key to successful project execution. The contract should establish requirements for submittals, monthly progress reports, required meetings, and formal notice procedures. Well-defined communication requirements help ensure that issues are identified early and known and understood by all parties.

The contract should clearly define responsibilities for owner-furnished and contractor-installed (OFCI) equipment, which is often a source of disputes on data center projects (and other projects). Any equipment with long lead times should be identified early, incorporated into the construction schedule, and assigned to the responsible party through activity coding or other tracking methods. Because delays in procuring owner-furnished equipment can significantly affect logistics, equipment storage, and installation, careful planning and coordination are essential to keep the project on schedule. I further discuss OFCI equipment later in this blog series, as this is an item that can lead to delay claims and other disputes.

Based on my experience working for a design engineer and general contractor, and working on construction delay claims, many projects encounter serious problems not because of technical challenges, but because they were not properly planned, organized, and managed. A well-prepared contract, detailed schedule with buy-in from all parties, clear communication, and disciplined project management provide the foundation for a successful project.

Construction of the Data Center
While data center construction follows many of the same steps as commercial and industrial facility construction, data centers require much greater attention to electrical power, cooling systems, backup and redundant infrastructure, physical security, and testing and commissioning before the facility can begin operating.

Construction typically begins with site preparation, earthwork, and installation of underground utilities. This is followed by construction of the building foundation, concrete slabs, structural steel, and the building enclosure. Once the structure is complete, the mechanical, electrical, and plumbing (MEP) systems are installed (although some of these systems may have large infrastructure installed during erection of the structure).

Because data center projects involve many participants, close coordination is essential throughout construction. Owners, engineers, equipment suppliers, general contractors, and subcontractors must communicate regularly to keep the project moving forward and on schedule.

As introduced above, a thoroughly and properly prepared CPM schedule is essential for the construction process. Certain construction tasks (and their related schedule activities) must occur in a specific order because of physical construction requirements. For example, equipment cannot be installed until its foundation is complete, and utility systems cannot be installed until the structure is in place to support them. Other construction tasks may follow the contractor’s preferred sequence for completing the work as efficiently as possible. A detailed narrative provided with the baseline schedule should communicate the contractor’s overall plan for project execution.

Procurement management is essential because data centers require thousands of specialized components, many of which have long manufacturing lead times. Careful planning is needed to ensure that equipment arrives when it is needed. Early delivery of equipment can create storage, handling, and damage risks, while late deliveries can delay construction and increase costs.

When owners purchase equipment directly from a vendor, coordination with the contractor becomes especially important. Contractors typically develop detailed material management plans that identify when equipment will be installed, where it will be stored upon arrival, and how it will be moved throughout the project site. Owners may incorrectly assume that equipment can be delivered whenever it becomes available, but deliveries that are not coordinated with the contractor’s installation schedule can create significant logistical challenges.

Ensuring adequate contingency plans, such as on- or off-site storage, is key to being sufficiently flexible to accept equipment and material delivery if the equipment is not installed immediately upon delivery. Additionally, having the proper storage space to maintain equipment warranties and lifespan is critical; some materials and equipment may require conditioned space or a fully dry environment. Properly sequencing equipment deliveries allows the contractor to maintain productivity, minimize material handling, and avoid unnecessary storage or rework. Successful projects require the owner and contractor to work together to coordinate procurement, delivery, and installation activities.

Procurement has become increasingly challenging as the demand for new data centers continues to grow. Many critical components, including electrical equipment, generators, transformers, switchgear, cooling systems, and other specialized equipment, are in high demand and often have extended manufacturing lead times. These supply chain constraints make early procurement planning and ongoing coordination essential to maintain the project schedule.

In the next post to this series, I explore the aspects of data center construction that differ from commercial and industrial projects.

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