Creating Winning Proposals For Hyperscale Tenants
Get buy-in for a win-win.
Over the last two years, we have been inundated by requests from wholesale and colocation clients to help develop winning proposals supporting hyperscale tenants. While each proposal we develop is customized to the hyperscale tenant, there are similarities and differences among each request. While many of the requirements follow UL 3223, Cloud Certification, the process and details differ from proposal to proposal.
No two hyperscale tenants are alike. The differences typically include: office requirements, rack load, security requirements, site adaptation, network requirements, and proposal deadlines. The prototypes created by the wholesale/colocation provider need to be adjusted to support the hyperscale tenant, as well as defining construction costs to ensure your proposal is as accurate as possible.
Here are some key tips when developing winning proposals for hyperscale tenants:
Quick turnarounds are critical
When hyperscale tenants submit request for proposals (RFP), the deadline is usually two to three weeks. This doesn’t give much time for the proposal team to create a custom approach to its requirements. Successful teams consist of: wholesale owner, architect, and engineering and estimating. In most cases, there is a site visit that occurs early in the process. The team needs to be flexible and, in many cases, at the site tour within a couple of days from notice. Several data center engineering companies are busy right now and do not have a specialist on “stand-by” to react this quickly to the site visit request.
Technical proposal team
In most cases, the engineering team is the lead consultant on the proposal team. Why? Because nearly three-quarters of the cost of data centers is engineering components, and within the industry engineers are typically the prime consultant during the design. The engineering proposal response typically is created around MEP space planning and computer room layouts. In many cases, the data center is designed from the inside out, and equipment sizing is adjusted based upon the hyperscale requirements. Single-line-diagrams are created as well as MEP equipment layouts for the proposal. Integrating network design into the proposal also creates a “winning edge” when responding to the RFP.
If the land is owned by the hyperscale tenant or a vacant greenfield site by the wholesale provider, the architects’ input is required to do site planning and facility renderings. Creating site planning and renderings within a two to three week period is extremely difficult for architects. The data center architect needs to be available and 100% dedicated to the proposal. With the industry being very busy, finding an architect who can respond with site planning and renderings is difficult.
Most recently, we crafted a detailed proposal with Jackson Metcalf of Gensler’s Mission Critical Facilities group. It was outstanding. The site plan was well thought out, showing multiple options, and Gensler was able to create excellent renderings … all within a two-week timeframe.
While engineering and architecture drive a majority of the effort, construction estimating is the most difficult to achieve within the proposal process. The architecture and engineering requirements need to be well defined to create the estimate, usually within two to three days prior to the proposal deadline. Additionally, the estimate needs to be detailed to ensure that the proposal rent response is accurate. While the estimating team only has a few days to create the estimate, the estimator should be involved from day one. The estimator should have data center experience and be able to create estimates on a conceptual basis. In most cases, the RFP will have a nondisclosure agreement in place; therefore, the estimator cannot go out to the subcontractor community for pricing. Few data center engineering firms have a good estimating program in place. The recent winning proposal stated above had all of the necessary members within the ESD/Gensler team.
Cost of proposal vs. winning
Typically, the proposal generation process is conducted within two to three weeks, and therefore even with 100% dedication to the effort, the cost of the proposal is generally around $30,000. If the owner/proposal team has agreements in place to work together, the $30,000 fee can be waived in the event of a win. Either way, the cost/risk is minimal compared to winning the project. Most hyperscale wins are multi-million-dollar contracts, and $30,000 doesn’t impact the proposal whatsoever. From an engineering standpoint, several hyperscale engineering proposals are a $1.5 million (+or -) engineering fee, resulting in a marketing effort of less than .002%. Either way, it is a “win-win.”