Data centers always require a significant investment, providing utility, storage, and flexibility in exchange for a high capital expenditure. Every decision made when building a new data center is important, including one of the first major choices a company faces: whether to build a new facility or rent space from a colocation provider.
New construction has several advantages — the facility is built to the company's specifications, has adequate space, and incorporates the power efficiencies required to reduce its carbon footprint. However, building a new facility is expensive, and it can take a considerable amount of time until it becomes operational.
Colocation solutions are another option. By becoming a colocation tenant, a company can obtain more capacity quickly and without the heavier investment of building its own data center. Data center tenants can enter markets quicker, generate revenue faster, and create less environmental impact so long as they have the proper assistance in performing the key construction work and retrofits on the data center where they are renting space.
Several potential challenges can present themselves when fitting out or retrofitting a colocation facility. This can include lengthy design and procurement stages, posing the risk of completion delays, potentially leading to cost overruns for both parties. Part of the challenge for tenants is that colocation providers may utilize in-house or incumbent contractors to handle the retrofit work rather than competitively bidding the works to market. The work cost will include an additional management fee for the property owner on top of the contractor's standard overhead and profit, as it is important for property owners to oversee the work ongoing in their facilities to ensure security and continued service for other tenants. Although uncommon, competitively bidding such retrofits to the market presents a potential security risk to colocation providers and their existing tenants.
What tenants require from a colocation provider
There are several reasons tenants choose a colocation site to meet their data center needs. The most significant is the speed in getting the facility up and running. This is a popular option for small and medium-sized businesses, whereby they can rent space and equipment that meets their needs and budgets. As with any path, there are pros and cons. Several of these are explored in a short-form report by Linesight, titled “Matching Data Center Delivery to Demand - The Changing Demands in Facilities.
However, not all colocation sites are appropriate for all tenants, and a consultant can provide guidance to tenants in their decision-making process to ensure their needs are fulfilled. The most important factor is to ensure the building has suitable services (i.e., uninterrupted power supplies, redundancies like diesel generators, and security systems to prevent unauthorized access or mitigate the risk of a fire) and is in a good location. Location is essential because the colocation facility must be close enough to the end users to reduce latency, near areas with skilled talent, yet not where natural disasters (tornados, floods, earthquakes) could jeopardize operations.
How project controls consultants improve outcomes
Besides helping to vet locations for the aforementioned reasons, an independent project controls consultant keeps a renovation project on schedule and within budget. They act on behalf of the tenant and liaise with the colocation provider to ensure the development achieves a fair market value for both parties. They help negotiate, provide independent reviews, and work to prevent conflict between the parties. For this reason, a tenant should start work with the consultant at the earliest opportunity.
Project controls consultants can provide many services that benefit a tenant from the beginning of a project. Consultants can assist with the procurement process to minimize delays brought on by supply chain issues. They can provide insight and expertise into the bidding processes, including bid leveling, to help the tenant get an apples-to-apples comparison in order to make the best choice. Consultants can negotiate mutually agreeable construction terms between the tenant and colocation provider.
When a renovation plan is being agreed to, the consultant can assist with schedule reviews and analysis to make sure projected timelines are feasible or timely. They can also provide risk management support by looking at potential choke points or disruptions early in the planning stage and creating workarounds to reduce the threat of delays. This can be important, considering the ongoing supply chain disruptions that have sent lead times soaring for certain types of equipment, such as cable bus or high-count fiber, and construction materials, like steel.
During the construction phase, project controls consultants provide the tenant with monthly cost reporting, cash flow, and accrual reporting information. For clients with multiple projects, consultants can handle portfolio reporting and analysis in order to identify problems at the earliest stages and allow leadership to take corrective action before they fester into serious issues. Project controls professionals can manage progress payment recommendations by verifying the completion of agreed-upon tasks.
During the construction phase, issues might arise that could see the colocation provider or future tenant ask to alter aspects of the project. A consultant can assist in this department by providing post-contract change control. This requires evaluating what the modifications mean to the overall project, including the benefits, time, quality, cost, risk, and other criteria, to allow the tenant to make an informed decision.
Once construction has been completed, the project controls consultant can assist with the final account resolution to ensure all bills are paid and the required work has been completed. He or she can review the relevant statements, construction logs, and site records in the event there are cost overages as well as assist in negotiations to settle any potential disputes. However, these should be minimal due to their robust oversight throughout the project. This is not an exhaustive list of the services a project controls consultant can provide; there are many other areas where experience and expertise can help overcome potential hurdles to a project. And it goes without saying that project controls consultants can provide the same services to providers, helping to anticipate and handle tenant issues as well as working with contractors to create an easier and more rewarding colocation process.
Whether for tenants or providers, project controls consultants provide incredible value. They prevent conflicts between tenants, providers, and contractors, and optimize the construction and retrofitting process. They provide risk management support and spot bottlenecks and cost traps to allow projects to finish on time and within budgetary requirements. Projects controls consultants work hard to provide the sort of robust oversight that prevents last-minute changes or emergencies from impacting the ultimate delivery of a project. Employing a project controls consultant can help any company get the best value out of data center colocation, regardless of the project size.
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