Industry challenges

Pressures on delivery due to rising demand

Delivery pressures remain common to all markets.

85 percent of respondents believe their regional data centre markets have ‘hot’ or ‘overheating’ tendering conditions – meaning the ability to meet demand is stretched to the point that costs are being driven upwards. This is a familiar story, fuelled in large part by labour and material supply constraints. 83 percent of respondents report delays to projects in the past year due to global material shortages.

On average, to what extent have lead times for key DC equipment change in the past 12 months

of respondents report delays to projects in the past year due to global material shortages.

report a shortage of experienced data centre construction teams.

80 percent have seen lead times increase, with over a third of those delays being 12 weeks or more. We have seen ongoing difficulty with lead times for securing key equipment, such as generators, chillers, RMUs and transformers. Delays have also continued in many markets for semiconductors. A resounding 94 percent report a shortage of experienced data centre construction teams. Skills shortages have been a long-term issue for the data centre sector, and this is showing no signs of abating in 2023. This skills shortage continues to disrupt labour costs, causing wages to increase in the sector. The competition to secure the best talent from a narrow pool is resulting in an upward trajectory of labour costs.

“While many European markets are welcoming data centre investment, securing project permitting approvals and power connections is becoming more difficult due to a tightening regulatory landscape, amplified by changing public opinion.”

Conor Nugent, Data Centre Cost Index Lead for Europe

Exploring new ways to deliver

Data centres are demanding projects that are often subject to change.

While it is still important to ensure that the teams involved in data centre delivery possess the necessary knowledge and experience to navigate the unique demands, there simply aren’t enough individuals with data centre experience. Faced with this constraint in the supply chain, we are seeing some clients begin to explore creative ways of expanding the potential pool. 66 percent report that data centres are being delivered using alternative procurement models in order to meet demand. Clients are adapting procurement models, moving away from single general contractor (GC) procurement to major packages, such as shell and core and fit out and blending the use of local and international GCs; and in some cases using of Project Management Consultancy.

As well as re-evaluating how to procure, many are also ordering long-lead-time items before designs are complete, while others are moving to greater pre-fabrication.

report that data centres are being delivered using alternative procurement models in order to meet demand.

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