Data centres feel crunch of escalating costs, report says

Data centres feel crunch of escalating costs, report says

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Data centre construction is facing record-breaking inflation amid delays stemming from several factors, a report from Turner & Townsend says.

The report indicates that there are delays to material deliveries and competition for skilled labour from large-scale advanced manufacturing projects and reveals how the average cost to build data centres has grown 15% on average across global markets.

The Data Centre Cost Index 2022 analyses construction input costs, including labour and materials across 45 key markets, alongside industry sentiment and insight from a survey of 250 data centre professionals.

Almost all (95%) of respondents agreed that global material shortages have impacted construction timescales, with most citing delays of over 12 weeks.

Meanwhile, 92% of respondents said they are struggling to meet construction demands due to a shortfall of experienced site teams.

Lisa Duignan, head of European data centres at Turner & Townsend said: “Developers are facing a perfect storm of currency fluctuations, a race for talent from other advanced technology sectors and materials delays and shortages.

“The sector has been adapting to this challenging environment over the past 12 months. It’s becoming increasingly vital for clients to prioritise a programmatic, collaborative approach to procurement, project delivery and project controls.

Despite these challenges, optimism remains high, with 85% of respondents saying that construction has struggled to meet demand in 2022.

As a result, 71% said they saw the sector as less susceptible to recessionary pressures than other industries.

The report adds that continued market growth is expected to be led by large scale data centre end users and developers as established companies scale their capacity to meet burgeoning demand in the system.

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