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Flexibility is Key to Mitigate Supply Chain Delays in Data Center Construction

Challenges likely to persist as competition for key components increases; DPR Construction says to align and procure early and be agile in approach.

WASHINGTON, D.C., June 27, 2024 – Supply chain delays continue to affect construction across the globe, especially for data center facilities. DPR Construction recommends collaborative procurement planning and built-in flexibility to help project teams maintain schedules and get new data centers online as planned.

According to McKinsey & Company, the U.S. data center demand is expected to grow at an average compounded annual growth rate of 10 percent a year until the year 2030. With demand booming, especially with the growth of the Cloud and AI, owners need to be proactive if they hope to head off supply chain issues and achieve speed-to-market.

“Data center development, advanced manufacturing and large infrastructure projects are all competing for a similar work force and critical components,” said Kurt Wallner, a leader in DPR Construction’s advanced technology core market at Bisnow’s DICE East event.

While Wallner said markets for various commodities have started to level out, there are several key components that require longer-lead planning such as utility grade transformers, generators, and MV switchgear.

“Not only is the demand for critical components off the chart, but we also need to look at the geopolitical landscape,” Wallner said, noting that global conflicts, new tariffs and more have caused jolts in the supply chain, especially on the component level. Additionally, some manufacturers are seeing zero to little margin and, if a small disruption occurs in any one of the components’ manufacturing processes, that will affect equipment vendors.

Wallner proposed steps project teams can take to mitigate potential supply chain issues. Aside from buying early, Wallner suggested:

  • Communicating and aligning all parties toward common goals for projects and their end users.
  • Standardizing the functional needs of equipment and materials but being flexible when looking for alternative solutions.
  • Engaging with trade partners to procure key project components while seeking technology innovations to reduce rework and changes.

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