Latin America Data Center Construction Market: Inside the Supply Chain Powering Digital Growth
Why it is Challenging to Get Right Construction Supply Chains for Data Centers
From the exterior, the construction of any data center is a marvelous architectural and engineering feat. Building solid, steel, and concrete structures, with the ability to construct cooling systems, and then fill the center with the endless rows of servers is a wonder to behold. Behind the construction of this building, lies a complicated web of people, and due to the nature of the work, numerous companies will have to collaborate and mesh their individual decisions, and work to align to a specific deadline. This intricate web of people and processes is what is known as the supply chain. If one section of the supply chain encounters any kind of hiccup, it will have a cascading effect across the whole data center construction project.
Everyone has different goals: Investors, hyperscalers, contractors, equipment suppliers, consultants, engineers. Aligning those goals is where the challenge really starts. An oversite on an update. A shipment that is behind schedule. Design revisions that come in after the deadline. Little problems escalate and become massive issues.
These various challenges are part of the reason why the construction of data centers is such a high-risk business. As the market keeps expanding, the risks continue to rise. Data on the Latin America Data Center Construction Market suggests that it will develop into a business worth $13.4 billion by 2032 according to GMI Research. This increasing rate of construction comes with the greatest expectations to increase the speed of construction and reduce errors.
Supply Chain Employees
Investors
Fǣnders are the unsung heroes supplying the construction capital. Their goals are to get the project built, make sure it is done on schedule, stay within the budget, and manage the risks associated with overextending. Cost overruns and delays make them nervous. Investing comes with a lot of moving pieces. With so many moving pieces, a project leader must keep their stakeholders informed and foster confidence in the project.
Hyperscalers
Amazon, Microsoft, Google, and Oracle are examples of hyperscalers. They create a large demand for new data center construction because they have specific facility size, computing power, and sustainability needs. Their deadlines are tight, because digital growth is constant. New artificial intelligence hardware complicates construction with higher power density and complex cooling requirements. This creates a complex build puzzle.
Equipment Manufacturers
OEMs are data center equipment manufacturers and provide essential power units, server racks, cooling systems, and semiconductors. Without them, data centers are inoperable.
This is due to lead times and rapidly changing tech. When finished a component may already be outdated. New design changes cause mismatches. Delayed supply deliveries impact entire construction timelines.
Contractors and Subcontractors
These teams include a variety of trades such as Electricians, HVAC, civil, and cable installation. Their skilled trades create the build. Their work is the result of smooth handovers and tight schedules from other trades.
Skilled labor shortages have made internal and external trade resources more tied. One trade waiting on another is costly because of lost time. Communication, rework, and deadlines are fused.
Consultants
These are design and project management consultants. They become the build leaders, and each discipline guides the work towards completion. This includes architects, engineers, construction and MEP specialists. They are the directors of design intent and where it is executed on site.
The combination of tight deadlines, changing technology needs, and working with various suppliers and contractors can be difficult and challenging. Conflicts can trigger redesigns. The whole project can be affected by a redesign caused by poor information flow.
Owner-Operators
Owner-operators are the main people affected by the aforementioned challenges. They manage all of the balancing of investor expectations, hyperscaler demands, contractor abilities, and supplier timelines. They are the decision makers and absorb the most pressure when something goes wrong. They need good visibility, coordination, and fast decision making.
The Importance of Coordination
Building a data center isn't just about constructing a building. It is about building a complex supply chain with no discrepancies. When communication issues arise, deadlines are missed and budgets are blown.
Owner-operators are starting to use AI supply chain and planning tools to improve communication and alignment before discrepancies arise.
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