The world of construction has faced some unprecedented challenges of late. The colossal curveball of the pandemic has thrown everything off course, and we are still trying to find our way back.
But, according to Linesight, all hope is not lost along with the supply chain. We just need to change how we approach construction projects – as many companies have done.
In a recent DCD>Talk, we were joined by Linesight’s David Nash and Carl Chapman to talk about the different procurement strategies that are working for the data center.
According to Nash and Chapman, the way forward is clear: OFCI.
OFCI, or Owner Furnished Contractor Installed, is a procurement method where equipment and materials are selected and purchased by an owner which are then installed by a contractor. This differs from a traditional pipeline in that previously, the contractor would be tasked with the selection and acquisition of hardware and equipment as well as the installation.
So why should we opt for OFCI?
In Chapman’s experience, the major data center developers are already following the OFCI method. Those who can, are purchasing for up to the next 10 years' worth of projects. The big shift is actually in those who are newer to the game, and are starting to see the value of OFCI.
“What we're seeing is that new players and developers in the marketplace are coming on board with OFCI and understanding the benefits that it can bring to them as a client, how early engagement can actually start to reduce some of the lead times that have been seen and, more importantly, the uncertainty around the lead times from equipment suppliers,” said Chapman.
“It's not only about cost and schedule reductions, it's about the relationship, about efficiencies, and driving the R&D proposals so that you get standardization across the equipment base,” he added.
The importance of standardization is understood across the industry and was underscored by Nash who suggested that it was even more important in today’s climate.
“We're in a volatile commodity market at the moment. There are global influences that, hopefully, we'll never see again. But they are currently really affecting our clients and how we are delivering projects and actually building buildings and data centers. Standardization is absolutely key with a data center,” admitted Nash.
Standardization brings with it many benefits to construction. It can extend from maintenance contracts to agreements over spare parts. By assimilating processes across the industry, you can reduce the peaks and troughs that suppliers are facing, and begin to ease the strain faced by the supply chain.
The potential for OFCI to support the supply chain was not neglected by Chapman, who pointed out the variety of benefits you can see.
“The benefits that it brings are that you have direct access to your supply chain and you're heavily involved. If you start to look at corporate and global social responsibilities, and the sustainability targets that you have, you as an owner can start to select your supply chain based upon those credentials that also bring you credibility within the market and attract funding resources as well.
“If you go down a traditional contractor furnished, contractor installed route, you're very reliant upon your contractor having the technical expertise to support their selection process and you generally end up with the cheapest option rather than the best value. You will very rarely get options for lifecycle costs to be taken into consideration.”
That value is particularly important in a mission-critical industry like that of the data center. Unless your contractors are experts in operating a data center, they won’t necessarily have the same appreciation for how important resilience, reliability, and guaranteed uptime are to the industry.
Ultimately, we need to embrace a new approach. The supply chain is turbulent and isn’t approaching smooth sailing any time soon. So what is holding back the industry? According to Nash, it's simple: good old-fashioned fear.
“People are scared of change. They don't like change, they procure things in a particular way because that's the way we've always done it. But we need to smash down those barriers,” said Nash.