mission critical industry and construction trends

8/3/2019 Mission Critical Industry and Construction Trends

1/13

M I S S I O N C R I T I C A L

I N D U S T R Y A N D C O N S T R U C T I O N T R E N D S

Professionals at the 7x24 Exchange Conference share their views on the

state of the U.S. Mission Critical Industry and the outlook for the future.

F E B R U A R Y 2 0 1 2

Photo by Joe Kay, Joe Kay Studios


2/13

Foreword

The importance of mission critical facilities to corporate and

public infrastructure continues to grow, and Mortenson will

continue to bring ingenuity, industry knowledge, and technical

expertise to bear on advancements shaping the industry.

To that end, we are pleased to share with you the following

insights and perspective.

The current dynamics in the U.S. mission critical industry rival that o

industries like tablet computers and smart phones. Excitement or the

industry could be seen at the Fall 2011 7x24 Exchange Conerence where

a record-breaking number o data center and acilities proessionals

gathered at the Arizona Biltmore Hotel.

We gathered eedback rom 90 proessionals at the conerence to

conduct this study. Respondents described a market that is strong

despite the struggling economy, where transormational changes are

taking place across a broad array o operational areas.

Optimism or the uture is high, with no obvious end in sight to either

the strong expansion o mission critical capacity or the underlying orces

necessitating this growth. Indeed, perhaps the greatest challenge acing

industry participants is which o the many promising technologies and

design trends will defne the uture o the industry.

ContentsStrong, Shiting Market _______________________________________1

Staying Power _______________________________________________2

Potential Threats _____________________________________________3

Hot and Dense ______________________________________________4

Cool and E cient ____________________________________________5

Better and Faster ____________________________________________6

Tranditonal vs. Collaborative Delivery ____________________________7

Where Can Contractors Help? __________________________________8

Mortenson is Listening ________________________________________9


3/13

1

A full 83 percent of colocation provider respondents and 60

percent of corporate and public entity respondents will likely

make mission critical investments in the next 12-24 months.

New internal data center

Internal data center retroft/ expansion

Colocation or expansion o thirdparty commitments

At least one o the above

Current investment plans o mission critical stakeholders reect the likely

growth o the market.

Over two-thirds of respondents reported that overall market

preference is shifting toward co-location facility capacity, with morethan a quarter describing the growth in preference as significant.

The act that more colocation respondents are planning new investments

than corporate or public entities may indicate a shit away rom internal

data center ownership toward colocation acilities. Another sign o this

potential shit: 33 percent o all corporate and public entity respondents

who manage their data center capacity internally are nonetheless planning

to make new colocation acility commitments in the next 12-24 months.

Will your company make any of the following data center

investments in the next 12-24 months?

Design, engineering, and supplier respondents anticipate healthy

volumes o uture activity as well. A ull 89 percent believe their data

center workload will increase over the next two years, with a quarter

anticipating substantially higher volumes.

Strong, Shifting Market

Colocation provider respondents

Defnitely will Probably will Probablywill not

Defnitelywill not

New internal data center

Internal data center retroft/ expansion

Colocation or expansion o thirdparty commitments

At least one o the above

48% 24% 5% 23%

32% 32% 16% 21%

35% 25% 15% 25%

63% 20% 17%

20% 60% 20%

40% 40% 20%

20% 20% 20% 40%

60% 20% 20%


4/132

Staying Power

Participants were asked which two sectors o the economy will have the

greatest need or new data center investments over the next fve years.

Healthcare was ranked as one o the top two sectors by nearly every

participant (92 percent), receiving signifcantly more votes than the next

highest sectors--technology companies (53 percent) and government

(30 percent).

Please select the two sectors you think will have the greatest

need for new data center capacity over the next five years:

Solid data center growth is seen continuing well into the uture.

All respondents

Eighty-two percent of participants believe the current strong

growth of data center construction will continue for at least

the next five years, with 25 percent believing the growth will

last at least 10 years.

Greater digitization of information is seen as the most important

factor driving data center growth, followed by growth in cloud-based

services and applications (Saas, Iaas, etc.).

Please rank from one to five the following items in terms of

what is driving strong data center growth at this time:

All respondents

Greater digitization o inormation

Growth in cloud-based services / applications

Growth o new devices

Growth in other applications / services

Corporate legal requirements to maintain data

Driving growth the most

(2.0)

(2.2)

(2.4)

(2.8)

(2.9)

A 2011 study by Gartner shows that the volume o storage data isgrowing at a rate o 40 percent to 60 percent each year. Not only

is dramatic growth continuing in established mediums such as

corporate email, but new media ormats such as video recordings

are now being stored.

Cisco recently released a study stating that by 2015 data center space

devoted to cloud computing will grow an astonishing 12 times romwhere it was in 2010.

Driving growth the least

AverageRank

ing

Received

Healthcare

Technology companies

Government

Goods companies (e.g. consumergoods, manuacturers)

Education

92%

53%

30%

Services companies (e.g. lawfrms, fnancial organizations)

7%

10%

13%

% o Top Two Votes Received


5/13

3

Potential Threats

What are the one or two greatest threats to the data center

market that could end current growth?

We asked respondents to write down the one or two biggest threats that

could end the data center boom. Their grouped responses are shown below.

All respondents

These responses suggest that for many it would take a

major economic or political event of a scale much greater

than exists todaysuch as a global economic collapse or

the passage of sweeping new CO2 regulationsto bring

down the mission critical market.

Although the weak economy o the past several years has ailed to stop

the expansion o data centers, the top threat identifed by 27 percent o

respondents was the economy and the potential or a double dip reces-sion. Likewise, although government policies today do not signifcantly

hinder the market, regulations received the second highest mentions.

Recession / economy

Regulations / government

Price / cost

Financing / banking industry problems

OverbuildingNew technologies / designs

Nothing

OtherThe cloud

27%

16%

11%

11%

8%

8%

6%3%

10%


6/13

4

Hot and Dense

Which does your current data center operations include?

A high majority of respondents currently utilizing the above

features were colocation providers, which suggests theseproviders are early adopters of new practices.

Corporate, public, and colocation participants were asked whether

their current mission critical operations include emerging data center

characteristics such as modular data centers. Approximately 30 percent

said high-density and high-temperature operations were a major part o

their operations, with another 42% reporting these characteristics were a

minor part o operations.

Corporate, public entity, and

colocation provider respondents

Similar to current operations, more participants see high-temperature

and high-density data centers as playing a major role in the uture than

other characteristics such as remote, containerized, or renewable energy

data centers.

How much of a future trend will the following be?

All respondents

Equipment / data centers thatcan operate at high temperatures

High-density data centers(>250 watts / square oot)

Containerized or modulardata centers

Data centers outside o the U.S.

Major part oooperations

Minor part ooperations

Not part o currentoperations

31% 42% 27%

27% 42% 31%

23%

25% 15% 25%

23% 23% 54%

65%12%

39% 53%8%Remote / non-urban data centers

Equipment / data centers thatcan operate at high temperatures

High-density data centers(>250 watts / square oot)

Containerized or modulardata centers

Data centers outside o the U.S.

Major uture trend Minor uture trend Will not be a uture trend

70% 24% 6%

68% 28% 4%

43%

25% 15% 25%

43% 52% 5%

23%34%

48% 19%33%

Remote / non-urban data centers


7/13

5

Cool and Efficient

Rank the following factors in terms of which most influence

where you locate new data center investments:

The large number of promising technologies and areas

participants identified reflects the tremendous advancements

currently taking place, and also suggests a lack of agreement

as to which offer the most promise.

Respondents were asked to write down the most promising new

technologies they see or data centers. Their grouped responses are

shown below.

Respondents did not consider proximity to their existing business to be

one o the top fve actors driving new data center location decisions.

However, respondents participating in this survey also have not rushed

outside o cities to construct mission critical acilities. Only eight percent

o participants stated that remote or non-urban data centers were a

major part o their operations.

Energy and cooling costs receive top consideration

when making data center location decisions, which is

understandable given the cost of these factors to facilities

that operate 7x24x365.

What are the most promising new technologies

you see for data centers?

Corporate, pubic entity, and

colocation provider respondents

Cost o energyCost o cooling/potential or ree cooling

Proximity to fber

Little or no threat o natural disasters

Cost o real estate

Proximity to transportation

Proximity to your existing business

Greater Influence on Location

(2.0)(2.2)

(2.3)

(3.3)

(3.4)

(4.4)

(4.9)

Lesser Influence on Location

AverageRanking

Received

Many technologies/areas mentioned relate directly to energy and energy

e ciency. The number one response o alternative, on-site energy

generation is promising to many even though certain challengessuch

as initial build cost premiumsremain to making on-site generation a

reality. Many responses also relate to reducing cooling costs, includinghigher operating temperatures, designs that optimize the use o

ventilation and evaporative cooling techniques.

All respondents

Alternative energy / on-site energy

Higher energy e ciency

Modular / exible designs

Airside economizing / better use o air

Evaporative cooling

New cloud services / applications

Other cooling technologies

Other

High density data centers

15%

13%

10%

8%

8%

6%

6%

6%

4%

Higher operating temperatures13%

Better voltage distribution

12%


8/13

6

Better and Faster

Participants were optimistic that the e ciency o mission critical

acilities would continue to improve.

What speed to market is reasonably achievable over the

next five years for a new Tier III, two megawatt data center?All respondents

In your opinion, what data center efficiency level will be

considered average over the next five years?

70%

Fifty-eight percent of participants believe an average PUE levelof at least 1.3 is achievable over the next five years, which is a

30 percent improvement over the 1.8 average PUE level

reported in May by the Uptime Institute.

Power Usage Efficiency (PUE) Level

All respondents

What will drive greater data center efficiency?

Speed to Market in Months

All respondents

About half of participants believe a 10-12 month speed to

market can be achieved for a new Tier III, two megawatt

data center, with another 38 percent believing a six to nine

month timeframeor even shorteris possible.

When asked to write down the actors that will drive greater data

center e ciency, higher operating temperatures and better cooling

technologies were mentioned the most. Several others mentionedtheir belie that external actors will orce data e ciencies, such as

higher energy prices and potential government policy actions. A ew

participants even expressed a belie that a new carbon tax will be

implemented in the uture.

Respondents were also asked what uture speed to market is

achievable over the next fve years.

This represents a signifcant improvement rom today, where Tier III

data centers can oten take well over a year to construct.

1.2 PUE 1.2 - 1.3 PUE 1.4 - 1.5 PUE 1.6 - 1.8 PUE >1.8 PUE

4% 54% 15%26% 1%

Better cooling technologies

(airside economizing was 7% o the 21%)

Pressure / actions rom government and

utilities

Energy costs

Better understanding / educationR&D / better designs / peopleSustainability concernsOther

21%

16%

12%

5%

5%

3%

17%

Higher operating temperatures21%

< 6months 6 - 9months 10 - 12months 13 - 18months

2% 36% 13%49%


9/13

7

Traditional vs.

Collaborative Delivery

A number o delivery methods are utilized to construct new

mission critical acilities, ranging rom the traditional design-bid-

build approach to collaborative solutions such as design-build andintegrated project delivery (IPD).

The majority o corporate, public entity, and colocation providers

believe that preerence or design-bid-build is growing at this time.

A couple o respondents stated that the current economy has made

this approach more attractive rom an overall cost standpoint.

These sentiments contrast with the majority o engineering, design,

and supplier respondents, who believe preerence in design-duild

and integrated project delivery is growing. It was not clear rom the

written responses why A/E and supplier respondents would perceive

more growth in collaborative solutions than owner respondents do.

Integrated approaches can ensure desired results when executingcomplex projects. The growing sophistication o mission critical

acilities may be driving greater interest in design-duild and IPD

within design and contractor communities. Owners who are less

amiliar with these methodologies may still need more inormation

regarding their advantages.

It should be noted that only a small minority o respondents

elt preerence or any particular delivery method was growing

signifcantly, suggesting relative stability in delivery preerences at

this time.

What is the trend in preference across the industry for the

following project delivery methods?

Corporate, Public Entity, andColocation Provider Respondents

Engineering, Design, and

Supplier Respondents

Design-Bid-Build

Integrated ProjectDelivery (IPD)

Design-Build

CM at Risk

15% 56% 22% 7%

12% 12% 73% 3%

18% 35% 54% 3%

21% 25% 46% 8%

Design-Bid-Build

Integrated ProjectDelivery (IPD)

Design-Build

CM at Risk

6% 28% 35% 31%

3% 32% 53% 12%

18% 48% 23% 11%

15% 57% 20% 8%

Growingsignifcantly

Growing Stayingthe same

Shrinking


10/13

8

Where Can

Contractors Help?

Educate and help the client understand the impacts of

their decisions, said one respondent.

Participants wrote down the ways they elt builders can most help new

mission critical projects be successul. Their grouped responses can be

seen to the right.

Owners o data centers such as corporations and colocation providers

emphasized the importance o builders to eectively educate, listen, and

communicate with them.

One important way contractors can help clients understand the

impact o their decisions is through the use o advanced technolo-

gies such as BIM/VDC. These technologies improve the coordinationand exchange o inormation between project stakeholders and

allow or the early identifcation o issues that could prove to be

costly during the construction phase.

Owner responses point to a potential larger role or alternative delivery

methods such as design-build. Alternative methods aord builders the

opportunity to advise owners early in the process beore key design and

investment decisions are fnalized.

Engineering and design respondents ocused on the need or builders

to be involved early in the process, collaborate with others, and bring a

strong team to the project.

What is the most important thing(s) a builder can do

to ensure a successful mission critical project?

Engage early to ensure that designs and speed to market

demands can be achieved, said one A/E respondent.

GCs who bring the best collaboration and communication

skills ensure the most successful project, stated another.

Corporate, public entity, andcolocation provider respondents

Educate and inorm

Listen / understand customer needs

Communicate

Ensure the best price

Be involved early in the process

Other

34%

23%

11%

11%

11%

10%

Engineering and designer

respondents

Be involved early

Collaborate, integrate

Support design-build

Listen / understand needs

Accurate pricing

Other

26%

22%

8%

6%

6%

14%

Have a great team12%

Communicate6%


11/13

9

Mortenson

is Listening

We sincerely thank the proessionals who oered their time to participate

in this study. Input rom studies like this and active listening to our

customers and business partners in day-to-day dialogue orm the basis

or the strategic direction o Mortenson Construction. Our aim is to bein lockstep with our customers and partners, resulting in a construction

experience thats second-to-none.

In todays dynamic mission critical industry, we are continually examining

our procedures with an eye to streamlining processes and creating

e ciencies. Our goal is to deliver e cient, high quality structures

that provide our customers the lowest liecycle cost o ownership. We

invite our customers to explore our industry-leading alternative energy

solutions and sustainability capabilities. We are dedicated to working

in an open and integrated manner with all o our business partners and

customers.

We welcome the opportunity to share more with you about Mortensons

mission critical expertise, delivery methods and unique capabilities to

provide world-class quality, innovation, and service to our customers.


12/13

10

To learn more about Mortensons mission critical capabilities, contact the office nearest to you:

Chicago, IL Denver, CO Madison, WI Milwaukee, WIHansel Bradley Courtney Ryan Je Madden Alicia Dupies847.472.8104 720.259.4823 608.287.5949 262.879.2537

Minneapolis, MN Phoenix, AZ Seattle, WA Toronto, Canada Shanghai, ChinaScott Ganske Ron Vokoun Chuck Haigh Brent Bergland Mike Koalska763.287.5147 480.339.7835 206.795.1096 763.287.5649 763-287-3545

Mortenson Offi ces and Mission Critical Project Locations:


13/13

A U.S.-based, amily-owned business since 1954, Mortenson Construction is a leading builder

in North America and one o the only domestic builders with capabilities in Asia. Mortenson has

more than 11 million square eet o mission critical construction and renovations nationwide

on our resume. Eighty percent o our mission critical experience is with repeat customers.

With services in general contracting, construction management, design-build, EPC/BOP and

project development, Mortenson is capable o delivering projects o any scope and size in

North America and abroad. From cutting-edge stadiums and state-o-the-art, LEED-certifed

mission critical projects to some o the most innovative renewable energy projects on the

planet, Mortenson is building structures and acilities or the advancement o modern society.

With o ces across the U.S. and operations in Canada and China, Mortenson is a global company

poised to continue building whats next.

w w w . m o r t e n s o n . c o m

2012 M. A. Mortenson Company. Mortenson is a registered trademark o M. A. Mortenson Company.

For questions regarding this survey, contact:

Steve Pekala, Manager o Market Intelligence | 763-287-5337

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