By James R. Germano, Esq.
Data center design and construction is booming. According to Business Wire, the data center construction market was valued at $8.4 billion in 2020 and is predicted to grow up to $13.9 billion by 2026. Although data centers are similar to other construction projects in many ways, they differ in some critical respects. This three-part article series analyzes how various AIA Contract Documents can be used to address the specific needs of data center projects.
In the first part of the analysis, you’ll find the contract language considerations and contract requirements for pre-construction site evaluation and planning, cost estimating, commissioning, expansion and phased design and construction, and more.
Data centers involve some unique design challenges, which require careful consideration of contract language and contract requirements. First, data center projects typically involve detailed and thorough pre-construction site evaluation and planning. Data center site evaluation and selection can be
Either way, the parties will want to be sure that site evaluation and planning is included in the project’s scope of work. In this regard, AIA document B101-2017 Standard Form of Agreement between Owner and Architect anticipates this scope of work and allows the parties to include it as a Supplemental Service and to designate the responsible party. Specifically, Section 4.1 includes a table of potential Supplemental Services, and Section 220.127.116.11 is “Site evaluation and planning.” Parties engaging in data center design should consider including this Supplemental Service and should designate the responsible party as either the Architect or the Owner. If the parties include this Supplemental Service, then they should also include a description per Section 4.1.2 or, alternatively, the parties can use and reference AIA Document B203-2017 Standard Form of Architect’s Services: Site Evaluation and Project Feasibility to outline the scope of work for this portion of the project.
Due to their numerous and complicated requirements for, among other things, long term IT and HVAC infrastructure, another common aspect of data center design is cost estimating. If the owner chooses to hire an outside cost consultant, then those parties might consider a construction manager (CM) or cost consultant contract. If the architect performs these services, then B101 again provides a good framework for this scope of work. Specifically, B101 Article 6 sets forth the terms and conditions related to general cost estimating.
AIA DOCUMENT B101-2017 ARTICLE 6.3. IN PREPARING ESTIMATES OF THE COST OF WORK.
From here, if the owner wants more detailed cost estimating, then the parties can select, as a Supplemental Service, Section 18.104.22.168, which is “Detailed cost estimating beyond that required by in Section 6.3.”
Another critical element of data center projects is commissioning, where the percentage of projects that include commissioning is significantly higher for data centers than most other project types. Like site evaluation and cost estimating, parties can add commissioning as a Supplemental Service in B101. Specifically, Section 22.214.171.124 allows the parties to select “Commissioning” and to choose which party will be responsible. If commissioning is added, then Section 4.1.2 requires the parties to describe the scope of the commissioning services to be performed. Regardless of whether the owner will hire the architect to perform commissioning or a separate commissioning professional, the C203-2017 Standard Form of Consultant’s Services: Commissioning can be used to clearly delineate this scope of commissioning services to be provided for the project.
Data center projects frequently anticipate expansion or phased design and construction. In this regard, parties should consider using the AIA’s B121-2018 Master Agreement and B221-2018 Service Order framework for their design contracts. Using this structure allows parties to enter into a single Master Agreement containing standard terms and conditions for the entire project, and then execute Service Orders for each expansion or phase, which contains only the terms specific to that expansion or phase – such as price, contract time, and unique insurance requirements. This type of contract framework can flow down to the architect’s consultants as well, using the C421-2018 Architect/Consultant Master Agreement and the C422-2018 Service Order.
If the parties consider the data center project to be so complex such that the B101 would need to be significantly appended, then they can consider using the B103-2017, which is a standard form of agreement between owner and architect intended for use on complex projects. Note that the B103 assumes that the owner will retain third parties to provide cost estimates and project schedules, and may implement fast-track, phased, or accelerated scheduling.
It is no secret that data centers require a lot of energy; they draw large amounts of electricity to power the vast arrays of computers, storage devises, switches, routers, and other equipment. And substantial additional electricity is required to provide the cooling required by the tremendous heat generated by such equipment. The ability of the local electrical utility to consistently and reliably provide such power must be investigated, and those issues can factor into the site selection analysis discussed above.
Additionally, it may be prudent and ecologically responsible for parties to consider adding a “Sustainable Objective” to their project using the E204-2017 Sustainable Projects Exhibit. The Sustainable Projects Exhibit has been developed for use on a wide variety of sustainable projects, including those in which the Sustainable Objective includes obtaining a Sustainability Certification, such as LEED® (Leadership in Energy and Environmental Design), or those in which the Sustainable Objective is based on incorporation of performance-based sustainable design or construction elements. E204 addresses the risks, responsibilities, and opportunities unique to projects involving substantial elements of sustainable design and construction. It is not a stand-alone document, but rather is intended to be attached as an exhibit to an existing agreement on a project, such as a data center, that includes a Sustainable Objective.
Continue to read Part 2: Cost and Risk Management Strategies During and Post Construction
This article is intended for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.