Irish firms remain at the forefront of data centre and mission-critical facility construction across Europe and beyond, but the CIF warns that action is needed to maintain that position. BARRY MCCALL reports.
Travel abroad to the UK, western Europe and the Nordic countries, discuss data centre and other mission-critical construction projects, and you’ll find names like Mercury Engineering, Jones Engineering, Kirby and Winthrop cropping up time and time again.
This success story began at home, according to Sean Downey, Director, Specialist Contracting, CIF.
“The export of specialist contracting services currently accounts for an average of 50% of turnover for many medium to large construction companies based in Ireland,” Sean Downey says.
“The foundations for this overseas success lie in the ability of Irish M&E contractors to take a solutions-led approach. These specialist management capabilities have been developed as a result of the critical mass of clients here that have allowed Ireland’s specialist sector to develop a niche for mission-critical facilities.”
The approach is key.
He continues, “This high-value intensive capital work demands a can-do attitude from delivery teams. Irish contractors have a very strong value-led approach to driving projects. The principle of mission-critical relates primarily to ‘first to market’; that is the demand from clients to get as quickly as possible from concept to actual manufacturing and delivery to market. The need for them to stay in production, full production, while they are actually carrying out a full overhaul, refit or upgrade of their existing facilities, is also critically important.”
Eoin Vaughan, CEO, Mercury Engineering, says early contractor involvement has also played a significant role.
“Early contractor involvement allows the project team to find the best solutions from the supply chain and helps us progress projects in a tight delivery timeframe,” he says.
“Bringing the team in as early as possible makes sense and allows the right people to engage at the right time. Mercury’s ability to analyse the critical mission objectives for any client across Ireland and EMEA, and to provide them with a model for certainty of delivery, is key to our ability to win premium projects. Mission-critical is all about value for money being at the centre of any private client’s agenda for project delivery.”
Tim Ferris, President, Electrical Contractors Association (ECA), and Director and General Manager, O’Sheas Electrical Ltd, agrees. “Driving this is a project team’s ability to coordinate themselves and put the best party able to manage risk in control as early as possible,” Tim Ferris points out. “We’ve seen huge benefits from early contractor engagement, and some other models, such as alternative project delivery (APD) for specific clients, where they truly engage and get involved and are not concerned about allowing another party to take the lead.”
Ireland’s High-Tech Clients
That critical mass of high-tech clients located here in Ireland dates back to the 1950s, according to Garry Connolly, President and founder of Host in Ireland, a strategic initiative created to increase awareness of the benefits of hosting digital assets in Ireland.
“IBM came here in 1956 with a mainframe computer for airline reservations systems and took the top floor of the Shelbourne Hotel as its offices,” he says.
“Later, companies such as Nixdorf, Dell, Microsoft, Oracle and Informix arrived, and they were then followed by the next generation of companies, such as Google, PayPal, Facebook, Amazon and others.”
As far back as 2000, Ireland was recognised by the Organisation for Economic Co-operation and Development (OECD) as the world’s largest software exporter, Garry Connolly points out.
“The software was going out on floppy disks back then, and distribution later moved online, and software as a service started to become the norm. Back in 2000, industry backed by the Irish Government increased the number and destinations of “Off Island” fibre cables, which would connect us to the rest of the world. That was the start of the data centre industry in Ireland. As of the first quarter of this year, Ireland is home to the largest data centre cluster in Europe.”
Centre of the Data Centre Universe
Ireland has all of the critical attributes, including construction expertise, to nurture this industry. It all comes down to what Garry Connolly calls the six Ps – ‘Policy, Pedigree, People, Power and Pipes, and Proximity’.
“Is Ireland an optimum place to host data because we have all of these?” Garry Connolly asks.
“‘Policy’ is so important in areas like data protection and intellectual property law. Ireland will be the last English speaking, common law jurisdiction within the EU after Brexit. The corporation tax rate and business-friendly environment are also important.
“‘Pedigree’ comes down to the ability to demonstrate that you know what you’re doing. Can we design, build and operate data centres to world-class standards? The answer is clearly yes for Ireland.
“‘People and ‘performance’ relates to a country’s ability to provide the talent, both to design and build the centres, as well as to operate them. ‘Power and pipes’ are fairly obvious requirements. A data centre is a digital facility that takes electricity as its raw material and turns that into services,” Garry Connolly continues. “Data centres are the factories of Industry 4.0.”
Ireland’s location between Europe and the US, neatly bridging Asian and American time zones, gives it the ‘proximity’ to key markets required by data centre operators.
The Irish industry’s expertise in data centre and mission-critical facilities construction has its roots in the growth of the sector here over the past two decades, but the drive towards exports really began in 2008, according to Dermot Reidy, Senior Development Adviser, Enterprise Ireland. “We started a flagship leadership for growth programme for construction chief executives in 2008,” Dermot Reidy explains. “We did that in conjunction with the CIF. We ran two iterations of the programme for around 70 chief executives, and we had all of the leading companies in the country taking part.”
The programme looked at the ambitions of the different companies and how they could be realised. “One of the things we did was ask them to focus on what they did successfully here that they could sell to the rest of the world,” he continues. “We then took them to various places around the world to look at projects. We wanted to inculcate the idea of working abroad. We brought them to trade shows and helped them take part in trade missions, and so on. Some companies were very successful in establishing themselves abroad as a result. The ones doing very well in Europe are the ones focused on data centres. There is a cluster of very successful Irish companies working with hyperscale and colocation data centre companies.”
The Full Irish
The logic was simple. These Irish firms had already built facilities for the global leaders in Ireland and were going out saying that they could do that anywhere in the world.
“Irish M&E companies are also bringing in other Irish firms, such as architects, general contractors and construction managers, on major European projects. Depending on the client and the procurement model that they use, it could be that the Irish company that looks after the whole contract from end to end.”
There is a patriotic agenda in evidence, Dermot Reidy believes.
“The green jersey is out there. Irish companies who are successful in hyperscale and colocation data centre construction see the green jersey is the intelligent thing to do. We definitely see it in the supply chain, with structural steel being fabricated in Ireland and shipped to Sweden. We are seeing Irish roofing contractors and other specialists following the large firms out as well. It’s a very collegiate industry.”
Irish Nordic Success
Copenhagen-based Enterprise Ireland Senior Market Adviser Karin Angus says there is an Irish element to just about every hyperscale data centre project in the Nordic region. “The mechanical and electrical contractors are from Ireland. Many of them are now winning the general contracts as well. Apple, Facebook and Google are in Denmark; Microsoft, Amazon Web Services and Facebook are in Sweden; and Google is in Finland, and Irish contractors are working on all of them.”
Karin Angus doesn’t believe this should come as any surprise.
“To be honest, because they work with them in Ireland, the US companies know how they work. They have reputations for keeping deadlines and working hard. They are choosing contractors who work with them in Ireland to build the hyperscale centres for them over here. Irish contractors can also bring the whole team of staff, suppliers and subcontractors with them.”
But that doesn’t mean that Irish companies are pushing out local competitors.
“It’s not about Irish companies coming in and taking over. It needs to be a win-win for everyone”, she adds. “Irish companies are partnering with local firms. Local companies haven’t had the experience that Irish companies have, so they are not competing for larger projects. They are already very busy with other domestic work. They don’t have experience in big complex projects and are partnering with Irish companies to work on them.”
Karin Angus works with Irish construction firms to provide them with market intelligence.
“I see myself as the industry’s eyes and ears over here”, she explains. “I work on a one-to-one basis with them, helping to find local suppliers for projects. I also put them in touch with service providers, such as local law firms, and assist with practical issues around starting up in a new market. I try to be the spider in the web, with as good a network as possible.”
That assistance also runs to physical market access. Direct flights from Ireland to Denmark have gone to Copenhagen up until now, whereas the data centre sector tends to be in the south and west of the country. Enterprise Ireland lobbied successfully for improved connectivity. “We have direct flights starting bi-weekly to Billund Airport in central Denmark shortly,” Karin Angus notes. “That’s going to help. It’s a start, and we are hoping to get more flight connections.”
Back home, Garry Connolly says continued development of hyperscale and other data centre types in Ireland will require two challenges to be met.
“We will have to make sure there are sufficient levels of renewables on the grid, and we need to build more and more fibre connections to Europe. The renewable energy piece is the biggest short- to medium-term challenge to maintaining tier one status.”
Interestingly, he does not see the planning regime as a very big issue and points to the success of Facebook in building, and later expanding, a hyperscale data centre in Co Meath as an example of how it can be done right.
“They engaged with the community 12 months in advance of the project and were successful. There are challenges in the planning system, but that’s business. Democracy demands a strong and robust planning system. We have a strong, fair and reasonable planning system. If you work with the system, you can succeed.”
There are other issues to be dealt with if the Irish construction industry is to remain at the forefront of data centre and mission-critical facility development, according to Tim Ferris.
“As the CIF Construction 4.0 Committee now turns its attention to addressing the challenges set out in the Investment Projects and Programmes Office’s (IPPO’s) productivity study, there are three key policy areas that are critical to allow our sector to develop in line with clients’ needs,” he says.
“Number one is the establishment of the Build Digital Project for Digital Transformation of our sector.
Number two is the development of the Research and Development Construction Hub to allow companies to engage with third-level institutes and drive a real research agenda.
Number three is advanced support and growth opportunities for true offsite fabrication to allow us to meet the skills need, and to meet the skills challenge, and enabling companies to be as effective as possible in resource allocation for projects.
With Government support and a strong leadership platform, we can help transform our industry and remain on a sustainable upward trajectory,” Tim Ferris concludes.
First published in CIF ‘Construction’ magazine November 2019