Safety, Speed, and the Future of Modular Construction | Work Done Right With Jim Ellis

Wes

Today’s guest is Jim Ellis, a globally respected senior executive with over 40 years of transformational leadership across engineering, manufacturing, project management, and operations. 

Jim has led diverse high impact teams across 60 countries and held senior roles at industry giants like DuPont, Sabic, and Microsoft, where he most recently served as corporate vice president of global construction. 

Now as CEO of Ellisian, he’s helping organizations deliver safe, sustainable, and innovative capital projects all around the world. Jim, welcome to the show.

Jim

 

Great, thanks Wes. Great to be here and I appreciate you having me and looking forward to our discussion today.

Wes

 

Yeah, absolutely. So with that, I did my best to summarize your expansive experience. 

But you know, I’m curious, one, if you could dive in a little bit more on maybe some of the specifics as far as what you’ve done across your career, how you started in the industry, really to how did you make that pivot from working in heavy industrial oil and gas, which is really where my experience lies and a lot of the frame of reference that I’ll use for this conversation, but into the data center environment, which is in a lot of ways, it’s a separate world. 

A very much emerging market right now that everybody’s talking about, but how did that change happen? So if you don’t mind just providing that context there.

Jim 

 

Absolutely. It’s a great question, Wes. So I started out very early in my career as an engineer working in the nuclear part of the business for DuPont and making nuclear fuel rods as a supervisor that was on shift and leading people. 

And really got a lot out of that part of my career very early on because I recognized at that point in time how important the folks that work for you are in your development. And that convinced me that, I was really into the operational side of things, right? Although I was trained as a mechanical engineer and undergrad and electrical engineer on my grad studies or masters, you know, I felt like operations was the right place for me to be. 

And that’s kind of defined my career. I’ve spent a good part of that, and when I speak about operations, I’m speaking broadly. So it includes business operations, it includes manufacturing.

It includes technology and it includes, you know, actually engineering and capital projects because that’s the way many companies, you know, sustain their operations in terms of run and maintain. 

And it also is a way that they grow. So that really excited me and I’ve been blessed to have just an outstanding career that kind of went, as you mentioned, through 35 years with DuPont and then another 10 years with Sabic. 

And then, you know, the Microsoft piece was really exciting. So most of my career, as you stated, has been in the kind of that industrial kind of environment. Petrochemicals and oil and gas and so forth and so on. But it was always focused on, you know, how do I help companies really think about strategy for growing in the latter part of my career? 

And then when I had the opportunity to come, you know, before me with Microsoft, that’s what it was all about. I started doing the research on data centers and looked how exciting that was and the growth that was just totally aspirational for a lot of these companies like Microsoft and Google and Amazon and Meta and now Oracle. 

Clearly, that got me really excited. So when I got the opportunity to go in there and really lead Microsoft’s hyperscaling strategy across the globe again, that really was something that I was really intrigued on looking at and spent a good part of my time developing those strategies with Microsoft. 

And today that market is just continuing to grow in such a significant way based on the needs of people that want to stay connected and want to be able to improvement in productivity and improvement in their lives, right?

Think about how AI is going to transform that over time, right? It’s already started to transform that in our lifetime. I’m really looking forward to my grandchildren really enjoying the benefits of all of this AI work that’s going on and making their lives in terms of work-family balance and a whole lot better.

So that’s how I got here and I just had a great experience, met a lot of people, have a lot of relationships around the world that I still have today and I’ve been blessed, frankly speaking, to really have those experiences.

Wes

Definitely. That’s, that’s the thing that I always say is really for me. The experience of it is great, but the people that you meet along the way is really, was really what makes it. 

That’s the thing that I look back and I remember. I don’t just remember the mega projects. It’s really the folks that I worked on these projects with, that really is just phenomenal to kind of recollect on. 

So with that, that’s sounds like there’s an organic sort of pivot to go from the heavy industrial oil and gas into the data center space. And one of the things that I’m hearing a lot more these days is that it’s not just that there are a lot of projects that are happening very quickly in the data center market, but there are very large projects that are initiating in the data center market, which in our experience in heavy industrial oil and gas, seems to be very, I mean, that’s much more commonplace, right? 

We’re very accustomed to these industrial mega projects, multi billion and multi tens of billions of dollars. But maybe not so often in the data center market, but it’s seeming to me like it’s happening more and more and more. 

So what sort of, guess, key drivers do you look at, or did you see within Microsoft that maybe you had to bring in from industrial construction, oil and gas into the data center market? 

And how did you, how did you help them to evolve their processes, looking at these larger projects?

Jim 

Now, that’s a great question. And the simple answer is, in order to scale, you have to have a systems approach.

And the systems approach becomes extremely important when not only you’re scaling, you know, from just say, you know, data centers were nominally 40 megawatts to 100 megawatts today where they’re sitting somewhere and into the future, you know, upwards of a half a gig to a gig. 

You know, that might be one of the biggest challenges in terms of how you drive a systems approach to getting these data centers to the point where they can deliver to both the company’s expectations as well as the client customer expectations. 

And today, one of the bigger challenges is because the scale is such a huge scale and time to market is the key priority for all of these data centers. And I was told when I got into Microsoft, ‘Time to market drives MPV, Jim’. And I said, get it. So we got to go fast. 

But if we’re going fast, we also have to go safe. We have to go sustainable. 

We can’t ignore cost because cost still has to be efficient. And we’ve got to be able to drive that schedule. And we’ve got to be able to drive quality and assurance of quality across that end-to-end cycle in a systems way. 

So that at the end of the day, when you turn over that asset to operations, they got something that’s safe. They have something that’s reliable. They have something that’s efficient. They can provide reliable, you know, megawatt capacity to their clients and customers. 

And that’s just, you know, something that is going to be essential moving forward that hasn’t changed and I don’t expect it will change with AI. 

Are we hitting the pause button a bit on that with AI in terms of, you know, model development and large language model training and things of that nature? For sure. But once you get into agentic AI and you start to get into inference AI, those expectations are going to be exactly the same, if not more so, in terms of the need for quality and reliability to the client. 

And it starts at the very beginning when you select a site, you develop the project, you execute the project, you fit it out to customer need, and then you basically turn it over to operations in a way that they can operate to expectations of both internal stakeholders as well as external stakeholders.

Wes 

And that all make sense. I hear oftentimes that right now, speed is everything. It’s all about getting these things up and running as quickly as possible. But you’re saying effectively in order to get value through the whole life cycle of this, it’s not just about speed. 

It’s also balancing the other kind of key performance indicators that we have throughout the project that we hear all over the place, right? It’s, it’s safety, it’s quality, it’s productivity cost, know, schedule in there.

So how is it that you see the balance between, honestly, I think that safety is always at the forefront of everybody’s mind on a project. Nobody will say, hey, we’re ever gonna sacrifice safety. 

But I feel like we’ll say maybe focus on quality is something that will go by the wayside or even focus on cost as opposed to schedule some side, sometimes we’ll go by the wayside.

How is it that you see the trade-offs there, the balance, how do you manage that process as a system like you’re saying, so that we’re delivering long-term value out of these data centers, returning value back to shareholders, et cetera?

Jim

Yeah. So I really like what you said around safety because safety is a core value. So that’s not something that anybody’s going to compromise. And I really feel good about our industry, both in the industrial side as well as the commercial side that, you know, across the supply chain, that clearly is not just a priority, but it is really a value because at the end of the day, it’s about people like we discussed earlier. 

But, you know, when I was coming through in my early part of my career and I was working on my very first couple of projects, you know, I was told, you know, the story of the three-legged stool. 

You could have cost, you could have schedule, or you could have quality, but you can only pick two out of the three. 

And so we made trade-offs based on that, right? Very early on in my career. And when you do that, you do it very early in a project cycle. You make these decisions in terms of what are the business objectives? 

How does that flow down to the project objectives that helps to guide decisioning across the end-to-end project itself? And at the end of the day, that tended to work because you made some decisions and you had some criteria that you went by in order to do that. 

What I find today, again, in the data center world and some other high-tech types of projects that I’ve been also involved in through my company, Ellisian, where I’m the CEO, I find that those trade-offs and that discussion just doesn’t happen as it used to happen because the stakeholders say, we have to have it all. 

We have to have time to market in a schedule. We can’t sacrifice safety. We can’t sacrifice quality. We got to have cost efficiency. And by the way, sustainability has got to be built in this. So when you’re making material selections, as an example, or you’re making energy choices, that’s got to be very clear in the decision making process. And that can’t, you know, drive things like schedule out. 

Now we do see that today with power being kind of the, I think the biggest constraint that we’re facing as a data center industry, but it’s broader than that. It’s just as a set of industries in the aggregate, right? 

Because if we can’t get power and we’re going to put all this gigawatt into, and some of the forecasts I’ve seen recently are upwards of 250 to 275 gigawatts by 2070, by, excuse me, 2030, not 2070, it’s 2030. You know, that’s an amazing task to move from where we are, which is nominally around 85 to 90 gigawatts across the globe. 

And to deliver all of those KPIs to your point, you know, key performance indicators, and get that turned over to operations and get that capacity in the hands of the clients that are, you know paying the bills at the end of the day for these hyperscalers and co-locators and enterprise players. That’s a huge challenge that we’re facing. 

But for a capital project and capital project teams and their leaders, it makes it a bit of a challenge when you have to kind of manage all of that, right? And it gets started very early in and decisions you’re making around site selection, decisions you’re making around how you’re going to develop the project and not only how you’re going to develop, who you’re going to develop it with and what are your degrees of freedom that you do have in order to deliver across a spectrum of KPIs that have to be all delivered on.

And you use the word balance. I would say that, you know, we do have still in order of priority in that market, right? Again, the market has not changed anything. It’s all kind of on the minds and hearts and souls of individuals that are facing that day in and day out. But it doesn’t forego those things we talked about: safety, quality.

Efficiency is starting, especially on the cost side, starting to surface a lot more in terms of a dollar, capital dollar per megawatt. And I see a lot of benchmarking out there from company to company and how we can do that. 

But that’s interesting, but not relevant because what these companies have to do, and this is where the systems approach comes in, you’ve got to really have a disciplined process approach to figuring out where those opportunities reside in terms of cost efficiency.

And what strategies can you deploy in order to get schedule and cost and quality, safety, so forth and so on, to the point where, you you go and that becomes part of your execution strategy for that project? And once you have that execution strategy, the success factor is based on how disciplined are you to really go by that execution strategy in a way that, you know, it was planned and thus how it should be delivered.

So that’s kind of where I see this balance kind of question you’re asking. So it’s not easy, it’s difficult. But is it doable? I’ve seen some really great projects that have met on all of the various KPI measurements that are again, required internally and externally. 

And then I’ve seen a lot of projects, and this is kind of fits where we are today, that are exceeding things like schedule and cost and not having the right level of quality. And sometimes when you’re not providing the right quality, there’s a huge connect with safety too. 

And I’ll use one example that I was faced with very early on and it wasn’t just the company I was working for, was across the industry. And that was the quality assurance around the electrical side of the job on a data center which that’s probably the biggest scope, is so important. 

And when you do that, you have to make sure that you assure the quality and the actual building of the equipment itself, the inspection of the equipment itself, the install of the equipment itself, the storage of the equipment itself, it doesn’t go in as soon as it’s delivered. 

And what we found is we were having a lot of arc flashes across the industry. And that you know, an arc flash is something that clearly is something that you want to avoid. Even if you’re protected from a standpoint of personal protective equipment, it still creates a risk for the humans that are at the interface of that installation, you know, day in and day out. 

And, you know, that was a key learning for me saying, hey, you know what, these do all connect. You’ve got to have the right assurance. You have to understand, okay, number one, you’re having these types of incidents take place. You know, what are the root causes associated with that?

And once you understand the root causes, what are the things you’re going to put in place to prevent recurrence? And that can’t just be an owner. It’s got to be across the entire supply chain, because a lot of different parts of that end-to-end supply chain touch this. 

So to me, that was a big lesson. But again, illustrates the importance of this balance between the various KPIs, because if you push quality out, other things kind of happen, like I just described.

Wes

Yeah. And that that totally makes sense to me. I used to one of the things I used to say whenever I was running crews back, geez, 10-15 years ago even, was that the quality of the work that we’re doing is directly going to impact the safety of the people who are operating the facility. 

Like that is, they’re so directly intertwined. But I feel like whenever we say that we have safety as a value, whenever it comes to all things construction, it’s really with all things construction, it’s no, do you have the guard on your grinder? Are you using tools and equipment properly? Do we have the safety measures in place for the way that we’re executing work, but not for the way that we’re, we’re effectively delivering the work or the manner, the form factor that it’s in whenever we deliver it. 

We don’t think about the safety of the life cycle of the facility. We really just think about the safety of the individual worker on the construction project. I, I feel like there’s a flaw in that somewhere that that we’re maybe a little bit short-sighted with some of the decisions that we’re making. 

So we do maybe inadvertently sacrifice quality because we’re chasing the efficiencies, we’re chasing schedule. But I think that also goes back to the way that we incentivize our contractors on projects in order to to maybe deliver faster. 

Do you see that as well? Is that something that that you saw either in your time in oil and gas or even whenever you switched over to working in data centers where those drivers that we’re incentivizing on are really still schedule based more than anything, rather than focusing kind of on the whole of the delivery?

Jim

Yeah, no, absolutely. Again, good question, Wes. And it’s not related just to data centers. Obviously, it’s across the industry where you see that, right? And, you know, the folks that are at the interface of the work, the project teams, the contractors that are supporting it, right? The operational teams that are overseeing it, they all feel the pressure of you know, if I don’t meet the costs and I don’t meet the schedule, you know, I’m not going to basically be meeting my boss’s expectation or their boss’s expectation or the company’s expectations. 

So we make these decisions. And what I put that in the category is folks will say it’s prudent risk. I say it’s risk that’s not always prudent. 

And so, you know, that whole balance of making sure that QA/QC happens across that life cycle and it doesn’t get pushed out, like safety, I think of it more like a core value. 

And when you do that early QA/QC, know, the buzzwords as well, of course it’s going to reduce your rework. Of course it will, right? If you don’t have to do the work twice, but you know, it’s also going to create a lot of other opportunities around risk reduction, you know, mitigating things like schedule delays.

Mitigating cost overruns, mitigating warranty issues, which can be very costly. And faster time to market. If you want faster time to market, proactive quality controls, streamline things like the install process, the commissioning process. 

Reduce the retesting that has to get done, whether that be during a fact test at the OEM shop or when it’s received at the field where you’re actually doing field inspection testing. And one thing I’ve seen the real value is when or the impact when you don’t do it is it actually extends the schedule and impacts the handover to that operating group that essentially has to take final care custody and control of that asset. 

And you said something here that resonated with me. We think a lot about the human element of safety that gets a lot of attention, but you when I was in oil and gas, process safety was, you know, is equally important as it is in the electrical side and somewhat the cooling side of the data center world, right? 

So if you don’t make sure things are tight, for example, and you haven’t assured the actual, you know, quality assurance of the install itself at a component level, you know, by default, you’re taking on risk and that risk has consequences if left unmitigated. 

So to me, I think you’re spot on. There are tools that I can say right now that can help, like the Cumulus tools that are available today in the market, which I’ve seen had tremendous value both in the oil and gas industry as it relates to high dense piping jobs and as well as the electrical side on the install and data centers, which is probably the key area in terms of magnitude and building that data center and doing it safely. 

So yeah, the end-to-end quality assurance QC, if pushed out, will have consequences. And so we’ve talked about some of those. 

The other pieces that we haven’t talked about is compliance and certainty, right? So a lot of these builds have to be compliant to certain tier certifications, right, at a permitting level.

You know, clients have SLAs, for example, with various agencies like FedRAMP. And, you know, regulatory on hyperscale specific standards are important. And what you don’t want to do is find a surprise when either you have an audit by one of these agencies or you’re at the end of the day and you’re looking to get that final sign off that you need to actually start up and turn it over to operations. 

So compliance and certainty is also an important element where if you have this end-to-end robust QAQC system that cuts across the end-to-end project delivery and then gets transferred to the operating team over that lifecycle of the operations, I think you’re going to be way ahead. 

So way ahead, what does that mean to me? You’ve done the project efficient, both cost and schedule. You’ve done the project safe.

You’ve assured the quality, you’ve turned over a reliable asset to the operating team. They can run that with confidence in terms of their ability to deliver their expectation to stakeholders, both internal and…

So why wouldn’t you do that? Why wouldn’t you put a robust QA, QC, end-to-end process in place? So I’ll look back to the systems approach on getting things done. This has to be a mission critical element of the systems approach to building and operating data centers.

Wes

Yeah, that to me, I think it all seems like it’s all obvious, but they’re the common objections that people will say, right?

And the first of which is, yeah, that checks out, but I don’t have these quality problems, right? My, my projects are, are always robustly built. We hire the best craft. We ensure we have these processes already in place.

So quality is just kind of a given, right? It’s what we expect. Well, I’ve also been told you get what you inspect, not what you expect, right? 

Jim 

Exactly.

Wes

 

So, I mean, what do you see though? What has been your experience with this? Pardon me. With like, what’s the rework rate that you’ve seen in data centers versus oil and gas experience, maybe?

Jim

 

Yeah, no, great question. So the rigor in an oil and gas, because of the process safety management concerns there, I see to be a lot more robust and not more focused. And when I think about that over the life cycle of the asset, right, let’s start with the build itself. I find that the rework that goes on in a construction environment is probably in the order of one to no more than 2%, which is fairly low, right?

And that’s not just having a good QAQC program. It’s also associated with good planning, making sure you’re understanding the scope. The scope is frozen. You can deliver on that with certainty because you know exactly what you’re doing. The priorities are very clear, and you can execute that project with the kind of expectations around safety quality, cost and schedule efficiency, productivity in the field, so forth and so on. 

When I came into the data center world, it was a little bit different. And a lot of that was driven by speed to market, right? I mean, getting out very quickly with, you know, 100% issue for construction drawings that we can go out to tender because we wanted to move so fast in a very finite period of time, right? There were certain decisions that get made. 

It doesn’t mean that people were sacrificing safety or quality in the design. That’s not what I’m saying here. But speed kind of trumped everything else in that process. And you’d probably push that out to other parts of the supply chain to make sure it got addressed along the way before you actually turn that asset over to the operating team. 

But I didn’t see the same level of rework in oil and gas that I saw in the data center world. That was upwards of a range depending on the job, right? But I would give you a range on average, maybe it was about seven or 8% of the rework that was done there. 

And some of those required stoppages too, because there were safety incidents that would take place.

And I’m not referring to Microsoft now, I’m talking about the broader industry across data centers. And so there’s an opportunity there, as I see it. 

You know, and I don’t think that opportunity is in any way misaligned with expectation, right? There is an expectation that quality is part of the job, and that’s no matter where you are, oil and gas, petrochemicals, data centers. But, you know, when you feel the stress of the moment, what gets pushed? And I think that becomes the problem, yeah.

Wes 

Definitely Yeah, you know, you know, you never explicitly hear somebody say, Hey, we’re just gonna wad up quality and throw it in the bin. But really, what you do here is where people putting their emphasis, right? 

Like what what, like, if everything’s equal, or, know, what, what does it say in Animal Farm? We’re all equal, some are just more equal than others, right? Like, we are like, whatever comes whenever push comes to shove, what are we really, really putting as our core value above the other and how..to me, it plays a balance, right? 

You should be able to weigh these things together and really think about it whole, as you say, as a system, right? How are we looking at not just the incident that we’re focused on or this one instance, but really how is this going to play to the life cycle of the build, of the asset, of what have you. 

So it’s interesting to hear that maybe at least initially on what we’ve been seeing, not just again, not within Microsoft or naming anybody specifically, but across all these data center projects. There was a significantly higher rate of rework than maybe what you had seen across your decades in oil and gas. 

And I got to say, like we know in oil and gas that we do still have rework on these projects. 

Jim

 

Absolutely.

Wes

We have a lot of people working through these things and there’s still a lot of opportunity to be made there with reducing a lot of that to help with schedule and with costs on these projects. 

So to say that was an order of magnitude higher within the data center market, just again, highlights the opportunity that we have in my mind. It’s not how do we condemn folks for not doing better. It’s how do we do better, right?

Jim 

Yeah, and we all want to do better at the end of the day, you know, whether it was DuPont when I was working there or Sabic or Microsoft, these are great companies, right? And they have great values and great approaches to how they get their capital project work done. 

But it’s not about that. It’s about can we do it better? Can we do it more efficient? Can we do it more safe? Can we do it more sustainable? Right. And what are the what are the key levers that enable that to happen? 

And I think our discussion today, when we focused a little bit on quality assurance end to end, that I see as a very key lever on this. And you’ve got to build it into the system in order to get entitled to the performance that we all know we want and should be entitled to, right?

Wes 

Yeah. I learned early on in my life that if you don’t put something as a priority, you’re just not going to do it. So if you don’t expose it, it’s never going to be fixed, effectively. So I think, you know, what I’m hearing is, let’s make sure that we are in fact, just looking for the opportunities and identifying the opportunities so that we can go forward and execute on that. 

You know, I’d be curious to hear what you’ve seen or, or what you’re seeing presently for how it is that across all of these KPIs, these, these five men KPIs that we’ve really been talking about today. What role do you see modularization playing in this? Because from what, from what I’m seeing from the statistics are showing online, about half of data center projects right now are using modularization in their, in their, project strategy. 

And when asked on a, I think it was a Vertiv study, something like 93% of data center owners and customers, owners and contractors, are saying that they plan here in the very near future to be using modularization in their build strategy. 

So what do you see? How do you see that aiding and delivering across these key drivers?

Jim

Yeah, so to me, yeah, modularization is something that I have been championing since the early 1990s when I built my first modular facility in Corpus Christi, Texas, right, with great success.

A build that was basically constructed in Japan and shipped over and plug and played into a facility in South Texas, and I became a believer very early on.

And do believe that modularization, which I have championed along with others in the industry as offsite construction, has the ability in a safe kind of environment and a controlled manufacturing approach to really deliver the expectations, I think, more with more certainty than, you know, a stick build construction job. 

And what I mean about that is, you know, when you’re in an environment that’s like a, you know, a closed environment for manufacturing driven prefab or modularization or integration, you’re going to buy a better safety. You’re going to be able to improve your quality assurance. You’re going to be able to get efficiencies on both cost and schedule delivery. 

And the technology and approach to this manufacturing has improved so much over the course of the last 30 years to the point where, yeah, a lot of the data center providers today are exploring that. And you might say, well, why are they doing it? Is it just cost and schedule efficiency? No, it is the safety. It’s the quality. 

The other piece I’ll say is also about eliminating the constraints. So when you think about schedule and you think about the fact that these modules eventually still have to end up at the site. Imagine a point where it is going to be plug and play. 

The constraints that you see today are very significant in the data center world. One: power, power, power availability. Number one, we’re short across the whole globe on power. We talked about that earlier. 

Second, permitting. Getting permits to the point where you can secure something that can be started into the field. And it’s taking longer and longer. And of course, everybody talks about expediting them and we have all the right approaches and government relationships and community relationships. But at the end of the day, the agencies are driving this and it just frankly takes longer. 

And then you talk about the labor shortages that are going on across the globe, right? You might say, well, we got a huge challenge in the U.S., here Statistics will basically show that we’re three to four million quality skilled crafts short in the U.S. to actually meet the infrastructure demand needs today. 

We have not done a very good job to really renew that and attract our early career folks that are coming out of the high schools and choosing to go to college versus going into trade schools or not having the the program sitting in the high school level anymore that kind of encourage and train and create opportunities for these students to go and make different career choices. And so we remain short.

Modularization helps that in a way that you’re doing it in this environment where you’re going to encourage folks to potentially want to be in an environment like that versus being out in the weather and being out in mud on boots and all that kind of stuff that goes with construction.

You you think about the constraints I just mentioned and think about how modularization plays into that.

Power right now, with what’s going on. If grid power can’t be there, you still have that power. So modularizing the power availability to the site of construction and maybe even early on into delivery to operations through these bridge power strategies on modular strategies that can be deployed.

Permitting. You could be building the module sitting in the prefab yard while you’re still waiting on permits. As long as you’ve kind of cleared the kind of basics from a technology standpoint with the AHJs and so forth and so on, that can progress. 

The building itself can be built in a modular fashion on the site and save time. I’m hearing all kinds of stories from different providers can come in here and cut the time of a building install in half just by putting in modular buildings that could be very applicable in a commercial construct environment. 

And then finally, think about just the shortage of labor that we talked about. So is it pivoting over to be a primary strategy with many of the hyperscalers? Yes, with all? No, but I think they’re all exploring at this point in time, so I think you chose the right words. 

Will it evolve with time to be the prominent strategy to go to construct? And I would say, yes, you’re seeing that already and I think it will continue to grow with time.

Wes

It’s an interesting thought with getting it ready even before permits come through. Cause I know that that can be a long time in the making a lot of the time, you know, be the long pole in the tent is just waiting on permits to come across. 

So really just saying, hey, we have the design. It’s been, maybe it’s been proven out in another facility before. So this is something that we’ve already done. Yep. We’ve already checked with, uh, with, like you said, maybe with the AHJ or with anybody else through this and we can go forward and while we’re waiting on all of this, this bureaucracy to kind of progress along with it, we can get construction at least going, even if it’s not done yet, we can at least start it offsite before we are fully cleared. 

And if something happens where maybe it doesn’t go through, we can pivot to a new facility. Cause this is something that we know that we want to do anyway. So that’s, that’s interesting, especially thinking about how it is that we, shorten that delivery process to as early as possible effectively.

Jim

Yeah. The other point I’ll make is with the changing to Wes and the technology that’s coming up, especially on MEP, right, which is basically mechanically electrical in the plumbing side of the job. Most of that’s going in and rack level today in a data center. 

And, you know, the rack densities because of AI are going to significant levels versus where they are today some stories of up to 500 to 600 kilowatts. It’s very difficult to construct that in the field. You have to do that in a much more controlled environment when you have bus bars and cooling piping and so forth and so on sitting all at a rack level, all your cable trays, potentially your batteries, maybe the servers and from an IT standpoint, you got to be able to cool it a lot more efficiently, right? You got to be able to provide power to it. 

So this whole shift in the technology is also a key driver for modularization moving forward with the data centers, as again, rack densities increase and complexity within the rack increases.

Wes

That makes sense. That fully makes sense. And it sounds like, again, there’s just a real opportunity there in order to improve this full delivery process at the system level, rather than just focusing on the one individual component. Wr can pivot a lot faster as needed just by utilizing this new approach or this modularization. 

It’s not really new, right? It’s just new to some folks. Like you said, modularization has been around for quite some time.

Jim

Yeah. And just think about the quality assurance pieces of that integrated rack right now too, that you’ve got to do it along what I’ll call the time schedule of the install rather than waiting to the end. Otherwise, it’s going to be a lot of rework taking that rack apart. So think about building that into, again, your system’s approach for modularization.

Wes

Yeah, that fully makes sense. Now I’d be curious to hear what other opportunities you see to improve, we’ll say that overall QA, QC process even, which has really largely been a lot of what the conversation has been focused around today.

Because what I usually see it, or at least what my experience has been a lot of the time and in my past experiences, we’ll just throw more bodies at it, right? 

That that’s typically how our approach toward quality is like, well, we’ll just throw more people to check it out of the backend, rather than maybe looking at something that we can do on the front end of the process or through the process maybe in order to assure it. 

So rather than, or is that the only option, right? Is that what you see? What do you see as the options, the opportunities that we have in front of us in order to streamline this process, improve this process, whatever it is?

Jim

Yeah, so I’m glad you mentioned about throwing more bodies at it because I have found that when we throw more bodies at it, becomes less efficient. 

Wes 

Hahaha, right? 100%.

Jim

You never get enough of that. And when projects go behind schedule, the first kind of gap closing strategy is let’s throw more bodies at it. And it doesn’t work. 

Wes

 

Every time, every time.

Jim

My experience is that it does not work. Can it work partially? Sure. But the root cause is, as you stated, is right up front in the planning process. It’s in feasibility and design. It starts there, design reviews. 

You want to catch code violations, constructability issues, spec conflicts before they cascade. Then it moves into the procurement, right? And vendor QA checks, ensure material and equipment meet the specs, right? And that it mitigates any counterfeit substandard inputs.

You know, I’ve seen some of that with bolting, for example, coming from China as an example in my days in oil and gas. Then in construction, you know, the whole in-process inspections that have to go on, right? 

Verify installation standards. You got the sequencing, avoid costly rework, you know, make sure the quality is built in. Then commissioning and fit out, right? Validate the whole system performance before you get to IST, which is basically integrated systems testing. 

You got to make sure that you’ve got that all of the quality built in and more importantly you’ve got to have what I’ll call a record of that quality over the life cycle and it can’t be sitting in a handwritten set of notes or even in an Excel spreadsheet I find that stuff is just so inefficient and goes back to my comment on system is there a system or a set of tools like Cumulus does provide, that can essentially provide that end-to-end documentation and so you’re not searching for it when you’re turning it over to operations or to the final quality guys that are going to do, or the guys that are doing the IST on the integrated testing. 

And it all has to be signed off on. And you want to catch things early along the life cycle of the project. Feasibility, design, procurement, construction, into commissioning and fit out, and then finally into turnover to operations. You need to have complete O&M manuals that have to be developed.

You want to be able to make sure you understand where the red lines are and the asset tags are. You have to ensure the facility teams have visibility into what was built. And those 2D and 3D models have to be kept up to spec and refreshed when changes take place. So what I’m describing to you is what I mentioned very early. 

A systems approach to building quality in, quality assurance in, and quality control, not just quality assurance, is essential number one to the success of delivering that asset to the operating team in a way that they can perform.

Wes

Yeah, no, I mean, all of that is music to my ears because what I’m hearing is taking more of the proactive approach rather than the reactive approach, right? 

If you take the reactive or the backend approach toward any of this, you’re just going to end up with a good way of finding issues. But that means that you’re still ending up with issues, right? 

So whatever we can do in order to prevent as early as possible any issues is really the approach that we want to take.

We’re coming up close on time here, Jim. So I want to ask just one last question. 

So overall in this world of data center construction, what do you see as being the biggest issue that’s still kind of pervasive throughout the industry and what can be done about it?

Jim

Okay. So, so yeah, so, so again, you know, that whole, speed to market is a driver that kind of trumps everything and it has, and it continues to trump everything. you know, leaders have to basically step up and say, okay, I understand that I want to be accountable to it. 

By the end of the day, I want to be also entitled to it. And the way I get entitled to it is through the way I plan the way I integrate the systems approach to getting things done.

The engagement of the supply chain early and often into the process. That’s something that doesn’t happen because it’s viewed as a cost versus a value. And I see it as a value personally coming in on my oil and gas days. 

And at the end of the day, you’ve got to bring this all together in terms of the team. Get them on board. 

I see a lot of what I’ll call vertical execution strategies here that don’t do real good integration of the project itself. And I don’t want to use the term, but I will, you know, through integrated project delivery, IPD. 

Is it for every project? No, you got to be entitled to the right project strategy and where you are in the world and so forth and so on. But at the end of the day, working as a team, doing in a collaborative way, engaging the team members with a system where they can work within that they can rely upon end to end, which includes managing safety, managing quality, delivering on cost and efficiency and sustainability and productivity.

And finally delivering again that asset to operations at where they expect to have it, which is being a cost efficient, reliable supplier of megawatt capacity to the client and customer.

Wes

Excellent. Well, hey, thank you for this excellent conversation today, Jim. I do appreciate it and hope to talk again soon.

Jim

Very good, Wes. I really enjoyed it. Thank you so much.

Wes

 

Yes sir, thank you.