The role of Project Management Consultant (PMC) is starting to take off on Data Centre projects across Europe. What is it, and does it have a future in the Americas? Soben’s Director, Americas, Rob Kim and Netherlands-based EMEA Director, Pieter Schaap discuss.
What is a Project Management Consultant?
Rob Kim: Pieter, we’re going to be talking about the role of PMC on Data Centre projects. I know it’s a hot topic for you in Europe, but I’ll be honest, it’s not something I’ve heard a lot about in the States. Can we start with a simple definition?
Pieter Schaap: Sure. The concept matured in the Oil & Gas industry, where it’s quite normal to have a Project Management Consultant (PMC) on a construction project. The PMC is responsible for overseeing and managing various aspects of the project on behalf of the client. They act as the client’s representative and play a crucial role in ensuring successful delivery within the specified scope, budget, and schedule, while adhering to quality, safety, and regulatory requirements.
RK: So where does the GC (General Contractor) come in?
PS: The GC still plays a key role and is distinct from the PMC. Strong collaboration and coordination between the two is key to project success. In short, the PMC oversees the project from a broader perspective, ensuring alignment with the client’s goals and requirements, while the GC focuses on the execution of construction activities on the ground. In the Oil & Gas industry giants like Fluor, Worley Parsons, McDermott, Wood and Jacobs are strong at the PMC role – acting as an extension of the client team. There is a heavy focus on strong project controls.
RK: Is that the same model you’re seeing in Data Centres?
PS: Not exactly. We’re starting to see clients move away from the traditional GC model in Europe and go straight to sub-contractors. We’re seeing MEP, OFCI packages, Commissioning Agent etc. all contracting directly with the client. This creates multiple interfaces and huge complexity. That’s where the PMC comes in – as more of a client’s agent. Of course, client’s representatives are nothing new, but the full PMC in data centres is more than that – they’re there to ensure robust project controls for project success, with construction management added into the mix.
Why are we seeing this shift in the market?
RK: Why do you think we’re starting to see this model emerge?
PS: There are quite a few reasons I can see. First, it gives the client more control over speed to market – you’re effectively cutting out the middleman. Secondly, there’s definite benefit to being able to flex your resource to meet the peaks and troughs over the project lifecycle. Having a full team of specialists on your team for the two or three years of one of these projects isn’t efficient. Finally, if the GC fails, the project is in trouble. We’re seeing more examples of the traditional model failing, costly project delays, and a string of litigation issues. The market is becoming so polarised that clients are looking to get more collaborative, going straight to source.
Ultimately, it’s a maturing of the market – we’re seeing seasoned professionals from industries like Oil & Gas starting to bring their experience to the Data Centre sector and that’s shaking things up.
RK: So is it working?
PS: It does take away the tensions we’ve been seeing between client and GC, merging the team into one collaborative function. It’s relatively new still in the data centre industry, so the market is still adjusting to the change. We’ve got some clients who have used the delivery model a handful of times in Europe, but it’s still not widespread.
The key to success is getting the right PMC partner on the job. When clients use a GC who flexes into doing project controls, the project could stay on track, but the client is missing the benefits that come from working with a strong commercial consultant. On the flip side, traditional consultants don’t have the construction management experience needed to ensure timely delivery within the quality parameters. The demand for this model is there, but an adequate supply of strong PMC partners is the barrier to it really taking off. It’s rare to come across a company like Soben that combines the best of both worlds – a contractor mindset, with a consultancy skillset.
Collaborative models
RK: But all this talk of collaboration is nothing new. It’s been over 25 years since the Egan Report was published in the UK and we still haven’t quite got the hang of collaborative contracting. This sounds very similar to Integrated Project Delivery (IPD).
PS: You’re not wrong. This is a couple of steps away from an IPD model. But we’ve tried IPD in the European Data Centre market and it can get very messy. With a shared contingency pot, everyone is in competition and there’s a lot of finger-pointing. A true IPD model is about everyone helping each other to get the project completed on time – and it works – but commercially it doesn’t always pay. With a PMC model, the sub-contractors are still working in their commercial silos and it’s the responsibility of the PMC to create the interfaces and project controls that ensure delivery. You need a stellar PMC to make this work, but it is definitely something that I see as our forte.
The US market
PS: So, how does this compare to what you’re seeing in the Americas?
RK: There have always been big differences between how we do things in the States compared to Europe. For starters, the role of Quantity Surveyor doesn’t really exist over here. A lot of trust is put into the hands of the GC, who aren’t always proactive in advising and reporting on cost variance. Project Controls is big over here though, from its roots in Oil & Gas, we’re now seeing heavy Project Controls environments in Data Centres.
I can see the benefits of a PMC-like model over here. One potential gain would be the opportunity to reduce the management structure, addressing the critical skills shortage facing the industry in the US. We’ve got clients investing in massive projects in hard to reach locations– and good talent is traditionally bunched around the central urban hubs.
It’s certainly something our clients are considering, but for it to take off, someone needs to demonstrate it can be successful. Contracting structures do need to be addressed though. We’ve got clients going into new markets in places like Chile and Brazil using the standard GMP agreements from 5 years ago – and that just isn’t translating locally. Something needs to change.
PS: With the AI boom, data centres are only getting bigger – and so are the size of the contracts. That’s got to be another huge incentive to change contracting models and execution philosophies.
RK: In theory, yes, but the market is very short-sighted. Everyone is just racing for space – and power. How we deliver – and how much is getting spent – isn’t what we’re seeing from our clients right now. Not when the push for capacity is so urgent. I don’t think we’re going to see anything changing in the next 6-12 months.
I think we need to try and be one-step ahead of the market and try and guide things towards rationalisation and finding efficiencies. Ultimately this will translate to leaner delivery models and faster speed to market, those who innovate when it’s difficult to force yourself to do so are going to reap the rewards long-term because they will beat the market.
In the US construction market, the amount of trust put in GCs would be alarming to someone coming from a European market. You pay a premium for it, but it gets things done and because we don’t have the step-by-step controls you see in Europe it tends to be a quick delivery model.
I think eventually we will see a change in how things are delivered, but it won’t be the same as in Europe. We’ll take learnings from other countries and other sectors and find our own way.
Is the PMC model the future?
PS: It’s not yet clear whether this will take off formally in Europe either. We are certainly seeing a trend towards larger client rep teams and a desire for more control around cost, quality, and schedule. Relationships are less transactional, so you need the right team to drive the project, getting the traditional supply chain involved and empowering and engaging them, rather than policing them. But, ultimately, a full Oil & Gas-style PMC model – I don’t know.
RK: Something has to change. Assuming we reach some kind of plateau with AI demand, I would expect that at that point everyone will start looking at how to drive better efficiency. The other driver for change is the pressing skills gap. If things get so extreme that there aren’t enough people with the right experience, the model will have to evolve.
What is vital is that the US market takes a long hard look at how projects are delivered. It’s crazy that some developers have the same delivery and contracting model regardless of project location, scale etc. There’s a massive competitive advantage to be gained from looking at different ways to deliver, different contracting and procurement strategies.
The market has shifted, and the size of the projects is mind-blowing. We’re talking hundreds of megawatts. The power consumption of New York City is something like 8GW – and we’re starting to talk about single data centre developments of 2GW of power. That’s astonishing. We’re in the midst of an arms race for talent, space, capacity – I’ve never seen anything like it.
There are definitely things we can learn from industries like Infrastructure and Oil & Gas, which have been delivering mega-projects for decades. These sectors have great delivery models, but the projects take years. So how do we borrow the delivery model, but keep speed to market?
My question to data centre developers and the industry as a whole is do you honestly have different delivery models, or are you just copy-pasting from project to project? In a rapidly developing market, why would you do the same thing over again and expect the same results?
PS: Everybody has their unique place in the supply chain at the moment. Historically, there hasn’t been anybody comfortable taking on the whole scope. The GCs aren’t interested, so the market is starting to look to consultants, but there are few that have the right combination of commercial experience and consultancy to be able to transition. I still think it could be the future though. There’s one major hyperscaler in Europe trailblazing in this space and I’m excited to see what happens.
About Soben
Soben offers something different: world-class construction consultancy, paired with hands-on commercial experience. We increase certainty in our clients’ investments through cost, schedule, risk, and project management. With a track record of successfully delivering major construction projects, we pride ourselves on going the extra mile. And we always deliver on our promises.
We are working with the global leaders in hyperscale and colocation data centre development on some of the world’s largest, most complex schemes.
