Edarat Group  DATA CENTER UNIVERSE   12 Part Series  |  3rd Publication
12 Part Series – 3rd Publication
The Hidden Costs
Behind $/MW for
Data Center Build

April 2024       3 mins read
The Hidden Costs
Behind $/MW for a
Data Center Build
April 2024      3 mins read

The benchmark cost for a Data Center build is always measured by $/MW of IT load. The $/Square meter for the total buildup area or size of the computer room (number of racks) will provide disappointing and conflicting figures when comparing data center projects, mainly because of the power density per rack (kW/rack).

Dollars per megawatt ($/MW) can be a misleading metric because no guidelines define which costs should be included in an estimate, and owners and contractors define their $/MW differently.

Several accumulating costs determine the total price of a greenfield data center, including design, land, regional impacts, substation requirements, utility costs, permitting fees, site development, building, procurement & logistics (including taxes & duties), MEP equipment, and testing and commissioning (CxA) costs. However, it often needs to be clarified which of these costs are included in the $/MW for a specific data center build. As a result, $/MW is only sometimes an accurate representation of the total price of a data center build.

Therefore, understanding what is included in the $/MW budget costs is essential to conducting an accurate comparison and evaluation when benchmarking to the global average cost for data center build.

Owner Costs

Owner costs are typically not included in the construction build $/MW figures but are a part of the overall owner’s capital expenditure.

These expenditures include:

  • Land acquisition
  • Design and Consultant fees
  • Building Permits
  • Utilities Connection fees (and/or HV/MV Substation where applicable)
  • Commissioning Agent (CxA) costs
  • Uptime Certification or LEED costs
  • Racks and Hot/Cold Ailes Containment
  • Structured cabling
  • DCIM
Construction Costs

Numerous intertwined owner performance requirements (OPR) and end-user design criteria contribute to a data center’s capital cost. The following factors are the primary drivers of data center design, and each directly impacts the final cost.

IT Capacity (MW):

The IT capacity and the Rack Density requirements will determine the size of the white space and influence the overall size of the data center building.

Data Hall Density:

The data hall density affects the size and type of MEP equipment and influences MEP systems layout and distribution. Floor loading capacity measured in kg/m2 also impacts the building structure and foundation system.

Availability and Resiliency:

The owner/end-users desired availability/resiliency targets and redundancies determine the MEP topology, affecting the grey space requirements.


The amount of infrastructure available on day one, the speed and intervals of IT capacity deployment, and the flexibility and readiness for future expansion.


PUE & WUE targets (Free Cooling, Indirect Evaporative Cooling, Liquid Cooling), how energy efficient the data center is regarding renewable energy, energy reuse, material selection, rainwater management, and waste management.

Ancillary Costs:

Several additional costs affect data center CAPEX, including office space, support spaces, storage, loading bays, security perimeter, site development …


While these primary cost drivers are standard across all data centers, no two data centers are designed and built to be identical. Not surprisingly, variations between these primary drivers lead to cost differences between data centers that are only sometimes evident from the $/MW figure alone.

Many other factors unrelated to design and construction can impact the cost of a data center build. Some of the non-design related factors that can have a considerable impact beyond $/MW are:

Project Location:

Weather conditions (hot/cold), seismic zone, flood zone, altitude, and coastal.

Plot Size:

Tight sites can incur additional building costs related to leasing plots for office space, laydown areas, remote storage, safety and rigging impacts.

Type of Construction:

Traditional Build vs Prefabricated Modular, and Owner Furnished Contractor Installed (OFCI) vs Contractor-Furnished Contractor-Installed (CFCI) models.

Scalability Approach:

Horizontal expansion vs Vertical expansion/number of floors, affecting construction cost and additional conveying systems.

MEP Infrastructure Tech:

Static UPS vs. Rotary, Gas Suppression vs. Water Sprinkler, and Air Cooling vs. Liquid Cooling…

Safety and Security Measures:

Depending on the local safety regulations and site risk exposure, security measures to mitigate risks include intrusion detection, a real-time location system, blast resistance, and EMP protection.

Local Codes and Regulations:

Environmental, Electrical, Fire & Safety codes.

Other External Factors:

Include the cost of labor, the cost of sourcing materials and equipment, the cost of shipping and transportation, customs duties, local taxes (VAT), the cost of funding, inflation …

Under the right circumstances and in the right environment, a low $/MW ratio can be the measuring stick for success. However, every data center is different, and it is essential to remember that $/MW is not the only factor determining the quality, efficiency, and total cost of a data center build.
DATA CENTER UNIVERSE |(1st Publication)
Regular VS Hyperscale Data Centers
Site Development Costs

Site costs, such as site clearing, site leveling (excavation and backfill), and site landscape, are rarely included in the $/MW discussion and can vary drastically depending on plot size, soil conditions, geotechnical aspects, and water retention requirements.

When site-related costs like these are not included in total cost calculations, they are typically rolled into land acquisition or owner costs.

Video: Aerial drone captures of Tier III hyperscale data center
managed by Edarat Group from inception to completion.
Building Shell & Core Costs
Not surprisingly, decisions about the building shell impact the project’s overall cost. When comparing $/MW figures between data centers, it is crucial to understand which building core and shell features are reflected in those numbers.
Traditionally, the building core and shell cost is measured in $/square meter rather than $/MW. Still, since the cost for site development and building Core & Shell only represents 25-30% of the total project value, using the $/MW as a benchmarking figure would be wiser.

The cost rises as owners, designers, and contractors make collaborative decisions about the shell based on functional requirements and aesthetic preferences. With that in mind, it is vital to be aware of the building core and shell parameters can drive your $/square meter or $/MW number higher:

Foundation system:

Isolated footings as opposed to raft foundation and dewatering.

Building Structure:

Precast Concrete or Steel Structure.

Skin type:

Precast concrete, Metal insulated panels, CMU blocks, or glazing.

Roofing type:

Precast concrete panels, concrete slabs, or sandwich panels.

Number of floors:

Single-floor vs two or multi-story building

MEP equipment locations:

Elevated platforms, mezzanines, exterior at grade or on roof locations (exterior-located equipment decreases building costs but increases site development costs unless the equipment is located on the roof of the building. Then, the structural system is increased to support the equipment.)

Prefabricated Modules, Enclosures, and skids for MEP equipment:

Electrical rooms (MV, LV), Generators and Transformer enclosures, Pump rooms, and hydronic piping skids can reduce construction complexity and reduce time to market. Still, the cost of the MEP could be inflated due to the cost of the enclosure, pre-engineering, assembly, pre-testing, handling, and transportation.

The cost of interior construction can vary greatly depending on the material and finishes and based on the owner’s requirements, furniture selection, and white-space fit-out costs, such as access floors, structural ceilings, cable trays, hot/cold aisle containment components, electrical distribution (row busway, whips, PDUs, and RPPs) are not always included in the contractor’s cost of data center build. Instead, many of these costs are pushed to the operations or considered as Non-Recurring Charges (NRCs) paid by the end-user, thus driving down the initial $/MW construction costs.

MEP Infrastructure Costs

MEP infrastructure represents the bulk of data center costs, with expenditures reaching up to 70% of the overall project value. The design capacity of the MEP systems, its topology and redundancy (N+1, N+2, 2N, xN, …), the amount of infrastructure ready on day one, and the available capacity to scale and expand in the future affects the total overall cost of the project, and consequently, the $/MW metric used to compare the price for data center build.

The Relevance of $/MW in MEP Cost Analysis

While the $/MW metric may not always reflect structural or site-specific attributes, it remains the most effective way to evaluate MEP costs, unlike the $/square meter metric, which fails to accurately predict data center MEP costs. The owner’s chosen business model, particularly the Furnished Contractor Installed strategy (OFCI), can also impact the $/MW cost. This model involves the owner directly purchasing all prefabricated modules and MEP infrastructure equipment installed by the contractor and commissioned by an independent CxA.

Misconceptions Surrounding Tier Levels

A data center’s Tier Level (III or IV) can mislead perceptions of $/MW costs. Although upgrading from Tier I to Tier IV typically increases costs, not all data centers neatly fit into these predefined categories. Some may incorporate higher-level features but still fall into a lower-tier classification. This discrepancy highlights that without a deep understanding of what is included in the $/MW figure, clients might incorrectly equate a lower $/MW with a lower Tier, potentially overlooking variations in resilience and associated risk factors.

Cost Variability in Data Center Design

Data centers may employ different technologies for their mechanical and electrical components, leading to diverse cost implications. For instance, mechanical costs can vary significantly based on the cooling system used, such as Direct Expansion (DX), evaporative cooling (IDEC), or different types of chiller plants. Additionally, variations in UPS systems, backup power solutions, and power distribution setups can greatly affect the initial capital costs. Identifying which systems or technologies are considered in the $/MW cost estimate is crucial for a realistic cost comparison.

Additional Costs in MEP Builds

The cost of Building Management Systems (BMS), Electrical Power Monitoring Systems (EPMS), and IT/Operational Technology (OT) can also vary widely. Factors such as the type of controls, system redundancy, and integration with other building systems can increase the foundational cost of these critical systems. It is important to understand which costs are included in a contractor’s $/MW figure to make informed comparisons between estimates.

Comprehensive Cost Analysis

For a precise measurement of MEP costs, including all system costs in the analysis is essential. Excluding components can distort the evaluation, rendering the $/MW metric less reliable. True accuracy involves accounting for the complete facility build-out costs, right down to the rack level, and comparing this to the total IT capacity. Additionally, certain MEP-related expenses that transition to operational costs post-build should be recognized. These include construction and commissioning utilities, fuel supplies, and maintenance agreements, which can be negotiated during equipment purchases.

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Sustainability Costs

Data centers have emerged as critical engines of the digital economy. However, their substantial and ever-increasing energy and resource consumption necessitates a shift towards sustainable infrastructure. Data Center Owners leading in sustainable practices align themselves with global environmental and sustainable goals and improve their competitiveness, especially if they want to target Hyperscalers and international players.

Obviously, the capital investment to achieve higher sustainability goals, such as moving from LEED Bronze to Platinum, would be substantially higher and would increase the capital cost $ /MW compared to a data center with no ESG goals. However, over the lifetime of the data center, the total cost of operation (TCO) will be less because sustainable solutions improve energy efficiency and water usage and ultimately reduce operating costs.

Approaching the goal of a carbon-neutral data center can take various forms, tailored to the specific needs and capacities of individual facilities and data center operators. To achieve carbon neutrality, there is inevitably a cost attributed to the design and construction of the data center but mostly in the cost of the operation of the data center as sometimes the end-user engages in Power Purchase Agreements (PPAs) from renewable energy resources to offset their energy consumption and gas emissions. For this reason, this cost should not be included in the cost $/

Ancillary Costs

The office space size and availability of all support functions such as meeting rooms, cafeteria, WC, Lockers, Firs-aid, and MEP spares. IT storage facilities and Loading bays, as well as other technical areas such as Meet-me-Rooms, Staging and Lab Test, Facility Monitoring rooms, and SOC/NOC rooms, will not only increase the $ cost/MW for the CAPEX but will also impact the data center operations and OPEX. Most data centers have space for these areas to be fully functional and fit-for-purpose. Yet, some owners demand a smaller office-to-data hall space ratio to reduce the project’s overall cost.

Safety & Security systems and specialty equipment can also vary from one data center project to the next based on location and site risk exposure. Applying SAFE standards, complying with ISO 22340 for Security and Resilience, and complying with PCI-DSS for the payment industry would require additional capital investments that can drive the $ Cost/MW even higher. Security systems can vary from a secured wire mesh fence to a blast-proof RC perimeter wall. Road Blockers, Vehicle Traps, Anti-tailgating, UVSS bomb detection systems, Intrusion Detection systems, and bullet-resistant UL levels impact a data center build’s overall $/MW figure.

The True Cost/MW
of Data Center Build

Understanding the hidden costs and why data center costs vary can help you paint a clear spending picture, evaluate your budget, and form a reasonable comparison between your next data center and what is advertised in the industry global average for the $ Cost/MW.

With so many factors going into the cost of a data center, remembering what to measure can take time and effort. Here are some helpful questions you can ask to help understand cost metrics like $/MW:

  • What is your desired IT capacity in MW?
  • What is the rack power density in kW/Rack?
  • What is the Data Hall power density?
  • What is your desired redundancy/resiliency level, Tier Class, and specific performance requirements?
  • Where will your data center be located?
  • What is the schedule of the build and scalability approach?
  • What type of Building Structure?
  • Do you want to include the Site Development cost?
  • How much office and non-data center space is accounted for?
  • What type of building shell, material finish, and furniture are included?
  • What type of MEP technologies are being used?
  • What is the Safety & Security level?
  • What are the ESG goals and Sustainability Targets?
  • Are Owner’s Costs Included?
  • What Costs and Other NRCs are excluded?

Start with an apples-to-apples comparison of only building costs, but remember that your total spending is subject to several additional variables, including $/square meter for site costs and building costs and the price of MEP systems in $/MW.

Therefore, exploring all procurement options, competitive pricing, potential buying agreements, and day-one infrastructure capacity is critical to keeping the $ Cost/MW as low as possible. Remember that equipment is also built to different quality standards, but has similar maintenance costs, resiliency, and energy efficiency.

Up until two years ago, the cost of building and operating data centers had fallen reasonably steeply. Improving technology, greater production volumes as the industry expanded and consolidated, large-scale builds, prefabricated and modular construction techniques, stable energy prices, and low capital costs have all contributed. While labor costs have risen during this time, better management, processes, and automation have helped to prevent spiraling wage bills.

However, these trends have halted in the past two years. Ongoing supply chain issues and rising labor, energy, and capital costs will make building and running data centers more expensive in 2023 and beyond.

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Pitt Turner, W., & Brill, K. (2008). Cost Model: Dollars per kW plus Dollars per Square Foot of Computer Floor. Uptime Institute. TUI3028A.
Robertson, J. (2017). The Hidden Costs behind $/MW. Skanska.
Smolaks, M. (2023). Data center costs set to rise and rise. Uptime Institute.
Turner & Townsend. (2022). Data centre cost trends. In Turner & Townsend. Turner & Townsend.

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