What is a data centre technical due diligence?
Independent due diligence is the backbone of my practice. Here is what it actually involves — and when it is worth doing.
A data centre technical due diligence is a desktop, physical or intrusive inspection of a facility and its surroundings, undertaken to establish the intended and actual design and operation of the site — and its potential for expansion. Operators, buyers and investors use it to get a clear, independent picture of an asset before they commit money to it.
Why it is done
Data centres are high-value assets that owners expect to perform at the highest level for decades. Before an investment or expansion, the people backing it need to understand three things: the fair market or book value of the site; the risk areas that need investment to bring the facility up to standard — data centres are expensive to build and run, so this figure can be large; and the opportunities to expand and make the most of the infrastructure already installed.
When it is undertaken
Usually at one of two junctures. First, before an operator begins upgrading a site — a due diligence sets a baseline that focuses the upgrade plan on what genuinely needs work and what is already sound. Second, when a buyer or investor is weighing an acquisition and needs independent advice on the facility's value, risks and potential.
Three levels of study
There are three ways to run one, each a step deeper than the last: a desktop review of the operator's information alone; a desktop plus site inspection, where the paper study is followed by walking the site with the operator and their technical team; and a desktop, site inspection and testing study, which adds mechanical and electrical tests on key equipment to establish its condition, remaining life and any faults.
The middle option is the one I undertake most. It balances effort against detail, and typically feeds expansion planning or an investment business case.