Why involve Baker Group in your Capital Expenditure and Operational Expenditure planning?

By Daniel Dove, Director of Critical Environments Service

In my previous position as CEOM at a large-scale data center company, I was responsible for managing daily operations teams with a strong focus on safety, maintaining Five-9s uptime standards, and overseeing financial performance. I have had the privilege of collaborating with accomplished professionals to attain a high standard of operational reliability and effective fiscal management. I am sharing these insights to support others who may benefit from my experience. 

Capital Expenditures and Operational Expenditures need to be fully understood to be financially responsible and reported in a timely manner. 

If a project has been cancelled or rescheduled, it is essential that the associated financials are accurately accounted for. This means that all previously allocated capital and operational expenditures must be reviewed, adjusted, and documented to reflect the change in project status. Any outstanding commitments, such as contracts, purchase orders, or service agreements, should be evaluated to determine potential financial impacts, including penalties, refunds, or reallocation of funds. Timely and precise reporting ensures that financial statements remain accurate, supports effective decision-making, and maintains transparency with stakeholders. Effectively managing these adjustments also helps organizations avoid unexpected costs, maintain compliance with regulatory requirements, and better plan for future investments.  

In data center management, capital expenditure (CapEx) involves large, upfront investments in long-term assets like infrastructure and hardware, while operational expenditure (OpEx) covers ongoing costs such as power, maintenance, and staffing. The AI boom is currently driving record-high CapEx, while the associated high-power consumption is a significant and rising OpEx challenge. Carefully examining all available options during the design phase prior to construction can significantly influence your long-term operational costs.  

At Baker Group, our dedicated Mission Critical Service Team is committed to fulfilling our client-for-life approach, stepping up to support projects at any point in the life cycle. Whether we are at the helm leading the way from start to finish or behind the scenes keeping budgets and timelines on track, we are able to meet you where you are at with a variety of project delivery methods. Our team is experienced in planning and preconstruction services for clients across the industrial, commercial and mission critical sectors. From design-assist and design-build services to engineering, procurement and construction (EPC) and EPC management (EPCM) solutions, we aid the preliminary stages of your project with our expert controls and advanced preconstruction capabilities. Our multiple divisions provide us with a distinct advantage, enabling us to deliver accurate designs and budget estimates for your new CapEx projects promptly and efficiently. 

CapEx vs. OpEx Breakdown 

Capital Expenditure (CapEx) 
CapEx typically covers 60-70% of total costs during a data center's initial build phases. These are strategic, big-ticket investments that provide long-term benefits and are depreciated over time for tax purposes.  

• Infrastructure and Construction: Building the physical facility, including land acquisition and structural engineering. Data center construction costs are typically around $10 million per megawatt (MW) of capacity. 
• Hardware: Purchasing servers, storage, networking equipment, and specialized AI accelerators (like GPUs).
• Technology Upgrades: Investments in essential technology to manage increased capacity and improve performance.  

Operational Expenditure (OpEx) 
OpEx represents the day-to-day costs of running the facility. While CapEx sets the foundation, OpEx can exceed the original CapEx amount within 5 to 7 years, depending on efficiency and scale. These costs are fully tax-deductible in the year they are incurred, offering immediate financial benefits. In today’s always-on data -center environment, downtime is not an option.  

At Baker Group, our Mission Critical Service Team brings full-scale facilities maintenance covering mechanical, electrical/battery, plumbing, and automation systems (EPMS/BMS/BAS) to keep your data center reliable, efficient, and optimized. We do not just respond to problems; we work proactively as an extension of your onsite team. From routine preventive maintenance to on-demand spot repairs and predictive analytics, our goal is to protect your uptime, support your operations, manage costs, and use our experience to help build accurate budgets for OpEx. 

Baker Group’s Mission Critical Service Team delivers tailored maintenance programs for Enterprise, Colocation, Cloud and Edge data centers, ensuring each environment receives the precise level of support, monitoring, and technical care it requires. 

• Energy and Cooling: The primary OpEx driver, especially with high-performance AI workloads that generate enormous heat. Power consumption can account for 15-25% of OpEx, while cooling efforts also add significantly to bills. 
• Maintenance and Labor: Maintenance can be around 40% of OpEx, along with staffing, water usage, and general administration. 
• Cloud Hosting/SaaS: The shift to cloud computing means many IT functions transition from CapEx to OpEx, offering flexibility and scalability via subscription models.

Summary 

• CapEx covers major upfront investments; OpEx includes ongoing costs that can surpass CapEx within several years.  
• AI drives higher spending on hardware and increases power and cooling needs.  
• Baker Group offers expert planning, accurate budgeting, and proactive maintenance for all data center types.  
• Financially, CapEx is depreciated over time; OpEx is immediately tax-deductible. 

Disclaimer 

This document is for informational purposes only and does not constitute a contract, guarantee, or professional advice. Services are subject to formal agreement and applicable terms. Baker Group endeavors to comply with all relevant laws and regulations. 

 
Dan Dove is the Director of Critical Environments Service at Baker Group with extensive experience in Data Center and Mission Critical Projects.