Data Center Construction: Part 3

This blog series explores how data center construction both parallels and differs from other commercial and industrial facility construction. The first post identified how data center construction management and scheduling are very similar to other large and complex construction projects, and the second post examined some of the differences. This final post focuses on several of the most common causes of delay claims and other construction disputes on data center projects—and best practices for avoiding them.

Data Center Construction Claims and Disputes
Data center construction disputes can stem from many of the same issues that plague other large and complex construction projects. Several causes have become more prevalent than others. According to Steven Williams, partner and co-head of the Infrastructure, Construction and Energy (ICE) Disputes Group at CMS in the UK, common causes of data center disputes are: 1) owner-furnished, contractor-installed (OFCI) equipment, 2) commissioning, and 3) poor contract administration.¹

Based on my experience in the engineering and construction industry and in the construction dispute industry, I agree that these items can trigger dispute on a large and complex construction project, and I have worked on projects in which disputes arose from each of these causes. I briefly address each cause below.

Owner-Furnished, Contractor-Installed (OFCI) Equipment
As introduced earlier in this blog series, OFCI equipment can lead to delay claims on data center projects, as well as industrial projects or any project requiring specialized equipment. OFCI equipment procurement requires significant coordination, planning, and scheduling from all involved parties.

Due to the increasing demand for data centers, specialized computer or cooling equipment may be unavailable for extended periods of time. For this reason, owners often purchase this equipment prior to the execution of the construction contract such that the procurement process can begin as early as possible.

The contract should thoroughly specify and describe OFCI equipment and include requirements for when the equipment is turned over and becomes the contractor’s responsibility. Additionally, the baseline schedule should include activities representing the scope for all equipment, including activities representing manufacture, shipping, delivery, potential storage logistics, installation, and testing. The schedule should also include all of the logic relationships between the procurement activities and the associated installation activities.

The procurement activities in a construction schedule often receive little attention during a contractor’s monthly (or more frequent) schedule updates. For a data center project, this could result in significant project delays. Because the installation of this equipment is a significant scope of the project (as well as testing and commissioning), the entire procurement process must be diligently tracked and managed.

The schedule should include activity coding to specify the party responsible for each of the activities associated with the procurement process. This includes any specific vendor-related activities. During schedule updates, each party should closely evaluate and update activities for which it is responsible; the contractor may require input from other parties to update the schedule.

An additional item to note in the schedule update process is the procurement activity itself. Due to the long lead time, the procurement activities may have long durations. It may be tempting for a party to adjust the duration to mask any project delays or adjust the procurement duration to avoid having the equipment on the critical path. However, due to the importance of the equipment, it is essential that the schedule properly communicates and shows any delays.

Commissioning
As discussed in Post #2 of this blog series, commissioning of a data center is among the most important stages of the project and is far more extensive than that required for a typical commercial building. Data center commissioning is very different from that of a process plant or industrial facility but requires a similar level of planning and execution.

As also discussed in Post #2, the testing and commissioning process includes many stages. These various stages, and the interdependent nature of the commissioning process, may lead to delays at one stage of the process that ripple through other processes, eventually delaying completion dates and commercial operations.

I have seen many contractors experience delays during commercial building and process plant construction and intend to make up the time during the commissioning phase. This achieves varying levels of success—typically not much. Like process plant commissioning, data center commissioning is highly complex and requires many steps. The testing and commissioning process must be carefully planned, scheduled, and executed. This work should be highly coordinated and be reflected in the construction schedules.

As with process plants, the baseline schedule may include placeholder activities for testing and commissioning. Although the activities are placeholders, the parties should ensure that adequate time is allowed. As construction progresses, the time planned for commissioning should not be reduced to compensate for any delays. As construction advances, the placeholders for commissioning activities should be supplemented with detailed activities for the full scope of the process. This should be a collaborative exercise with all parties to ensure the process is properly planned and includes all required steps. The parties may elect to rebaseline the schedule at this point, such that the project record includes a baseline plan for the detailed commissioning process.

Poor Contract Administration
In Post #1 of this blog series, I discussed the proper planning, scheduling, and execution of data center projects, and how these items also apply to other large and complex construction projects. It is essential that construction projects are based on a well-written and properly detailed contract. Although the entire contract is paramount, certain sections may deserve particular attention, including the project schedule and reporting requirements, notification procedures, change management, and document control.

However, establishing the contractual requirements is only the first step. The owner and/or their representative must properly administer each of the contractual provisions. All parties need to be held accountable for all items specified in the contract. These provisions do not only apply to the contractor and its scope of work. The owner may be accountable to the contractor for items such as submittal review times or procurement updates on OFCI equipment.

Communication between parties is of the utmost importance in contract administration. Although the contract should specify the contractual communication requirements (i.e., schedule updates, monthly reporting, requirement meetings, notice requirements, etc.), communication beyond the contract requirements rarely harms an overall project. All too often, lack of communication and related lack of exchange or information provide the basis for a claim or dispute to develop and grow into something greater and more detrimental to the project.

¹    Greg Thompson, “Data Center Disputes and Dilemmas,” Construction Super Conference Analysis, July 15, 2026, https://constructionsuperconference.com/analysis/data-center-disputes-and-dilemmas/133619/?utm_campaign=38765944-CSU_Third%20Thursday%20Newsletter_2026&utm_medium=email&_hsenc=p2ANqtz–31VlbgMt7s18ieiia9WAun7AXKKaHnDowJjuvwD9Jel_ncgZ7m6jUDLFlrBU0BGanOvoVAgwCxWPHoNU7VVebNNFubA&_hsmi=428393285&utm_content=428393285&utm_source=hs_email.

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