Risks in data centre construction

Data centres have become as fundamental to modern economies as roads, railways and the power grid. They are now seen as “critical national infrastructure”, where thousands of computer chips train AI models to carry out advanced problem-solving from everyday tasks such as generating content from an OpenAI GPT prompt to sophisticated medical diagnostics. The eye-watering sums of money pouring into AI are fuelling the development of ever bigger and more complex data centre infrastructure. With the delivery of this new class of global infrastructure comes a unique level of technical complexity and risk that demands closer attention from all industry participants. To better understand how risk is perceived, allocated, transferred, and managed across the sector, we surveyed 123 professionals spanning developers, contractors, suppliers, investors, consultants, and tenants involved in data centre projects worldwide.

The findings are revealing, indicating trends and challenges for the construction industry. The industry is divided on whether established procurement models such as OFCI reduce or increase risk. An overwhelming 94% of respondents see benefit in a standard suite of data centre construction contracts – a clear market signal. Insurance, long assumed to be a reliable backstop, proves difficult to obtain for 65% of respondents, leaving substantial residual risks unaddressed .Interestingly, when disputes do arise (60% of respondents having escalated to formal resolution), project delays are their leading cause, but the prospect of further delays caused by formal dispute resolution ensure early resolution.

Perhaps most thought-provoking is what the data reveals about perception gaps: different parties to the same transaction often hold fundamentally different views of where risk sits and who bears its consequences.

The five articles that follow explore these themes in detail – from how risk is structured and allocated, through the limits of insurance as a transfer mechanism, to the realities of dispute resolution and the forward-looking question of how risk can be managed or avoided altogether. We hope the data challenges assumptions and prompts fresh thinking about how this sector manages its most significant risk exposures.