Keeping Cool Under Pressure: Risks in Data Center Construction
Date Posted: October 6, 2026
Posted In: Discussion,
From IRMI: The race to build data centers has created one of the fastest-growing construction markets in North America. Driven by cloud computing, artificial intelligence (AI), and the ever-increasing demand for digital infrastructure, owners are pushing projects to market at unprecedented speed. While the buildings themselves are not necessarily more structurally complex than other large commercial projects, the combination of aggressive schedules, massive labor requirements, specialized equipment, and mission-critical performance expectations creates a unique risk profile for contractors.
For contractors, success in this market is not simply about building a facility—it is about delivering a highly integrated system of power, cooling, communications, and operational redundancy while navigating workforce constraints and supply chain uncertainty. Based on AXA XL’s construction risk engineering and underwriting experience, several risks consistently rise to the top.
Schedule and Supply Chain Risk
The single greatest challenge facing many data center projects is the relentless pressure to accelerate delivery. Owners are pursuing speed-to-market because every day that a facility is delayed represents lost revenue and lost computing capacity. As a result, contractors often find themselves managing schedules that are more aggressive than historical benchmarks would support.
Compounding the challenge are long-lead equipment items such as transformers, switchgear, generators, cooling equipment, and servers. Delays in any of these critical components can disrupt the schedule, delay commissioning activities, and delay turnover. The scale of procurement required for data centers magnifies the exposure, particularly when global supply chain disruptions affect manufacturing or transportation.
Contractors that succeed in this environment typically focus heavily on early procurement planning, supply chain resilience, schedule validation, contingency development, and frequent coordination with suppliers throughout the project life cycle.
Workforce and Subcontractor Capacity
Data center projects demand enormous amounts of craft labor, and large projects can require thousands of workers on-site, often in markets where skilled labor is already scarce. The challenge becomes even greater when multiple data center projects are competing for the same workforce within a region.
Beyond labor availability, contractors must evaluate whether subcontractors have the operational and financial capacity to execute increasingly large-scope packages—mechanical, electrical, civil, and utility contractors are often stretched across multiple projects simultaneously. Also, a subcontractor that performs well on traditional commercial projects may struggle when confronted with the scale, pace, and complexity of a hyperscale data center program.