Data Centres: Middle East

The Middle East – and the UAE in particular – is experiencing a boom in data centre construction. This surge, as with elsewhere across the globe, comes with significant construction and legal hurdles. Given their complexity, data centre construction projects grapple with schedule delays, budget overruns, design revisions, and workforce constraints, often culminating in disputes. There are several construction-related challenges associated with the delivery of data centres in the Middle East, three of which are outlined below.

Delay

The UAE is accelerating its development of data centres with, for example, the unveiling of the Khazna Data Centres that have 100 MW AI facility in Ajman¹. Similar investments are being made in the Kingdom of Saudi Arabia and in Kuwait. The consequence of this rapid investment is fast-tracked construction where building work begins before designs are finalised. This often results in timelines running longer than and planned and projects exceeding their budget.

Environmental challenges

Environmental conditions in the Middle East necessitate a heavy emphasis on energy availability and sustainability. Especially as AI-driven facilities require up to ten times more power than tradition builds². As a result, there has to be close coordination between power infrastructure and data-centre construction.

Masdar has recently launched a 1 GW uninterrupted-energy facility illustrating the scale of the supply required to support such projects. These exceptional energy demands have the potential to strain regional supply chains for specialised equipment and technologies which creates challenges not typically seen in other markets. These constraints can typically give rise to delay and prolongation costs claims.

Workforce requirements

Workforce constrains are a further contributing factor to disputes in the region because of the further constraint they place on construction schedules. The competition for skilled engineers and tight timelines often mean the quality of the work is at risk of being comprised which gives rise to defect claims. Local-labour requirements which apply in the UAE and KSA, for example, add an administrative consideration which may enhance delay risks. For that reason, adequate planning, early design and realistic scheduling could greatly contribute to the avoidance of disputes and cost overruns.

¹Unlocking the data centre opportunity in the Middle East
²Unlocking the data centre opportunity in the Middle East, overcoming challenges to sustain growth.