Data Centres: UK

In the UK, delay is a perennial issue facing data centre projects. This is often driven by design challenges. In particular, changes to design and scope. Rapid technological developments in the industry mean end-users frequently revise their specifications during construction. These changes can have knock-on effects on other aspects of the project (given the fact that projects involve multiple-trade interfaces), exacerbating delays.

Further challenges arise in the context of Owner-Furnished Contractor-Installed (OFCI) equipment delivery, where misalignment between the parties can lead to the disruption of commissioning timetables. Where this misalignment occurs, there may also be uncertainty regarding who is responsible for the integration of OFCI equipment into the overall programme, which can create friction between the parties involved.

In the post-construction phase, we have also seen difficulties arising from the stringent confidentiality requirements imposed by many UK-based tenants. These requirements make it difficult to share information, which can make it more difficult to investigate defects. Where contractors attempt defect rectification, progress may be slowed by the stringent security protocols that many tenants employ to protect the secrecy of their data and of the technological aspects of the data centre. We are increasingly seeing contracts which include an arbitration clause, which favours the confidentiality requirements of the tenants, given the greater privacy that arbitration can offer.

As the industry evolves and the growth in AI increases the need for processing power, data centre projects are set to become significantly more complex. Concerns over energy supply and water consumption may lead to the larger data room providers moving towards self-sufficiency, with projects being located in more remote areas, incorporating/collaborating with renewable energy projects for a more independent power supply, developing more advanced and innovative cooling systems, enhanced security measures, more supporting infrastructure and even including desalination plants (for example, if seawater is to be leveraged for cooling). This would transform what is already a complex build into a mega-project. We anticipate that coordinating these diverse elements and associated risk under one contractor would be less feasible, leading to multi-contractor arrangements and heightened challenges in aligning responsibilities and risk allocation. As complexity and the number of stakeholders rises, so too does the potential for disputes, making robust contractual frameworks and proactive risk management more critical than ever.