Data Centre Construction

Data centre construction combines traditional construction and civil works with highly technical systems. The physical building is only one part of the project. Power and electrical infrastructure, cooling, automation and safety systems are equally critical and must be designed, installed, tested and commissioned to form an integrated, fully functioning facility.

These systems will typically be delivered by different contractors and suppliers under separate contracts within the delivery chain. As a result, successful delivery depends heavily on effective interface and schedule management. A delay, design change or performance issue in one package may affect the installation, testing or commissioning of several others. Clear allocation of scope, responsibilities and dependencies is therefore essential for successful project delivery.

Contract models

Data centre projects can be delivered under a variety of different contracting models. The key distinction between different models is how responsibility for design, procurement, construction, coordination, system integration and construction management is allocated between the project owner and the different contractors involved.

The selected contract model determines who bears the risks associated with design, interfaces, delays, coordination and overall system performance. In practice, a single project often combines several models across the delivery chain. The project owner may appoint a single contractor to take a central role in the delivery and coordination of the project or a defined part of it. That contractor may in turn procure individual work packages from subcontractors and suppliers through separate construction, supply or installation contracts.

Compared to more traditional industrial investments in Finland, most data centre investments are distinguished by their pronounced internationality. In most cases, the project owner will not be a Finnish company but rather a globally acting IT corporation. The Finnish investment will also usually be part of the investor’s global upscaling strategy and therefore be only one link in a chain of investments in numerous countries.

This set-up has various implications.

First of all, while much of the construction services and deliveries will be procured locally or regionally, the investor will usually use the same trusted suppliers throughout different investments for certain critical trades. Such suppliers will bring with them their own working cultures and cooperation habits, making the working environment and interfacing more challenging also for other contractors.

Second, the investor will often seek to replicate contract terms used with its contract partners throughout projects in different countries. This means that data centre project partners will be facing contract models that are otherwise not widely used in Finnish construction, and such contracts may be subjected to foreign jurisdictions. Subcontracting further down in the delivery chain will nevertheless gravitate towards more traditional Finnish contract models, which can make it challenging arranging contract obligations in the chain back-to-back.

In this environment, standard contract forms widely used in Finnish contracting practice (e.g., YSE 1998, KSE 2013) may be less useful than usually. More guidance may be found in the FIDIC contract models that enjoy substantial popularity in international plant construction but are still less known in Finland, in particular:

FIDIC Red Book: Construction form typically used where the project owner is primarily responsible for design and contractor executes the works. May be relevant for defined civil or infrastructure works, but must be aligned with Finnish law, authority processes and local construction practice.

FIDIC Yellow Book: Design-build / plant form where the contractor carries more design and performance responsibility. Potentially relevant for MEP, power, cooling, substation or integrated technical packages if adapted to Finnish project realities.

FIDIC Silver Book: EPC/turnkey form intended for projects where the contractor assumes broad responsibility for design, procurement, construction and performance. Potentially relevant for integrated facilities or major technical packages, subject to substantial tailoring.

Key contractor risks

Construction interfaces as a core issue

Data centre construction is interface-heavy by nature. Civil works, building envelope, substations, electrical distribution, backup generation, UPS systems, cooling, ventilation, fire safety, automation, security, fiber, IT halls, and heat recovery all need to align. Each package must arrive at the right time, with the right information and with clear handover points. Unclear responsibility for interfaces, delay, testing and performance is the most pronounced legal risk in data centre construction.

Contractors should focus on scope boundaries, design responsibility, employer’s requirements and dependencies on other packages. Access to work areas, information obligations, change control and delay responsibility also need precision. The same applies to testing, energisation, commissioning and acceptance. Many disputes arise not from total non-performance, but from unclear responsibility for interfaces.

Security, cybersecurity and operational readiness

Data centres sit at the intersection of digital services, energy infrastructure and security of supply. For contractors, this affects more than physical site access. It can shape personnel screening, confidentiality, information security, documentation control, incident reporting, supply-chain requirements, physical security and handover procedures.

Customers in regulated sectors may impose additional requirements that flow down to contractors and suppliers. The contract should clearly distinguish between obligations the contractor can control and those belonging to other parties. These may include the owner, operator, colocation customer, network provider or facility manager.

From tendering to claims prevention

For contractors, the value of legal advice is often highest before the contract is signed. Tender clarifications, scope exclusions, assumptions and qualifications should be addressed early.

The same applies to schedule dependencies, design deliverables, change procedures, employer obligations and acceptance criteria. At this stage, there is still real leverage to shape the risk profile.

Is the contractor’s scope clear, complete and separated from other packages?

Are tender clarifications, exclusions and assumptions incorporated into the contract?

Are design responsibility, employer information and performance criteria clearly allocated?

Are grid requirements, permits, site access, employer deliverables and interfaces reflected in the time schedule?

Are payment milestones, retention, advance payment, security, title and suspension rights workable?

Are procedures for variations, acceleration, and disruption workable in practice?

Are extension-of-time rights available for employer, authority, grid, permit and third-party delays?

Are test criteria, prerequisites, evidence requirements, partial acceptance and deemed acceptance clear?

Are liability caps, exclusions, LDs, indemnities, insurance and warranty obligations proportionate?

Which owner, lender, customer, security, ESG and cybersecurity requirements are being passed down?

Are notice templates, document-control rules and evidence routines ready from day one?

Once construction starts, disciplined contract administration becomes critical. Notices, records, variations, delay analysis, testing documentation and handover evidence need to be managed from the outset. Issues should be escalated before the positions harden.

In fast-moving data centre projects, claims prevention is usually more effective than dispute resolution after the schedule has slipped.

Dispute resolution

Construction disputes are best handled early, while the project can still move forward. The contract should set out clear escalation steps, notice requirements and decision routes for changes, delays, defects, testing issues and final account claims.

Common dispute resolution methods include management negotiations, mediation, expert determination for technical issues, arbitration and court proceedings. Arbitration is often preferred in industrial-scale projects because it is private, flexible and allows the parties to choose arbitrators with relevant expertise.

For contractors, the practical priority is dispute readiness during delivery. Timely notices, meeting minutes, site records, photographs, correspondence, change logs, delay analysis and testing documentation often decide whether a claim can be resolved commercially or must be escalated.