3 Top Risks in Data Center Construction –– and How to Manage Each

What AEC Firms Need to Know About Labor, Delivery, and Scheduling Risks on Data Center Projects

Conversations around data center growth have largely focused on power, capital, and equipment. Less discussed is what happens when the people, delivery structures, and project timelines supporting these projects pose risks that traditional insurance programs were not designed to handle.

Firms are increasingly relying on newer workers to fill staffing gaps, creating execution pressure that ripples through quality and safety. Meanwhile, project work is being divided among more contractors and specialty trades, raising questions about who is responsible when something goes wrong. And when data center projects finally reach testing and commissioning, delays can trigger financial consequences precisely when coverage tends to narrow.

While the exposures associated with data center construction are evolving fast, firms can manage them by treating risk, contracts, and coverage as a single connected strategy from day one.

3 Major Risks in Data Center Construction

Each risk carries distinct insurance implications and yet there are concrete steps firms can take to reduce their exposure before problems arise.

1. Specialized labor shortages

Experienced crews are in short supply and increasingly stretched thin across multiple projects simultaneously, driving greater reliance on newer, less experienced workers. The U.S. could require more than 140,000 additional skilled trade workers by 2030, including electricians, HVAC technicians, welders, equipment operators, and construction laborers.¹

In highly technical environments, this elevates safety and quality concerns. Compressed schedules can also reduce the time available for training, supervision, and reinforcement of site-specific safety expectations. Workers who are unfamiliar with site conditions, project pace, or data center construction requirements may be more likely to cause safety incidents or make costly installation errors. Incidents involving energized or heavy electrical equipment can be severe and costly.

Best practices:

• Review workers’ compensation coverage carefully –– crew size, experience levels, and use of specialty or local labor all affect your exposure and your premiums. Ensure your policy reflects how the project is actually being staffed.
• Implement thorough onboarding, recurring safety training, toolbox talks, and site-specific education for workers operating in mission-critical environments.
• Strengthen quality assurance/quality control (QA/QC) processes and establish clear feedback loops between field leadership, safety teams, and operations to identify and correct safety or workmanship issues before they result in claims, losses, or rework.
• Document workforce training, safety performance, and project controls to support risk management efforts and demonstrate strong operational practices to insurers.

2. Fragmented project delivery

No single contractor can absorb the full scope of many projects anymore. Work is increasingly being divided across multiple contractors, mechanical, electrical, and plumbing (MEP) teams, specialty trades, and subcontractors simultaneously to keep schedules moving. The result is a more fragmented delivery structure that traditional contracts and insurance programs may not support.

Many owner-controlled (OCIP), contractor-controlled (CCIP), and builder’s risk insurance programs now carry large deductibles and layered coverage structures that leave substantial portions of losses retained within the project itself. Responsibility for damaged work, installation failures, delays, or testing issues is often disputed when multiple parties are operating across overlapping scopes and timelines.

Best practices:

• Review professional liability, builder’s risk, and installation floater programs to confirm coverage aligns with the project’s delivery model and contractual responsibilities.
• Review subcontractor insurance requirements, additional insured provisions, and waivers of subrogation to ensure risk transfer expectations are clearly defined and consistently applied.
• Ensure contracts reflect the project’s delivery structure, particularly when multiple contractors, specialty trades, delegated design, modular systems, or prefabrication are involved.
• Define how retained risk is allocated across the project team, including responsibility transfer points for equipment, systems, and work in progress.</li

3. Delays in critical project phases

Testing, commissioning, and energization phases are heavily dependent on specialized equipment, much of which carries long lead times and requires precise installation. Delays in these phases can create broader financial consequences tied to liquidated damages, phased turnover obligations, missed operational deadlines, and costly rework. Insurance usually becomes more complicated during these stages because many builder’s risk policies contain restrictions, exclusions, and sublimits once systems are energized or undergoing testing.

Best practices:

• Review builder’s risk, delay in start-up (DSU), and installation floater coverage to understand how testing, commissioning, energization, operational startup activities, and related delays are treated.
• Assess transportation, storage, and contingent coverage for critical equipment that may be staged, warehoused, or moved multiple times before installation.
• Identify any restrictions, exclusions, sublimits, or periods where coverage changes, narrows, or terminates during testing and commissioning activities.
• Clarify who is responsible for repair costs, delay-related expenses, and operational impacts when coverage restrictions, exclusions, or uninsured losses apply.

Limited Insurance Capacity is Amplifying Your Risk

As data center projects continue to grow and become more complex, project insurance is not synonymous with full risk transfer. Coverage is often limited by exclusions, restricted phases, or deductibles large enough to leave significant losses with the project team.

For example, a contractor may assume the builder’s risk program will cover damage during commissioning, only to learn the loss falls within a multi-million-dollar deductible or restricted phase.

With limited insurance capacity available, firms that demonstrate strong risk management practices are more likely to secure the most favorable coverage terms possible. Brokers and risk advisors can help project teams understand where exposures exist, develop a strategy for managing them, and make sure contracts, project delivery, and insurance are aligned before something goes wrong.

For more information on managing data center risk, download our latest guide.

[1] Center for Strategic and International Studies “GenAI’s Human Infrastructure Challenge,” September 2025.