An In-House Lawyer’s Perspective of Construction Risk on GCC Data Centres
The construction risks on a GCC data centre are, individually, nothing new to anyone who has been involved in a large infrastructure project. What is new is the speed at which they now arrive, and the number of them arriving on the same project at once. Announced GCC data centre capacity runs into the tens of billions of dollars, and global investment in the sector is heading toward USD 7 trillion by 2030, most of it built on aggressive, compressed timelines that leave little room to absorb the risks.[1]
Scope and design risk
GCC data centre contracts are frequently let before design is complete, and technology-driven specification changes — cooling strategy, rack density, power distribution — continue after signature. On a typical large FIDIC-form project in the region, variation orders run to 15–25% of final contract value and can exceed 40% where design was incomplete at tender.[2]
Power and energy infrastructure risk
Grid connection and behind-the-meter generation, not the building works, now sit on the true critical path on most GCC data centre programmes.[3] Substation and interconnection works — L&T’s recent 400kV UAE–Oman interconnection contracts are one example of the scale involved[4] — run on the utility’s own timeline, which does not always match the construction programme, and contracts that do not sequence power works against construction milestones routinely produce a building that is complete with nothing to switch on. What, for example, are the implications for a parties’ liability under UAE Civil Code for liquidated damages or liability further along the supply chain?
Commissioning and interface risk
A hyperscale data centre build usually takes the owner, developer, design consultant, main contractor, a long list of MEP subcontractors, equipment vendors, the utility provider, a commissioning agent and the eventual operator through a five-stage commissioning sequence — factory testing, site verification, subsystem testing, full systems integration, and a “pull-the-plug” test of the whole facility under fault conditions.[5] Every interface between those parties is a seam where responsibility can later be disputed, and the projects most exposed to conflict are usually the ones where no single party owned those interfaces. What, for example, are the consequences of disruption to the main contract works or MEP contract works, caused by others?
Supply chain risk
Advanced cooling systems reliant on custom-built chillers, and electrical transformers and UPS units sourced from a narrow pool of global manufacturers, face lead times that are vulnerable to geopolitical disruption and manufacturing bottlenecks — a constraint felt as acutely in the Gulf’s import-dependent market as anywhere.[6] Specialist trades with genuine data centre experience — high-voltage electricians, data centre-qualified HVAC technicians — are in short supply regionally, contributing to schedule slippage and workmanship disputes.
Delay and disruption risk
Aggressive delivery timelines leave minimal float, and poor contract administration remains, as it has always been, one of the leading causes of construction disputes generally. On FIDIC-form GCC contracts, a variation or claim not confirmed in writing, or a determination not challenged within the contractual time limit, is often the difference between a recoverable claim and a lost one.[7] Cost quantification, causation analysis and structured claims records are what distinguish a defensible claim from an unresolved dispute once matters reach a Dispute Adjudication Board or arbitration.[8]
Safety and technical risk
High-voltage electrical systems, heavy mechanical installation, confined-space work and multiple specialist trades operating simultaneously under schedule pressure create a materially higher safety-management burden than conventional commercial construction, with energisation and commissioning-stage testing a particular point of exposure.
Environmental, community and regulatory risk
The Gulf contains sixteen of the world’s twenty most water-stressed countries, and GCC data centre water demand is forecast to reach 426 billion litres a year by 2030 — a figure that is drawing increasing regulatory and community attention to cooling strategy and power sourcing, which together account for the great majority of a facility’s true water footprint.[9]
Payment and commercial risk
Retention and security-of-payment disputes are sharpened by the sheer volume of variation activity on these projects, and — as with construction generally — contractual triggers for release of retention often do not align cleanly with actual completion of the work, leaving contractors financing completed work for months while disputes over release conditions run on.[10] Termination exposure where an owner’s strategic direction pivots mid-programme, and currency and cost-escalation exposure on long-duration, capital-intensive contracts, complete the picture.
The challenge for contractors
Almost every risk mentioned above has the same underlying structure: the event that ultimately decides a dispute — the verbal instruction, the notice that was or was not served in time, the design change nobody formally recorded, the determination nobody challenged within the contractual window — happens in real time, in the field or in a site office, usually before any lawyer is involved. By the time a law firm is instructed on a variation dispute or a delay claim, the record that will win or lose it was almost always set months earlier, by commercial or project staff acting without legal input.
The commercial case for an embedded legal function
Contract administration
An embedded function reviews the variation instruction before it goes out rather than after it is disputed, tracks notice deadlines against the contract in real time rather than reconstructing them from correspondence months later and ensures the contemporaneous file — the file every FIDIC-form dispute ultimately turns on — is actually being built while the project is live. On a programme where variations can represent a quarter or more of contract value, that discipline is not administrative housekeeping; it is the difference between a recoverable claim and a lost one.
Governance across the interface count
With owner, contractor, a long MEP subcontractor list, equipment vendors, the utility, a commissioning agent and the eventual operator all party to the same programme, someone needs to own the gaps between them before they become disputes. Counsel embedded in the delivery team, rather than consulted at arm’s length by a single party to it, is positioned to see those gaps early enough to fix them by contract amendment rather than argue about them later in arbitration.
Compliance
The GCC’s regulatory environment for data centres is not settled law being applied to a project; it is law still being written while the project is under construction — evolving foreign-ownership frameworks, and data-residency obligations layered on top of ordinary construction approvals. An embedded compliance function tracks the change as it happens and is already familiar with the facility, the contract structure and the commercial context when a new requirement lands.
None of this is particularly exotic. It is disciplined, unglamorous contract administration and compliance tracking, delivered close enough to where decisions are actually made to deliver a positive outcome — which is exactly the challenge a fractional legal model aims to meet, and why the current risk profile on GCC data centre construction plays directly to it.
[1]DLA Piper, Global Construction Bulletin: Focus on data centres (December 2025).
[2]Archdesk, 2026 Guide to FIDIC Variation Orders in the GCC (April 2026).
[3]GCC Data Centres, GCC Data Centres 2026: The $93B Execution Challenge (August 2026).
[4]Zawya/Reuters, PROJECTS: L&T unit to construct GCC grid substation in the UAE (October 2025).
[5]GCC Data Centres, GCC Data Centres 2026: The $93B Execution Challenge (August 2026).
[6]Global Arbitration Review, The Arbitration Review of the Americas 2026 — Navigating the surge: data centre construction disputes (2026), on supply chain and skilled-labour constraints generally applicable to the sector.
[7]Archdesk, 2026 Guide to FIDIC Variation Orders in the GCC (April 2026).
[8]StoneTurn, Following the Money: Cost Accountability in Data Centre Construction Disputes (April 2026).
[9]Data Centre World Middle East, Middle East data centres: the gap between announced gigawatts and the AI capacity CIOs can actually use, citing Computer Weekly (March 2026).
[10]DWF Group, Is this the end of poor payment culture in construction? (May 2026); Taurus Collections, Construction Retentions and Late Payment (May 2026).
