In recent years, the surge in data center construction has been fueled by what many have described as “open-faucet” spending. Owners pushed projects forward at an unprecedented pace, and recovery for delays and cost overruns, particularly by the subcontracting community, was often less constrained than in traditional markets. However, that landscape is shifting.

A recent Bloomberg article indicates that nearly half of all data center construction projects scheduled for 2026 are experiencing delays. These delays translate directly into increased costs and impacts for subcontractors, especially those in the mechanical, electrical, and plumbing (MEP) trades. At the same time, growing scrutiny over revenue, profitability, and the broader community impacts of large-scale data center developments is causing owners to reassess spending. The once wide-open faucet is beginning to close, and belts are tightening. As is often the case, this tightening will flow downhill.

For MEP subcontractors, this means that claims for delay, disruption, and labor overruns, claims that may have previously received less pushback, are now being examined far more closely by owners and general contractors. Contractual compliance and legal entitlement are taking center stage.

While the data center market remains robust, subcontractors must be proactive in identifying, documenting, and tracking impacts. Doing so is critical to preserving their ability to recover costs for delays and disruptions outside their contractual obligations and beyond their control. Outlined below are five essential steps every data center subcontractor should follow to maximize their potential to recover delay and disruption claims on problem projects.

Know Your Contract Requirements

First and foremost, subcontractors must thoroughly understand their contracts. This includes not only a clear definition of scope, such as what is included and, equally important, what is excluded, but also the legal and procedural requirements governing claims. Subcontractors must pay particular attention to notice provisions, change order requirements, and any “no damages for delay” clauses. Equally critical are the contractual procedures for requesting time extensions. Failure to comply with these requirements can bar recovery altogether, regardless of the merit of the underlying claim. In today’s tightening environment, strict compliance is no longer optional; it is essential.

Ensure the Baseline Schedule Reflects Your Work

A defensible delay claim begins with the baseline schedule. Subcontractors must carefully review the project’s baseline schedule to confirm that it accurately reflects their planned work, including activity durations, sequencing, and logic. Just as important as knowing that your entire scope is captured in the project’s baseline schedule is understanding how your planned labor is allocated within that schedule. For example, two sequential activities requiring 200 crew hours each may be achievable with a single crew, something you have the labor pool to meet. However, if those same activities are stacked or overlapped, the required manpower effectively doubles. In this scenario, your scope remains the same, but you are now required to provide 400 crew hours to complete those same two activities in accordance with the project schedule, which may be a labor requirement you cannot meet. In fast-paced data center projects, where aggressive timelines are the norm, these distinctions are critical.

Additionally, it is crucial to ensure that the baseline schedule properly identifies the predecessor work that is not within your scope but which your work depends on. You must be aware of what pinch-points and bottlenecks exist, what work is essential to the start or progress of your work, and that all of that information is properly reflected in the baseline schedule so that any future delays to that work are captured correctly. Thus, to the extent possible, subcontractors should ensure that the schedule aligns with their actual execution plan, not an unrealistic or artificially compressed version imposed by others, and that it includes all necessary information to serve as a tool for properly monitoring progress and identifying delays.

Document, Document, Document

The most successful delay and impact claims are built on thorough, contemporaneous documentation. Subcontractors must maintain detailed daily reports, meeting minutes, project photographs, correspondence, labor records, and cost data throughout the life of the project. It is equally important that, when impacts occur, they are clearly detailed and described, including explanations of how they delayed or affected your work. Notably, contemporaneous records carry much more weight than after-the-fact narratives created by the project participants. These contemporaneous records benefit from a presumption of accuracy and are also assumed to have been developed without the expectation of litigation, thereby creating a lack of bias. Contrast that with an after-the-fact creation detailing the project events, which are often viewed with skepticism and inherent bias. Simply put, the strength of your documentation often determines the strength of your claim.

Track Schedule Updates and Evolving Impacts

Like any project, data center projects are dynamic, and the schedule will naturally evolve over time. As the project progresses, the original baseline plan often changes, sometimes significantly. Early delays related to design, coordination, submittals, procurement of long-lead items, or even structural and enclosure work are frequently absorbed or masked by the builder through the compression or acceleration of downstream activities. Generally, this compression or acceleration is usually done at the expense of the project’s MEP trades. Thus, subcontractors are now forced to meet the original contract completion dates despite earlier delays by others. To protect themselves, subcontractors must closely monitor each schedule update to see this train coming down the tracks as early as possible. By tracking changes in durations, logic, sequencing, float, and compression of scope, these issues can be identified and documented much earlier, and before they actually begin to affect your work. This level of documentation of delay and compression and their resultant impacts is critical to substantiating claims for labor overruns and inefficiencies. Without this detailed analysis, demonstrating entitlement and proving cause and effect, both necessary elements to recover a delay or impact claim, has become significantly more difficult.

Engage Professional Assistance

Finally, subcontractors should not hesitate to seek professional support, especially those with less claims experience. To successfully pursue a delay and disruption claim requires a thorough understanding of contract requirements, scheduling principles, and industry best practices. Owners and builders often have much more experience and even have resources dedicated to managing and defending against such claims, particularly on complex data center projects. Engaging experienced help can ensure that these delay and impact claims are properly documented, analyzed, and presented in compliance with contractual obligations and meets accepted industry best practices. By doing so, you can help level the playing field against often one-sided contractual arrangements.

Conclusion

While the data center boom is far from over, the rules of engagement are beginning to change. As owners tighten spending, builders will increase scrutiny of MEP subcontractor claims. Thus, these trades must meet this raised bar when documenting and pursuing delay and impact claims. Through a thorough understanding of contract requirements, detailed analysis of the project schedules, maintenance of detailed and complete project documentation, and leveraging the expertise of those versed in the world of contract claims, subcontractors can ensure they are in the best position to recover costs for delays and impacts to which they are entitled. In today’s environment, this level of diligence is no longer optional; it is the key to protecting profitability.

Bill Haydt is a Principal of Trauner. He is a qualified expert witness in construction scheduling, forensic delay analysis, inefficiency and productivity, and impact damages. His expertise lies in the areas of construction claims preparation and evaluation, development and review of critical path method (CPM) schedules, delay analysis, training, and dispute resolution.

For further discussion or questions about your project challenges, please contact Bill at bill.haydt@traunerconsulting.com

More interesting reading: Protecting The Bottom Line: Fuel and Energy Cost Increases and Recovery for Contractors Facing Project Delays

Quantifying Inefficiency: Comparing Comparisons Part I, Part II.

Did you enjoy this article?

Don't leave empty handed. Grab this free ebook!