Last year “datacentres” were a key topic when discussing opportunities with other lawyers in different specialisms and with construction professionals and this year looks to be no different. I attended a seminar late Autumn last year and as I prepare to attend the Datacentre Expo in February in London it seemed an opportune time to reflect on key themes, with the focus on construction.

Much of the current discussion still centres around power availability and grid constraints which are outwith the scope of this blog. However, the conference and other discussions have also highlighted the construction challenges that come with delivering these highly specialised facilities. That prompted us to consider the question “what are the key legal and commercial issues for developers, funders, and occupiers in this fast-growing sector?” In order to stick to an appropriate word count we have focussed on procurement and contracting strategies and in future blogs will consider matters like design coordination, interface, modularisation, testing and commissioning, security and sustainability.

The UK Market Context

The UK currently hosts around 500 data centres, making it the third-largest market globally after the US and Germany. Growth is accelerating: industry reports forecast nearly 100 new sites by 2030, with capacity expected to almost double by 2028, driven by AI workloads, cloud computing, and government-backed infrastructure reforms. This expansion is underpinned by significant investment from hyperscalers and US tech firms, but also raises questions about whether US-style contracting strategies are being imported wholesale into the UK, despite fundamental differences in legal frameworks and risk allocation.

Why Construction Lessons Matter

While data centres are unique in their technical complexity and uptime requirements, some challenges, such as managing long-lead plant, interface risk, and performance testing, are familiar from other sectors like renewables, life sciences, and advanced manufacturing. Lessons learned in those industries about early contractor engagement, modularisation, and robust commissioning can be applied here.

Procurement and Contracting Structures

Data centre projects are typically procured under Design & Build (D&B) or Engineering, Procurement and Construction (EPC) models, depending on the client’s risk appetite and whether the facility is delivered as a turnkey solution or with fit-out packages let separately. Key considerations include:

  • Long-lead items and logistics: Specialist equipment (e.g. generators, UPS systems, cooling plant) often has extended lead times and booking a manufacturing slot is required in order to keep to programme. Early procurement can mitigate programme risk but introduces issues around storage, length of warranties (i.e so that these don’t expire before/within a short time after installation of the equipment), and liability for damage, particularly where vibration during transport can compromise sensitive kit.
  • Framework agreements: Increasingly relevant for clients rolling out multiple sites, these can streamline procurement and provide opportunities for reducing costs, but require careful drafting to manage scope and pricing flexibility.
  • Contract form:
    • NEC4 ECC (Option A) is popular for some clients due to its collaborative ethos, but standard forms such as this need detailed amendments to address items like:
      • Design liability: clarity on contractor design portions and residual employer risk. Consideration of fitness for purpose requirements
      • Delay and disruption: tailoring compensation event mechanisms and secondary options (e.g. X7 for delay damages) to reflect critical path sensitivity.
      • Performance testing: bespoke provisions for staged commissioning, integrated systems testing (IST), and reliability demonstration.
      • Bespoke insurance arrangements: more detailed requirements to properly reflect the insurances that are required for the construction of the works, professional indemnity insurance and ensuring such insurance caters for the value of any specialised equipment that is on site/during delivery to site.
    • EPC contracts may suit hyperscale or mission-critical facilities where a single point of responsibility is essential, but their fixed-price, turnkey nature can reduce flexibility and increase premiums. EPC contracts will often use or be based on one of the FIDIC forms – either the “Yellow” book or “Silver” book depending on the extent of Contractor responsibility. Whilst these already contain more detailed performance testing clauses these will typically also have “Special Conditions” to address design and programme requirements,
  • US vs UK contracting: US-style EPC and “construction management at risk” models often assume different insurance regimes and liability caps than UK practice. UK contracts typically impose stricter fitness-for-purpose obligations and statutory duties under the Construction Act, which do not translate directly from US forms.

If you would like to discuss any of the issues raised, or how we can support your data centre project, please contact Kirsteen Milne or your usual Brodies contact.

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Kirsteen Milne

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