Large-scale data center projects are some of the most scrutinized capital investments in the market today. Budgets are modeled in detail, contingencies are debated at length, and delivery teams are under constant pressure to move quickly.
Yet even on well-managed, well-funded data center builds, cost overruns still occur — often without a clear explanation.
In our experience, this disconnect rarely stems from poor planning or bad actors. Instead, it’s the result of a fast-moving, highly complex environment where execution outpaces traditional financial controls. The challenge isn’t the budget — it’s what happens after work begins.
On a $1B data center project, even small inconsistencies at the invoice level can quietly compound into millions of dollars.
What “Cost Leakage” Really Means in Data Center Construction
Cost leakage is not fraud, and it’s rarely intentional. More often, it’s the accumulation of small misalignments between contracts, scopes, and how work is ultimately billed.
Common examples include:
- Contracted rates applied inconsistently across invoices
- Equipment billed for availability rather than actual utilization
- Labor classifications drifting from negotiated tiers
- Approved change orders that don’t fully reconcile at closeout
None of these issues indicate failure. They reflect the reality of multi-phase, MEP-heavy projects operating under compressed timelines.
For construction leaders, procurement teams, and finance groups, the challenge isn’t capability — it’s scale.
Where Cost Leakage Actually Hides on Hyperscale Builds
MEP-Heavy Scopes
Electrical, mechanical, and commissioning scopes generate enormous invoice volume. Premium labor, overtime, shift differentials, and escalation clauses all increase the risk of billing inconsistencies — especially when multiple subcontractors are mobilized simultaneously.
Equipment & Temporary Infrastructure
Generators, lifts, temporary cooling, and power infrastructure are essential — but they’re also frequently billed on day-rate or standby terms. When schedules shift (as they often do), equipment utilization doesn’t always align with invoicing assumptions.
Change Orders That Prioritize Speed
Change orders are often approved quickly to protect the schedule. Documentation typically lags behind execution, and by the time final costs surface, teams are already focused on the next phase.
Overlapping Phases on Campus Builds
On multi-building campuses, scopes often overlap across phases. Vendors roll on and off site, responsibility shifts, and costs can drift without clear ownership unless actively monitored.
Why Cost-Plus Contracts Still Leak Money
Cost-plus contracts are commonly used on data center projects for good reason: they provide flexibility, enable fast starts, and accommodate evolving designs.
But cost-plus does not mean cost-proof.
Most leakage we see occurs within the rules of the contract, not outside of them.
Examples include:
- Markups applied differently across vendors
- Labor billed at blended rates instead of agreed classifications
- Allowable costs miscategorized
- Equipment charges exceeding utilization assumptions
These outcomes aren’t caused by misconduct. They stem from the difficulty of governing thousands of invoices across dozens of vendors while keeping construction moving.
Cost-plus contracts work — but only when paired with consistent, contract-aware invoice governance.
Why Traditional Controls Miss These Issues
Data center teams are built for delivery. Finance teams are built for reporting. Procurement teams are built for sourcing. None of these functions are designed to slow work to validate every invoice line in real time.
Common constraints include:
- Invoices reviewed weeks after work is complete
- Limited visibility into field-level execution
- Audits occurring after contractors demobilize
- Automation that flags math errors but misses contractual nuance
As projects accelerate — particularly for AI-driven infrastructure — these gaps widen.
What Effective Cost Governance Looks Like on Modern Data Center Projects
The most effective owners don’t replace internal teams — they augment them.
Best-in-class cost governance typically includes:
- Real-time or near-real-time invoice validation
- Reviews grounded in contract terms, not just totals
- Focus on high-risk scopes and peak spend periods
- A blended approach combining live oversight with targeted retroactive reviews
This approach protects budgets without disrupting contractors or slowing delivery.
Why Small Percentages Matter
On complex data center builds, identifying even 1–3% in misaligned spend is common.
On a $900M–$1B project, that translates to:
- $9M–$30M recovered or prevented
- Additional scope funded without new capital
- Reduced pressure on contingency
- Cleaner closeout and fewer disputes
Just as important, early visibility reduces friction between teams and vendors — strengthening relationships rather than straining them.
Closing Thought: Speed and Control Don’t Have to Compete
Data center projects move fast because they have to. Power constraints, AI demand, and competitive pressure aren’t slowing down.
The teams that succeed aren’t choosing between speed and accountability — they’re building processes that support both.
Cost leakage isn’t a supplier problem. It’s a systems problem. And when addressed thoughtfully, it becomes an opportunity to protect value without changing how the work gets done.