Construction of data centers is surging, but labor and supply-chain challenges persist.
BY NICK FORTUNA
Across the country, AGC members have been building large data centers at breakneck pace to fuel the rise of artificial intelligence, and by any metric, the race is just getting started. Technology giants such as Microsoft, Amazon, Alphabet, Meta and OpenAI have pledged trillions of dollars toward the construction of giant data centers, and in July, President Trump issued an executive order to streamline their development through accelerated permitting, financial incentives and the easing of environmental regulations.
Data centers used about 4.4% of total U.S. electricity in 2023, up from 1.9% in 2018, and are expected to consume anywhere from 6.7% to 12% of the nation’s electricity by 2028, according to the U.S. Energy Department. Accordingly, employment at U.S. data centers has risen sharply, reaching 501,000 workers in 2023, up from 306,000 in 2016, according to the Bureau of Labor Statistics.
Duane Gleason, director of industry workflow for Trimble, an AGC of America capstone supporter, said some developers are pushing for data centers to be operational as soon as 15 months after breaking ground, roughly doubling the typical pace of construction. With the number and size of projects growing rapidly, construction demand is “insane,” and contractors are under the gun, he said.
“I don’t think the word ‘surging’ even begins to describe it,” Gleason said. “There are dozens and dozens of projects going on right now, and mega-data centers are on the rise. Even an average data center is very demanding – very fast-paced, with a lot of labor and coordination – and some of the data centers going up now are bigger than you can get your head around, and they just keep popping up.”
Take Meta, the parent company of Facebook, for example. In December, the company announced plans to build its largest data center, a $10 billion facility measuring 4 million square feet in northeastern Louisiana. The project is creating 5,000 construction jobs, and once complete, it will use more electricity each day than the city of New Orleans during the peak of summer, according to the Associated Press. “That’s been a big shift in the last three to four years; the jobs have gotten so much larger,” said Bill Mazzetti, senior vice president and chief engineer for Rosendin, the nation’s largest employee-owned electrical contractor and a member of multiple AGC chapters. “We’re now doing jobs two to three times faster than we did 10 years ago, but that means you need more labor and materials, and those are challenges.”
Strong Demand for Tradesmen
Electrical contractors account for about half of the manpower needed to build a traditional data center, but today’s larger projects are stressing the labor supply of other trades as well, Mazzetti said. In the past, computer servers had been primarily air-cooled, but with the heavier electrical loads demanded by AI, water-cooling systems are increasingly vital, driving demand for plumbers and pipefitters, he said.
In addition, the sheer size and accelerated timelines of today’s projects place stress on general contractors and subcontractors specializing in concrete, steel and roofing, Mazzetti said. In response, some developers are using precast concrete and prefabricated materials to shorten construction timelines and avoid the potential for weather-related delays on-site.
“If you’ve got 20 months to construct a building and you shorten the physical-structure time by a couple of months, that takes a lot of pressure off the mechanical and electrical trades,” Mazzetti said.
Modular and prefabricated construction enable faster deployment, greater scalability and tighter cost control, according to Skanska, a member of multiple AGC chapters. To reduce on-site labor on data-center projects, developers are opting for skid-mounted mechanical, electrical and plumbing systems, precast concrete shells and plug-and-play electrical rooms, the company said.
This approach not only accelerates delivery but supports repeatable designs across multiple geographies. Simultaneously, liquid-cooling infrastructure, especially direct-to-chip and immersion systems, is becoming standard for AI-ready data centers, prompting new design considerations and specialized materials, Skanska said.
Since many data centers are being built in rural areas, it’s especially important to have strong relationships with suppliers, Mazzetti said. Most data centers are being built far away from urban centers, where land is cheaper and there are fewer regulatory hurdles. These project sites also are more likely to be near utility-scale renewable-energy projects, making it easier to secure affordable, reliable power.
For developers, the downside is that these areas are unlikely to have a robust supply of construction labor, so workers need to be brought in and provided meals and housing. With electrical contractors and other trades working two to three shifts a day, weekends included, any construction delays rapidly increase the overall cost of the project, so running out of materials isn’t an option, Mazzetti said.
Amid stiff competition for materials and equipment, it helps to have long-standing relationships with suppliers and major purchasing power. Some companies have even acquired key suppliers to eliminate long lead times for essential components, Mazzetti said.
“Everybody in this space today has entered into a strategic procurement arrangement with key manufacturers for every element in the building, including steel, concrete, cable and pipe,” he said. “Every major technology company has a relationship with the mechanical suppliers, as do we, so they’ve already on-ramped onto the freeway. The challenge is with some of our newer customers that are entering the space.”
Dividing up the Work
In the past, major contractors like Rosendin would have sought to build each data center “from stem to stern,” but during the first phase of the massive Stargate project in Abilene, Texas, the company took a different approach, Mazzetti said. The $500 billion project, a collaboration led by OpenAI, involves building a network of large data centers over the next four years.
“To alleviate labor issues, we just did the big power systems on the job, and we subcontracted for lighting, special systems and substation work,” he said. “We ended up doing that over and over again, and the labor gets better at it, so you need fewer people to push through the same amount of work in the same amount of time. That was an ‘aha moment’ for us.”
Gleason, of Trimble, said construction teams are embracing new technologies and spending more time collaborating to ensure labor and supply chains are properly synchronized. His company offers digital solutions such as Trimble Connect, which uses digital twins to create a common set of data for stakeholders, and Trimble SiteVision, an augmented-reality tool.
With augmented reality, a supervisor with a tablet can walk through a jobsite, scanning the as-built environment, and compare it with the job specifications.
“With 3-D scanning, you can check every day that what you put in was according to plan, and you have a permanent record of it,” Gleason said. “You can look at it in the context of your design and assign any fixes that you need, because it’s really all about avoiding rework. That’s the kryptonite for any datacenter project.”
Gleason said digital tools that provide a shared, up-to-date environment for all stakeholders can aid the procurement process, ensuring that materials arrive in time to prevent delays.
“If you’ve got hundreds of electricians on the jobsite and they’re all pulling wire, you go through a lot of wire, so you’ve got to work very closely with your suppliers,” he said. “The last thing you want is to have all those electricians standing around, looking for materials. When you have such a stacked parade of trades, materials and scopes and such a tight deadline, basically everything is on the critical path. There is no wiggle room for things to go wrong.”
Environmental concerns over data centers also are leading to some innovative solutions. Ozinga, a member of multiple AGC chapters, for example, is using its mobile concrete plant division to bring production to large data-center jobsites, reducing transportation costs and carbon emissions while speeding production.
Ozinga recently announced the formation of its mission-critical team, a dedicated unit focused on pioneering low-carbon concrete solutions and rapid response for data centers and advanced-technology facilities across North America.
“The rapid expansion of AI and digital infrastructure requires innovative approaches to construction,” said Marty Ozinga, chief executive of Ozinga. “Our mission-critical team combines advanced materials science, cutting-edge technology and strategic collaboration to revolutionize how sustainable infrastructure is developed for the data center era.”