Data center projects frequently encounter community resistance. How can contractors address this proactively?

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Before a data center project even breaks ground, contractors often already face challenges such as labor shortages and high material costs. Now, they may have to contend with another type of construction risk: the site is ready, but growing community opposition to data center development means the project may not proceed smoothly.

According to a recent Data Center Watch report, in the first quarter of 2026, at least75 data center projects(valued at approximately $130 billion) experienced delays or were directly obstructed. This number is nearly equal to the total number of disrupted projects throughout all of 2025.

"The biggest risk contractors face isn't necessarily project cancellation, but rather that delays become so prolonged that all the assumptions behind their pricing and schedules become outdated," Mark Carter, a partner in the Atlanta office of Buchalter law firm, told Construction Dive. "Contractors can handle almost anything as long as they clearly understand what they are dealing with."

Although contractors have few tools to stop community opposition, construction law experts agree that companies can still take steps to prepare for potential obstacles in the approval process.

The risk of delays at the construction site

Carter said community opposition to projects takes various forms, including permit appeals, zoning challenges, environmental reviews, utility approval delays, litigation, political pressure, and temporary construction injunctions.

In other words, even if a project has all the basic conditions to move forward,progress can still stall for months. These delays then create a cascade of downstream problems for contractors.

Carter cited examples where work stoppages could lead to crews being reassigned elsewhere or equipment sitting idle. Additionally, because materials for data center facilities—especially electrical equipment—often have long lead times, pricing assumptions and project schedules may need to be completely redrawn.

"Contractors cannot eliminate the risk of community opposition, but they can take steps to avoid becoming the 'insurer' of that risk," Carter said. "The industry seems to be gradually recognizing that entitlement challenges, utility constraints, and community opposition are not low-probability events, but rather foreseeable risks that should be addressed early in the project."

Key construction contract protections

Because contractors cannot control the approval process or community relations, lawyers emphasize that the best time to manage risk is before signing the construction contract.

This starts with accurately understanding where the project stands in the approval process. Viktor Pregel, an attorney at Washington, D.C.-based Greenstein DeLorme & Luchs, said contractors need to know whether there are pending lawsuits or appeals, and whether environmental reviews or utility commitments have been secured.

"Before the construction contract is signed and ground is broken, contractors have the most leverage to mitigate community opposition risk," Pregel told Construction Dive. "Contractors should ensure that the force majeure clause in the construction contract covers local public protests, community-led injunctions, citizen-initiated zoning lawsuits, and municipal construction moratoriums, thereby transferring the risk to the owner rather than the contractor."

Pregel added that the contract should also address cost and liability management. Additionally, Tom Curran, an attorney in the New York office of Duane Morris, said that even if contracts provide protection for such project interruptions, contractors still need to ensure they maintain detailed records to recover costs.

"For example, during the pre-construction and early construction phases—when these interruptions are most likely to occur—contractors would be well-advised to maintain continuous documentation, because they will need to rely on the contract to cover work completed up until any interruption occurs," Curran said. "Many contractors, especially in the data center sector and in the current environment, take this very seriously, and they are wise to do so."

Furthermore, if a project hits a snag, contractors may face difficult staffing decisions. Curran said some owners may even agree to help pay for the retention costs of key on-site personnel so they are ready when construction resumes.

Pregel added that contractors should also negotiate for reimbursement of ongoing costs incurred during the suspension period, including expenses such as trailer and crane rentals, site security, demobilization, remobilization, and personnel retention.

"Having contractual reimbursement rights is crucial for contractors," Pregel said. "During a suspension, some operating costs don't disappear... These should be reimbursed by the project owner."

Lawyers say these legal and contractual considerations are increasingly becoming astandard part of data center project planning. Carter believes this focus should increase further as opposition to data center development spreads.

"The data center construction boom hasn't really changed the fundamental principles of construction risk allocation; rather, it has exposed their importance," Carter said. "The best-performing projects will be those where the parties identify risks early and clearly assign responsibility before construction begins."

The data center construction boom continues

However, Curran noted that not all disputes over data center projects lead to work stoppages. Instead, there is more focus on the impact these projects have on communities.

"One growing issue I've observed is the tax burden on local power grids, especially rural grids that aren't yet prepared to handle the surge in energy demand," Curran told Construction Dive. "But data center owners and developers take this very seriously. They are actively seeking solutions because, if possible, they don't want the government to impose them."

Construction economists point out that despiteremarkable data center demand, community opposition and infrastructure constraints such as power and water availability are "headwinds that will intensify in the coming months," said Juan Arias, national director of U.S. industrial analysis at CoStar. He believes this should drive more investment in related infrastructure.

"Given the scale and scope of these projects, and the increasing schedule risks, contract drafting is becoming more sophisticated and detailed," Carter said. "There is a lot of focus on long-lead procurement risk, price adjustment clauses, utility delay risk, suspension rights, resequencing of owner directives, extended overhead recovery, and similar issues. Owners and contractors are increasingly focused on schedule resilience."