Chapter 17: Physical Construction & Commissioning

17.1 Overview

Before a GPU can compute, someone has to pour the concrete, pull the cable, and bolt the racks to the floor. This chapter covers the general contractors, electrical contractors, and engineering firms that physically build data centers. The construction layer is the last step before the operators described in Chapter 17 can take occupancy and the servers described in Chapter 18 can be installed. Site selection, land acquisition, and permitting (which precede construction and have become a binding constraint in their own right) are covered separately in Chapter 16.

The global data center construction market was valued at approximately $227.6 billion in 2025 and is projected to reach $434.7 billion by 2035 at a 6.8% CAGR. North America dominates, with the US alone generating $59.5 billion in revenue in 2025 (approximately $85.8 billion including all tiers, per some estimates). In 2025, data center construction investments hit a new high of $61 billion globally according to S&P Global, reflecting the AI-driven building boom ¹²³.

The market is fragmented. The top five construction firms (AECOM, Skanska, Jacobs Engineering, Obayashi, Kajima) hold only about 12% combined market share. AECOM leads with 3.5% share, reflecting the project-based and regionally diverse nature of construction. Other major players include Turner Construction, DPR Construction, Mortenson, Holder Construction, and Rosendin Electric (the largest electrical contractor in the US). Cupertino Electric and IES Holdings provide the specialized electrical and technology infrastructure ¹⁴.

Quanta Services occupies a unique position. Rather than building the data center itself, Quanta builds the power infrastructure that connects data centers to the grid: transmission lines, substations, and load centers. Its 2025 revenue was $28.5 billion with a backlog approaching $44 billion, and it expects 2026 revenue of $33.25-33.75 billion. The Electric Infrastructure Solutions division generates over 80% of revenue. For every data center built, someone must build the substation and transmission interconnection, and Quanta is the dominant contractor for that work ⁵⁶.

The construction industry is increasingly adopting modular and prefabricated approaches. Factory-built modules containing electrical switchgear, generators, chiller plants, and IT infrastructure are shipped to sites and assembled, reducing on-site construction time by 30-50% and mitigating skilled labor shortages. In 2026, every major hyperscaler uses some form of modularity. Modular prefabrication reduces on-site labor by approximately 40%, which is critical as certified electricians and HVAC technicians command 20-30% premiums over conventional construction rates ²⁷.

Site selection is increasingly determined by power availability rather than traditional factors like proximity to customers or fiber connectivity. Decommissioned coal plant sites are gaining favor because they have existing transmission lines and grid interconnections. Grid operators now require non-refundable deposits equal to 20% of project cost (locking up $50-200 million for up to three years) before granting interconnection rights. This shifts significant financial risk to the developer before construction even begins ²³.

17.2 Market Sizing & Growth

Global data center construction: $227.6 billion (2025), projected $434.7 billion by 2035 at 6.8% CAGR ¹. Alternative estimates: $300.38 billion (2026) to $431.39 billion (2031) at 7.51% CAGR ².

North America: $23.79 billion in 2025, projected $33.21 billion by 2031. US alone: ~$59.5 billion (broader scope) ²³.

US colocation market: $40.21 billion (2025), projected $72.37 billion by 2030 at 11.5% CAGR ⁸.

Quanta Services: Revenue $28.5B (2025). Backlog ~$44B. FY2026 guidance $33.25-33.75B. Electric Infrastructure >80% of revenue ⁵⁶.

17.3 Supply Chain Flowchart

PHYSICAL CONSTRUCTION & ENGINEERING
    |
    |---> ENGINEERING & DESIGN (pre-construction)
    |    AECOM: #1 market share (3.5%); end-to-end design + program mgmt
    |    Jacobs Engineering: consulting, engineering, construction mgmt
    |    Black & Veatch: power + data center engineering
    |    HDR: mission-critical facility design
    |
    |---> GENERAL CONTRACTORS (building the shell)
    |    Turner Construction: large-scale hyperscale campuses
    |    DPR Construction: technology-focused builder
    |    Mortenson: data center specialist
    |    Holder Construction: hyperscale focus
    |    Skanska: large-scale sustainable construction; $900M Ohio DC contract
    |    Clayco: design-build for data centers
    |    Fluor Corporation: hyperscale EPC services
    |
    |---> ELECTRICAL CONTRACTORS (power + connectivity infrastructure)
    |    Rosendin Electric: largest US electrical contractor
    |    Cupertino Electric: electrical design/engineering for DCs
    |    IES Holdings: integrated electrical + technology systems
    |    EMCOR Group: mechanical/electrical services
    |    MasTec: infrastructure contractor
    |
    |---> POWER INFRASTRUCTURE CONTRACTORS (grid connection)
    |    Quanta Services: transmission lines, substations, load centers
    |         Revenue $28.5B; backlog $44B; 2026 guide $33.25-33.75B
    |    MYR Group: electrical construction for utilities
    |    Pike Electric (Pike Corporation): distribution + transmission
    |    Sterling Infrastructure: E-infrastructure including DC site work
    |
    |---> MODULAR / PREFABRICATED CONSTRUCTION
    |    Schneider Electric: prefab power + cooling modules
    |    Vertiv: modular power + cooling infrastructure
    |    BladeRoom: modular data center construction
    |    Flexenclosure: prefab data center buildings
    |    Trend: reduces on-site labor 40%; cuts timeline 30-50%
    |
    +---> SITE SELECTION CONSTRAINTS
         Power availability: #1 factor (grid interconnection queues 3-5 years)
         Water: liquid cooling requires 1-2M gallons/day per 100 MW
         Fiber: connectivity to network backbone
         Labor: skilled electricians/HVAC technicians at 20-30% premiums
         Land: 50-200+ acres for hyperscale campuses
         Permitting: Trump EO 14318 (Jul 2025) streamlines federal DC permits

17.4 Key Companies

Company	Ticker	Exchange	Approx. Mkt Cap	Role in Buildout	Key Metric
Quanta Services	PWR	NYSE	~$112B	Power infrastructure: transmission, substations, load centers for DCs	Revenue $28.5B; backlog $44B; 2026 guide $33.25-33.75B
AECOM	ACM	NYSE	~$14.0B	Engineering, design, program management for DC construction	#1 DC construction market share (3.5%)
EMCOR Group	EME	NYSE	~$41.0B	Mechanical/electrical services for DCs	Strong DC electrical/mechanical contractor
MasTec	MTZ	NYSE	~$32.7B	Infrastructure contractor; power and communications	Growing DC-related electrical infrastructure work
Fluor Corporation	FLR	NYSE	~$8.0B	Hyperscale EPC; large-scale construction management	Project-based DC construction exposure
Sterling Infrastructure	STRL	NASDAQ	~$25.9B	E-infrastructure including DC site work	Growing data center site preparation business
IES Holdings	IESC	NASDAQ	~$13.3B	Integrated electrical and technology systems for DCs	125+ locations, 8,000+ employees; DC electrical specialist
Rosendin Electric	Private	Private	Private	Largest US electrical contractor	Key contractor for hyperscale DC electrical systems
DPR Construction	Private	Private	Private	Technology-focused general contractor	Major hyperscale DC builder
Nucor Corporation	NUE	NYSE	~$52.0B	Structural steel, rebar, insulated metal panels for DC construction	Supplies >95% of structural steel used in data center construction (self-reported). Only domestic supplier at scale. Acquired Southwest Data Products ($115M). New IMP facility in Utah.
Comfort Systems USA	FIX	NYSE	~$68.0B	HVAC, mechanical, electrical, plumbing (MEP) installation for DCs	45% of revenue from AI data centers (up from 33% YoY). Backlog $12.5B. 20-25% revenue growth guidance 2026. Skilled HVAC labor is the binding constraint.

17.5 Bottleneck Analysis

Skilled labor shortage (SEVERE): Certified electricians, HVAC technicians, and data center commissioning engineers are in critical shortage. Industry projections estimate a shortfall of 349,000 to 499,000 workers to meet existing demand, with the gap widening as leased capacity from 2024-2025 activates in the second half of 2026 into 2027 ⁹. Mission-critical construction requires specialized skills that command 20-30% premiums. Multiple hyperscalers competing for the same labor pool in the same regions (Northern Virginia, central Texas, central Ohio) creates wage inflation and schedule delays. Training pipelines take 2-5 years (apprenticeship programs for electricians, HVAC certification), meaning this shortage cannot be resolved on the same timeframe as transformer or semiconductor bottlenecks. Modular prefabrication partially mitigates by shifting work to factory settings, reducing on-site labor by approximately 40% ²⁷.

Grid interconnection timelines (SEVERE): Covered in Chapters 13-14 but directly impacts construction schedules. A data center building can be physically complete but unable to operate because grid interconnection has not been approved. Non-refundable deposits of $50-200M are required ²³.

Permitting and zoning (MODERATE-HIGH): Community opposition to data centers is growing, driven by noise, visual impact, water consumption, and electricity rate increases. Some jurisdictions are imposing moratoria. Trump Executive Order 14318 (July 2025) aims to accelerate federal permitting, but state and local approvals remain challenging ³.

17.6 Risks

Construction cost inflation: Rising costs for steel, copper, concrete, and labor inflate data center construction budgets. If costs rise faster than hyperscaler willingness to pay, project timelines stretch and some projects may be cancelled. Tariffs on imported steel and copper exacerbate this.

Overbuilding risk: If AI demand disappoints, the construction pipeline could result in significant excess capacity. Construction projects take 18-36 months; decisions made today based on current demand could deliver capacity into a softer market.

First principles check: Can construction keep pace with demand? Probably not in the near term. A hyperscale data center campus takes 2-3 years from groundbreaking to full operation. Power interconnection adds 3-5 years. The combined 5-8 year timeline from decision to full capacity means that the industry is structurally unable to respond quickly to demand surges. This is why existing facilities with available power command premium pricing.