In short
A change order is a written document that amends a construction contract. It can adjust the scope of work, the contract price, or the completion date. The standard forms most often used are the AIA A201 in the United States and the FIDIC Red and Silver Books internationally. On AI data center projects, scope growth is common because technology, power requirements, and equipment lead times shift during construction. The cost of change orders runs from 3 to 5 percent of the contract value on projects where design is mostly locked, to 8 to 14 percent on projects where design evolves during construction. When change order processes break down, disputes are rising fast. Arbitration is the preferred forum, and parties are increasingly using litigation funding to pursue claims.
What is a change order in construction?
A change order is the legal mechanism for modifying a construction contract after it has been signed. Under the American Institute of Architects A201 General Conditions, the most common standard form in U.S. commercial construction, a change order must be a written document. It is prepared by the architect and signed by the owner, the contractor, and the architect. The document states what the change is, how much the contract sum will change, and how much the contract time will change. AIA A201 § 7.2.1
Once signed, the change order becomes a binding contract amendment. It replaces the relevant parts of the original contract.
There are two other less formal tools under the AIA form. A Construction Change Directive, or CCD, is a written order signed by the owner and architect directing the contractor to start work on a change before the cost and time adjustments are agreed. AIA A201 § 7.3.1 The contractor must perform the work, but the financial terms still have to be finalized later in a formal change order. An Architect’s Supplemental Instruction, or ASI, is used for minor changes that do not affect the contract sum or time. AIA G710 summary
Under AIA A201 § 15.1.3.1, contractors must give written notice of a claim for extra cost arising during the corrective work period within 21 days and present it to the Initial Decision Maker. Under § 15.1.3.2, claims arising after the corrective work period have no contractual deadline. AIA A201 § 15.1.3.2 The AIA A201 General Conditions do not prescribe a fixed overhead and profit percentage for change orders, leaving the rate to be set by contract. Industry practice commonly ranges from 10 to 15 percent combined, though some contracts allow up to 25 percent. AIA Contract Documents, Industry guide, Industry guide
How FIDIC handles variations
Internationally, many large-scale AI data center projects use FIDIC forms. Under the FIDIC Red Book, Clause 13 gives the engineer the right to instruct variations. A variation can change quantities, quality, dimensions, work sequence, or add new work. FIDIC Red Book Sub-Clause 13.1 The procedure starts with the engineer requesting a proposal from the contractor. The contractor submits the description, cost, and time impact. The engineer then approves, disapproves, or comments. FIDIC Red Book Sub-Clause 13.3
The FIDIC Silver Book, used for EPC/Turnkey projects, has a much tighter variation regime. The contractor carries most of the risk and the contract is designed to minimize changes. Under FIDIC Silver Book Clause 13, the Employer instructs variations and adjusts the Contract Price to compensate the Contractor including reasonable profit, while the Contractor bears only the cost of preparing its own value engineering proposals. FIDIC Silver Book Clause 13 This structure creates a strong incentive for the contractor to control scope and resist ad hoc changes.
How delivery models change the cost of change orders
The way a project is delivered has a measurable effect on how much change orders will cost. Industry tracking data from Engineering News-Record in 2025 shows two common patterns.
On design-build projects where the design packages are locked at roughly 60 percent completion, change orders typically add between 3 and 5 percent to the contract value. archdesk.com On general contracting routes where design continues in parallel with construction, often called live design, change orders run from 8 to 14 percent. archdesk.com
The EPC or engineering procurement construction model, which bundles design, procurement, and construction under a single lump-sum price, gives the contractor a strong incentive to control scope and tends to produce even fewer change orders. In one reported case, an EPC contract for a complex facility came in 5 percent under the owner’s budget. linkedin.com Independent, AI-data-center-specific data on change-order rates by delivery model is still limited, so treat these benchmarks as directional.
| Delivery Model | Change Order Cost (% of Contract) |
|---|---|
| Design-Build, design locked at ~60% | 3 to 5% |
| GC live-design route | 8 to 14% |
| EPC/Turnkey | Typically lower, incentive to minimize |
The technology shifts that expand scope mid-project
AI data center projects face a set of scope change drivers that are not present in traditional data centers or commercial construction.
The computing workload itself is shifting. AI workloads could take up half of all data center workloads by 2030, up from about 25 percent in 2025. avidsolutionsinc.com This shift from training to inference AI changes the power density and cooling requirements of a facility. As those requirements change, the original design must be updated, and a change order results.
Liquid cooling systems are becoming increasingly common for GPU intensive AI workloads, and change order provisions in construction contracts must address the design modifications that arise as AI changes facility requirements. thebulldog.law Retrofitting or adding these systems mid construction requires formal scope changes.
The size of the construction crews has also grown dramatically. In the cloud era, a peak crew might have 750 workers. Today, AI data center projects routinely employ 4,000 to 5,000 workers at peak. bvp.com Managing a workforce of that size, amid a national construction labor shortage of roughly 439,000 workers as of late 2025, adds scheduling pressure that often leads to delays. bvp.com
Equipment lead times force early decisions that create later changes
Critical equipment for AI data centers has lead times measured in years, not months. Generators currently take 72 to 104 or more weeks from order to delivery. Transformers take 52 to 78 weeks. naes.com Large power transformers can take 128 weeks, and generator step up units can run to 144 weeks. archdesk.com A 52 week factory quote can become 74 weeks to site once you add submittal revisions, missed factory acceptance test slots, and logistics. archdesk.com
These long lead times mean that equipment must be ordered early, often before the final design is complete. If the design later changes, the ordered equipment may no longer fit. Changing or reconfiguring that equipment triggers a change order. Owners also frequently supply critical equipment themselves, a practice known as Owner Furnished Contractor Installed or OFCI. Coordination failures between OFCI equipment and contractor furnished items are a regular source of disputes over delay responsibility. NAOCON [Layer](https://layer.team/blog/procurement-strategies-for-managing-long lead-items)
The high cost of delays
The financial stakes of a change order dispute are high. Global AI data center construction costs for shell and core reached roughly $10.7 million per MW by 2025. JLL AI optimized facilities exceed $20 million per megawatt, and all in AI builds including GPU fit out reach $30 to $40 million per megawatt. archdesk.com Power infrastructure alone drives 30 to 40 percent of total facility cost. archdesk.com
A one-month schedule slip on a moderate 60 megawatt facility costs the owner about $14.2 million in lost revenue. archdesk.com More than half of AI data center projects in 2025 experienced construction delays of three months or more. naes.com In that environment, even a small change order that affects the schedule can trigger a multi million dollar dispute.
When change orders go wrong, the dispute landscape
The average value of North American construction disputes rose 40 percent from 2023 to 2024. The average dispute value reached $60.1 million, nearly double the 2021 average and triple the 2019 average. Arcadis 15th Annual Construction Disputes Report The average time to resolve a dispute did drop, by 14 percent to 12.5 months, the shortest in a decade. Arcadis 2025 Construction Disputes Report
For three years running, errors or omissions in the contract documents have ranked among the top two causes of construction disputes in North America. Owner directed changes ranked third among causes. Arcadis 2025 Disputes Report Nearly 30 percent of survey respondents encountered project impacts due to price escalation and supply chain issues, consistent with last year’s findings. Arcadis 14th Annual Construction Disputes Report
A real world example, Microsoft and Rogers-O’Brien
In 2020, Rogers-O’Brien Construction, a Dallas based general contractor, sued Microsoft for $34 million over an AI data center project in San Antonio, Texas. The contractor alleged that Microsoft failed to manage vendors and respond to repeated requests to intervene amid design errors, water intrusion, and defective software, causing cascading delays and cost overruns. enr.com $13.6 million of the claim was for unpaid retainage. The case was soon abated pending arbitration and dismissed with prejudice by joint stipulation on April 6, 2023. courtlistener.com The settlement terms are confidential.
This case illustrates the OFCI risk and the speed with which a project level dispute moves to a formal arbitration. It also shows that even the largest hyperscalers are not immune to change order claims when equipment coordination breaks down.
A 2024 North Carolina construction dispute over a data center project generated roughly 1.2 million emails in discovery, prompting a Federal Rule of Evidence 502(d) clawback order and reflecting the immense document burden in these cases. abccarolinas.org
Why arbitration is the preferred forum
Arbitration is the dominant method for resolving AI data center construction disputes. It is valued for its confidentiality. Arbitrators with technical expertise in construction and engineering can be selected, and the procedures support efficient resolution. Awards are final and broadly enforceable. Arbitration in data center construction disputes, 9 U.S.C. §§ 9-10, New York Convention art. III
The widely used FIDIC model contracts for international construction adopt multi tiered dispute resolution. Disputes go first to a standing Dispute Avoidance/Adjudication Board that issues decisions that are provisionally binding during the project, with a short window to object. The next step is amicable settlement through negotiation or mediation, and only then arbitration. Law firm analysis Under FIDIC, the deadline to file a notice of dissatisfaction with a DAB decision is 28 days. Missing it can mean losing the right to arbitrate. whitecase.com
Litigation funding is also common. Third-party funders provide capital to pursue claims in exchange for a share of any recovery. This lets contractors pursue claims without tying up their own working capital. omnibridgeway.com
Key takeaways
- Choose the delivery model with your risk appetite in mind. Design-build with locked design at roughly 60 percent will likely keep change order costs between 3 and 5 percent. EPC can reduce changes further but puts maximum risk on the contractor.
- Write the change order clause carefully. The AIA A201 and FIDIC forms provide tested mechanisms, but they must be adapted to AI data center realities, such as OFCI coordination and long-lead equipment.
- Document everything contemporaneously. Signed change orders, daily reports, meeting minutes, and correspondence are what decide who bears a disputed cost. An unsigned change order where the owner verbally directed work is a recurring problem.
- Build the schedule around verified equipment lead times. Do not accept a supplier’s factory quote as a delivery date without adding time for submittal, testing, and logistics. A 52-week quote can easily become 74 weeks to site.
- Know the notice deadline. Under AIA A201, the contractor must give written notice of a claim within 21 days. Under FIDIC, dissatisfaction with a DAB decision must be given within 28 days. Missing these deadlines can be fatal.
- Expect disputes and prepare for them. The volume and value of construction disputes are at historic highs. Assume a claim will arise and create a clear trail of documents from day one. Include a multi-tiered dispute resolution clause that leads to arbitration.
- Consider litigation funding if cash flow is a concern. Third-party funding is now a standard tool for AI data center construction claims.
Frequently asked questions
Q:What is the difference between a change order and a construction change directive?
A:A change order is a signed agreement changing the contract. A construction change directive is a written order to proceed with work before the cost or time adjustment is agreed. The CCD binds the contractor to perform the work but the financial terms must still be negotiated into a formal change order.
Q:How long does a contractor have to file a claim for extra cost under AIA A201?
A:For claims arising during the corrective work period, the contractor must give notice within 21 days after occurrence or recognition, whichever is later. Claims arising after the corrective work period have no contractual deadline. AIA A201 § 15.1.3.1, Law firm analysis
Q:Why are AI data centers more prone to change orders than traditional buildings?
A:The technology is evolving mid-project. AI workloads demand higher power density and liquid cooling, which often were not in the original design. Equipment lead times force early procurement that may not match the final design. And the sheer scale and speed of projects create coordination gaps.
Q:What is the average markup on a change order?
A:Under AIA-governed contracts, the contractor’s combined overhead and profit markup on a change order typically ranges from 10 to 15 percent, though some contracts allow up to 25 percent. AIA Contract Documents, Industry guide
Q:What is the number one cause of construction disputes?
A:Errors or omissions in the contract documents once again topped the list of dispute causes in North America in 2024, the third consecutive year this issue has ranked among the top two. Owner-directed changes ranked third. Arcadis 2025 Disputes Report
Q:Is arbitration better than litigation for AI data center disputes?
A:Arbitration is usually preferred because it is confidential, faster, and allows the parties to choose decision-makers with construction expertise. Multi-tiered clauses that provide for negotiation and mediation before arbitration are the norm. bracewell.com
Q:What can owners do to limit change orders?
A:Lock the design as much as possible before construction starts. Use a delivery model that aligns incentives, such as design-build or EPC. Order long-lead equipment early and ensure OFCI equipment is coordinated with the contractor’s schedule. Write clear scope documents and require all changes to be in writing.
Q:What is OFCI and why does it cause disputes?
A:OFCI stands for Owner Furnished Contractor Installed. The owner buys and supplies key equipment, and the contractor installs it. If the equipment arrives late or does not integrate properly, the parties often disagree about who bears the delay cost. Clear coordination requirements in the contract can reduce this risk. jdsupra.com
Q:How long is the current lead time for a large power transformer?
A:Large power transformers average 128 weeks from order to delivery. Generator step-up units run to 144 weeks. archdesk.com
Q:What is litigation funding and is it common in AI data center disputes?
A:Litigation funding is an arrangement where a third-party funder pays a party’s legal fees in exchange for a share of any recovery. It is increasingly used in data center construction disputes, allowing contractors to pursue claims without tying up their own working capital. omnibridgeway.com
Subscribe to The Compute Law Brief
The Compute Law Brief is a free weekday newsletter on the law of AI infrastructure across tax, real estate, construction, power, and deals. The big US build markets and federal law. Three minutes a morning. No paywall, and no email gate to read the blog. Subscribe if you want it in your inbox.
Junde Liu, JD, LL.M. (Taxation) candidate at UF Law. Originally published on Compute Law Blog. This article is general information and does not constitute legal advice. Reading it does not create an attorney client relationship. The reader should not act on the basis of any content here without first consulting a licensed attorney in the relevant state. Last reviewed for accuracy May 23, 2026.