Contractors pursuing large-scale commercial work are facing a new combination of risk factors: rising petroleum-related material costs, accelerated project schedules and uncertainty surrounding the long-term viability of hyperscale data centers. During a recent episode of If Walls Could Talk, hosted by Jill Bloom, construction attorney Trent Cotney outlined the legal and operational issues wall and ceiling contractors should be monitoring closely.

Cotney said volatility in oil pricing continues to affect the construction sector well beyond fuel costs. Petroleum derivatives remain embedded in numerous building products used throughout the wall and ceiling industry, including insulation systems, coatings, adhesives and other manufactured materials. As existing inventories cycle out, contractors should expect upward pricing pressure across multiple product categories.

Fast-Tracked Data Centers

Construction attorney Trent Cotney explained how petroleum-driven material inflation and accelerated data center construction schedules are increasing risk exposure for contractors. The conversation also explored termination clauses, procurement challenges and how future technology shifts could reshape demand for large-scale data center projects.

“Freight, shipping materials and fleet costs all rise with oil,” Cotney said. “But contractors also need to understand how many construction products have petroleum components built into them.”

For drywall and ceiling contractors working on fixed-price contracts, Cotney emphasized the importance of escalation language and careful bid review. Long-duration projects can create exposure when material pricing shifts significantly between award and installation.

“We’ve been through material inflation before,” he said. “Follow the same playbook. Make sure you have price-escalation provisions and protect yourself on long-term projects.”

Data Center Construction Driving Opportunity — and Liability

Bloom noted the unprecedented scale of current data center construction, with some projects spanning more than 200 acres. The market has become a major target for contractors seeking backlog growth, but Cotney warned that aggressive schedules and evolving technology create unique legal and financial risks.

“These projects are enormous, and many are fast-tracked,” Cotney said. “When schedules compress, contractors can end up moving so quickly that administrative protections fall behind.”

Cotney said disputes are already emerging around performance obligations tied to building envelope requirements and thermal performance criteria. In some cases, contractors are being pulled into liability claims tied to specified R-values or system performance benchmarks that traditionally fall under the design professional’s responsibility.

For wall and ceiling contractors, that means careful scope definition is critical — particularly when assemblies involve high-performance insulation systems, air barriers or specialty envelope interfaces commonly found in mission-critical facilities.

“Contractors need to focus not only on what their scope is, but what it is not,” Cotney said. “Ask the right questions before bidding and document everything throughout the project.”

Technology Shifts Could Reshape the Market

Cotney also cautioned contractors against assuming today’s data center boom will continue indefinitely. Advances in computing technology, including potential adoption of quantum computing and more efficient server infrastructure, could reduce future space requirements dramatically.

“If technology shifts quickly, owners may determine these massive footprints no longer make sense,” he said. “That creates the possibility of projects being terminated midstream.”

One major concern is the widespread use of termination-for-convenience clauses, which allow owners to stop work at virtually any time. Contractors are typically compensated only for completed work and limited overhead or profit, leaving exposure for stored materials, staffing commitments and downstream subcontract obligations.

Cotney advised contractors to ensure termination provisions flow consistently through subcontract agreements and supplier contracts.

“You could be terminated upstream but still owe your subcontractors downstream,” he said.

Material Procurement and Storage Exposure

Bloom also raised concerns about contractors purchasing large volumes of material in anticipation of major project demand, only to face delays or work stoppages later.

Cotney recommended contractors clarify ownership and payment structures for stored materials before procurement begins. Some owners use direct purchase orders (DPOs), while others reimburse only after delivery or require contractors to absorb storage costs temporarily.

Special-order and fabricated materials present elevated exposure because they may have limited resale value if a project pauses or cancels.

“If you have specially fabricated materials, you have significant exposure,” Cotney said. “That’s where accelerated payment terms or prepayment become important.”

For interior contractors involved in prefabricated ceiling systems, specialty framing packages or custom acoustical assemblies, procurement timing and storage language may become increasingly important on large-scale technology projects.

Contractors Seeking Stability Amid Market Uncertainty

Despite concerns surrounding oil pricing and geopolitical instability, Cotney said overall construction indicators remain relatively healthy. Backlog remains solid across much of the industry, although some residential sectors are softening.

Still, many contractors are looking for greater predictability after several years of supply chain disruption, labor shortages and material volatility.

“I think contractors are just looking for stable ground,” Cotney said. “The work is still there, but people want some consistency so they can focus on executing backlog.”

For wall and ceiling contractors entering the data center market, the discussion underscored a familiar lesson: rapid growth opportunities often come with equally significant contractual and operational risks. Careful documentation, clearly defined scope language and procurement controls remain essential safeguards as project scale and complexity continue to increase.