And What Your Missing POs are Costing Your Construction Firm
For construction firms handling data center infrastructure, project scale is increasing alongside procurement complexity. Data center construction is accelerating at a pace few sectors have ever experienced. Hyperscaler capital spending reached roughly $244 billion globally in 2024 and continues to rise, with tens of billions flowing into U.S. data center construction alone.
For general contractors, CMAR firms, and design-build teams, this isn’t just a growth story—it represents a structural shift in how projects are procured, financed, and managed. One of the biggest risks emerging from this shift is a flaw in traditional construction accounting: some of the largest financial exposures on a project are not tied to what has been invoiced, but to what has already been committed and not reflected in financial reports.
The Hidden Financial Risk for General Contractors
For many general contractors, this issue shows up early—and quietly. Long-lead equipment is often committed before financial systems are fully aligned to capture it.
Multi-million-dollar purchase orders for transformers, switchgear, and generators may be issued months or even years before invoicing begins. If those commitments are not reflected at the time of the PO, project financials can appear healthy while significant cost exposure is already locked in.
Why Early Procurement is Required for Data Center Projects
The data center boom has fundamentally rewritten the rules of procurement for general contractors. Transformer procurement lead times now range from 80 to 210 weeks, with two- to three-year delivery windows becoming standard.
To stay on schedule and secure supply in a constrained market, firms are increasingly adopting early contractor involvement (ECI) models. Leading firms are placing purchase orders (POs) for transformers, switchgear, and generators before trade partners are even contracted or project financials are fully established.
For general contractors, this doesn’t show up as a theoretical issue—it shows up in day-to-day project execution. Project teams may issue multi-million-dollar purchase orders for long-lead equipment, but those commitments often never make it into job cost reports or WIP schedules until invoices are received.
The result is a disconnect between what’s happening in the field and what finance sees. Project managers believe costs are under control, while finance teams are reporting margins that don’t yet reflect significant committed spend. Over time, that gap becomes the source of unexpected margin erosion—and where phantom margin begins.
The CFO Problem: Phantom Margin at Scale
For contractor CFOs, the issue is not theoretical—it’s financial distortion. When committed capital and purchase orders are not reflected in financial reports:
- Project financials overstate margin from day one
- Cash exposure builds outside the forecast
- Portfolio reporting reflects only part of reality
Consider a $500 million data center campus: a 2% Work in Process (WIP) error driven by missing committed cost visibility results in a $10 million margin miss—often discovered only after it is unrecoverable. At the scale of today’s data center construction, these are not rounding errors—they are material financial risks.
The Controller Problem: Accruals Without Data
Controllers in contracting firms face the same issue as CFOs, from a different angle. When equipment delivery timelines span three years or more, construction accruals become judgment calls rather than data-driven entries. This leads to:
- Inconsistent accrual methodologies across different project teams
- Increased close cycle complexity as teams hunt for missing PO data
- Higher audit scrutiny when revenue recognition under ASC 606 (the standard for revenue recognition from contracts with customers) doesn’t align with actual project commitments
Across large portfolios, these judgment-based accruals become a systemic audit risk rather than isolated variances.
Visibility and Cash Exposure
For CFOs of general contractors delivering data center projects, the lack of real-time visibility into committed spend limits proactive financial decision-making. When major equipment POs aren’t reflected:
- Cash forecasting becomes unreliable
- Bonding and lender confidence weakens
- Portfolio-level performance is distorted
To address this, finance leaders are increasingly utilizing tools like Sage Copilot. Instead of digging through spreadsheets, a CFO can simply ask the system: “What is our current outstanding cash exposure on interconnection-delayed programs?” and get an audit-ready answer in seconds.
The Legacy ERP Gap in Construction
Most legacy construction accounting systems like PENTA and Foundation were built around invoice-based cost recognition. That model worked when procurement cycles were measured in months. It breaks when procurement decisions happen 18–24 months before delivery.
Without the ability to track committed costs at the time of the PO, firms are forced to rely on spreadsheets and manual workarounds—creating margin leakage, reporting delays, and operational disconnect.
The Sage Intacct Advantage for Data Center Construction
Sage Intacct Construction is designed specifically for this environment—where financial visibility must align with real-world procurement decisions. It enables finance teams to move from reactive reporting to real-time control:
- Committed Costs at PO Placement: Purchase orders are captured and reflected immediately—not when invoices arrive
- Unified Financial Visibility: Budgets, actuals, commitments, and WIP are consolidated in a single, real-time view
- Sage Copilot Intelligence: Finance leaders can query live data in plain language
- Field-to-Finance Alignment: A certified native Procore connector ensures committed costs, job data, and change activity remain synchronized without manual intervention
Proof in Practice
Firms operating at scale are already seeing measurable results, including:
- Real-time visibility across budgets, actuals, commitments, and WIP
- Elimination of re-entry between estimating and live job tracking
- Improved WIP accuracy and faster financial close cycles
Why This Matters for General Contractors
Updated DOE transformer efficiency standards that took effect in 2025 have further constrained supply and extended lead times—placing additional strain on an already limited manufacturing base. These constraints are not temporary—and contractors will face them across multiple projects as data center demand continues to grow.
Real-time financial reporting and committed cost visibility are no longer differentiators—they are becoming requirements for repeat work.
The Risk Isn’t the Missing PO—It’s the Blind Spot it Creates
Early procurement isn’t the problem, the blind spot is. When purchase orders and committed costs are not reflected in financial reports:
- Margin appears stronger than it is
- Cash exposure builds silently
- Financial surprises emerge too late to correct
The contractors that solve this protect margin and maintain credibility in a high-stakes market.
Get Visibility into Your Committed Costs
Is your team still relying on invoice-based reporting to understand project financials? SWK Technologies works with construction firms delivering complex data center projects to modernize financial management, improve WIP accuracy, and provide real-time visibility into committed costs and cash exposure.
Connect with SWK Technologies here to evaluate how your current systems handle committed costs—and ensure your next multi-million-dollar PO doesn’t become a multi-million-dollar blind spot.