Executive Summary
This was a significant week for Pennsylvania commercial construction policy, even though the number of major new building announcements was relatively modest.
The biggest development by far was Gov. Josh Shapiro’s August 18 executive order imposing new requirements on data-center development. The order immediately removes data centers from Pennsylvania’s Fast Track permitting program, requires local approval before state permits can be issued, requires developers to make legally binding commitments on power, workforce, environmental protection and community engagement, and prohibits nondisclosure agreements involving data-center projects.
For contractors, this could be a major change to the state’s largest emerging private construction market.
At the same time, the week produced several meaningful building projects: a $68 million Duquesne University health-sciences building, a $31.7 million advanced-manufacturing expansion in Armstrong County, and the opening of a $50 million Allegheny General Hospital emergency-department expansion.
BIG STORIES:
- Pennsylvania Puts New Guardrails on Data-Center Construction
August 18 — Gov. Josh Shapiro signed Executive Order 2026-05.
The order represents a substantial change in Pennsylvania’s approach to AI/data-center development.
Under the new requirements:
- Data centers are removed from the state’s Fast Track permitting program.
- DEP will not issue permits until required local approvals have been obtained.
- Developers must make legally enforceable commitments under the state’s GRID — Governor’s Responsible Infrastructure Development — standards.
- Developers must pay the full cost of new generation, transmission, distribution and other infrastructure needed to serve their projects.
- Developers must engage local communities and pursue community-benefit agreements.
- Developers must hire and train local workers.
- Projects face stronger water and environmental requirements.
- Data-center developers cannot use nondisclosure agreements with state agencies.
- The state will publicly track data-center proposals that have engaged with DEP.
The administration says more than 100 data-center proposals have been publicly reported in Pennsylvania, but only five projects currently have all permits necessary for their first phase.
Pennsylvania Governor — Executive Order on Data Centers
Why contractors should care
This is potentially the most consequential construction-policy development of 2026.
The order could:
Slow projects down:
Removing data centers from Fast Track permitting could lengthen preconstruction schedules.
Eliminate speculative projects:
Developers without firm financing, power arrangements or end users may have difficulty moving forward.
Change project economics:
Developers must absorb infrastructure costs rather than shifting them to ratepayers.
Create additional construction work:
The requirement to provide power and infrastructure could create opportunities for electrical, utility, civil, generation and transmission contractors.
Increase local hiring requirements:
The workforce component could favor KCA contractors with established apprenticeship and workforce-development capabilities.
KCA perspective:
The important distinction is that Pennsylvania is not banning data centers. The state is trying to separate credible, financeable projects from speculative proposals.
That distinction will be important for KCA’s advocacy.
2. Construction Costs Remain a Concern
New July data show construction input prices increased 0.1% month over month but remain 7.4% higher than a year earlier. Nonresidential construction inputs were up 7.2% year over year.
There were specific warnings that lumber and iron/steel prices were rising and that diesel prices had jumped more than $0.50 per gallon after the period used to calculate the July index.
AGC’s analysis put the year-over-year increase in nonresidential construction input prices at 7.1% and highlighted continuing pressure from tariffs and metals prices.
AGC — July Construction Materials Prices
Why it matters
Contractors should be cautious about interpreting the 0.1% monthly increase as “stable pricing.”
The annual number remains high, and fuel, steel, copper and other materials could create additional pressure on:
- Estimates
- Contingencies
- GMPs
- Subcontractor pricing
- Escalation clauses
- Project schedules
3. Backlog Is Sending a Warning Signal
AGC reported that its national Construction Backlog Indicator fell to 8.0 months in July, down 0.8 months from both June and a year earlier.
The most important finding for KCA members: contractors working on data centers reported 11.4 months of backlog, compared with 7.5 months for contractors without data-center work.
National economists described the data-center boom as masking weakness in other construction segments.
Why it matters to Pennsylvania
This is perhaps the clearest national data point explaining the Pennsylvania market:
The construction market isn’t uniformly strong.
It is increasingly divided between:
High-growth:
Data centers, power, industrial, healthcare and selected infrastructure.
More challenged:
Traditional office and other financing-sensitive private development.
This makes diversification increasingly important for contractors.
Market Intelligence: What This Week Tells Us
The Pennsylvania construction market is becoming more specialized.
The strongest projects announced or advanced this week fall into four categories:
1. Data centers
Huge potential pipeline—but increasingly subject to political, zoning and infrastructure constraints.
2. Healthcare
Large, dependable capital programs from major health systems.
3. Advanced manufacturing
Smaller than data centers in dollar value, but geographically diverse and important to regional economies.
4. Public/institutional construction
Universities, transportation agencies and public authorities continue generating opportunities.
That diversification is important because the data-center market now carries substantially more regulatory risk than it did even a few months ago.
KCA’s 5 Things to Watch Next
1. What happens to Pennsylvania’s data-center pipeline?
This is the biggest question.
Watch for developers to:
- Withdraw speculative projects
- Seek local approvals quickly
- Announce power-generation arrangements
- Modify project sizes
- Increase community-benefit commitments
- Challenge or adapt to the new permitting requirements
KCA should be watching the projects that remain viable—not simply the number of projects proposed.
2. Senate action on data-center legislation
The House has moved legislation, while the Senate has been reluctant to act.
The question now is whether the Senate responds to the Governor’s executive action or whether the regulatory framework remains primarily executive/administrative.
3. Power infrastructure associated with data centers
The next major construction story may not be the data-center buildings themselves.
Watch for:
- Gas plants
- Substations
- Transmission
- Distribution upgrades
- On-site generation
- Battery storage
- Nuclear power arrangements
The companies that build the power infrastructure may have as much opportunity as the companies constructing the data centers.
4. Healthcare capital spending
The Duquesne and Allegheny General developments reinforce the strength of the healthcare/health-sciences market.
Watch for additional hospital expansions and outpatient projects from Pennsylvania’s major health systems.
5. Contractor backlog outside data centers
The national backlog data deserves close attention.
If the data-center market is masking weakness elsewhere, KCA members should be looking carefully at where non-data-center work is actually expanding—particularly healthcare, manufacturing, higher education and public capital projects.
Bottom Line
This was a policy-heavy week that could have major construction implications.
Pennsylvania did not shut the door on data centers—but it changed the rules of entry.
The new GRID requirements mean future projects will need to demonstrate power availability, financial credibility, local approval, workforce commitments, environmental responsibility and community support before moving through the state’s permitting process.
For KCA members, that creates both risk and opportunity.
The risk is that speculative projects disappear or legitimate projects experience longer approval timelines.
The opportunity is that projects that survive the new requirements are more likely to be real, financed, power-secured projects—and therefore projects that actually reach construction.
Meanwhile, healthcare, advanced manufacturing, higher education and public construction continue providing the diversified pipeline Pennsylvania contractors need.
Building Pennsylvania 