Highway Construction Cost Escalation in the United States: Component-Level NHCCI Evidence and Project Management Implications

Document Type : Case Study

Authors

1 Ms in Civil Engineering, Department Civil Engineering, Islamic Azad University, Science and Research Branch, Tehran, Iran

2 Ms in Civil Engineering ,Department Civil Engineering, Islamic Azad University, Pardis Branch, Tehran,Iran

Abstract
Highway construction cost escalation poses a persistent challenge for transportation agencies, yet the component-level structure of this growth remains poorly understood. This study analyses 91 quarterly observations of the U.S. National Highway Construction Cost Index (NHCCI) from 2003 Q1 to 2025 Q3, applying component-level contribution analysis, volatility ranking, pre- versus post-2020 comparison, and ARIMA time-series modeling. The aggregate NHCCI grew by 230.8% over the study period, with 68.0% of that growth occurring in just 23 quarters after 2020. While asphalt was the dominant long-run contributor, the post-2020 period revealed a fundamentally different pattern ; traffic control (+468%), concrete (+341%), and electrical (+292%) recorded the largest proportional increases, indicating that recent cost escalation extended well beyond petroleum-linked materials and became broad-based across all major pay-item groups. ARIMA(3,1,3) forecasting projects near-term stabilisation of the index between 3.29 and 3.40 through 2026 Q3. The central message of this study is that infrastructure agencies can no longer rely on aggregate escalation factors alone. Cost forecasting, contingency allocation, and price adjustment clause design must be grounded in component-specific evidence , because in the post-2020 environment, the risk is everywhere, not just in asphalt.

Keywords

Subjects
Abdul Nabi, M., El-Adaway, I. H., & Assaad, R. H. (2024). Modeling inflation transmission among
different construction materials. Journal of construction engineering and management, 150(5),
04024024.
Alsharef, A., Findley, D., Jaselskis, E., Dudley, T., Pyo, K., & Yang, G. (2024). Examining Contingency
and Inflation Practices Within Several Departments of Transportation in the United States.
Transportation Research Record, 2678(10), 850–861.
Anderson, S. D., Molenaar, K. R., & Schexnayder, C. J. (2007). Guidance for cost estimation and
management for highway projects during planning, programming, and preconstruction (Vol. 574).
Transportation Research Board.
Ashuri, B., & Lu, J. (2010). Time series analysis of ENR construction cost index. Journal of construction
engineering and management, 136(11), 1227–1237.
Bureau of Transportation Statistics. (2024). Infrastructure Investment and Jobs Act funds authorized for
highway by fiscal year and amount reduced by construction cost inflation: 2012–2026. U.S.
Department of Transportation. https://www.bts.gov/browse-statistical-products-and-data/infogallery/infrastructure-investment-and-jobs-act-funds
Cantarelli, C. C., Flybjerg, B., Molin, E. J., & Van Wee, B. (2013). Cost overruns in large-scale
transportation infrastructure projects: Explanations and their theoretical embeddedness. arXiv
preprint arXiv:1307.2176.
Cantarelli, C. C., van Wee, B., Molin, E. J., & Flyvbjerg, B. (2012). Different cost performance: different
determinants?: The case of cost overruns in Dutch transport infrastructure projects. Transport
policy, 22, 88–95.
Cheng, G., & Wilmot, C. G. (2009). Louisiana highway construction cost trend after hurricanes Katrina
and Rita. Journal of construction engineering and management, 135(7), 594–600.
Damnjanovic, I., & Zhou, X. (2009). Impact of crude oil market behavior on unit bid prices: The evidence
from the highway construction sector. Construction Management and Economics, 27(9), 881–890.
Davis, J. (2024). FHWA: Highway construction costs continued to grow at 24% annual rate. Eno Center
for Transportation. https://enotrans.org/article/fhwa-highway-construction-costs-continued-togrow-at-24-annual-rate
Etesami, S., Raufi, P., & Maniat, M. (2024). New Technology and Primary Energy Consumption in the
Transportation Sector: A Critical Discourse Analysis. Journal of Technology Innovations and
Energy, 3(4), 15–31.
Federal Highway Administration. (2025). National Highway Construction Cost Index 2024 Q3. O. o. T. P.
Studies. https://www.fhwa.dot.gov/policy/otps/nhcci/NHCCI_Narrative_Article_2024_Q3.pdf
FHWA. (2021). Description of Component Contributions to Changes in the National Highway
Construction Cost Index (NHCCI). United States Department of Transportation.
https://www.fhwa.dot.gov/policy/otps/nhcci/component_contributions.cfm
FHWA. (2024). National Highway Construction Cost Index (NHCCI)
Flyvbjerg, B., Skamris Holm, M. K., & Buhl, S. L. (2003). How common and how large are cost overruns
in transport infrastructure projects? Transport reviews, 23(1), 71–88.
Flyvbjerg, B., Skamris Holm, M. K., & Buhl, S. L. (2004). What causes cost overrun in transport
infrastructure projects? Transport reviews, 24(1), 3–18.
Huseynov, S., Ribera, L. A., & Palma, M. A. (2018). Predicting the highway costs index with machine
learning. Semantic Scholar.
Ilbeigi, M., Ashuri, B., & Joukar, A. (2017). Time-series analysis for forecasting asphalt-cement price.
Journal of management in engineering, 33(1), 04016030.
Liu, H., Kwigizile, V., Abudayyeh, O., & Huang, W.-C. (2024). Improving cost estimation and budget
planning with new Michigan highway construction cost index.
Maniat, M. (2024). Introduction of Discourse Analysis in Transportation: A Framework for Understanding
Policy and Practice in Urban Mobility.
Civil and Project Journal, 2026, 8(5), 11-32
https://doi.org/10.22034/cpj.2026.584929.1445
32
Morad, A. (2023). An analysis of global construction projects causes and implications of cost overruns.
OSF, Jun, 14.
Naghdi, M., Erfani, A., Geary, G., & Ashuri, B. (2026). Price Adjustment Clauses in Highway
Construction: State of the Practice. Journal of Legal Affairs and Dispute Resolution in Engineering
and Construction, 18(2), 04525119.
Odeck, J. (2004). Cost overruns in road construction—what are their sizes and determinants? Transport
policy, 11(1), 43–53.
Raufi, P., & Maniat, M. (2024). Transport Policy's Impact on Auto Emissions: A Critical Review. Available
at SSRN 4719317.
Shahandashti, S. M., & Ashuri, B. (2016). Highway construction cost forecasting using vector error
correction models. Journal of management in engineering, 32(2), 04015040.
Shane, J. S., Molenaar, K. R., Anderson, S., & Schexnayder, C. (2009). Construction project cost escalation
factors. Journal of management in engineering, 25(4), 221–229.
Shrestha, J., K, Jeong, H. D., & Gransberg, D. D. (2016). Current practices of highway construction cost
index calculation and utilization. Construction Research Congress 2016,
Shrestha, K. J., Jeong, H. D., & Gransberg, D. D. (2017). Multidimensional highway construction cost
indexes using dynamic item basket. Journal of construction engineering and management, 143(8),
04017036.
Swei, O., Gregory, J., & Kirchain, R. (2017). Probabilistic approach for long-run price projections: Case
study of concrete and asphalt. Journal of construction engineering and management, 143(1),
05016018.
Touran, A., & Lopez, R. (2006). Modeling cost escalation in large infrastructure projects. Journal of
construction engineering and management, 132(8), 853–860.
Welde, M., & Dahl, R. E. (2021). Cost escalation in road construction contracts. Transportation Research
Record, 2675(9), 1006–1015.
Wilmot, C. G., & Cheng, G. (2003). Estimating future highway construction costs. Journal of construction
engineering and management, 129(3), 272–279.
Wong, E., & Swei, O. (2021). New construction cost indices to improve highway management. Journal of
management in engineering, 37(4), 04021030. 
  • Receive Date 03 May 2026
  • Revise Date 06 June 2026
  • Accept Date 10 June 2026
  • First Publish Date 10 June 2026
  • Publish Date 23 July 2026