Federal Report: Highway Construction 50 Percent More Expensive Than in 2020

The Federal Highway Administration’s (FHWA) National Highway Construction Cost Index (NHCCI) for the third quarter of 2022 shows that construction costs in the sector have gone up by 50 percent since December 2020, according to Jeff Davis writing for the Eno Center for Transportation.

The NHCCI started in the third quarter of 2003, based at an even 1.0000 and the third quarter 2022 index was 2.7862 which means that highway construction cost almost 2.8 times as much in summer-fall 2023 as it did 20 years prior. But the chart shows two great inflation runs: 2004-2006, fueled by a doubling of oil prices and by China’s entry into the WTO (and the effect that had on the world demand for construction materials), and the present run which started at the beginning of 2021.

The majority of the cost increase is attributed to the price of crude oil, diesel fuel, and steel. “So far in 2023, [crude oil] prices have oscillated in the $70-80 per barrel range. So, while the rate of increase in the NHCCI may decrease in the coming quarters, there is no sign that they will give back significant amounts of what has already been increased.”