The 2026 State Of The Road Building Industry: Use Caution Ahead

The only pure certainty in life is that the future is uncertain, and that is something which has been painfully apparent to me over the last several months as I try to get a grasp on what 2026 is going to look like for our industry. Some messaging has remained consistent, but what they indicate isn't exactly positive either. The factors that have been nagging at asphalt contractors for the past few years, like: Finding and retaining skilled workers, rising costs and the availability of materials, and shifting federal expectations continue to be concerns as they have for a long time.

To try and capture as accurate a forecast as possible for next year, we've expanded our report metrics and analysis for 2026 by adding an entirely new section dedicated to a questionnaire specifically aimed at contractors. We published the survey back in June, halfway through the year, and received a lot of feedback from real-life people in the industry sharing their take on how things were going, and how they expect them to be going forward based on their current season. 

Additionally, this year's report features our regular annual feedback from multiple associations who partner with the road building and asphalt industry: the National Asphalt Pavement Association (NAPA), the American Road and Transportation Builders Association (ARTBA), Sage Policy group, and a special contribution from the CEO of Superior Construction.

Highway Trust Fund & Funding Sustainability

How confident are you that the Highway Trust Fund will remain a sustainable source of highway and road funding over the next decade?

Nick Largura, Superior Construction: I'm cautiously optimistic in the short term, but concerned about the long-term sustainability of the Highway Trust Fund as it currently operates. The fundamental challenge is clear: the HTF relies primarily on fuel taxes, and those revenues are eroding as vehicles become more fuel-efficient and electric vehicles gain market share. We're essentially watching the funding mechanism slowly become obsolete.

What concerns me is the political difficulty of addressing this. The federal fuel tax hasn't been increased since 1993, and significant political hurdles would have to be overcome before it would be raised. Meanwhile, construction costs have increased significantly — we saw annual cost increases of 10% in 2021 and 12% in 2022, though they moderated to about 2-3% in 2024. The gap between available funding and actual infrastructure needs continues to grow.

Without a fundamental reform to how we fund highways, whether that's indexing the fuel tax to inflation, implementing new revenue sources, or some combination, the HTF will struggle to meet the nation's infrastructure needs over the next decade.

Audrey Copeland, NAPA: After decades of teetering on collapse, HTF solvency needs to be addressed now. There’s likely no single solution to address its $250 billion shortfall, but we can chip away at this large deficit by implementing tried-and-true solutions. One approach is to identify new user fees in the short term and deploy them in the market to analyze revenue impact. Importantly, HTF is a dedicated fund; we cannot sacrifice its autonomy and we cannot afford to let it languish, because it allows the roadbuilding community to operate with clear market predictors on what the government spends and what the government will capture as it relates to user fees.

Which alternative or supplemental revenue sources do you think are most promising to sustain highway funding in the future?

Dr. Alison Black, ARTBA: ARTBA supports any revenue mechanism that will provide resources to the Highway Trust Fund and sustain federal investment levels.  Some options that Congress could consider include an electric vehicle fee, increasing and indexing the federal motor fuel tax, a road usage charge, a freight fee, or a national registration fee.  These are sources of revenue that are derived from the system, generate recurring revenue, and support additional investment. 

Copeland: 

• Increase in federal fuel tax (with index for inflation)
• Mileage-Based User Fees (charging drivers per mile driven)
• Tolling expansion on highways/bridges
• Dedicated sales taxes (e.g., on vehicles or auto parts)
• General fund transfers or other public funding (beyond user fees)
• Public-private partnerships or private financing mechanisms

For the first time in decades, we were close to seeing HTF revenues increased by capturing EV and hybrid drivetrains, which contribute little to nothing into the HTF. Although unsuccessful this time, the mere possibility demonstrated that we can find additional revenues if we are willing to take action. And, frankly, that includes raising and indexing the fuel tax for the first time since the 1990s. Still, we know that any perceived new gas taxes or increases are unpalatable to most legislators, regardless of the need. EV and hybrid fees may be the lowest hanging fruit given they passed the House just a few months ago – it’s time for the Senate to get on board and support new revenues for the HTF.

Largura: The reality is that maintaining and expanding our highway infrastructure requires substantial, stable funding, and no single revenue source will meet this need. We need a combination of approaches that generates sufficient resources and provides the predictability needed for long-term planning.

Long-term, Mileage-Based User Fees (VMT fees) make the most sense. Instead of paying a gas tax, drivers would be charged based on the number of miles they actually drive. This is sustainable regardless of vehicle fuel type — whether you're driving a gas car, hybrid or electric vehicle — and it aligns costs directly with road usage and wear. The transition will be complex and needs careful phasing to address privacy concerns and ensure fairness, but several states are already piloting VMT programs successfully.

In the near term, indexing the federal fuel tax to inflation would provide stability while longer-term solutions are developed. Other approaches like public-private partnerships for major projects and dedicated sales taxes can play complementary roles.

The key is implementing a funding framework that's adequate, sustainable, and provides the certainty needed for long-term infrastructure investment.

What are some other technologies, besides Electrification, that are shaping up to have a greater impact on the future of the industry?

Black: In terms of funding, flexible financing tools that foster innovation and accelerate project delivery could have an impact on the future of the industry.  Some of these tools include eliminating the cap on Private Activity Bonds, enhancing the Transportation Infrastructure Finance & Innovation Act (TIFIA) program, and lifting the federal ban on Interstate tolling.

Largura: The broader shift toward data-driven decision-making is having perhaps the most significant impact. Better data on asset conditions, project performance and cost factors allows agencies and contractors to make more informed decisions about where to invest and how to deliver projects most effectively.

Several specific technologies are making this happen. Digital project management and preconstruction planning tools, like drone mapping, 3D modeling and digital risk assessment, allow us to identify potential issues before breaking ground, reducing the need for costly changes during construction.

Automated and connected work zone systems, including smart traffic management, real-time data communication, and advanced warning systems are improving both safety and traffic flow while minimizing disruption to the traveling public.

Advanced materials and construction methods are also making a difference, from longer-lasting pavement materials to accelerated bridge construction techniques that shorten project timelines.

Project Delivery Timelines and Delays

What are the primary factors causing project delays in road/highway construction today?

Copeland: There are many variables that impact highway project delivery, all of which are policy arenas NAPA aims to improve. The most significant is the permitting process, which is layered between local, state, and federal jurisdictions. On Capitol Hill, NAPA focuses on permitting reform and streamlining to ensure roadway projects are executed on time and on budget – specifically modernizing the National Environmental Policy Act (NEPA) to improve timing and eliminate duplicative reviews across agencies and jurisdictions, similar to what NAPA supported via One Federal Decision under IIJA. Another improvement is expanding categorical exclusions for projects like road maintenance to avoid costly reviews for infrastructure work within existing footprints.

Largura: Funding is the primary factor. Projects are at the mercy of funding cycles and budget decisions that are often beyond our control. Right now, we're tracking five projects, and two of them just got pushed back two months due to funding issues. You have to go with the flow, but it creates real challenges for planning and resource allocation.

Workforce availability is another challenge we're managing, though it hasn't directly caused project delays for us. Getting craft workers is difficult everywhere, but we've been able to work around those constraints so far. We're even building a two-story training center to help address workforce development long-term.

Are recent permitting reforms (e.g., streamlined environmental review processes, faster federal approvals) having any impact on project delivery times for road projects?

Black: There have been cost and time savings for the eight states that have taken over the environmental review and permitting process for federal aid highway projects.  The NEPA assignment has allowed California to shave years off its environmental reviews.  Florida estimates $22 million in annual savings, and Ohio reported $32 million in avoided construction delays and inflation costs.  Utah has saved between nine and 11 months by handing the NEPA process.

Copeland: Permitting reform – such as how NEPA is interpreted and executed, or whether certain duplicative federal and state agency reviews are consolidated – is a welcome change to how we build surface transportation projects in this country. Permitting challenges and delays stalled a lot of projects within IIJA (outside of formula funding dollars for roads, bridges, and highways). Permitting reform used to be more of a political wedge between the power brokers in DC; it has become more apolitical as elected officials have developed a better understanding that industry can evolve with permitting reform and environmental stewardship – they are not mutually exclusive. But we also understand that these changes take time, so the reforms we are seeing today likely will not be fully realized for at least a couple of years.

Largura: We haven't seen much impact from the permitting reforms yet. Obtaining permits from the Army Corps of Engineers is a six- to ten-month process, and that hasn't changed. In design-build projects, obtaining those permits falls on us as the contractor, which adds complexity. With NEPA permits and environmental reviews, if we want to change something in the design after permits are approved, we have to go through the permitting process again. That means we have to carefully assess whether the potential delay is worth it. Sometimes you're locked into the original plan even if there's a better way.

The bigger issue is that private owners and even some county agencies don't fully understand the permitting process and its timelines. They're under pressure to move quickly or risk losing funding, but the regulatory requirements don't speed up just because there's urgency on the funding side.

What changes would most help speed up project delivery for road infrastructure?

Copeland: Allowing states more NEPA authorities can have immediate effect and help certain markets speed up projects. This summer, FHWA granted TxDOT the ability to conduct its own environmental review within the NEPA authorities. This is a great incentive for states to take more ownership of the federal dollars they receive for projects in their backyard, driving momentum to fulfill projects quicker when possible. Granted, certain state politics may be different if given the ability to utilize their own NEPA reviews, but ultimately if state agencies control the local process for their projects, more states may be inclined to find efficiencies within their permitting review.

Black: Eliminating inefficiencies would help speed up the delivery of highway and bridge infrastructure projects.  Some measures to improve federal investments include streamlining the discretionary grant application and agreement process, reallocating stalled project funds, accelerating project delivery through NEPA reforms and harnessing innovative practices learned form emergency responses. 

Largura: One key change would be using design products that don't rely on materials with long lead times. Structural steel, for example, can have very long lead times. If you can use precast concrete instead, that can significantly reduce delays. Sometimes it's worth choosing a slightly more expensive material if you know you can get it faster and save money by keeping the project on schedule.

IIJA Sunset and Future Funding Expectations

How would you rate the impact of IIJA on the road building industry during its time?

Black: The increased investment in the federal-aid highway program through the IIJA has had a significant market impact on highway and bridge construction.  Federal investment has helped support significant increases and record levels of major indicators, including contract awards, highway and bridge contractor employment, and construction activity.

Largura: The Infrastructure Investment and Jobs Act has had a significant positive impact on our industry and on the broader economy. Since fiscal year 2022, federal funding has supported the construction of more than 85,000 new highways and bridges across all 50 states. Public highway and pavement construction is expected to reach $124.8 billion in 2025, an increase of 4.79% compared to 2024. That growth is directly tied to IIJA funding flowing through to projects.

Two other challenges have tempered IIJA's impact. First, the bill coincided with significant inflation in construction costs — 10% in 2021 and 12% in 2022. While the increased funding was welcome, cost escalations eroded some of the benefit, particularly for contractors on fixed-price contracts. Second, permitting processes and project development take time, so some IIJA funding is still working its way through the pipeline.

Copeland: No doubt, there is a lot to celebrate in IIJA and what it achieved: record levels of investment into infrastructure (both traditional and non-traditional) with a clear mandate from Congress and the White House that America’s infrastructure requires critical resources to expand and remain efficient. IIJA’s record funding levels, unfortunately, were essentially eaten away by the effects of the pandemic and inflation – rendering those record amounts, effectively, status quo. If it weren't for those funds, infrastructure work would be even further behind, because those external variables were so unpredictably impactful on the roadbuilding sector. Even taking this into account, the record levels established in IIJA, like the formula funding program, were used effectively. Congress and the White House must acknowledge that IIJA established the baseline for funding vital road, highway, and bridge projects. To serve the nation now and into the future, the 2026 reauthorization must increase, allowing states and their roadbuilding partners to execute projects more efficiently. That's why NAPA is advocating for permitting reform, increased HTF revenues, and common-sense regulations.

With IIJA funding expiring in 2026, how concerned are you about a potential funding gap or slowdown in projects if a new bill is not passed in time?

Largura: A funding gap would be significantly disruptive for the industry. At Superior, we've adjusted operations and investment decisions based on IIJA funding levels, and contractors across the country have built their workforce to meet the increased demand.

We're seeing stark regional variations in how states are planning for the post-IIJA period. In Florida, FDOT has several large work programs scheduled, which provides confidence and visibility for planning. In other markets, the absence of scheduled major work programs raises questions about maintaining stable operations after a decade of increased funding.

The industry needs consistent project volume to maintain trained crews, specialized equipment, and operational efficiency. When work slows significantly, contractors face difficult decisions, and then when funding returns, there's inefficiency ramping back up. This creates waste in the system that benefits no one.

That's why active industry involvement in advocating for timely federal reauthorization is so important. A smooth transition from IIJA to the next bill isn't just good for contractors — it's essential for maintaining the workforce and capacity needed to deliver America's infrastructure projects efficiently.

Copeland: Without a clean extension of reauthorization, state DOTs would be forced to delay projects without the federal match that is currently available – creating delays in project development for those currently in design and likely resulting in stop-work orders for projects are under construction.

What priorities or features would you most like to see in the next federal surface transportation bill (the successor to IIJA)?

Black: The next federal surface transportation bill should increase investment levels to continue the progress being made to improve the nation’s infrastructure.  At a minimum, investment levels should be increased to offset the impact of historic inflation over the last four years.  Additional investments would allow states to continue to repair and replace bridges, address freight bottlenecks, increase mobility and improve safety. These investments could be supported by a combination of new and existing user fees, or if necessary, General Funds. All of these should be policy options.

Largura: A longer-term bill with stable funding: Five years is the minimum for meaningful planning, but six or even ten years would be better. States need to program projects with confidence that funding will be available to complete them, and contractors need visibility to make appropriate capacity investments.

A Highway Trust Fund fix: Whether through indexing the fuel tax to inflation, implementing VMT fees, or using another mechanism, we need to address the long-term sustainability of the funding source. A short-term funding boost without addressing the underlying revenue problem just kicks the can down the road.

Workforce development support: The labor shortage is real and industry-wide. At Superior, we've made substantial investments in workforce development, from formalized apprenticeship programs and equipment operator training to partnerships with educational institutions and dedicated training facilities. We're even transitioning experienced workers into leadership and mentorship roles. But these investments require significant resources that not every contractor can afford. Federal support would level the playing field and help the entire industry develop the workforce we need.

Copeland: NAPA’s priorities are enumerated below, with full details on our website:

• Work zone safety: Keeping construction workers safe while they pave our nation’s critical road network.
• HTF solvency: Solving issues with HTF financial solvency and ensuring all road users contribute to the system.
• Reclaimed asphalt pavement (RAP): Incentivizing the use of recycled materials that save on road construction costs, efficiently use existing materials and advance road construction sustainability.
• Accelerated Implementation and Deployment of Pavement Technologies (AID-PT): Reauthorizing this important pavement deployment program that produces better-performing pavements and reduces costs to taxpayers.
• Buy America construction material exemption: Preserving the critical construction materials supply chain by maintaining the Buy America exemption that has been in place for raw construction materials (such as asphalt binder and aggregate) for more than 40 years.
• Permitting reform: Addressing challenges associated with permitting road and bridge projects via programs like NEPA and other federal regulatory processes.
• Limit arbitrary PFAS liabilities on passive receivers: Ensuring critical construction materials suppliers are not held liable for passively receiving recycled materials potentially containing PFAS.
• Limit overreliance on discretionary grants: IIJA substantially expanded discretionary grant programs delivering great projects but not without unforeseen challenges. While certain discretionary grants work well, like AID-PT, an overabundance of discretionary programs creates problems and rising costs.
• Workforce opportunities: Supporting workforce challenges facing the industry, including finding and training the workforce necessary to complete the thousands of roadway projects across the country each year.
• Material neutrality: Ensuring there is no material bias within any federal highway bill regarding pavement materials and mixtures.

Workforce Development & Labor Challenges

How challenging is it currently for the industry to recruit and retain qualified workers for road construction jobs?

Copeland: Like most other industries, we are constantly seeking talent. The good news is that many of our State Asphalt Pavement Association (SAPA) partners are leading on workforce development with training initiatives, community college and technical school partnerships, and seeking opportunities with groups that connect candidates with jobs. Further, Women of Asphalt and its local branches  demonstrate to women of all ages and capabilities that road construction offers opportunities for them too. NAPA, through our Research & Education Foundation (NAPAREF) has also worked with SAPAs and others like the National Center for Asphalt Technology (NCAT) at Auburn University to elevate opportunities for undergraduate and graduate students to gain early industry experience and open their eyes to the opportunities among member companies. Just this year, the NAPAREF Road Scholars program granted its first round of scholarships to NCAT graduate students.

Black: A highly-trained and safe workforce is key to delivering infrastructure projects The number of workers employed by highway, street, and bridge contractors reached record levels over the summer construction season –with 411,100 employees, up by over 35,600 jobs, or 9 percent, compared to 2021.  But while the industry has been adding jobs, it is likely that contractors would be hiring more workers in some areas.     

Largura: It's extremely challenging, and I'd say it's one of the most critical issues facing our industry right now. We're dealing with a perfect storm: Baby Boomers are retiring and taking decades of knowledge with them. Roughly 40% of the construction workforce is expected to retire in the next decade or so, and we don’t have nearly enough new workers entering the field to replace them. Plus, many Millennials got the message that a four-year college degree was the only path forward. When I’m on jobsites today, I see younger workers and experienced veterans, but there's a real gap in that middle tier — the people who should be stepping into leadership roles.

The challenge isn't just finding bodies to fill positions. It's finding people with the right skills and mindset who want to build a career in heavy civil construction. And frankly, we're competing against a public perception that construction is dangerous or just a fallback option, when the reality is we're offering stable, well-paying careers with real growth potential.

Contractor Survey Results

The results of this year’s contractor questionnaire reveal a sector that is cautiously optimistic about work volume, but deeply strained by workforce shortages, regulatory complexity, and shifting specifications tied to sustainability and federal funding. Although sentiment varies by company size and market, the data paints a consistent picture. Contractors expect steady or increasing work in 2026, but they are preparing for another year of difficult hiring conditions, supply chain pressure, and compliance burdens that continue to change the way they bid, manage, and deliver work. More than one hundred contractors responded to our industry survey, on which we based the following narrative analysis. 

Work Volume Outlook: Stable But Not Without Concerns

Most respondents expect their overall road work volume in 2026 to match or exceed 2025. This aligns with ongoing IIJA-funded activity, strong demand in local and state programs, and a backlog of work that remains elevated. Yet the optimism is tempered by how unevenly that work is distributed. Contractors who depend heavily on public projects express more concern about congressional gridlock and the next highway bill transition. The highest reported fear is a lapse or reduction in long-term federal commitment, which many respondents described as a threat to both planning and staffing.

Federal and State Policy Pressures Shape Business Decisions

A clear majority of contractors cite policy uncertainty as their biggest concern heading into the next authorization cycle. Delayed rulemaking, shifts in Buy Clean and EPD-driven requirements, and inconsistent state-level adoption are creating confusion during bidding. Several respondents report losing or withdrawing from bids due to sustainability requirements they could not satisfy, often because producers in their region have not yet adopted EPDs or low-carbon mix pathways.

This suggests a widening compliance gap. Contractors want to participate in federally funded opportunities, but uneven rollout of specs creates competitive disadvantages that disproportionately harm small and mid-sized companies.

Permitting and Cost Delays Continue to Disrupt Projects

A large share of contractors report having at least one project delayed in the past year due to either cost escalation or permitting issues. These delays are eroding margins and destabilizing work schedules, especially for firms with seasonal windows that are already tight. Respondents cite inflation in liquid asphalt, trucking shortages, and slow municipal approvals as the top obstacles.

Workforce Pressure Remains the Number One Operational Constraint

Across the questionnaire, workforce strain emerges as the most consistent and long-running challenge. When asked to identify their single biggest workforce issue, contractors overwhelmingly point to hiring difficulty. This includes a lack of qualified applicants, inability to retain new workers, and the rising wages required to compete with other trades. Nearly every respondent notes that their hiring situation is either unchanged or more difficult compared to last year.

This workforce pressure ripples across business operations. Contractors report turning down work, extending schedules, or stretching existing crews thin to meet demand. Many state that the talent shortage is increasingly misunderstood by policymakers and the general public. One of the most selected responses to the “misunderstood aspect of the industry” question is that margins are far smaller than people believe, and that quality declines are rooted in workforce scarcity, not contractor negligence.

Training And Development Are Rising Priorities

Despite workforce strain, a strong majority of respondents say they are actively investing in training, certifications, and apprenticeship programs. Contractors understand that skill development is one of the few levers they can control. These investments span safety certifications, equipment operator training, and quality-focused education such as mix design, QC practices, and new spec compliance.

Training adoption also tracks closely with companies that are bidding on projects requiring EPDs or new sustainability criteria, suggesting that forward-leaning contractors are proactively preparing for future compliance expansion.

Equipment Purchasing Trends Reflect A Pragmatic Mindset

Most respondents report purchasing or leasing new equipment in the past twelve months, signaling continued capital investment despite economic uncertainty. Contractors identify reliability, total cost of ownership, and dealer support as the top factors influencing purchase decisions. Price is still important, but contractors seem more concerned with avoiding downtime during peak season.

This year’s responses also show the first signs of sustainability-related criteria influencing equipment decisions. Fuel efficiency and alternative power options appear more frequently as secondary considerations, especially among companies already affected by new bidding requirements.

Sustainability Expectations Are Rising Faster Than Understanding

A notable share of contractors report that they do not fully understand EPDs or how to incorporate them into their bids. Yet many are already encountering EPD-driven requirements in procurement documents. This mismatch between expectations and available guidance remains a critical friction point.

Contractors who have not bid EPD-linked work say they expect those requirements to reach their markets soon. Those who have tried navigating these specs describe them as confusing, inconsistent, or incompatible with existing supplier capabilities. This reinforces the need for trade associations, producers, and DOTs to standardize education and support.

Participation In Industry Associations Remains High and Useful

A majority of respondents say they belong to either NAPA or a State Asphalt Pavement Association (SAPA), and a large portion attended an industry event within the past twelve months. This reflects a growing dependence on associations for compliance information, training resources, and best-practice guidance. Respondents who are more active in associations tend to report greater confidence in navigating spec changes and planning for the next highway bill.

A Profession Misunderstood By Those Outside It

When asked what the public misunderstands most about the asphalt contracting profession, the most common answers include:

• Margins are thinner than people think.
• Talent shortages drive schedule delays and quality issues.
• Permitting, compliance, and regulatory changes are beyond contractor control.

These responses underscore a need for clearer communication about the realities contractors face. It also highlights a risk that negative public perceptions could influence future policy or funding decisions if the workforce crisis is not addressed.

Overall Industry Outlook

Taken together, the results of this questionnaire capture a sector that feels the work is there, the demand is real, and the opportunities are growing. Yet the industry’s ability to fully capitalize on that demand is limited by forces outside contractors’ control. Workforce shortages remain the anchor dragging on growth. Sustainability policies are accelerating faster than the guidance needed to implement them. Federal funding remains strong, but confidence in long-term stability wavers.

The narrative that emerges is not pessimistic. It's practical. Contractors are investing in training, buying equipment, modernizing their operations, and navigating increasingly complex requirements. They are adapting faster than many realize. But the success of the next decade will depend on achieving better alignment across specifications, training pipelines, policy timelines, and workforce development.

The data shows that contractors are ready to meet the moment. They just need a system that moves at the same speed they do.