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New FHWA index measures materials’ steady cost escalation

Sources: Federal Highway Administration; CP staff

The new National Highway Construction Cost Index, dubbed NHCCI 2.0 following major methodological revisions to improve accuracy, shows asphalt, concrete and metal prices rising 107 percent, 61 percent and 45 percent, respectively, from 2003 to 2016.

NHCCI 2.0 is the first major revision since FHWA created the index in 2007, and reflects steadily rising costs of highway construction and repair. Though the data fluctuate slightly each quarter due to a variety of factors, including market conditions, labor supply, materials costs and inflation, the latest figures show that overall highway construction costs today have climbed 67 percent over a 13-year period. Agency officials stress the index’s importance to national transportation decision makers, who rely on forecasts and cost estimates to ensure sufficient financial support for growing transportation needs.

Many states track their own construction costs, FHWA notes, with some experiencing much higher inflation than others. California’s composite cost index increased by 143 percent between 2003 to 2016 versus 122 percent for Texas over the same period.