The road building and asphalt industry is entering 2026 with cautious confidence. Contractors broadly agree that demand for work remains strong, fueled by Infrastructure Investment and Jobs Act (IIJA) funding and elevated state and local programs. However, beneath that optimism are mounting concerns tied to workforce shortages, material costs, permitting delays, sustainability mandates, and long-term funding uncertainty.
Industry leaders say the challenges confronting contractors today are not new—but their cumulative impact is becoming harder to manage.
“The only pure certainty in life is that the future is uncertain,” Brandon Noel writes, noting that workforce recruitment, rising costs, material availability, and shifting federal expectations continue to weigh on contractors just as they have for years.
To better understand where the industry is headed, this year’s State of the Road Building Industry report expanded its scope, incorporating contractor survey data alongside insights from key trade groups and industry executives, including the National Asphalt Pavement Association (NAPA), American Road & Transportation Builders Association (ARTBA), Sage Policy Group, and Superior Construction.
One of the most pressing concerns for contractors is the long-term sustainability of the Highway Trust Fund (HTF), which remains the backbone of federal highway investment.
Nick Largura, CEO of Superior Construction, expressed guarded confidence.
“I'm cautiously optimistic in the short term, but concerned about the long-term sustainability of the Highway Trust Fund as it currently operates.”
Largura pointed to the erosion of fuel tax revenues as vehicles become more fuel-efficient and electric vehicle adoption grows.
“We're essentially watching the funding mechanism slowly become obsolete.”
He also highlighted the political difficulty of addressing the issue.
“The federal fuel tax hasn't been increased since 1993, and significant political hurdles would have to be overcome before it would be raised.”
NAPA President and CEO Audrey Copeland warned that inaction is no longer an option.
“After decades of teetering on collapse, HTF solvency needs to be addressed now.”
She emphasized the importance of preserving the HTF’s structure.
“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.”
Industry leaders agree that no single funding mechanism will solve the problem.
ARTBA Chief Economist Alison Premo Black said Congress must remain flexible.
“ARTBA supports any revenue mechanism that will provide resources to the Highway Trust Fund and sustain federal investment levels.”
She cited options including electric vehicle fees, fuel tax indexing, road usage charges, freight fees, and national registration fees.
Copeland echoed that sentiment, pointing to missed opportunities.
“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.”
Largura stressed the need for a blended approach.
“The reality is that maintaining and expanding our highway infrastructure requires substantial, stable funding, and no single revenue source will meet this need.”
He said mileage-based user fees offer the most sustainable long-term path.
“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.”
While electrification dominates transportation discussions, industry experts say other technologies may have an even greater impact on road building.
Black pointed to financing tools.
“Flexible financing tools that foster innovation and accelerate project delivery could have an impact on the future of the industry.”
Largura highlighted the growing role of data.
“The broader shift toward data-driven decision-making is having perhaps the most significant impact.”
He noted that drone mapping, 3D modeling, digital risk assessment, and smart work zone systems are helping contractors reduce risk, improve safety, and minimize disruption.
Despite increased investment, project delivery timelines remain vulnerable.
Copeland identified permitting as a persistent bottleneck.
“The most significant is the permitting process, which is layered between local, state, and federal jurisdictions.”
She said NAPA continues to push for NEPA modernization and expanded categorical exclusions.
Largura said funding uncertainty often causes delays.
“Projects are at the mercy of funding cycles and budget decisions that are often beyond our control.”
He added that design-build projects face added complexity when permits fall on contractors.
“Sometimes you're locked into the original plan even if there's a better way.”
Industry leaders agree IIJA has delivered meaningful gains—but not without caveats.
Black said the legislation drove record activity.
“Federal investment has helped support significant increases and record levels of major indicators.”
Largura emphasized IIJA’s scale.
“Since fiscal year 2022, federal funding has supported the construction of more than 85,000 new highways and bridges across all 50 states.”
But inflation eroded some benefits, he said.
“Cost escalations eroded some of the benefit, particularly for contractors on fixed-price contracts.”
Copeland warned that the next reauthorization is critical.
“Congress and the White House must acknowledge that IIJA established the baseline for funding vital road, highway, and bridge projects.”
Across survey responses and expert commentary, workforce challenges emerged as the industry’s most severe limitation.
Copeland described broad recruitment efforts.
“Like most other industries, we are constantly seeking talent.”
Black noted employment growth but persistent gaps.
“While the industry has been adding jobs, it is likely that contractors would be hiring more workers in some areas.”
Largura was blunt.
“It's extremely challenging, and I'd say it's one of the most critical issues facing our industry right now.”
He cited retirements, missing middle-career talent, and misconceptions about construction careers.
“We're competing against a public perception that construction is dangerous or just a fallback option.”
Survey data shows contractors expect stable or increased work in 2026, but nearly all report continued hiring difficulties, regulatory complexity, and rising compliance costs tied to sustainability requirements.
Respondents expressed concern over uneven implementation of EPD and Buy Clean policies, noting that inconsistent specifications can disadvantage small and mid-sized firms.
Workforce shortages, permitting delays, and cost escalation continue to erode margins and strain schedules, even as contractors invest heavily in training, equipment, and modernization.
Despite the challenges, the prevailing industry mood is pragmatic rather than negative. Contractors are adapting—investing in people, technology, and processes—while urging policymakers to align funding, permitting, workforce development, and sustainability timelines more realistically.
As Sage Policy Group CEO Zachary Fritz summarized:
“Uncertainty ruled the construction industry in 2025… Those headwinds will exacerbate uncertainty related to the impending expiration of IIJA funding.”
The industry, contractors say, is ready to deliver. What remains uncertain is whether the systems supporting road building will move fast enough to keep pace.
Originally reported by Brandon Noel in For Construction Pros.
