Skyrocketing highway construction costs in Indiana don’t just come down to inflation, state and industry leaders say.

Indiana spent an average of $46 million to construct a centerline mile of interstate highway in the 2026 state fiscal year, which ended in June. That’s up nearly 450% from the $8.4 million average recorded in the 2015 fiscal year, according to a slide shared in a late August meeting of the State Budget Committee meeting.

“That’s unbelievable,” Sen. Fady Qaddoura, D-Indianapolis, said.

The figures represent centerline miles built as part of full reconstruction or added travel lane plans. Some years had more or less of those projects, or “none at all,” Indiana Department of Transportation spokeswoman Natalie Garrett said.

Costs include the lane replacements and additions, widened and rebuilt shoulders, barrier walls and guardrails, traffic and drainage control, materials, labor and more. Garrett offered inflation in material costs, supply chain shortages and even the pandemic as factors.

Other states are seeing higher costs, too. Kentucky Transportation Cabinet spokesman Allen Blair acknowledged increases but said costs differ by project and are difficult to compare across states.

However, Indiana is “unique,” Garrett said: the state is building additional capacity where others are focused on highway maintenance or federal bridge funding.

What and where

Indiana is tackling bigger projects now, leading to higher costs, said Brian Gould, the executive director of Build Indiana Council.

After the General Assembly approved a major road-funding law in 2017, he said the industry was largely asked to perform “pretty basic” resurfacing. Contractors milled off the top two inches of spent asphalt and put down another two to four inches of fresh material.

Since then, Gould said, the state has shifted from resurfacing to a variety of major capital projects, often near large metropolitan areas.

“Those are really your two biggest factors when it comes to cost: what what do you want us to build, to what scale, and where do you want it located at?” Gould said.

INDOT’s average in the last fiscal year included two particularly complicated projects: Revive I-70 in Wayne County and the Safer Drive 65 in Scott and Clark counties.

“Both of these projects require complex maintenance of traffic set-ups to sustain high traffic volumes on I-70 and I-65 during construction, which adds to the cost,” Garrett said.

Urban work is typically more expensive: more front-end engineering to manage the higher displaced vehicle traffic, more lanes of work to do, more barriers to protect workers and more, pricier materials.

Major interstate and bridge work is “very heavy on the steel and very heavy on the concrete side — and those are two materials specifically that we’ve seen a huge increase in cost over the last five years or so, in part due to inflation, tariffs (and) just the demand for those materials,” Gould said. 

The Federal Highway Administration’s national highway construction cost index tracks the impacts of price changes for asphalt, base stone, bridges, concrete, drainage, electrical and more. The index rose by more than 60% from 2020 through 2025.

Road builders are also competing with other big developers — like data centers.

“We’ve had kind of a booming economy here in Indiana, and data centers are consuming as much concrete and steel and asphalt as job sites are, so we’re competing against them as well,” Gould said. “… The cost of the equipment that we use on our projects, it’s challenging to find them right now because data centers are consuming a lot of them.”

Controlling costs

INDOT uses a variety of strategies to manage expenses, per Garrett.

Projects are competitively bid, and the agency must generally pick the lowest-priced proposal.

The agency also uses “alternative delivery” methods that get contractors involved pre-construction.

“This early involvement is most useful on complex projects as it has shown to enhance risk mitigation, accelerate delivery, increase industry collaboration, incentivize design innovations and provide greater cost certainty through all phases of project development,” Garrett said.

INDOT additionally bundles its projects within contracts based on timing, location and other needs. Garrett said bundling helps with more than spending, by limiting traffic impacts to drivers.

She touted Indiana as the only state country that maintains 20-year asset management plans for infrastructure like pavement, bridges, drainage and more. INDOT uses the plans to “intervene early and often” with lower cost maintenance instead of leaving assets to decline until they need to be totally replaced at a higher cost, Garrett said.

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