espite shakeups in a few areas, Alaska’s construction industry is strong, according to the Associated General Contractors (AGC) of Alaska’s January 2025 Construction Spending Forecast.

The report, produced by McKinley Research Group and released in January, is an annual look at projects on the horizon in Alaska and whether spending in key categories is up or down. AGC of Alaska is the construction industry’s largest trade association, representing more than 600 businesses in all facets of the construction industry, from general contractors to banks and insurers.

In 2024, the forecast was mostly that private-sector spending was down and public-sector spending was up. The downward trend for private construction was largely due to high interest rates and the escalating cost of materials dampening commercial and residential construction, with public construction up due to federally authorized transportation bills that boosted spending.

This year, interest rates dipped a little, and businesses shared plans to advance projects, particularly related to air cargo and logistics projects at Ted Stevens Anchorage International Airport and through Alaska Housing Finance Corporation’s new $24 million Last Frontier Housing Initiative, created in 2024 to fund low-income and professional housing projects across the state.

Public-sector spending, however, is down, particularly in Alaska Department of Transportation and Public Facilities (DOT&PF)-related projects. The 2024 projection for highways and roads was $805 million versus the 2025 projection of $600 million—roughly $200 million down, year over year.

AGC of Alaska Executive Director Alicia Amberg has her eye on that number. “One of our top advocacy concerns right now is the concerning decrease in the amount of DOT work on the street, which doesn’t appear to be a one-off trend, experienced last year as a result of challenges with the STIP [Statewide Transportation Improvement Program],” Amberg told the Resource Development Council for Alaska at its February 6 breakfast forum, where the forecast was discussed. Her audience could well recall the disruption when federal highway officials rejected the initial submission of the state program, citing flaws that needed fixing.

Two days before that forum, Amberg and the AGC Department of Transportation Committee co-chairs, Marcus Trivette and Jeff Miller, testified before the Alaska House and Senate Transportation committees, asking for help in offsetting a roughly $300 million shortfall in contract payments made by the state to construction contractors.

The shortfall translates to job cuts. Amberg noted that one contractor in February had already made significant cuts to the company’s management team and was looking at having to lay off 10 percent of its workforce. The same contractor, she said, on February 4, 2024, had eight contracts in hand, ready for the year. This year, by that date, the contractor had only three.

“There are a few prime contractors who flew here to be with me today. Every single one of them is experiencing the same scenario. They are down 50 to 90 percent. These are specialized larger contractors; if they are having this experience, what is happening to the small mom-and-pop contractors?” she asked House Transportation Committee leadership.

While legislators expressed concerns about the job impact that a slower construction season might have, they did not add $300 million to the state budget to boost transportation spending.

But the back and forth did have other results. DOT&PF staff set up monthly public Tentative Advertising Schedule updates in which regional preconstruction engineers go over projects they expect to “hit the street” or go out for bid in the next few months. The first meeting was held March 19. Set up as a webinar, it wasn’t clear to viewers how many attended, and DOT&PF officials did not take questions live, but they did invite participants to type them into a question area. DOT&PF leaders say this was due to the webinar—rather than group meeting—format, where questions might have appeared publicly in the chat.

DOT&PF Deputy Commissioner Katherine Keith said during the meeting that the goal was to provide contractors with “a certain degree of certainty” about the department’s upcoming schedule of work. “How we’re communicating about this is important and will inform how we communicate about it in the next meeting,” Keith told those who attended the meeting.

DOT&PF has since set up a website for the Tentative Advertising Schedule monthly update meetings, where five questions asked during the first update have been posted, along with DOT&PF responses.

After a post-presentation meeting with contractors, some of whom also attended the meeting, Amberg said she planned to submit to DOT&PF a list of points about the meeting that those she spoke with hope are addressed in future meetings. Those points include information about projects that were dropped from the list without comment, addressing questions for each region as they came up during the presentation, and allowing the meeting to be more of a dialogue between presenters—some of whom did not appear on screen—and audience members.

Meanwhile, DOT&PF is working diligently to bring projects forward. Commissioner Ryan Anderson in February told state legislators he planned to have $100 million in projects advertised by April 1 and another $100 million by May 1. DOT&PF Director of Communications Shannon McCarthy on March 28 said the department almost reached the first milestone, with $97.5 million advertised by that point.

“We view the construction contractors as our partners. We strive for continuous conversation with them,” McCarthy says. “We’ll keep updating our efforts to try to ensure that we have that two-way communication.”

The AGC forecast includes some bright spots for private-sector construction. Topping the list, with an estimated $1.49 billion in construction projects expected to hit the street this year, is oil and gas development. That’s largely due to Santos’ expectation that its Pikka Phase 1 project will wrap up this year while work continues on ConocoPhillips Alaska’s Willow Project through 2029.

The ramped-up work on the North Slope accounts for much of the uptick in private construction spending forecast for this year, says McKinley Research Group President Katie Berry.

Santos, on March 19, reported the Pikka Project Phase 1 is about 80 percent complete, with the final push to first oil possible in late 2025. Santos Executive Vice President and Alaska President Bruce Dingeman says key production modules must be barged to the Arctic Ocean via the Hay River in Canada’s Northwest Territories, tasks that depend on logistics and weather, so the company is estimating first oil will more likely flow in mid-2026. Pikka Phase 1 is expected to deliver 80,000 barrels per day at full production. The Pikka update accompanied an announcement that new oil was developed at the Sockeye-2 exploration well east of Prudhoe Bay, a development in which Santos holds a one-quarter stake, with APA Corporation holding a 50 percent stake and Lagniappe Alaska holding the remaining 25 percent share.

The ConocoPhillips Alaska Willow Project, with estimated production at 180,000 barrels of oil per day at peak operation, created more than 2,400 construction jobs over the winter and is expected to support 300 long-term jobs, with first oil expected in 2029. It’s the largest project to be developed on the North Slope in more than twenty years.

ConocoPhillips Alaska’s Nuna drill site 3T project in the Kuparuk River Unit (KRU) reached first oil production in December 2024. It was for this site that ConocoPhillips Alaska built an oil field production module—the first built in Alaska in more than twenty years—and shipped it to KRU last summer. The company says it plans to have a total of twenty-nine development wells, along with additional on-pad infrastructure and pipelines that will connect the new wells to existing KRU processing facilities.

Although the oil and gas construction spending makes up a little more than 40 percent of all private construction spending outlined in the AGC forecast, there are other glimmers of hope. Most other categories on the spending forecast—utilities, residential, other basic industry, and other industrial/commercial—saw upward movement of $10 million or more over last year’s forecast.

Construction spending related to hospitals and healthcare remained flat, with about $260 million estimated in spending this year, and mining saw a downward trend from $165 million in 2024 to $135 million in 2025. That’s largely due to building activity at the Manh Choh gold mine wrapping up now that the mine is in production, Berry says.

Mining, she notes, can be tricky to categorize. Some activity, such as work done to support exploration, doesn’t lead to actual construction. Berry asks, “What is actual construction work versus capitalized drilling or other capital expenses that are not construction?”

She notes that the Ambler Access Road, currently on hold, was not part of the forecast, but that project is likely to move forward again. A January 20 executive order entitled “Unleashing Alaska’s Extraordinary Resource Potential” calls for review of a 2024 US Bureau of Land Management “No Build” decision that ultimately stalled the proposed 211-mile industrial road. The order also reinstates a 2020 Record of Decision that had allowed the project to move forward during the first Trump administration. The timing of the order meant the project was not included in the forecast, Berry says, but she notes McKinley Research will be tracking it for future forecasts.

While the highways and roads category took the hardest hit, public-sector spending is mostly down across the board. Education-related construction spending is down by $95 million from last year, with an estimated $240 million forecast for this year. Also down by $95 million is airports, ports and harbors, and railroad spending. Other state and local government construction spending was estimated to be down by $20 million this year over last.

That doesn’t mean public works projects are not moving forward. Construction on a permanent school in Kaktovik is expected to wrap up this year, and Cornerstone General Contractors has begun work on the roughly $50 million Inlet View Elementary School replacement in Anchorage. Other education-related projects, both at K–12 schools and the University of Alaska, are moving forward. And $470 million of construction spending is estimated for airports, ports and harbors, and railroad projects, including major airport infrastructure in Deadhorse, Kodiak, Nightmute, and Kongiganak, along with airport terminal improvements in Sitka and Ketchikan.

The Port of Nome project has potential to result in higher spending than the 2025 forecast estimated. Port construction was delayed when initial pricing was well above US Army Corps of Engineers (USACE) statutory limits in October 2024, so the project was advertised again with a smaller scope. Instead of a Phase 1 that comprised a 3,500-linear-foot West Causeway extension with a 2,000-foot open-cell sheet pile dock, the Phase 1A project will include a 1,200-linear-foot causeway and 600-foot dock with the remainder of the project to be advertised as future phases of work. Phase 1A carries an estimated cost between $250 million and $500 million. The bid award is expected in August 2025, and work could begin in spring 2026.

A bright spot on the public-sector outlook is in national defense construction spending, which is up from $600 million forecast in 2024 to $940 million forecast in 2025. That amount includes extensive USACE-Alaska District construction, which includes residential upgrades statewide, new fuel infrastructure, major pier repairs on Shemya Island, construction of the Joint Integrated Test and Training Center on Joint Base Elmendorf-Richardson, and significant US Coast Guard projects in Kodiak and Ketchikan, along with Coast Guard communication site maintenance projects statewide.

The Joint Integrated Test and Training Center, considered a US Department of Defense mega-project with an estimated cost of between $250 million and $500 million, is expected to begin construction in the fall. Solicitations closed in February, with a project award expected in the summer.

Also on the list of USACE-Alaska District projects is a $364 million runway extension at Joint Base Elmendorf- Richardson, which will extend Runway 16/34 from 7,500 feet to 10,000 feet and add supporting taxiways, along with providing shoulders, grading, drainage, an arm/disarm pad, airfield lighting, and an instrument landing system.

One of the challenges in creating this year’s forecast, Berry says, was guessing how the Trump administration will handle projects funded under the previous administration. Some projects funded under the Infrastructure Investment and Jobs Act were paused in January, pending further federal review. That bipartisan infrastructure bill included large pots of funding, particularly related to broadband internet access, that are included in that review.

“There’s about a billion dollars in funding [to Alaska] that this year could be awarded to subgrantees, or might not,” Berry says. “If you have a billion dollars in the balance, clearly it’s not a billion going out to contractors [this year], but some of it might.”

Berry notes that McKinley Research doesn’t publish revisions to its forecast, so researchers will be noting the changes when crafting the 2026 forecast.