Highway construction projects are associated with various risks. It is compulsory for highway project stakeholders to include project risk management in their project plans to avoid time and cost overrun. The main objective of this paper is to improve the performance of highway construction projects by determining the most critical risk factors influencing their cost. A total of 29 risk factors leading to cost overrun were identified from the literature. These factors were used to develop a questionnaire which was sent to construction engineers working on highway construction projects. From the analysis, 12 factors, viz., improper planning, delay in land acquisition, delay in project approval and permits, delay in making progressive payments, inaccurate cost estimate, delay in inspections, corruption at different levels, price increase of materials, shortage of equipment, machinery and tools, shortage of skilled manpower, frequent breakdown of equipment, and difficulties in financing, were identified as critical risk factors causing cost overrun in highway construction projects. The result of this study will help project stakeholders to develop strategies to mitigate the adverse effects of such risks and improve their performance.