Irresponsible firms who allow their road works to overrun will face penalties of up to £25,000 a day under plans published by Transport Minister Sadiq Khan.
The Government also set out proposals for a tougher inspection regime giving local councils more powers to charge utility companies for inspecting road works in their streets.
Mr Khan said: "These new measures show just how serious the Government is about tackling problem road works which cost our economy £4.2 billion each year.
"There is no excuse for those companies who allow their works to drag on for longer than they should, causing inconvenience and frustration for the travelling public. The new charges and tougher inspection regime will provide a strong incentive for utilities to finish works on time or pay for the disruption they cause."
The proposals are intended to provide utility companies with a strong incentive to finish works on time. Utility firms will not be permitted to pass the cost of these charges on to their customers.
The new inspection regime will mean that utility firms that consistently fail to keep their sites safe, or fail to replace the road surface properly, could be required to pay for additional inspections by local councils.
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