Until the 18th century there were no official roads in Iceland, only paths and barely visible tracks which people followed with the help of cairns for a few kilometers in either direction.

These places had long been sites for Danish tradesmen but as these trading posts became villages, communication and infrastructure were bound to improve due to increased traffic.

In the 1980s and 1990s, when the huge wave of privatisation in Iceland and Western Europe, independent contractors became more common in road construction, both in urban and rural areas.

Vegagerðin reduced its direct labour workforce and began to rely more and more on private contractors for building roads and other infrastructure.

Although the word vegagerðin means "the road-makers", it is now an administrative organisation which employs mainly office staff, doing measuring, planning and tendering.

[3] Vegagerðin has its headquarters in Garðabær near the capital, Reykjavík, but its activity in the countryside is controlled from outposts in various towns and the country is divided into four administrative divisions.