A new step-by-step methodology for estimation of operating speed and capacity in work zones on highways is presented and validated. The underlying principle of this methodology is that the operating factors in work zones, which include work intensity, lane width, lateral clearance, and other factors, cause motorists to reduce their speed. The reduced speed adversely affects the capacity of the work zones. Video data were collected for around 30 h from 11 work zones on Interstate highways in Illinois where one of the two lanes was closed. These work zones included eight long-term and three short-term ones. Work intensity in the work zone was quantified, and the relationship between work intensity and consequent speed reduction in construction zones was established. Speed reduction in a long-term work zone was established with field data, and the reduction in a short-term work zone was established with data from a driver survey. These relationships were used to compute the operating speed in the work zone. A speed-flow curve, which represents the operating conditions in work zones, was developed. The congested part of the curve was developed with the field data, corresponding to platooning vehicles, and the uncongested part was developed from information in the "Highway Capacity Manual" and the educated judgment of the authors. Once the operating speed is known, this curve can be used to obtain the capacity of the work zone. The developed methodology was used to predict the operating speed and capacity of work zones, and these predictions were compared with field data for validation.