Common Construction Analysis Questions

1. What Value Is Entered for Output in a Construction Impact?

For the new construction sectors, Output is the total value of the structures being built within the Region, but does not include items that are not integral to the structure itself. The value entered for Output should include the total construction budget (payroll + non-payroll) plus any profits and indirect business taxes (i.e., taxes on production) paid by the construction firm.

The value entered in Industry Output for construction should be the full cost of the structure, and only the structure. This includes hard costs and soft costs.  Because Employment, by definition, is based on where the job is located not where an individual resides, Employment should include the full value full-time, part-time and temporary Employment on the job site during the year. Additional considerations of costs attributed to construction are considered below.

2. How Do I See What Soft Costs are Included in the Construction Sectors?

You can view the current spending pattern of the construction sector you are working with going to Region Details and navigating to 

     Social Accounts > Balance Sheets > Industry Balance Sheet > Commodity Demand

You will select your Industry using the Filter. Gross Absorption represents the total amount of each Commodity that is required for production, while the Regional Absorption shows the amount of that Commodity that will be purchased locally when an analysis is run.

3. How Can These Be Modified if They Don't Match My Specific Project?

If you would like to modify this to match your data you can do so by using an Industry Spending Pattern Event. You can then edit the specific Commodities by following the directions in the article Editing Industry Spending Pattern Events.

4. How Do I Model the Impact of Fees and Tax Revenues Paid by a Construction Project?

Fees, permits, and taxes do not contribute directly to impacts in the model, but you can choose to create separate Events to examine impacts associated to new government revenues. Here are a couple of cautions to keep in mind when considering modeling the impacts of government spending.

  1. The Federal government is not likely to change its spending behavior as a result of local economic activity.
  2. Locally collected federal tax dollars are unlikely to return to the region from which they are collected.
  3. State and Local taxes, fees, and permits can be run through the State/Local Government Non-Education Institutional Spending Pattern.
  4. It is also important to keep in mind that depending on the definition of your region, not all collected state or county taxes may return to your region.

5. How Should Jobs Associated to Multi-year Construction Impacts be Reported?

We recommend that you divide the impact over the number of years of the project and report the average jobs per year. Also, take a look at the article Construction: Building Across Years.

For example, if a construction site generates 85 jobs across 3 years, then the report would state the supported jobs as 85/3 or 28 jobs per year. This is because the jobs on the construction site are not cumulative, in the same way that an employee working a job for 3 years is not viewed as 3 jobs. We recommend reporting average annual jobs in this way.

We also recommend considering construction jobs as supported instead of created. This is because construction jobs are typically site-to-site and the jobs on the site are constantly changing based on the state of the construction project. 

Suppose you are investigating the impacts of a new sports event center like a new football stadium. It is important to distinguish the construction impacts of the stadium ("one-time" impacts) from the operations impacts ("on-going" impacts). Construction impacts arise from the activity of building the stadium, and occur only while the project is being built. These impacts essentially end when the project is complete. For example, job impacts associated with construction of a site are not "permanent", because these jobs only exist while the project is underway. Even if a construction projects lasts several years, these positions have a clear termination point.

In contrast, operating the built facility is presumed to be "on-going", and the impacts are usually described on an annual basis. For our stadium example, the annual impacts would result from the operating budget expenditures to run the stadium, as well as, on- and off-site expenditures of visitors to the events. An analyst reporting the impacts of projects like this should refrain from combining the construction and operations impacts into a single impact estimate; it just makes more sense to keep the two kinds of impacts separate.

6. Why are there no Indirect or Induced Effects to the Construction Industries in IMPLAN?

Production functions show goods and services needed for the process of creating goods and services. They are current accounts only and do not include investment. By definition, new construction is an investment and is only sold to final demand. Therefore, new construction will not show up as an indirect or induced effect for any industry.



Construction: Building the Right Model

Construction: Building Across Years


Updated March 29, 2021