Construction analysis question

I'm analyzing a multi-year construction project. The total investment includes contingencies, legal and processing fees for purchase of land and the land purchase. I know land purchase can't be included in the analysis, but how are legal and contingency costs handled? What, if any, sector, would these costs fall under (construction services?) Thanks!
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  • Hello, Regarding the legal and real estate fees (the processing fees for the land purchase), the following forum discussions should be helpful: Regarding the contingency costs, it really depends on whether or not they actually get spent as to whether they have any impact or not. You could run one scenario where they are spent and another where they are not to give you a range of likely impacts. For the case in which they are spent, I would simply add the amount to the other construction sector spending value unless you have a better idea as to what they might most likely be spent on.
  • Thanks I appreciate the help! Also, since I have a breakdown of costs for construction (engineering, environmental, etc.) over multiple years, should I do an analysis by parts or can I just use sector 36 and do a customized analysis per year? I was thinking about including separate events for each cost component category under one construction activity per year. What do you think?
  • If you are going to run it all through sector 36, then there is no need for separate Events. For example, if you ran 3 Events for sector 36 for $1 million each, that would be the exact same thing as running one single event for sector 36 for $3 million. No difference in results unless the separate events had different Event Years. Running everything through sector 36 is definitely the simplest way to do the analysis, but if your architectural/engineering costs and/or environmental consulting costs are much higher than the average for sector 36, you'll want to use the Analysis-By-Parts methodology to more accurately reflect your particular project. To find out the average proportion of sector 36's Total Output that goes toward these two items, for comparison purposes, go to Explore > Social Accounts > Balance Sheets tab > Commodity Demand tab and select sector 36 from the drop-down menu. Scroll down to commodities 3369 (architecture/engineering) and 3375 (environmental) and note the Gross Absorption values. Note that these percentages are dollar expenditures per dollar of [u]Total Industry Output[/u], as opposed to [u]budget[/u]. Recall that Output = non-labor inputs + labor costs + taxes + profit, so when comparing your percentages to IMPLAN's, be sure to calculate your percentage based on TIO. If you don't know TIO, then you can calculate new 'per dollar of non-labor budget' percentages for IMPLAN's data by dividing the Gross Inputs (found in the same table) for each of these two commodities by the non-labor budget for sector 36, which can be found in Gross Inputs column for the top row of this table (Total Commodity Demand).
  • Thanks! Turns out the input percentages fall right in line with the industry average (after land cost, inflation and contingencies)

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