Modeling Construction Impacts

I am looking at a construction budget of $5,775,000 for a new Hotel in Montezuma County Colorado. Using Dollar year 2012 I am getting Induced effects of 9.8 (employment), Labor income $269,5230 and Value added $647,657. What do I have to do to find out the Direct and Indirect figures for these same variables?
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  • How are you running the analysis? If you are running an Industry Change Activity, the direct effects are those that the software fills in for you in the Setup Activities screen when you enter the Industry Sales value. You can also see these (and the indirect and induced effects) in the Summary Results tab of the Scenario Results screen.
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  • I am doing an analysis by parts. I have a payroll ($250-350 k annually)and number of employees (15-20) for the operational phase, and am trying to figure out labor and labor income impacts during the construction phase. The only info I have for the construction phase is a projected budget of $5,775,000.
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  • The simplest way for you to do this is to estimate direct construction Output by using the Study Area Data for the appropriate construction sector and then running that as an Industry Change Activity. Assuming that the $5,775,000 includes payroll: 1. Go to Customize > Study Area Data and select the appropriate construction sector. 2. Divide Output by the sum of Intermediate Expenditures + Employee Compensation. This gives you an Output per budget ratio. 3. Multiply this ratio by your budget to get an estimate of your direct Output. 4. Create an Industry Change Activity for the construction sector and enter this output value into the Industry Sales field. Zero out Proprietor Income then run the analysis.
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  • Thanks Jenny!
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  • When analyzing construction impacts, I've generally assumed that the construction budget is equal to direct output. Your response above suggests that, doing so would be underestimating direct output. Can you confirm if that's the correct interpretation? Are there situations in which the construction budget would be equal to direct output?
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  • If the construction budget includes line items for profits and taxes on production, then the construction budget would indeed be equal to direct output. Oftentimes, analysts are working with budgets that include just the materials and labor; in those cases, the Study Area Data can be used to get an estimate of direct OPI and IBT.
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