Capital Investment

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    IMPLAN Support
    Hello Rob, You would differentiate between these two for exactly the reason that you have described. If the capital investment is industry specific i.e. Agricultural Investment, you would use the BEA spending pattern. If the capital is investment is construction related, you would relate that to construction type. Both Industry Spending Patterns and Institution Spending Patterns are similar in the sense that neither includes capital (i.e., investment) purchases; rather, they include only those goods and services that are used up in the production process and thus must be repurchased annually. They do include purchases of repair and maintenance to depreciable products, but not the purchases of these products themselves. Industry Spending Patterns (such as that used in the linked example) are used to analyze a business or industry's operations - not its capital investments. The exception is if you are using the Industry Spending Pattern for one of the construction sectors, which is appropriate for a construction-type investment. In the case of your highway improvements, the Industry Spending Pattern for the highway construction sector from our old 509 sectoring scheme is a good option. You may also want to consider using the old sector for water and sewage plant construction. You can find these spending patterns by going to Activity Options > Import > From Another Model, then navigate to the MIG\Implan\Utilities folder and select the "SpendingPatterns_for_Operations_by_509Industries_MIGActLib440.impdb" file and select sector 509-039 and 509-040. Note that when using an Industry Spending Pattern (as in these two cases), you'll need to run an accompanying Labor Income Change as shown in the linked example. This is not necessary for the Investment Spending Patterns. Please let us know if you have any additional questions.
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    YardCrowes
    Thank you for the quick reply. As you probably guessed I meant to say "BEA-Investment Pattern vs. Industry Spending Pattern" in my first post, but you answered it perfectly. What if I do not know the labor income amount? Is there a good rule of thumb to use (such as 25% of the funds will go to labor or something to find out)?
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    IMPLAN Support
    Hi Rob, For the construction spending, the best 'guess' would be to map the Labor Income portion of the industry to it's closest companion in the current IMPLAN Sectoring scheme. For 509-39 and 509-40 that would be Sector 36. The imported spending pattern will reflect a Sum of Event Values less than 1.00. The difference between the Sum of Event Values and 1.00 is the Value Added coefficient. By going to the Explore>Study Area Data menu you can chose the View By: Industry Detail sheet to see the values paid to Employment Compensation and to Proprietor Income for Sector 36. The View By: Industry Summary can then be selected to pull the Total Value Added for Sector 36. You can then divide Employment Compensation/Total Value Added and Proprietor Income/Total Value Added to determine the ratios of compensation and income to Total Value Added. From this you can multiply these ratios by your total Value Added for construction, based on the proportion assigned by the spending pattern, to determine the value you should apply to each Event (one Event for Employment Compensation and one Event for Proprietor Income in your Labor Income Change Activity). For example if your Industry Spending Pattern summed to 0.59 the Value Added coefficient would be .41. So for a million dollars, Value Added would be $410,000. If you calculate from Sector 36 that 77% of this is Employment Compensation then $315,700 would be the Event value for 5001 Employment Compensation, and if your regions Sector 36 Proprietor Income was 17% then your second Event for 6001 Proprietor Income would be for $69,700. If you don't have the Explore menu available,it can be turned on in File>User Preferences>Analysis tab. On the Analysis tab you will select Advanced Modeling, and then the Enable Accounts Explorer check box. Please let us know if you have any additional questions.
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    YardCrowes
    Thanks for the explanation. The example is particularly helpful. Last question. In the example, it's stated that "if you calculate from sector 36 that 77% of this is Employment Compensation then ... and if your regions Sector 36 Proprietor Income was 17%...". Is this 77% and the 17% coming from adding up Employee Compensation, Proprietor Income,and other Property income in that sector and then just finding the share on each? Just want to make sure that I'm not missing something and I'm including everything that is needed. Thanks again for all the help.
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    YardCrowes
    I think I got it. I take it as the share of total value added? So I add Employee Compensation+Proprietor Income + Other Property Type Income + Tax on Production and Imports, and then find the share of Employee Compensation and Proprietor Income? Thanks again
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    IMPLAN Support
    Hi Rob, That's exactly it! It is the share of Total Value Added which you get already summed from the View By: Industry Summary sheet in the Explore> Study Area Data. We were just trying to keep you from having to sum manually by recommending switching between those two views. Sorry if we caused confusion. Please let us know if you have any additional questions. IMPLAN Support Team
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    YardCrowes
    A previous post stated that 509-39 would be good for me to use for the Highway Maintenance in my capital expenditures. If I use 509-044 would that be acceptable as the title seems to be more in line? Will Sector 36 still line up for the value added calculations? Thanks so much for all your help. Capital expenditures aren't as straightforward and I appreciate the guidance.
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    IMPLAN Support
    Hi Rob, You certainly could use 509-044 if maintenance and repair are a better fit for the work you are looking at. As regards the Value Added, technically Sector 39 is its equivalent in the current Sectoring scheme. We would suggest, in general, to match it to the maintenance and repair Sector, unless your knowledge of the Sector would seem to make the ratios of Value Added components for Sector 36 more applicable. We are certainly glad to help, and you are right one of the great and yet difficult things about the software are its many nuances. Please let us know if you have any additional questions. IMPLAN Support Team
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    YardCrowes
    Hello, I have the "fun" of revisiting this topic after a very long time. Unfortunately, the link that I referenced in the first post is no longer available on the new site (are there any other articles about capital investment available?). It also appears that BEA investment patterns are now substituted with Investment 536 available for download (like I said, I haven't done this in a while so bear with me)? I've been given a quick question about a capital investment. But I don't have much to go on (just the spending) so I'm looking for a quick and easy estimate. Can I just import the Investment_With_Structures_536 (there are buildings involved in this), choose the correct name for the industry, and set the activity level to the dollar amount? I'm not sure how the 536Investment files work. Also, is there any documentation on the Investment patterns? The BEA investment patterns I can't load into the new data and it seems that the new investment patterns are commodity changes while "MIG2007ActLib440_SpendingPatterns_for_Investment_by_BEAIndustry" was an industry change. Thanks for any help you can give me.
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    IMPLAN Support
    Hi Rob, Sorry that you are running into these issues. We would love to assist you, but we can only provide free support for licensed IMPLAN users over our support forum and we cannot tie your forum login information to any our current IMPLAN subscriptions or data licenses. Could you please email us either an order number or the email address with which you download or subscribed as support@implan.com so that we can tie your forum information to your user account and you won't experience this issue in the future. Thank you, and again we apologize for any inconvenience this may cause you, IMPLAN Support Team
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    IMPLAN Support
    Thank you for the confirmation of the order information. We apologize for the inconvenience. We will also ensure all your information gets placed together so you won't have any issues with this in the future. You are correct there are new investment spending patterns associated to the new Sectoring scheme for 536. These do include both a 'with structure' and 'without structure' which is a change from earlier when they were FFE only. [url=http://implan.com/index.php?option=com_content&view=article&id=358&Itemid=1797 ]The following article[/url] will hopefully help you to be a little more comfortable with having to revisit this topic. You are also correct about the methodology for selecting a spending pattern to breakdown your lump sum Capital Expenditure value. You would try to find the best Industry correspondence to your investment Industry and then use that spending pattern. A couple of quick notes: [ul] [li]LPP should be set to SAM Model Value unless you happen to know that a particular item is not purchased locally or is purchased only locally.[/li] [li]The Sum of Event Values on these spending pattern is 1.00 so Activity Level should be set to the entire investment value.[/li] [li]Event Year should be the year of the investment dollar allocation.[/li] [/ul] It sounds like you probably already have it, but if not you can [url=http://implan.com/index.php?view=document&alias=7-investment-with-structures-536sector&category_slug=536&layout=default&option=com_docman&Itemid=1764 ]download the updated 536 Industry here[/url]: You are correct that the Activity Type changed, but they are both on a Commodity basis and they both will function the same way, the 536 was put together by a new team and they chose to do build the patterns as Commodity Change Activity Types instead of Industry Spending Patterns. The downside to this is that the Commodity Change Activity Type only stores 2 digits instead of 6 after the decimal, but values exist in every Event field and will be displayed in the results. Please let us know if you run into any other issues or concerns or if you need additional documentation. Hopefully this helps --Implan Support Staff
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    YardCrowes
    This is great. Thank you so much for the quick response. My last question related to this is an investment pattern with structures....does that mean construction included (I wish it did but I'm guessing it doesn't)? I'll probably have to use part of the funds for this investment pattern and the rest for construction. thanks so much again for all your help.
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    IMPLAN Support
    Hello, You are correct there are new investment spending patterns associated to the new Sectoring scheme for 536. These do include both a 'with structure' and 'without structure' which is a change from earlier when they were FFE only.
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