Construction Soft costs

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    lynettehatton4

    Hi Sydney,

     

    This can be done with Analysis-by-Parts (ABP). You'd need to import the appropriate construction Spending Pattern and eliminate the commodity Events that are relevant to your "soft costs" and normalize the Spending Pattern. You'd want to be sure your Event Years in the Spending Pattern are in the Dollar Year of your expenditure data, then make the non-soft cost expenditure dollars the Activity Level. Then the construction labor is separately modeled as a Labor Income Change. (Note: ABP leaves out the Direct Effect which will have to be added back in by you). 

    Since the soft costs would be excluded from the ABP, you'd then be able to model those soft costs as Industry Changes. This would require some estimation since you don't know the breakdown of the soft cost amounts. 

    You are absolutely right to go to the Commodity Demand page to see all Intermediate Expenditures of the construction sector. Once you have identified which of those commodities match your"soft costs" you can start the process of eliminating those expenditures in your main construction impact and model them separately as I've described here. 

     

    What that table is telling you in the "Gross Absorption" column is the percentage of the Industry's Output that goes to purchasing each of the commodities. Notice the total Gross Absorption is less than 1. It shows the total percentage of output going to purchase all Intermediate Expenditure commodities. When an Industry Spending Pattern is imported, the coefficients on each of the commodity Events will be in terms of percentage of Output just like in the Commodity Demand page. When the Spending Pattern is normalized, the coefficients sum to one, converting the coefficients to be in terms of percentage of Intermediate Expenditure. This is why when a commodity is deleted, the Spending Pattern should be normalized and the Activity Level should be set to the total Intermediate Expenditure dollars (excluding dollars that would be spent on the eliminated commodities) instead of total Output. 

    Please let me know if you have any additional questions!

     

  • Avatar
    SrichGSBS

    As a follow up to this question I've decided to explain my situation and hopefully get some guidance. I have received data from a client for a construction project with many subsections that fall into different Implan Construction Sectors. I have expenditures broken out by sub-project by year for 15 years.

    All of that is fine, but the issue I am dealing with is that they have provided soft costs as an aggregate by year. I currently have no information about the ratios involved in the soft costs and their percent of the total projects' costs per year varies drastically.

    For instance, in 2013 there is a single sub-project expenditure of $360,950 and then a Soft Costs expenditure of almost 3 million dollars (this is due, I am sure, to the fact that this is the initial year). In another year there are 19 sub-projects totaling 154.3 million with soft costs of 20 million. I'd like to run an analysis by year by sub project, but I have no idea what to do with these soft costs.

    The only information I have about them is this:

    In total aggregate for the Entire Project the soft costs are made up of "general conditions, pre-reconstruction services, A&E, Project management, art, owner material testing, professional services, and other miscellaneous costs that are paid out by SLC.  These costs will be rolled into the project costs when complete."

    I have asked for a bit more detail per year about the breakdown of soft costs, but I am unsure if I will get any more detail. I realized that even if I do, I am not sure how to make sure that I am not double counting soft costs (or something like that) as the construction sectors account for both hard and soft costs. 

    Any help is greatly appreciated. Still trying to wrap my head around this one. 

    Thank you thank you,

    Sydney

  • Avatar
    SrichGSBS

    Also,

    Is there a way to zero out soft cost sectors in a model in order to work with these expenditures separately and then run the soft costs as their own thing?

  • Avatar
    SrichGSBS

    Hi Lynette,

    After I have imported the spending pattern, how do I apply it to a model with an activity? How do I add back in direct effect? Which activity level am I changing? What is meant by normalizing a spending pattern?

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    SrichGSBS

    I should note that I am using Implan online.

  • Avatar
    lynettehatton4

    Hi Sydney,

    Here's our article on ABP  - https://implanhelp.zendesk.com/hc/en-us/articles/360000814393-Basics-of-Analysis-By-Parts-IMPLAN-Online-

     

    Here's the link to our video: http://implan.com/analysis-by-parts-implan-online/

    The spending pattern imports an activity with a collection of events. You can adjust those events to suit your needs.

    Adding back the direct effect requires you to create a separate activity with just the direct inputs, calculate those then add just that line item to the labor income change event you do for the ABP analysis (so, you're adding it independently of the model, just as a part of your results)

    Normalizing, as discussed above, is just making sure the coefficients to the spending pattern will equal to one after subtracting whichever soft costs you don't have a value for.

    If you need additional assistance with this concept, I can suggest a Project consultation or project review and one of our economists can answer any questions that may arise http://implan.com/products/#projectconsultation

    This is just a starting point so please let me know if you have any questions.

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    SrichGSBS

    Alright,

    is there a way to set the even year for an activity so that I do not have to manually change each of these event years for my construction sector to 2018?

  • Avatar
    lynettehatton4

    Yes, there is!

    Go to the left side carrot and extend the activity details. Then, where it says "Change All", select that option and choose "event year" change it to 2018 and then all of the events will have that event year.

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