We keep hearing about United States politicians bickering amongst themselves about whether or not creating construction projects bolsters the economy. From my perspective, construction will forever be a continual and ongoing necessity. Like air, water, and food, shelter and infrastructure are equally necessary for humanity’s survival. From time to time, every necessity requires cleansing and renewal for humans to live. However construction is often overlooked. Our society regularly operates under the misguided notion that the structures we build last forever when everyone basically knows that isn’t really true.
So for everyone who continually debates whether or not to put into place infrastructure improvement policies, here is a calculator that models the amount of jobs a construction project of a given size generates, assuming some known variables like average hourly rate, regular purchases, and taxes.
To begin this exercise, think about a single municipal construction project. Is it a park, repaving a street, fire or police station, a highway section or a bridge?
Let’s say the project is a $10 million dollar project.
How many jobs and what types of jobs do you think there are in that single project? I am willing to bet the rough number you come up with in your head under-estimates the number of humans actually needed. The construction industry is the third largest industry in the United States. It employs millions of workers, and when you consider many of those workers support families, the number of people touched by each project can be surprising.
The calculator below sheds some light on how many people are needed for a single construction project. The calculations are based on decades of construction estimating experience and empirical data sources. Some will challenge the assumptions and calculations, so the calculator is made to adjust the values and recalculate if needed. If you think that one of the values is incorrect, simply change its associated editable green cells, to change the outcome.
With a little experimentation, I am sure that you will come away with the realization that with every construction project, there is real work for a variety of real people on who real families depend.
Of course, the above calculator only serves as a rough guide and the fact that every project is unique, makes it that much more imperfect. Still, for our purposes it does an excellent job of illustrating our point that:
“Construction Projects Create and Sustain Jobs!”
This calculator is proprietary so I’m not going to give away the formulas. Still, I expect that I might receive a certain amount of criticism for it, so I think it will help if you have an understanding of some of the assumptions I used for the model:
- Project Cost is the total cost of the project for design and construction.
- A work-year is calculated based on 52, 40 hour work weeks, or 2080 hours.
- Employee benefits and employment taxes are part of the ‘Average Hourly Rate’.
- Design Phase office support staff is not included as it varies greatly depending on company organization.
- Secondary expenditures are generated as a result of, and not in addition to, Primary Expenditures.
© 2012, RCartright. All rights reserved.