How to Use the AGC Construction Impact Model

Overview

The Associated General Contractors of America (AGC) has partnered with regional economist Brian Lewandowski of the University of Colorado Boulder (Brian.Lewandowski@colorado.edu) to develop the AGC Construction Impact Model.

This tool enables AGC members, chapters, policymakers, and researchers to estimate the economic impact of construction investment by state and by project type. The model projects how investments in 10 distinct categories of construction affect:

  • State employment

  • Employee and labor compensation

  • Value added (contribution to state GDP)

  • Gross output (total in-state spending)

 

How to Use the Calculator

Navigate to the Calculator tab and enter values that reflect your project. Here’s a step-by-step guide:

Classification Inputs

Select from dropdown menus or manually enter:

  • Geography: Choose a state or the U.S. as a whole.

  • Project Start Year: Select the year your project begins.

  • Report Year ($): Adjust for inflation by selecting a base year for dollar values.

  • Project Duration (Years): Defines how long the investment is spread (e.g., 1 year vs. 3 years).

  • Investment Amount ($): Input total investment to scale the model results.

  • Project Type: Choose the type of construction activity. (See project categories below.)

Project Types

Projects fall under the following construction and service categories:

New Construction

  • Construction of new health care structures

  • Construction of new manufacturing structures

  • Construction of new power and communication structures

  • Construction of new educational and vocational structures

  • Construction of new highways and streets

  • Construction of new commercial structures, including farm structures

  • Construction of other new nonresidential structures

  • Construction of new single-family residential structures

  • Construction of new multifamily residential structures

  • Construction of other new residential structures

Maintenance and Repair Construction

  • Maintenance and repair construction of nonresidential structures

  • Maintenance and repair construction of residential structures

  • Maintenance and repair construction of highways, streets, bridges, and tunnels

Professional Services

  • Architectural, engineering, and related services

 

Understanding the Results

After entering your inputs, the model generates two sets of outputs:

Projected Economic Impact

This section provides a paragraph summary followed by a detailed table. The results break down into:

  • Direct effects: Jobs and spending from the construction activity itself

  • Indirect effects: Impacts from suppliers and service providers

  • Induced effects: Additional household spending from worker income

Also displayed are:

  • Employment (total and average)

  • Employee compensation (wages, salaries, benefits)

  • Labor income (including income from sole proprietors)

  • Value added (contribution to state GDP)

  • Gross output (total in-state economic activity generated)

Example:
A 3-year, $100 million investment in the construction of new commercial structures in Alabama (beginning in 2025) supports:

  • 874 total jobs in Alabama (291 per year)

    • 567 direct construction jobs

    • 132 indirect jobs at suppliers and service providers

    • 175 induced jobs across the economy

  • $53.5 million in total labor income

    • $40.9 million in employee compensation

  • $82.8 million in value added (state GDP)

  • $164.5 million in gross output

    • $100.0 million to contractors

    • $35.2 million to in-state suppliers

    • $29.3 million from additional household and business spending

Top 10 Industry Impacts

The second results table lists the top 10 in-state industries by sales growth, based on the selected construction project. These include:

  • Construction (receives the full investment amount)

  • Industries involved in supplying materials and services (e.g., ready-mix concrete, architecture)

  • Industries benefiting from household spending by project workers and owners (e.g., housing, retail)

 

How the Model Works

The Construction Impact Model uses economic multipliers from IMPLAN (www.implan.com), a widely used input-output model, combined with data from the Bureau of Economic Analysis (BEA). It calculates:

  • Direct effects: Based on spending directly related to construction

  • Indirect effects: From supplier inputs and services

  • Induced effects: From increased household income and related spending

The relationships used in the model are based on historical averages. As such, results should be interpreted as general estimates, not precise forecasts for individual projects. Actual impacts may vary based on timing, geography, material costs, labor availability, and other factors.

Still, the model provides a useful and consistent method for estimating the scale and nature of benefits associated with different types of construction investment.

 

Who Can Benefit from This Tool?

The AGC Construction Impact Model is designed to support:

  • Contractors and suppliers assessing potential demand and workforce needs

  • Chapter leaders advocating for public investment or policy change

  • Researchers and consultants evaluating construction’s role in state economies

  • Public officials and decision-makers examining infrastructure and private development impacts

  • Communications teams preparing economic talking points or presentations