Where does the money go? Economic flow analysis of construction projects

ABSTRACT

A new approach is introduced for analysing the economic flows in a construction project that will complement the existing methods. The main focus of the new method is to trace the flow of costs in the project and identify their spatial characteristics as well as who are the final recipients. This type of analysis highlights the flow of costs of the specific project in the local economy. It can be used for decision-making purposes from the project-commissioning party. Costs were divided into six categories, namely: labour, materials, energy, office overheads, taxes and personnel, and into two levels: local and national. Three case studies of stone and reinforced concrete structures were selected and analysed to test the application of this method. The case studies showed that this method and the representation by a Sankey diagram can provide useful insights regarding both the spatialized distribution of the cost of a project and the economic flows going to direct labour versus overhead and taxes. For future projects, local authorities or developers can select the most economically suitable strategy maximizing the income of the local community.

KEYWORDS:

• built environment
• construction costs
• development
• economic flows
• labour
• local development
• local economy
• localization
• material flow

Acknowledgements

The authors thank Konstantinos Ioannidis and Lacratis Constructions Partnership for their invaluable help in providing all information and data for the projects in Athens and Nafplion. They also thank Chiara and Giuseppe Ongaro for providing data on stone production, and Nam Le Thanh for discussion and feedback on our ideas. In addition, they sincerely thank the journal’s anonymous reviewers for their insightful comments, which greatly improved the quality and structure of the paper. A preliminary version of this research was presented in the Sustainable Built Environment 2016 Conference in Zurich and was selected as one of the best contributions.

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Guillaume Habert http://orcid.org/0000-0003-3533-7896

Dimitra Ioannidou http://orcid.org/0000-0001-5461-1139