- Economic & Fiscal Impact Analysis
As economic development organizations are facing increased pressure and questions regarding the distribution of financial assistance, many are looking to quantify the impact of the assistance to the community in order to make good decisions. Many are looking not only at the fiscal impacts, but also the economic impacts of the project in question and how it will create new jobs, earnings, and sales within the local economy.
This is an important undertaking and one that will only prove to help economic development organizations gain the publics’ trust and document the process under which their decisions were made. However, there are four key mistakes that some economic development organizations make when completing an economic and fiscal impact analysis – none of which have to do with the actual numbers.
- Oversimplifying or Overcomplicating: All projects have their own nuances and require customization to ensure the right questions are being asked and answered. It is unhelpful to apply a complicated process to a simple project, just as it is unhelpful to apply a simple process to a complicated project. Ensuring the right approach is taken and a strong methodology is used is critical to guaranteeing the analysis is done properly.
- Lack of Visual Appeal: Finding the right way to communicate the results is important to making sure that the public and others are able to fully comprehend the findings. By including infographics, simple to understand charts, and clear language, the analysis is more likely to be accepted and adopted by the reader and used by decision makers.
- Undertaking the Analysis Too Early in Process: Certain inputs are required to reasonably model the impact of a project. If an impact analysis is undertaken too early in the planning process before solid estimates of construction spending and on-site operations are available, you may be wasting time and resources. Waiting until you are comfortable with the information you have will help avoid having to redo the analysis as project scope changes.
- Limited Understanding of Process and Results: Measuring the impact of a particular project or industry requires a series of assumptions to be made, and without a full understanding of the methodology it is difficult to stand behind the report. If you feel like you don’t fully understand the analysis that you are presenting to the board and public, it can be difficult to be confident in the results. Being clear on what input was used, how the output was generated, and what it all means is important to being successful in understanding and explaining the results.
Impact analyses are an important tool for economic developers when they are looking to understand and communicate the benefit/cost of a particular project, event, or industry. Being able to establish a proper methodology, communicate the findings, and understand the process are all part of being a strong economic development organization that can stand behind the financial assistance decisions being made.
If your team is struggling in any of these areas, reach out and lets talk about it.