Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
TWO
PROFILE
OF
THE
CONSTRUCTION
AND
DEVELOPMENT
INDUSTRIES
2.1
INTRODUCTION
The
construction
and
development
(
C&
D)
industry
plays
an
integral
role
in
the
nation
 
s
economy,
contributing
approximately
five
percent
of
the
Gross
Domestic
Product.
Establishments
in
this
industry
are
involved
in
a
wide
variety
of
activities,
from
land
development
and
subdivision
to
homebuilding,
construction
of
nonresidential
buildings
and
other
structures,
heavy
construction
work
(
including
roadways
and
bridges)
,
and
a
myriad
of
special
trades
such
as
plumbing,
roofing,
electrical,

excavation,
and
demolition
work.
C&
D
activity
affecting
water
quality
typically
involves
site
selection
and
planning,
and
land­
disturbing
tasks
during
construction
such
as
clearing,
excavating
and
grading.

Disturbed
soil,
if
not
managed
properly,
can
be
easily
washed
off­
site
during
storm
events.
Storm
water
discharges
generated
during
construction
activities
can
cause
an
array
of
physical,
chemical
and
biological
impacts.
EPA
 
s
proposed
effluent
guidelines
for
the
C&
D
industry
seek
to
reduce
the
environmental
and
economic
effects
of
storm
water
runoff
from
construction
sites.

Several
characteristics
of
the
C&
D
industry
affect
the
structure
of
this
economic
analysis:

 
Individuals
(
e.
g.
,
homebuyers)
are
often
the
direct
customers
of
the
C&
D
industry.
With
individuals
as
the
direct
consumer
it
is
necessary
to
address
issues
such
as
cost
passthrough
and
the
impacts
of
regulations
on
housing
affordability.

 
There
are
complex
and
varying
relationships
between
developers
and
builders,
resulting
in
a
variety
of
different
business
models.
Developers
may
undertake
all
site
improvements
and
sell
completed
lots
directly
to
builders,
act
as
builders
themselves
and
remain
onsite
to
build
out
the
development,
or
some
combination
of
the
two.

 
The
C&
D
industry
is
dominated
by
small
businesses.
As
a
result,
EPA
will
carefully
consider
the
impacts
on
small
businesses
in
accordance
with
the
Regulatory
Flexibility
Act,
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA)
.

 
C&
D
activities
are
highly
localized.
This
suggests
that
a
regional
approach
to
analysis
is
appropriate
to
account
for
varying
market
conditions.

2­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
 
The
standard
industry
definitions
include
a
large
number
of
establishments
primarily
engaged
in
remodeling
activities,
who
are
less
likely
to
be
involved
in
land
disturbing
activities.

The
C&
D
industry
as
defined
for
this
proposed
rule
is
comprised
of
four
main
industry
groups
that
will
further
affect
the
structure
of
this
analysis:

 
Land
development
and
subdivision
 
Residential
construction
 
Nonresidential
construction
 
Heavy
construction
These
four
industry
groups
encompass
those
parts
of
the
industry
most
likely
to
engage
in
land
disturbing
activities.
Land
disturbing
activities
are
further
described
in
the
Development
Document
(
EPA,
2002a)
and
the
impacts
of
these
activities
are
described
in
the
Environmental
Assessment
(
EPA,

2002b)
.

2.
1
.
1
Recent
Trends
in
the
C&
D
Industry
Between
1992
and
1997,
the
number
of
establishments
with
payroll
in
the
C&
D
industries
overall
increased
from
235,789
to
261,617,
an
increase
of
11.0
percent
(
see
Table
2­
1)
.
This
overall
modest
increase
masks
some
significant
offsetting
changes
in
establishment
counts
within
individual
industries,
as
defined
under
the
North
American
Industrial
Classification
System
(
NAICS)
,
i.
e.
:

 
The
number
of
establishments
in
the
land
development
industry
group
(
NAICS
2331)
decreased
by
46.6
percent;
1
1
The
decrease
in
the
number
of
developers
may
have
been
a
response
to
changes
in
tax
laws
and
the
Financial
Institutions
Reform,
Recovery,
and
Enforcement
Act
(
FIRREA)
of
1989
(
Pub.
L.
101­
73,
August
9,
1989)
and
the
1993
implementing
regulations.
The
objective
of
FIRREA
and
the
implementing
regulations
was
to
correct
events
and
policies
that
led
to
a
high
rate
of
bankruptcies
in
the
thrift
industry
in
the
late
1980s.
The
regulations
changed
lending
practices
by
financial
institutions,
requiring
a
higher
equity
position
for
most
projects,
with
lower
loan­
to­
value
ratios,
and
more
documentation
from
developers
and
builders.
(
Kone,
2000)
.

2­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
 
There
was
a
13.5
percent
increase
in
the
number
of
establishments
in
residential
and
nonresidential
construction
(
NAICS
233,
except
2331)
;

 
The
number
of
establishments
in
heavy
construction
increased
by
14.5
percent;

 
There
was
a
33.0
percent
increase
in
the
number
of
special
trades
contractor
establishments,
(
NAICS
235)
,
including
a
31.2
percent
increase
among
excavation
contractors
and
a
59.6
percent
increase
among
demolition
contractors.

Table
2­
1
Number
of
Establishments
in
Construction
and
Development
Industries,
1997
vs
1992
NAICS
Industry
1992
1997
Pct.
Change
233,
exc.
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdevelopment
168,407
191,101
13.5%

2331
Land
development
and
subdevelopment
15,338
8,185
­
46.6%

234
Heavy
construction
37,180
42,557
14.5%

235
a
Special
trade
contracting
14,864
19,771
33.0%

Subtotal
235,789
261,617
11.0%

a
Includes
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
.
Figures
may
not
add
to
totals
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2.
1
.
2
Data
Sources
Used
Several
data
sources
are
used
in
this
profile
chapter
to
characterize
the
C&
D
industry.
The
primary
data
source
is
the
1997
Census
of
Construction
(
herein
referred
to
as
Census)
,
conducted
every
five
years
by
the
U.
S.
Census
Bureau.
A
second
data
source
comes
from
the
U.
S.
Small
Business
Administration
(
SBA)
.
The
SBA
data
is
used
because
it
provides
firm­
level
data
that
is
necessary
for
economic
modeling
purposes
and
for
the
small
entity
analysis
(
the
Census
data
is
reported
at
the
level
of
the
construction
establishment,
not
the
firm)
.
Table
2­
2
compares
the
Census
data
with
that
from
SBA
in
order
to
further
clarify
the
differences
and
identify
how
each
are
used
in
this
Economic
Analysis.
The
majority
of
this
chapter
uses
data
from
the
1997
Census
to
profile
the
C&
D
industry,
since
that
source
provides
a
greater
level
of
detail
on
industry
characteristics.

2­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
2
Comparison
of
Major
Data
Sources
Characteristic
Data
Source
Census
of
Construction
SBA
Level
of
Detail
Establishment
a
Firm
b
(
company)
and
establishment
Source
of
Data
Survey
(
sent
to
approx.
130,000
establishments
from
a
universe
of
650,000)
County
Business
Patterns
SUSB
report,
which
ultimately
relies
on
administrative
records
data
How
the
Data
are
Applied
in
this
Analysis
Industry­
level
analysis
to
determine
the
number
of
potentially
affected
establishments
Firm­
level
analysis,
for
purposes
of
determining
the
number
of
potentially
affected
firms
considered
 
small
 
by
SBA
size
standards
a
The
Census
Bureau
defines
an
establishment
as
 
a
relatively
permanent
office
or
other
place
of
business
where
the
usual
business
activities
related
to
construction
are
conducted
 
(
(
U.
S.
Census
Bureau,
2000a)
.
b
A
firm
is
considered
to
be
an
aggregation
of
the
establishments
owned
by
a
single
company;
therefore,
one
firm
may
be
comprised
of
several
establishments.

2.1.3
Organization
of
this
Chapter
The
purpose
of
this
industry
profile
is
to
provide
an
overview
of
the
C&
D
industries,
describe
their
key
characteristics
and
structure,
and
analyze
current
and
historical
trends.
Section
2.2
describes
the
process
that
EPA
used
to
identify
and
define
the
industry
for
the
purposes
of
the
proposed
rule.

Section
2.3
presents
characteristics
of
the
C&
D
industry,
including
both
industry
and
firm­
level
data.

Section
2.4
discusses
supply
and
demand
factors
in
the
C&
D
industry
while
Section
2.5
describes
various
economic
and
financial
characteristics
of
the
industry.
Section
2.6
looks
at
key
business
indicators
and
ratios.
Section
2.7
covers
industry
growth
and
trends,
and
Section
2.8
takes
a
brief
look
at
international
competition
in
the
C&
D
industry.

2­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.2
INDUSTRY
DEFINITION
2.2.1
Basis
for
Regulation
The
proposed
rule
will
cover
establishments
within
the
construction
sector
(
NAICS
23)
that
disturb
the
land
at
construction
sites
of
one
acre
or
more.
2
These
land­
disturbing
activities
may
include
site
preparation
and
site
clearing
tasks
such
as
tree
removal,
excavation,
blasting,
scraping,
and
grading,

and
are
generally
accomplished
with
the
aid
of
heavy
equipment
such
as
skidders,
bulldozers,
backhoes,

excavators,
and
graders.
These
activities
may
destabilize
soils
and
create
conditions
that
allow
storm
water
to
accumulate
and
flow
across
the
site.
This
increase
in
storm
water
flow
can
cause
erosion
and
lead
to
the
transport
of
soil
particles
and
attached
pollutants,
which
eventually
may
be
conveyed
offsite
and
discharged
into
receiving
waters.
Both
the
increased
flow
and
associated
pollutant
and
sediment
loads
that
result
from
land­
disturbing
activities
can
negatively
impact
the
biological,
physical,
and
chemical
characteristics
of
the
receiving
waters.

The
proposed
effluent
guidelines
will
build
upon
the
Phase
I
and
Phase
II
storm
water
regulations
promulgated
under
the
National
Pollutant
Discharge
Elimination
System
(
NPDES)
,
as
well
as
upon
EPA
 
s
storm
water
construction
general
permit
(
CGP)
.
The
CGP
is
the
vehicle
through
which
Phase
I
regulations
are
being
implemented,
and
upon
revision
in
2003
it
will
also
reflect
the
Phase
II
regulations.
The
CGP
also
will
be
the
vehicle
through
which
the
proposed
rule
is
implemented.
The
proposed
rule
will
also
build
upon
current
state
and
local
storm
water
control
requirements
by
adding
increased
specificity
and
consistency
to
these
requirements.
See
Chapter
Three
for
more
information
on
the
proposed
rule.
The
methodology
chapter
provides
further
detail
on
the
planned
implementation
of
the
proposed
rule.

2
The
Bureau
of
the
Census
classifies
industries
according
to
the
North
American
Industrial
Classification
System,
or
NAICS.
Under
the
NAICS,
economic
activity
is
first
divided
into
twenty
broad
2­
digit
industry
codes.
One
of
these
is
Construction
(
NAICS
23)
.
Each
2­
digit
industry
is
further
subdivided
into
3­
,
4­
,
and
5­
digit
level
industries.

2­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.2.2
Industry
Definition
For
the
purposes
of
this
economic
analysis,
the
 
C&
D
industries
 
are
assumed
to
include
those
establishments
within
the
construction
sector
(
NAICS
23)
that
may
be
involved
in
activities
that
disturb
the
ground
at
construction
sites.
This
includes
site
clearing
or
site
preparation
activities
such
as
tree
removal,
excavation,
blasting,
scraping,
grading,
etc.
EPA
believes
that
many
establishments
in
NAICS
233
(
Building,
developing,
and
general
contracting)
and
NAICS
234
(
Heavy
construction)
are
likely
to
engage
in
such
activities
on
a
regular
basis.
Establishments
within
selected
5­
digit
industries
that
are
part
of
NAICS
235
(
Special
trade
contractors)
may
also
engage
in
land­
disturbing
activities.
The
latter
may
include
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
.

However,
as
discussed
in
Section
VI.
A
in
the
preamble
of
the
proposed
rule,
Special
trade
contractors
are
typically
subcontractors
and
not
identified
as
NPDES
permittees.
Table
2­
3
identifies
the
industries
that
may
be
covered
by
the
proposed
regulations.

2­
6
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
3
Industry
Definitions
for
Construction
and
Development
Industry
Profile
NAICS
Code
Industry
Relevant
SIC
Codes
a
233
Building,
developing,
and
general
contracting
2331
Land
subdivision
and
development
23311
Land
subdivision
and
development
6552
Land
subdividers
and
developers,
except
cemeteries
2332
Residential
building
construction
23321
Single­
family
housing
construction
1521
General
contractors
 
single­
family
houses
1531
Operative
builders
(
partial)
8741
Management
services
(
partial)

23322
Multifamily
housing
construction
1522
General
contractors
 
residential
buildings
other
than
single­
family
(
partial)
1531
Operative
builders
(
partial)
8741
Management
services
(
partial)

2333
Nonresidential
building
construction
23331
Manufacturing
and
industrial
building
construction
1531
Operative
builders
(
partial)
1541
General
contractors
 
industrial
buildings
and
warehouses
(
partial)
8741
Management
services
(
partial)

23332
Commercial
and
institutional
building
construction
1522
General
contractors
 
residential
buildings,
other
than
single­
family
(
partial)
1531
Operative
builders
(
partial)
1541
General
contractors
 
industrial
buildings
and
warehouses
(
partial)
1542
General
contractors
 
nonresidential
buildings
except
industrial
buildings
and
warehouses
8741
Management
services
(
partial)
234
Heavy
Construction
2341
Highway,
street,
bridge,
and
tunnel
construction
23411
Highway
and
street
construction
1611
Highway
and
street
construction
contractors,
except
elevated
highways
8741
Management
services
(
partial)

23412
Bridge
and
tunnel
construction
1622
Bridge,
tunnel,
and
elevated
highway
construction
2349
Other
heavy
construction
23491
Water,
sewer,
and
pipeline
construction
1623
Water,
sewer,
pipeline,
and
communications
and
power
line
construction
(
partial)
8741
Management
services
(
partial)

23492
Power
and
communication
transmission
line
construction
1623
Water,
sewer,
pipeline,
and
communications
and
power
line
construction
(
partial)
8741
Management
services
(
partial)

23493
Industrial
nonbuilding
structure
construction
1629
Heavy
construction,
n.
e.
c.
(
partial)
8741
Management
services
(
partial)

23499
All
other
heavy
construction
1629
Heavy
construction,
n.
e.
c.
(
partial)
7353
Heavy
construction
equipment
rental
and
leasing
(
partial)
8741
Management
services
(
partial)
235
Special
trade
contractors
23593
Excavation
contractors
1794
Excavation
work
special
trade
contractors
23594
Wrecking
and
demolition
contractors
1795
Wrecking
and
demolition
work
special
trade
contractors
a
NAICS
recently
replaced
the
SIC
(
Standard
Industrial
Classification)
System.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
7
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
As
seen
in
Table
2­
3,
each
NAICS
industry
is
comprised
of
one
or
more
industries
defined
under
the
former
Standard
Industrial
Classification
(
SIC)
system.
With
the
1997
Census,
the
Census
Bureau
switched
from
reporting
data
on
an
SIC
basis
to
an
NAICS
basis,
thereby
making
it
difficult
to
compare
data
from
1997
with
that
from
the
1992
and
earlier
Census
reporting
periods.
Within
this
economic
profile
the
objective
is
to
provide
data
at
the
most
detailed
level
as
possible,
while
still
maintaining
the
ability
to
provide
meaningful
comparisons
between
1997
and
earlier
Census
periods.
With
this
in
mind,

most
of
the
statistical
tables
contained
in
this
profile
reflect
the
following
industry
breakdown:
3
NAICS
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
subdivision
and
land
development
NAICS
2331
Land
subdivision
and
land
development
NAICS
234
Heavy
construction
NAICS
235
Special
trades
contractors
a
a
Covered
industries
to
include
NAICS
23593
(
Excavation
contractors)
and
NAICS
23594
(
Wrecking
and
demolition
contractors)
only,
when
possible.

2.3
INDUSTRY
CHARACTERISTICS
Several
steps
are
used
to
define
the
number
of
C&
D
establishments
that
may
be
affected
by
the
proposed
regulations.
First,
EPA
identifies
all
C&
D
establishments
as
defined
above
using
data
from
the
1997
Census
of
Construction.
Second,
EPA
estimates
the
number
of
establishments
classified
as
C&
D
establishments
that
are
primarily
engaged
in
remodeling
work,
using
data
from
the
National
Association
of
Home
Builders
(
NAHB)
and
the
Joint
Center
for
Housing
Studies
at
Harvard
University
(
Joint
Center)
.
Third,
EPA
estimates
the
number
of
establishments
classified
as
C&
D
establishments
that
are
engaged
in
C&
D
activities
but
are
unlikely
to
disturb
more
than
one
acre
of
land,
using
data
from
Census
and
various
secondary
sources.
Section
2.3.1
looks
at
the
industry­
wide
characteristics
of
C&
D
establishments,
including
number
and
size
of
establishments,
employment,
and
geographic
distribution
of
3
Some
detailed
breakdowns
may
be
available
only
at
the
3­
digit
NAICS
level,
in
which
case
separate
data
for
NAICS
2331
cannot
be
provided
and
will
be
included
with
data
for
all
of
NAICS
233.
NAICS
233,
except
2331,
includes
data
for
both
residential
and
nonresidential
construction
activities.
Where
more
detailed
data
are
available
they
are
included
in
this
profile.
In
some
cases
data
at
a
more
detailed
NAICS
level
is
available
(
e.
g.
,
5­
digit
NAICS)
but
was
considered
too
detailed
to
present
in
the
body
of
this
profile.
The
availability
of
such
data
is
noted
throughout
the
profile,
and
reference
is
made
to
Appendix
2A
where
such
tables
are
presented.

2­
8
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
establishments.
Section
2.3.2
describes
firm­
level
data
for
the
C&
D
industry.
Section
2.3.3
describes
the
number
of
small
entities,
and
section
2.3.4
looks
at
the
number
of
entities
in
the
C&
D
industry
that
disturb
less
than
one
acre
during
the
normal
course
of
business.
The
estimated
number
of
potentially
affected
establishments
is
presented
in
Section
2.3.5.

2.3.1
Establishment­
Level
Data
This
section
presents
data
for
all
establishments
within
the
C&
D
industry
as
defined
in
Section
2.2,
based
primarily
on
1997
Census
of
Construction
sources.
Included
is
information
on
the
number
and
size
of
establishments,
geographic
distribution,
employment,
payroll
and
benefits,
and
level
of
specialization.

2.3.1.1
Number
and
Size
of
Establishments
Data
from
the
Census
of
Construction
indicate
there
were
a
total
of
261,617
establishments
with
payrolls
in
the
C&
D
industries
in
1997
(
i.
e.
,
NAICS
233,
234,
23593,
and
23594;
see
Table
2­
4)
.
Of
these,
the
largest
number
of
establishments
are
in
NAICS
233
(
Building,
developing,
and
general
contracting)
.
This
subsector
includes
199,289
establishments,
representing
76.2
percent
of
all
C&
D
establishments.
Within
NAICS
233,
single­
family
home
construction
(
NAICS
23321)
accounted
for
the
majority
of
establishments
(
138,849
out
of
199,289
or
69.7
percent)
.

Land
development
and
subdevelopment
(
NAICS
2331)
accounted
for
8,185
establishments
or
3.1
percent
of
all
establishments
in
the
C&
D
industries.
NAICS
234
(
Heavy
construction)
includes
42,557
establishments
or
16.3
percent
of
the
total.
Of
these,
27
percent
are
primarily
highway
and
street
construction
contractors,
another
27
percent
are
contractors
that
work
on
water,
sewer,
pipeline,

communications
and
power
line
projects,
and
43
percent
are
engaged
in
other
types
of
heavy
construction
(
All
other
heavy
construction)
.
Within
the
special
trades
contractors
subsector
(
NAICS
235)
,
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
together
account
for
2­
9
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
19,771
establishments,
or
7.6
percent
of
the
C&
D
industries
total.
Excavation
contractors
account
for
over
90
percent
of
these
establishments.

Table
2­
4
Number
of
Establishments
in
the
Construction
and
Development
Industry,
Based
on
the
1997
Census
of
Construction
NAICS
Industry
Establishments
With
Payrolls
Number
Percent
of
Total
233
Building,
developing,
and
general
contracting
199,289
76.2%

2331
Land
development
and
subdivision
8,185
3.1%

23321
Single­
family
residential
building
construction
138,849
53.1%

23322
Multi­
family
residential
building
construction
7,543
2.9%

2333
Nonresidential
construction
44,710
17.1%

234
Heavy
construction
42,557
16.3%

235
a
Special
trade
contracting
19,771
7.6%

SUBTOTAL
261,617
100.0%

a
Covered
industries
include
NAICS
23593
(
excavation
contractors)
and
NAICS
23594
(
wrecking
and
demolition
contractors)
only.

Across
the
board,
the
C&
D
industries
are
dominated
by
small
establishments.
4
As
shown
in
Table
2­
5,
Census
reports
that
some
60.6
percent
of
establishments
with
payrolls
have
fewer
than
5
employees,
77.8
percent
have
fewer
than
10
employees,
and
87.1
percent
have
fewer
than
20
employees.
5
Overall,
only
1.1
percent
of
C&
D
establishments
with
payrolls
have
100
or
more
employees.
On
average,
establishments
in
NAICS
234
(
Heavy
construction)
are
somewhat
larger
than
those
in
the
other
NAICS,
with
a
lower
percentage
of
establishments
appearing
in
each
of
the
smaller
establishment
size
classes.

4
Establishments
are
officially
defined
as
 
small
 
by
the
SBA
according
to
size
standards
based
on
either
number
of
employees
or
annual
revenue
(
13
CFR
121)
.
Qualifying
revenue
levels
differ
among
NAICS
industries,
and
within
the
C&
D
industries
there
is
a
range
of
qualifying
revenue
levels,
from
$
5.0
million
for
NAICS
23311
(
Land
subdivision
and
development)
to
$
27.5
million
for
the
majority
of
industries
within
NAICS
233
and
234.
A
more
detailed
review
of
industry
size
distribution
based
on
the
SBA
definitions
will
be
presented
as
part
of
the
Small
Entity
Impact
Analysis.

5
And,
as
noted
above,
some
450,338
establishments
in
the
C&
D
industries
have
no
employees.

2­
10
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
preponderance
of
small
establishments
is
equally
apparent
when
analyzed
on
the
basis
of
revenue
size
class.
Overall
in
1997,
37.1
percent
of
establishments
with
payrolls
had
annual
revenues
below
$
250,000;
54.7
percent
had
annual
revenues
below
$
500,000;
and
69.6
percent
had
annual
revenues
below
$
1.0
million.
These
data
are
shown
in
Table
2­
6.
Only
9,118
establishments,

representing
3.5
percent
of
the
total,
had
annual
revenues
in
excess
of
$
10.0
million.
Section
2.3.1.7
contains
more
information
on
small
entities
in
the
C&
D
industry
and
the
small
business
analysis
is
presented
in
Chapter
Six
of
this
EA.

In
addition
to
the
small
establishments
with
payrolls,
a
large
number
of
establishments
 
some
450,338
in
1997
6
 
operate
with
no
paid
employees
and
are
not
included
in
the
totals
in
Tables
2­
4
through
2­
6.
Available
data
suggests
these
establishments
are
very
small
relative
to
establishments
with
payrolls.
While
employer
establishments
in
NAICS
233
and
234
had
$
517.7
billion
in
receipts
for
1997,

nonemployer
establishments
had
only
$
36.5
billion
in
receipts,
which
represents
only
7
percent
of
the
receipts
of
employer
establishments.

6
Includes
establishments
in
NAICS
233
and
234
only.
Data
on
nonemployer
establishments
was
not
available
at
the
5­
digit
NAICS
level
for
NAICS
235,
thus
information
for
NAICS
23593
and
23594
could
not
be
separated
from
the
rest
of
NAICS
2359
(
Other
special
trade
contractors)
.
Including
all
nonemployer
establishments
in
NAICS
2359
(
339,521)
,
the
total
number
of
such
establishments
in
the
C&
D
industries
is
789,859.

2­
11
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
5
Number
of
Small
Establishments
with
Payrolls
in
the
Construction
and
Development
Industry,
Based
on
Employment
NAICS
Industry
Total
Establishments
with
less
than
5
employees
Establishments
with
less
10
employees
Establishments
with
less
than
20
employees
No.
Percent
of
Total
No.
Percent
of
Total
No.
Percent
of
Total
233
a
Building,
developing,
and
general
contracting
199,289
138,926
69.7%
172,079
86.3%
187,672
94.2%

234
Heavy
construction
42,557
18,956
44.5%
26,802
63.0%
33,337
78.3%

235
b
Special
trade
contractors
19,771
700
c
3.5%
4,690
23.7%
6,833
34.6%

TOTAL
261,617
158,582
60.6%
203,571
77.8%
227,842
87.1%
than
a
Data
below
the
3­
digit
NAICS
(
i.
e.
,
for
NAICS
2331
Land
development
and
subdevelopment)
not
publishable.
b
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
c
Data
for
NAICS
23593
(
Excavation
contractors)
not
included
in
this
calculation
because
data
did
not
meet
publication
standards.
Figures
may
not
add
to
totals
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
.

Table
2­
6
Number
of
Small
Establishments
in
the
Construction
and
Development
Industry,
Based
on
Value
of
Business
Done
NAICS
Industry
Total
Establishments
with
less
than
$
250,000
in
business
Establishments
with
less
than
$
500,000
in
business
Establishments
with
less
than
$
1
million
in
business
No.
Percent
of
Total
No.
Percent
of
Total
No.
Percent
of
Total
233
a
Building,
developing,
and
general
contracting
199,289
83,536
41.9%
118,493
59.5%
147,917
74.2%

234
Heavy
construction
42,557
13,364
31.4%
20,238
47.6%
26,726
62.8%

235
b,
c
Special
trade
contractors
19,771
269
1.4%
4,344
22.0%
7,385
37.4%

TOTAL
261,617
97,169
37.1%
143,075
54.7%
182,028
69.6%

a
Data
below
the
3­
digit
NAICS
(
i.
e.
,
for
NAICS
2331
Land
development
and
subdevelopment)
not
publishable.
b
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
c
Figures
may
be
low
due
to
lack
of
sufficient
data
for
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
for
values
under
$
250,000.
Figures
may
not
add
to
totals
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
.

The
overall
average
level
of
receipts
among
nonemployer
establishments
is
$
81,000
versus
$
1.98
million
for
establishments
with
payrolls.
A
recent
study
by
the
Joint
Center
for
Housing
Studies
of
2­
12
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Harvard
University
indicates
that
a
substantial
number
of
the
nonemployer
establishments
 
at
least
141,000
of
those
classified
as
general
building
contractors
(
NAICS
233)
 
are
actually
remodelers
(
Joint
Center
2001)
.
7
The
Joint
Center
estimates
do
not
account
for
nonemployer
establishments
outside
NAICS
233
(
i.
e.
,
NAICS
234
(
Heavy
construction)
or
235
(
Special
trades)
.
As
discussed
further
in
Section
2.3.2,
EPA
has
reviewed
available
data
on
such
nonemployer
establishments
and
concluded
that
most
are
unlikely
to
be
affected
by
the
proposed
rules.

2.3.1.2
Legal
Form
of
Organization
The
Census
Bureau
defines
construction
establishments
according
to
how
they
are
organized
legally,
using
the
following
classification
scheme:
(
a)
corporations,
(
b)
proprietorships,
(
c)
partnerships,

and
(
d)
other.
In
1997,
a
total
of
173,602
C&
D
establishments
with
payrolls
(
66.4
percent
of
the
total)

were
organized
as
corporations
(
see
Table
2­
7)
.
A
further
64,733
(
24.7
percent)
were
organized
as
proprietorships
while
14,313
(
5.5
percent)
operated
as
partnerships
and
8,969
(
3.5
percent)
operated
under
some
other
legal
form
of
organization.
Organization
as
a
corporation
is
most
prevalent
in
NAICS
2331
(
Land
subdivision
and
development)
,
at
76.6
percent,
and
least
prevalent
in
NAICS
235
(
Special
trade
contractors)
,
at
61.6
percent.
See
Appendix
2A
for
more
detailed
industry­
level
data.

7
The
estimate
of
141,000
establishments
is
probably
an
underestimate.
The
Joint
Center
applied
the
percentage
of
establishments
with
payrolls
known
to
be
remodelers
to
the
nonemployer
establishments.
In
practice,
remodelers
probably
account
for
a
larger
percentage
of
nonemployer
establishments
than
employer
establishments.
As
the
report
states,
 
(
o)
ur
procedures
thus
generate
a
conservative
estimate
of
the
number
of
businesses
concentrating
their
activities
in
residential
remodeling
 
(
(
Joint
Center,
2001,
p.
35)
.

2­
13
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
7
Number
of
Establishments
in
the
Construction
and
Development
Industry
with
Payrolls,
by
Legal
Form
of
Organization
NAICS
Description
Corporations
Proprietorships
Partnerships
Other
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
233
Building,
developing,
and
general
contracting,
except
land
subdivision
and
development
(
2331)
124,475
65.1%
50,235
26.3%
9,827
5.1%
6,567
3.4%
191,104
100.0%

2331
Land
subdivision
and
development
6,268
76.6%
327
4.0%
1,323
16.2%
267
3.3%
8,185
100.0%

234
Heavy
construction
30,682
72.1%
8,401
19.7%
2,115
5.0%
1,359
3.2%
42,557
100.0%

235
a
Special
trade
contractors
12,177
61.6%
5,770
29.2%
1,048
5.3%
776
3.9%
19,771
100.0%

TOTAL
173,602
66.4%
64,733
24.7%
14,313
5.5%
8,969
3.5%
261,617
100.0%

a
Covers
establishments
in
NAICS
23593
(
Excavation
Contractors)
and
23594
(
Wrecking
and
Demolition
Contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
14
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.3.1.3
Geographic
Distribution
Figure
2­
1
shows
a
geographic
distribution
of
establishments
by
state.
The
largest
concentrations
of
establishments
are
in
California,
New
York,
Texas,
Florida,
and
Pennsylvania.
Combined,
these
states
account
for
approximately
25
percent
of
all
C&
D
establishments
nationwide.

Figure
2­
1.
Number
of
establishments
in
the
C&
D
industries,
by
state,
1997.

2.3.1.4
Employment
In
1997,
establishments
with
payrolls
in
the
C&
D
industries
employed
a
total
of
nearly
2.4
million
workers.
Table
2­
8
shows
a
distribution
of
employment
by
NAICS
industry.
NAICS
2331
(
Land
subdivision
and
land
development)
accounts
for
41,827
employees
(
1.8
percent
of
the
total)
,
the
rest
of
2­
15
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
NAICS
233
(
Building,
developing,
and
general
contracting)
accounts
for
1.3
million
employees,
or
55.2
percent
of
the
total.
A
total
of
880,400
or
37.3
percent
of
the
total
are
employed
in
NAICS
234
(
Heavy
construction)
,
and
NAICS
23593
and
23594
(
Excavation
contractors
and
Wrecking/
demolition
contractors)
employ
135,057
(
5.7
percent
of
the
total)
.

Table
2­
8
Number
of
Employees
in
the
Construction
and
Development
Industries
Establishments
With
Payrolls,
1997
NAICS
Industry
Number
of
Employees
Percent
of
Total
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
subdivision
and
land
development
1,301,126
55.2%

2331
Land
subdivision
and
land
development
41,827
1.8%

234
Heavy
construction
880,400
37.3%

235
a
Special
trade
contractors
135,057
5.7%

TOTALS
2,358,410
100.0%

a
Includes
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

Construction
is
a
seasonal
activity
in
many
parts
of
the
country,
and
employment
data
from
the
industry
bear
this
out.
Figure
2­
2
shows
quarterly
employment
data
for
all
NAICS
in
the
C&
D
industries,

as
well
as
the
annual
average.
Overall,
employment
of
construction
workers
was
lowest
in
March
at
1.59
million
and
highest
in
August
at
1.83
million.

2­
16
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Figure
2­
2.
Seasonal
trends
for
employment
in
the
C&
D
industries,
1997.

2.3.1.5
Payrolls
and
Benefits
In
1997,
the
payrolls
of
all
C&
D
industries
totaled
$
76.8
million
(
see
Table
2­
9)
.
Of
this
number
$
48.3
million
(
62.9
percent)
went
to
construction
workers
and
$
28.5
million
(
37.1
percent)
went
to
other
2­
17
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
employees.
8
In
addition,
the
C&
D
industries
incurred
$
11.2
million
in
legally
required
fringe
benefit
expenditures
and
$
6.5
million
in
voluntary
fringe
benefits,
for
a
total
of
$
17.6
million
in
fringe
benefits.
9
Table
2­
9
shows
detailed
data
on
payrolls
and
benefits
for
each
of
the
C&
D
industries.

2.3.1.6
Specialization
Specialization
in
the
C&
D
industries
refers
to
the
percent
of
establishment
revenues
earned
from
different
types
of
construction
activity.
Specialization
data
provide
some
insight
into
the
homogeneity
of
businesses
classified
within
the
same
NAICS
industry.
When
reporting
to
Census,
an
establishment
self­

reports
its
own
degree
of
specialization
by
type
of
construction,
based
on
the
percentage
of
revenue
earned
from
each
type
of
construction
work.
Table
2­
10
shows,
as
an
example,
the
specialization
of
establishments
in
NAICS
23321
(
Single­
family
home
construction)
across
the
 
type
of
construction
 
categories
defined
by
the
Census
Bureau,
and
the
revenues
earned
by
establishments
in
each
specialization
category.
10,
11
8
Construction
workers
include
all
workers
up
through
the
working
supervisor
level
directly
engaged
in
construction
operations,
such
as
painters,
carpenters,
plumbers,
and
electricians.
Included
are
journeymen,
mechanics,
apprentices,
laborers,
truck
drivers
and
helpers,
equipment
operators,
and
on­
site
recordkeepers
and
security
guards.
Other
employees
include
employees
in
executive,
purchasing,
accounting,
personnel,
professional,
technical
activities,
and
routine
office
functions.

9
Legally
required
contributions
include
Social
Security
contributions,
unemployment
compensation,
workman'
s
compensation,
and
State
temporary
disability
payments.
Voluntary
expenditures
include
life
insurance
premiums,
pension
plans,
insurance
premiums
on
hospital
and
medical
plans,
welfare
plans,
and
union
negotiated
benefits.

10
Due
to
high
degrees
of
variation
of
specialization
and
types
of
construction
among
NAICS
sectors,
detailed
tables
for
each
NAICS
in
the
C&
D
industries
are
presented
separately
in
Appendix
2B.

11
Because
the
Census
Bureau
only
considers
construction
establishments
to
be
specialized
if
they
earn
more
than
half
of
their
revenues
from
one
particular
type
of
construction,
the
total
value
of
construction
work
shown
in
these
tables
will
not
match
industry
totals,
which
cover
all
establishments,
including
those
that
are
not
specialized.

2­
18
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
9
Payrolls
and
Benefits
for
Employees
in
the
Construction
Industry
(
Thousands
of
1997
Dollars)

NAICS
Industry
Payrolls
a
Fringe
Benefits
(
All
Employees)

Construction
workers
b
Other
employees
c
All
employees
d
Legally
required
expenditures
e
Voluntary
expenditures
f
Total
fringe
benefits
g
233
Building,
developing,
and
general
contracting
$
23,135,832
$
19,410,280
$
42,546,112
$
5,929,710
$
3,011,115
$
8,940,824
23311
Land
subdivision
and
land
development
$
254,247
$
1,255,526
$
1,509,773
$
164,669
$
71,648
$
236,317
23321
Single­
family
housing
construction
$
7,739,858
$
7,224,726
$
14,964,583
$
2,000,118
$
623,079
$
2,623,197
23322
Multifamily
housing
construction
$
1,022,265
$
744,361
$
1,766,627
$
255,879
$
76,644
$
332,523
23331
Manufacturing
and
industrial
building
construction
$
3,322,347
$
1,806,620
$
5,128,967
$
777,829
$
446,522
$
1,224,351
23332
Commercial
and
Institutional
building
construction
$
10,797,116
$
8,379,046
$
19,176,160
$
2,731,214
$
1,793,222
$
4,524,436
234
Heavy
construction
$
22,218,582
$
8,073,267
$
30,291,850
$
4,665,757
$
3,120,979
$
7,786,736
23411
Highway
and
street
construction
$
7,095,139
$
2,432,488
$
9,527,626
$
1,507,465
$
1,109,177
$
2,616,641
23412
Bridge
and
tunnel
construction
$
1,378,759
$
468,401
$
1,847,160
$
344,821
$
263,297
$
608,117
23491
Water,
sewer,
,
and
pipeline
construction
$
4,087,007
$
1,435,273
$
5,522,281
$
844,394
$
493,761
$
1,338,155
23492
Power
and
communication
transmission
line
construction
$
1,748,715
$
638,717
$
2,387,432
$
374,145
$
231,538
$
605,683
23493
Industrial
nonbuilding
structure
construction
$
2,734,020
$
988,343
$
3,722,363
$
486,625
$
302,813
$
789,439
23499
All
other
heavy
construction
$
5,174,943
$
2,110,046
$
7,284,989
$
1,108,307
$
720,394
$
1,828,701
235
h
Special
trade
contractors
$
2,940,440
$
1,005,609
$
3,946,050
$
582,157
$
329,925
$
912,082
23593
Excavation
contractors
$
2,525,857
$
828,017
$
3,353,874
$
483,764
$
283,952
$
767,716
23594
Wrecking
and
demolition
contractors
$
414,583
$
177,592
$
592,176
$
98,393
$
45,973
$
144,366
TOTAL
$
48,294,854
$
28,489,156
$
76,784,012
$
11,177,624
$
6,462,019
$
17,639,642
a
Payrolls
includes
the
gross
earnings
paid
in
the
calendar
year
1997
to
all
employees
on
the
payrolls
of
construction
establishments.
It
includes
all
forms
of
compensation
such
as
salaries,
wages,
commissions,
bonuses,
vacation
allowances,
sick
leave
pay,
prior
to
such
deductions
as
employees'
Social
Security
contribution,
withholding
taxes,
group
insurance,
union
dues,
and
savings
bonds.
b
Construction
workers
include
all
workers
up
through
the
working
supervisor
level
directly
engaged
in
construction
operations,
such
as
painters,
carpenters,
plumbers,
and
electricians.
Included
are
journeymen,
mechanics,
apprentices,
laborers,
truck
drivers
and
helpers,
equipment
operators,
and
on­
site
recordkeepers
and
security
guards.
c
Other
employees
include
employees
in
executive,
purchasing,
accounting,
personnel,
professional,
technical
activities,
and
routine
office
functions.
d
Sum
of
construction
workers
and
other
employees.
e
Legally
required
contributions
include
Social
Security
contributions,
unemployment
compensation,
workman'
s
compensation,
and
State
temporary
disability
payments.
f
Voluntary
expenditures
include
life
insurance
premiums,
pension
plans,
insurance
premiums
on
hospital
and
medical
plans,
welfare
plans,
and
union
negotiated
benefits.
g
Total
fringe
benefits
represent
the
expenditures
made
by
the
employer
during
1997
for
both
legally
required
and
voluntary
fringe
benefit
programs
for
employees.
h
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
19
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Specialized
establishments
in
NAICS
23321
(
i.
e.
,
those
that
earn
51
percent
or
more
of
revenues
from
one
type
of
construction)
may
be
specialized
in
either
detached
single­
family
housing
construction
or
attached
single­
family
housing
construction.
12
The
number
of
construction
type
specializations
may
depend
on
the
NAICS,
as
some
industry
definitions
encompass
a
broader
set
of
construction
activities
(
see
Appendix
2B)
.
Within
NAICS
23321,
establishments
specialized
51
percent
or
more
in
detached,

single­
family
housing
construction
performed
construction
work
valued
at
$
127.9
billion.

Establishments
100
percent
specialized
in
detached,
single­
family
housing
construction
performed
construction
work
worth
$
90.4
billion,
or
64.4
percent
of
all
work
done
by
establishments
with
specialization
in
construction
work.
Similarly,
for
establishments
specializing
in
construction
of
attached
single­
family
houses
by
51
percent
or
more,
the
value
of
work
was
$
12.5
billion,
and
52.8
percent
of
the
work
(
$
6.6
billion)
was
done
by
establishments
with
complete
specialization
in
attached
single­
family
houses.
Further
analysis
of
the
value
of
construction
work
performed
by
the
C&
D
industries
can
be
found
in
Section
2.7.1.

Table
2­
10
Specialization
within
NAICS
23321
(
Single­
Family
Home
Construction)
,
Categorized
by
Value
of
Construction
Work
(
Millions
of
1997
Dollars)

Type
of
Construction
with
Specialization
Estabs.
spec.
51
%
or
more
Estabs.
with
100
%
spec.
Estabs.
with
90
to
99
%
spec.
Estabs.
with
80
to
89
%
spec.
Estabs.
with
70
to
79
%
spec.
Estabs.
with
60
to
69
%
spec.
Estabs.
with
51
to
59
%
spec.

Single­
family
houses,
detached
$
127,870
$
90,434
$
14,615
$
7,040
$
6,600
$
6,603
$
2,574
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
12,534
$
6,623
$
1,292
$
877
$
1,074
$
1,693
$
971
Source:
U.
S.
Census
Bureau
(
2000a)
.

12
Although
they
may
earn
revenues
from
other
types
of
construction
(
e.
g.
,
highway
construction)
they
would
no
longer
be
classified
in
NAICS
23321
if
they
earned
51
percent
or
more
of
their
revenue
from
such
sources.

2­
20
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.3.2
Firm­
Level
Data
The
SBA
Office
of
Advocacy
contracts
with
the
U.
S.
Census
Bureau
to
produce
firm­
level
data
for
U.
S.
industries.
Currently,
distributions
by
employment
size
are
available
on
an
NAICS
basis
for
1998,
and
distributions
by
receipt
size
are
available
on
an
SIC
basis
for
1997.

The
SBA
data
is
based
primarily
on
administrative
records
and
is
not
generated
in
conjunction
with,
nor
is
it
linked
to,
data
collected
through
the
Census
of
Construction.
As
a
result,
there
may
be
minor
inconsistences
between
data
reported
by
SBA
and
that
reported
by
the
Census
of
Construction.
13
The
SBA/
Census
data,
however,
is
the
only
firm­
level
data
available
for
C&
D
industries,
so
EPA
is
including
it
in
this
analysis
because
it
is
valuable
to
the
economic
modeling
and
the
small
entity
analysis,

which
applies
at
the
firm,
not
the
establishment,
level.
14
2.3.2.1
Number
and
Size
of
Firms
Table
2­
11
presents
the
number
of
firms
with
payrolls
(
firms
with
paid
employment)
and
number
of
establishments
in
the
C&
D
industries
in
1998.
15
These
data
indicate
that
a
majority
of
firms
operate
a
single
establishment,
and
have
fewer
than
20
employees.
Of
the
215,301
C&
D
firms
in
1998;

approximately
99
percent
of
these
operate
only
one
establishment,
and
94
percent
have
fewer
than
20
employees;
less
than
1
percent
of
firms
have
more
than
500
employees.
In
1998,
there
were
39,062
firms
in
heavy
construction
and
these
operated
40,091
establishments.
More
than
97
percent
of
the
heavy
13
For
example,
the
SBA
data
provide
estimates
of
the
number
of
establishments
operated
by
C&
D
firms.
These
establishment
counts,
however,
do
not
match
those
reported
in
the
Census
of
Construction.
This
is
partially
due
to
differences
in
coverage
(
the
SBA
data
include
administrative
establishments
while
the
Census
of
Construction
does
not)
as
well
as
differences
in
data
collection
methods.

14
For
clarification,
an
establishment
is
defined
as
 
a
relatively
permanent
office
or
other
place
of
business
where
the
usual
business
activities
related
to
construction
are
conducted
 
(
(
Census,
2000a)
.
A
firm
refers
to
the
aggregation
of
all
establishments
owned
by
one
company;
therefore
one
firm
may
consist
of
several
establishments.

15
"
The
data
excludes
non­
employer
businesses,
thus
excluding
many
self­
employed
individuals
(
employment
is
measured
in
March
so
firms
starting
after
March,
firms
closing
before
March
and
seasonal
firms
can
have
zero
employment)
.
"
SBA
Office
of
Advocacy
website,
http:
/
/
www.
sba.
gov/
advo/
stats/
data.
html.

2­
21
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
construction
firms
operate
a
single
establishment
and
approximately
79
percent
of
heavy
construction
firms
have
fewer
than
20
employees.

Table
2­
11
Employer
Firms
and
Establishments
by
Employment
Size
of
Firm
by
NAICS
Codes,
1998
­
­
SBA
Data
Industry
NAICS
Firms
Establishments
Total
0
<
20
<
500
500+
Total
0
<
20
<
500
500+

Building,
developing,
&
general
contracting
233
215,301
38,904
202,969
214,921
380
216,893
38,907
203,020
215,478
1,415
Land
subdivision
&
land
development
23310
11,192
2,829
10,618
11,101
91
11,369
2,832
10,628
11,179
190
Single­
family
housing
const.
23321
153,029
29,168
149,240
152,937
92
153,561
29,168
149,253
153,108
453
Multifamily
housing
const.
23322
8,054
1,405
7,413
8,027
27
8,091
1,405
7,414
8,041
50
Mfg
&
industrial
building
construction
23331
6,842
720
5,470
6,775
67
6,904
720
5,471
6,784
120
Commercial
&
institutional
building
construction
23332
36,355
4,782
30,240
36,158
197
36,968
4,782
30,254
36,366
602
Heavy
construction
234
39,062
4,589
30,987
38,788
274
40,091
4,589
31,010
39,098
993
Highway
&
street
const.
23411
10,884
1,493
8,265
10,806
79
11,268
1,493
8,273
10,901
367
Bridge
&
tunnel
construction
23412
886
70
520
865
21
925
70
521
880
45
Water,
sewer,
&
pipeline
construction
23491
7,749
676
5,786
7,704
45
7,823
676
5,787
7,726
97
Power
&
communication
transmission
line
construction
23492
3,170
404
2,464
3,133
37
3,305
404
2,465
3,157
148
Industrial
nonbuilding
structure
construction
23493
641
52
411
575
66
709
52
411
583
126
All
other
heavy
construction
23499
15,860
1,894
13,541
15,758
102
16,061
1,894
13,553
15,851
210
Excavation
contractors
23593
23,209
4,310
22,145
23,201
8
23,240
4,310
22,145
23,223
17
Wrecking
&
demolition
contractors
23594
1,336
247
1,094
1,329
7
1,344
247
1,094
1,332
12
Source:
U.
S.
Small
Business
Administration
(
1998)
,
based
on
data
provided
by
the
U.
S.
Census
Bureau.

2.3.2.2
Firm­
Level
Revenues
Table
2­
12
shows
the
number
of
employer
firms
and
establishments,
in
1997,
based
on
NAICS
industry
and
revenue
size
class.
These
data
also
show
that
a
large
number
of
firms
in
the
C&
D
industries
2­
22
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
are
small.
Approximately
three­
quarters
(
75.2
percent)
of
the
firms
in
the
target
industry
sectors
reported
under
$
1.0
million
in
revenues
for
1997
and
nearly
94
percent
of
firms
reported
revenues
under
$
5.0
million.

2­
23
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
12
Firms
and
Establishments
with
Payrolls
by
Revenue
Size
Class
(
1997)
a
(
SBA
Data)

Description
FIRMS
ESTABLISHMENTS
b
Total
Number
of
Firms
<
$
1
Million
<
$
5
Million
<
$
7.5
Million
<
$
25
Million
<
$
100
Million
Over
$
100
Million
Total
Establish
­
ments
<
$
1
Million
<
$
5
Million
<
$
7.5
Million
<
$
25
Million
<
$
100
Million
Over
$
100
Million
Land
Subdivision
and
Development
11,036
7,744
10,207
10,501
10,851
10,948
88
11,205
7,746
10,218
10,514
10,896
11,018
186
Single­
Family
Housing
Construction
149,130
123,414
145,305
146,917
148,634
148,975
155
149,823
123,420
145,339
146,962
148,736
149,161
661
Multifamily
Housing
Construction
6,911
5,128
6,347
6,518
6,791
6,877
34
7,009
5,129
6,354
6,527
6,810
6,910
99
Manufacturing
and
Industrial
Building
Construction
7,950
4,674
6,841
7,156
7,692
7,879
71
8,075
4,675
6,847
7,166
7,713
7,914
160
Commercial
and
Institutional
Building
Construction
38,195
22,518
32,523
34,085
36,964
37,882
313
39,044
22,526
32,560
34,133
37,075
38,124
920
Highway
and
Street
Construction
10,778
5,683
8,681
9,291
10,320
10,679
99
11,117
5,683
8,689
9,302
10,349
10,758
359
Bridge
and
Tunnel
Construction
875
287
583
638
788
847
28
915
288
584
640
795
859
56
Water,
Sewer,
and
Pipeline
Construction
7,916
4,475
6,861
7,245
7,768
7,883
33
8,075
4,476
6,864
7,251
7,791
7,938
137
Power
and
Communication
Transmission
Line
Construction
2,781
1,572
2,411
2,546
2,729
2,770
11
2,837
1,572
2,412
2,548
2,738
2,789
48
Industrial
Nonbuilding
Structure
Construction
3,941
2,786
3,612
3,713
3,860
3,909
32
4,023
2,787
3,617
3,720
3,874
3,936
86
All
Other
Heavy
Construction
12,973
9,110
11,873
12,213
12,697
12,863
111
13,594
9,118
11,920
12,279
12,814
13,087
507
Excavation
Contractors
22,046
19,093
21,659
21,820
22,002
22,038
8
22,072
19,093
21,661
21,823
22,005
22,055
17
Wrecking
and
Demolition
Contractors
1,270
840
1,165
1,204
1,249
1,261
9
1,285
840
1,166
1,205
1,252
1,271
14
TOTAL
275,802
207,324
258,068
263,847
272,345
274,811
992
279,074
207,353
258,231
264,070
272,848
275,820
3,250
a
Data
are
for
1997.
SBA
does
not
report
revenue
size
class
data
in
NAICS
format
and
will
not
do
so
until
the
2002
Economic
Census
is
published.
These
figures
were
calculated
using
percentages
provided
in
the
Census
Bureau
 
s
NAICS
to
SIC
bridge,
which
is
available
at
www.
census.
gov/
epcd/
ec97brdg.
HTM.
b
The
number
of
establishments
reported
here
may
differ
from
the
number
reported
in
previous
tables
due
to
the
different
sources
used
(
see
Table
2­
2
and
accompanying
text
for
further
discussion)
.
Earlier
tables
are
based
on
data
from
the
1997
Economic
Census;
Table
2­
12
is
based
on
1997
data
from
SBA/
Census
and
was
converted
from
SIC
to
NAICS
for
the
purposes
of
this
analysis.
Source:
SBA
1998
2­
24
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.3.3
Number
of
Small
Entities
Small
entities
are
defined
by
the
SBA
according
to
size
standards
based
on
either
number
of
employees
or
annual
revenue
(
13
CFR
121)
.
For
all
of
the
C&
D
industries,
the
size
standards
are
based
on
annual
revenues.
Table
2­
13
presents
the
SBA
revenue
thresholds
for
the
C&
D
industry,
which
range
from
$
5.0
million
for
NAICS
233110
(
Land
subdivision
and
land
development)
to
$
27.5
million
for
the
majority
of
NAICS
233
(
Building,
developing,
and
general
contracting)
and
NAICS
234
(
Heavy
construction)
.
An
estimated
189,805
C&
D
businesses,
representing
99.5
percent
of
all
businesses
in
the
C&
D
industry,
fall
below
the
SBA­
defined
revenue
thresholds
for
this
industry
and
therefore
may
be
qualified
as
small
businesses.
Table
2­
13
shows
the
total
estimated
number
of
businesses
and
total
small
businesses
in
the
C&
D
industry;
the
number
of
potentially
affected
small
businesses
is
developed
in
Chapter
Six.

Table
2­
13
Number
of
Firms
and
Establishments
Above
and
Below
SBA
Thresholds
for
Small
Business
Definition:
Based
on
Data
from
SBA
NAICS
SBA
Revenue
Threshold
(
million
$
)
Total
Estimated
Number
of
Businesses
Estimated
Number
of
Small
Businesses
Small
Businesses
as
a
Percent
of
Total
233210:
Single­
family
Housing
Construction
$
27.5
138,732
138,583
99.9%

233220:
Multifamily
Housing
Construction
$
27.5
7,534
7,491
99.4%

233310:
Manufacturing
and
Industrial
Building
Construction
$
27.5
7,257
7,050
97.1%

233320:
Commercial
and
Institutional
Building
Construction
$
27.5
37,220
36,681
98.6%

TOTAL
 
190,743
189,805
99.5%

a
For
those
industries
with
a
$
27.5
million
SBA
cutoff,
the
table
shows
the
number
of
firms
and
establishments
with
revenues
below
$
25.0
million
(
the
next
closest
SBA
data
break
point)
.
For
industries
with
a
$
11.5
million
SBA
cutoff,
figures
shown
are
for
firms
and
establishments
with
revenues
below
$
7.5
million.
Source:
SBA
1998;
also
see
Chapter
Six,
Tables
6­
2
and
6­
3
2­
25
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.3.4
Entities
Not
Covered
by
the
Proposed
Rule
Not
all
establishments
and
firms
that
fall
within
the
industry
definitions
outlined
in
the
previous
sections
will
be
affected
by
the
proposed
rule.
The
proposed
rule
will
apply
only
to
those
NPDES­

permitted
establishments
engaged
in
activities
that
disturb
land.
EPA
believes
that
some
entities
will
be
excluded
from
regulatory
coverage
because
they
are
primarily
engaged
in
remodeling
activities
that
will
not
result
in
land
disturbance.
Others
will
be
excluded
because
they
are
generally
not
the
primary
NPDES
permit
holder.
As
discussed
in
Section
VI.
A
in
the
preamble
of
the
proposed
rule,
Special
trade
contractors
are
typically
not
identified
as
NPDES
permit
holders
and
thus
will
not
likely
be
covered
by
the
proposed
rule.
In
this
section
EPA
estimates
the
number
of
establishments
that
fall
into
these
categories.
The
resulting
estimates
are
brought
together
in
Section
2.3.5
to
derive
the
number
of
establishments
covered
under
each
option
of
the
proposed
rule.

2.3.4.1
Establishments
Engaged
in
Remodeling
Two
sources
provide
information
on
the
potential
number
of
C&
D
establishments
that
are
actually
remodelers.
In
an
article
published
in
Housing
Economics,
NAHB
economists
estimated
that
in
1997
approximately
45,952
establishments
in
the
residential
building
industry
were
involved
in
remodeling
activities
only
(
Ahluwalia
and
Chapman,
2000)
.
This
count
is
based
on
analysis
of
Census
microdata
on
establishments,
receipts,
and
source
of
receipts.
Establishments
were
classified
as
remodelers
in
this
study
if
they
earned
100
percent
of
revenues
from
remodeling
activities.

The
Joint
Center
for
Housing
Studies
at
Harvard
University
recently
published
a
report
focused
solely
on
the
remodeling
industry
(
Joint
Center,
2001)
.
This
report
classified
establishments
that
derive
at
least
half
of
their
revenues
from
remodeling
activities
as
remodelers.
When
defined
in
this
manner,

the
study
found
that
62,400
establishments
classified
as
general
contractors/
builders
in
1997
were
actually
remodelers.

Both
of
these
estimates
are
based
on
establishments
classified
by
Census
as
general
contractors/
builders.
The
Joint
Center
study
goes
further
to
identify
establishments
classified
in
various
special
trades
(
e.
g.
,
Carpentry,
Plumbing)
that
are
primarily
engaged
in
remodeling,
but
these
estimates
2­
26
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
do
not
include
those
considered
part
of
the
C&
D
industries
(
i.
e.
,
NAICS
23593
Excavation
contractors
and
23594
Wrecking
and
demolition
contractors)
.
16
NAHB
does
not
address
the
issue
of
special
trades
contractors
in
their
report.
Neither
report
estimates
the
number
of
establishments
in
NAICS
234
(
Heavy
construction)
that
may
be
engaged
primarily
in
remodeling
activities;
however,
EPA
does
not
expect
that
establishments
in
the
heavy
construction
sector
would
be
engaged
in
remodeling
activities.

Following
review
of
these
studies,
EPA
used
the
estimate
from
the
Joint
Center
study
as
the
best
estimate
of
the
number
of
remodelers
included
in
statistics
of
the
C&
D
industries.
This
study
defines
remodelers
as
establishments
that
earn
at
least
50
percent
of
revenues
from
remodeling
activity
(
and
thus
earn
less
than
50
percent
from
building
activity)
.
EPA
concludes
that
these
establishments,
when
engaged
in
building
activity,
are
unlikely
to
disturb
more
than
one
acre
of
land
and
would
therefore
not
be
covered
by
the
proposed
rule.

2.3.4.2
Establishments
That
Are
Not
NPDES
Permttees
EPA
has
included
in
the
universe
of
potentially
affected
establishments
all
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
because
such
establishments
engage
in
land
disturbing
activities.
In
reality,
however,
establishments
in
these
industries
generally
act
as
subcontractors
on
C&
D
projects
and
are
hired
by
developers
or
general
contractors
to
perform
specific
tasks.
EPA
does
not
believe
that
such
establishments
generally
appear
as
NPDES
permittees
or
copermittees.
Therefore,
while
these
establishments
are
included
among
the
universe
of
potentially
affected
establishments
(
and
appear
below
in
Table
2­
14)
,
EPA
has
not
included
them
in
the
subsequent
economic
impact
analysis
chapters
(
i.
e.
,
Chapters
Four,
Five,
and
Six)
.

16
The
Joint
Center
study
does
provide
an
estimate
for
the
number
of
remodelers
classified
in
 
miscellaneous
special
trades
 
(
(
NAICS
2359)
,
which
includes
NAICS
23593
and
23594,
but
several
other
industries
as
well.
The
number
of
remodelers
classified
primarily
in
NAICS
23593
and
23594
may
not
be
large,
however,
since
the
total
number
in
NAICS
2359
is
only
6,600.

2­
27
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.3.5
Number
of
Potentially
Affected
Entities
EPA
took
several
steps
to
adjust
the
number
of
affected
entities
to
account
for
regulatory
coverage
and
data
availability.
Previous
sections
estimated
that
the
total
number
of
establishments
in
the
C&
D
industry
is
261,617
(
see
Table
2­
4)
.
Subtracting
the
62,400
remodeling
establishments
estimated
in
Section
2.3.4
from
this
figure
yields
a
potentially
affected
universe
of
199,214
establishments.
EPA
subtracted
the
62,400
residential
remodeling
establishments
from
the
single­
family
and
multifamily
building
construction
industries
(
NAICS
23321
and
NAICS
23322)
,
based
on
their
respective
shares
of
residential
building
establishments.

In
preparing
its
economic
impact
analysis,
EPA
concluded
that
data
limitations
on
land
developers
(
NAICS
2331)
would
preclude
retaining
this
as
a
separate
industry
for
purposes
of
regulatory
analysis.
17
Rather
than
excluding
establishments
in
this
industry
category
(
which
would
potentially
underestimate
the
number
of
affected
entities
and
associated
impacts)
EPA
distributed
them
among
the
four
building
construction
industries
(
single­
family,
multifamily,
commercial,
and
industrial
construction)
,
based
on
each
industry
 
s
share
of
total
establishments.
18
Table
2­
14
reflects
this
allocation,
which
was
done
after
removing
those
establishments
engaged
primarily
in
remodeling.

EPA
has
further
adjusted
the
population
of
affected
establishments
to
account
for
differences
in
regulatory
coverage.
As
described
in
Chapter
Three,
the
proposed
rule
considers
three
erosion
and
sediment
control
(
ESC)
options.
Option
1
would
apply
to
sites
that
disturb
one
acre
or
more
of
land,

while
Option
2
would
apply
to
sites
that
disturb
five
acres
or
more
of
land.
Option
3
is
a
no
regulation
option,
meaning
that
no
sites
or
establishments
would
be
affected.

EPA
used
data
from
the
Census
Bureau
and
other
sources
to
define
an
average
housing
density
for
the
nation
as
a
whole
(
average
number
of
housing
units
per
acre)
,
then
used
this
analysis
to
identify
classes
of
establishments
that
would
be
excluded
based
on
their
likelihood
of
disturbing
less
than
one
acre
(
Option
1)
or
five
acres
(
Option
2)
on
a
project
basis.
EPA
believes
these
estimates
to
be
17
Specifically,
EPA
could
not
obtain
equivalent
financial
data
with
which
to
build
financial
models
of
the
land
development
industry.

18
EPA
provides
further
justification
for
and
details
about
this
step
in
the
analysis
in
Chapter
Four.

2­
28
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
conservative
in
terms
of
identifying
establishments
unaffected
by
the
proposed
rule.
First,
while
the
regulatory
threshold
applies
to
each
site
,
EPA
excluded
establishments
if
the
estimated
number
of
acres
disturbed
in
a
year
is
below
the
regulatory
threshold.
In
addition,
the
analysis
was
not
adjusted
for
the
percent
of
sites
normally
left
undisturbed.
19
Based
on
this
analysis,
EPA
assumed
that
establishments
in
the
single­
family
building
construction
industry
(
NAICS
2331)
that
complete
between
1
and
4
housing
units
each
year
would
be
excluded
under
Option
1.
Under
Option
2,
EPA
also
assumed
that
establishments
in
the
single­
family
building
construction
industry
(
NAICS
2331)
that
complete
between
5
and
9
housing
units,
as
well
as
establishments
in
the
multifamily
building
construction
industry
(
NAICS
2332)
that
complete
between
2
and
9
housing
units
each
year,
would
be
excluded.
Chapter
Four
contains
further
detail
on
the
data
sources
and
method
used
to
make
this
adjustment.

Table
2­
14
shows
the
distribution
of
establishments
potentially
affected
under
Option
1
and
2,

following
the
redistribution
of
land
developers
(
NAICS
2331)
and
adjustment
for
small
builders
exempt
from
the
site
size
limitations
of
each
option.
Due
to
limited
data,
the
number
of
establishments
in
NAICS
234
(
Heavy
construction)
and
NAICS
235
(
Special
trades)
affected
under
each
option
could
not
be
refined
further,
so
no
adjustments
are
made
to
these
establishment
counts.
Moreover,
as
discussed
in
Section
XII
of
the
preamble
of
the
proposed
rule,
special
trade
contractors
are
not
included
in
Chapter
5,

Economic
Impact
Analysis
Results
of
this
report.
Special
trade
contractors
are
typically
subcontractors
and
are
not
NPDES
permittees.
Therefore,
these
contractors
would
not
be
directly
affected
by
the
proposed
rule.

19
For
example,
an
establishment
that
completes
15
houses
per
year
is
estimated
to
account
for
5.6
acres
of
converted
land,
based
on
the
average
housing
density
of
2.67
new
single­
family
housing
units
per
acre.
EPA
would
include
this
establishment
among
those
covered
under
Option
2,
even
though
the
actual
area
disturbed
may
well
fall
below
5
acres
once
open
space,
buffers,
and
other
 
undisturbed
 
areas
are
factored
in.
.
Furthermore,
as
noted,
EPA
assumes
that
all
of
the
housing
units
are
covered
by
a
single
NPDES
permit
while
in
reality
the
establishment
might
operate
on
more
than
one
site,
none
of
which
exceeds
the
5­
acre
threshold.

2­
29
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
14.
Number
of
Affected
Establishments
in
the
Construction
and
Development
Industry
NAICS
Industry
Option
1
Option
2
Number
Percent
of
Total
Number
Percent
of
Total
23321
Single­
family
residential
building
construction
34,070
22.9%
21,362
15.9%

23322
Multi­
family
residential
building
construction
4,603
3.1%
2,699
2.0%

23331
Manufacturing
and
industrial
building
construction
7,742
5.2%
7,742
5.8%

23332
Commercial
and
institutional
building
construction
39,810
26.8%
39,810
29.7%

234
Heavy
construction
42,557
28.6%
42,557
31.8%

235
a
Special
trade
contracting
19,771
13.3%
19,771
14.8%

Potentially
affected
establishments
148,553
100.0%
133,941
100.0%

a
Includes
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Figures
may
not
add
to
totals
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
and
EPA
estimates.

2.4
MARKET
SUPPLY
AND
DEMAND
The
sections
below
discuss
the
supply
and
demand
factors
that
affect
the
residential,

nonresidential,
and
heavy
construction
industries.
This
discussion
provides
insight
into
the
dynamics
of
the
construction
market
and
provides
a
basis
for
many
of
the
key
assumptions
used
in
the
economic
impact
models.

2­
30
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.1
Characteristics
of
Construction
Supply
This
section
discusses
the
factors
that
influence
supply
in
the
C&
D
industry.
Topics
include
number
and
value
of
residential,
nonresidential,
and
heavy
construction
projects;
barriers
to
entry
in
the
industry;
and
supply
trends
(
the
latter
primarily
for
the
residential
construction
market)
.

2.4.1.1
Residential
Building
Number
of
Projects
The
Census
Bureau
operates
three
data
collection
programs
that
track
and
report
output
measures
relevant
for
the
C&
D
industry:

 
The
Building
Permits
Program
collects
monthly
information
on
building
permits
issued
for
new
private
residential
construction.

 
The
Survey
of
Construction
collects
information
on
residential
units
started,
sold,
and
completed
each
month.
Several
data
series
are
produced
from
this
program.
These
include:

 
Housing
Starts
(
Series
C20)
 
Provides
monthly
data
on
the
number
of
housing
starts,
including
number
of
housing
units
authorized,
started,
and
authorized
but
not
yet
started.

 
New
One­
Family
Houses
Sold
(
Series
C25)
 
Provides
monthly
data
on
units
sold
and
for
sale,
average
and
median
sales
prices,
and
price
distribution
of
units
sold.
This
series
also
produces
the
Price
Index
of
New
One­
Family
Houses
Sold.

 
Characteristics
of
New
Housing
(
Series
C25A)
 
Compiles
and
publishes
data
annually
on
housing
prices
and
physical
characteristics
such
as
size
of
unit,
number
of
bathrooms,
type
of
heating
system,
and
type
of
exterior
wall.

 
Housing
Completions
(
Series
C22)
 
This
series,
,
published
monthly,
provides
data
on
the
number
of
housing
units
completed
in
a
month
and
on
those
under
construction.

2­
31
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
 
New
Residential
Construction
in
Selected
Metropolitan
Areas
(
Series
C21)
 
Provides
quarterly
data
by
metropolitan
area
on
units
authorized,
started,
and
completed.
20
 
The
Value
Put
in
Place
program
publishes
estimates
of
the
value
of
construction
work
performed
each
month.

Combined,
these
data
programs
produce
vast
amounts
of
information
on
construction
industry
output.
This
profile
focuses
on
building
permits,
since
the
activities
most
likely
to
be
influenced
by
the
proposed
effluent
guidelines
regulations
are
those
that
take
place
early
in
the
development
process.
The
following
discussion
and
supporting
tables
provide
further
details
about
the
building
permits
data
collection
program.

The
Building
Permits
Program
collects
data
on
private
residential
construction
authorized
by
building
permits
based
upon
reports
submitted
by
local
building
permit
officials.
21
The
data
include
the
number
of
permits
authorized
by
type
22
and
the
value
of
permits.
These
reports
are
provided
in
response
to
a
mail
survey
using
Form
C­
404
 
Report
of
Building
or
Zoning
Permits
Issued
and
Local
Public
Construction.
 
The
mail
survey
covers
a
sample
of
8,500
permit­
issuing
places
from
a
universe
of
19,000
in
the
U.
S.
23
Approximately
96
percent
of
all
privately
owned
housing
units
are
built
in
areas
that
require
building
permits.

20
Census
has
discontinued
publication
of
this
series.
The
last
year
for
which
data
were
published
was
1998.

21
Census
discontinued
collection
of
data
on
nonresidential
construction
authorized
by
building
permits
in
1995
due
to
budget
cuts.
EPA
has
used
historical
data
from
this
series
to
create
projections
of
nonresidential
building
activity
beyond
1995.
See
Section
2.6.1.2.

22
Private
residential
construction
is
classified
as:
single­
family
homes,
2­
family
buildings,
3­
4
family
buildings,
or
5
or
more
family
buildings.
Data
collection
for
other
types
of
construction
(
including
nonresidential
housekeeping,
nonresidential
buildings,
and
demolition
and
razing)
was
discontinued
in
1995.

23
All
permit­
issuing
places
in
the
most
active
MSAs
and
all
CMSAs
are
selected
with
certainty
for
the
sample.
The
remaining
places
are
stratified
by
State
into
two
strata
based
on
the
number
of
housing
units
authorized
in
1989,
1990,
1991,
and
1992.
In
each
State,
all
places
that
authorized
housing
units
during
the
period
greater
than
or
equal
to
a
predetermined
number
of
units
were
selected
with
certainty.
The
other
places
were
selected
at
the
rate
of
1
in
10.

2­
32
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Figure
2­
3
shows
monthly
data
from
January
1994
through
July
2000
on
the
number
of
housing
units
authorized
by
building
permit.
The
data
in
this
chart
represent
seasonally
adjusted
annual
averages.

Seasonal
adjustment
eliminates
the
effect
of
changes
that
normally
occur
at
about
the
same
time
and
with
about
the
same
magnitude
every
year.
24
As
seen,
the
seasonally
adjusted
annual
rate
of
building
permits
issued
shows
a
steady
rise
over
the
recent
period.
From
an
average
of
between
1.3
and
1.5
million
units
per
year
over
the
1994
to
1997
period,
the
rate
then
rose
through
the
1998
to
2000
period.
The
rate
appears
to
have
reached
a
peak
in
January
2000
when
it
hit
1.7
million
units,
and
has
since
fallen
steadily
back
to
approximately
1.5
million
units
per
year.

24
This
includes
the
influence
of
factors
such
as
normal
or
average
changes
in
weather
conditions,
differences
in
the
lengths
of
the
months,
and
differences
in
the
composition
(
trading­
day
variation)
of
the
months.
The
seasonally
adjusted
annual
rate
is
the
seasonally
adjusted
monthly
rate
multiplied
by
12.
The
seasonally
adjusted
annual
rate
for
a
particular
month,
for
example
July,
can
be
interpreted
to
mean
that
if
the
only
changes
which
occur
in
building
permits
from
July
through
June
of
the
following
year
were
the
normal
seasonal
changes
described
by
the
seasonal
indexes,
then
the
total
building
permits
in
that
12­
month
interval
would
equal
the
seasonally
adjusted
annual
rate
for
July.
The
seasonally
adjusted
annual
rate
has
the
advantage
of
facilitating
comparisons
with
previous
annual
building
permit
figures
as
well
as
with
the
seasonally
adjusted
annual
rates
for
prior
months.
The
seasonally
adjusted
annual
rate
is
neither
a
forecast
nor
a
projection;
rather
it
is
a
description
of
the
rate
at
which
building
permits
are
issued
in
the
particular
month
for
which
it
is
calculated.

2­
33
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
total
number
of
new
housing
units
authorized
in
1997
was
1,441,136.
Of
these,
1,062,396
or
73.7
percent
were
for
single
housing
units.
25
Table
2­
15
shows
the
number
of
new
privately
owned
housing
units
authorized
by
building
permit,
allocated
to
Census
region
and
subregion.

1994
1995
1996
1997
1998
1999
2000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
(
'
000)

Figure
2­
3.
New
Privately
Owned
Housing
Units
Authorized,
Seasonally
Adjusted
Annual
Rate,
U.
S.

Source:
U.
S.
Census
Bureau
(
2000e)
,
Series
C­
40,
Building
Permits.

25
A
 
housing
unit
 
consists
of
a
room
or
group
of
rooms
intended
for
occupancy
as
separate
living
quarters
by
a
family,
by
a
group
of
unrelated
persons
living
together,
or
by
a
person
living
alone.
Separate
living
quarters
are
those
in
which
the
occupants
live
and
eat
separately
from
other
persons
in
the
building
and
have
direct
access
from
the
outside
of
the
building
or
through
a
common
hall.
In
accordance
with
this
definition,
each
apartment
unit
in
an
apartment
building
is
counted
as
one
housing
unit.

2­
34
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
15
New
Privately
Owned
Housing
Units
Authorized
by
Building
Permits
in
Permit­
Issuing
Places
in
1997,
by
Region
Region
Sub­
Region
Total
1
Unit
2
Units
3
and
4
Units
5
Units
or
More
Number
of
Structures
with
5
Units
or
More
Northeast
New
England
41,110
35,838
904
687
3,681
236
Middle
Atlantic
100,776
75,312
4,278
2,347
18,839
963
Total
Region
141,886
111,150
5,182
3,034
22,520
1,199
Midwest
East
North
Central
209,213
154,513
8,168
8,401
38,131
3,118
West
North
Central
90,628
65,510
4,472
2,910
17,736
1,105
Total
Region
299,841
220,023
12,640
11,311
55,867
4,223
West
Mountain
179,632
134,403
2,548
3,675
39,006
3,098
Pacific
183,913
132,670
4,590
5,180
41,473
2,902
Total
Region
363,545
267,073
7,138
8,855
80,479
6,000
South
South
Atlantic
392,540
291,564
5,070
5,605
90,301
5,839
East
South
Central
79,979
61,863
2,264
1,933
13,919
1,106
West
South
Central
163,345
110,723
2,556
2,850
47,216
2,760
Total
Region
635,864
464,150
9,890
10,388
151,436
9,705
TOTALS
1,441,136
1,062,396
34,850
33,588
310,302
21,127
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
35
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Value
of
Projects
The
same
Census
program
that
compiles
and
reports
data
on
the
number
of
housing
units
authorized
by
building
permit
also
compiles
data
on
the
value
of
permits
issued.
The
value
reported
in
the
permits
data
refers
to
the
value
of
structures
and
site
improvements
covered
by
the
building
permit,

but
excludes
land
costs.

The
total
value
of
residential
building
permits
issued
in
the
U.
S.
in
1997
was
$
141.0
billion.
Of
this,
$
121.2
billion,
or
86.0
percent,
was
accounted
for
by
single­
family
housing
units.

Table
2­
16
shows
the
value
of
new
privately
owned
housing
units
authorized
by
building
permits
in
1997,
by
Census
region
and
subregion.
The
South
region
accounted
for
$
55.9
billion
(
39.6
percent
of
the
total)
,
followed
by
the
West
with
$
40.7
billion
(
28.8
percent)
,
the
Midwest
with
$
30.3
billion
(
21.4
percent)
,
and
the
Northeast
with
$
14.1
billion
(
10.0
percent)
.

2­
36
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
16
New
Privately
Owned
Housing
Units
Authorized­
Valuation
for
Regions
(
Millions
of
1997
Dollars)

Region
Sub­
Region
Total
1
Unit
2
Units
3
and
4
Units
5
Units
or
More
Northeast
New
England
$
4,737.7
$
4,423.8
$
59.3
$
49.0
$
205.5
Middle
Atlantic
$
9,399.5
$
8,142.4
$
232.4
$
134.3
$
890.4
Total
Region
$
14,137.2
$
12,566.2
$
291.7
$
183.3
$
1,095.9
Midwest
East
North
Central
$
21,688.0
$
18,858.2
$
584.1
$
516.4
$
1,729.4
West
North
Central
$
8,573.9
$
7,292.4
$
294.3
$
184.1
$
803.3
Total
Region
$
30,261.9
$
26,150.5
$
878.3
$
700.4
$
2,532.6
West
Mountain
$
17,426.3
$
15,038.7
$
225.4
$
245.8
$
1,916.4
Pacific
$
23,299.2
$
19,693.7
$
389.6
$
410.3
$
2,805.6
Total
Region
$
40,725.5
$
34,732.4
$
615.0
$
656.1
$
4,722.0
South
South
Atlantic
$
35,206.7
$
29,973.8
$
301.1
$
341.9
$
4,590.0
East
South
Central
$
6,840.6
$
6,042.5
$
106.1
$
66.3
$
625.7
West
South
Central
$
13,832.4
$
11,729.1
$
111.8
$
109.6
$
1,881.9
Total
Region
$
55,879.7
$
47,745.4
$
518.9
$
517.8
$
7,097.6
TOTAL
$
141,004.4
$
121,194.5
$
2,304.0
$
2,057.7
$
15,448.2
Figures
rounded
from
thousands
reported
by
Census.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2.4.1.2
Nonresidential
Building
Census
discontinued
the
collection
of
data
on
nonresidential
construction
authorized
by
building
permits
in
1995
due
to
budgetary
restraints.
To
fill
this
data
gap,
EPA
has
used
historical
(
pre­
1995)
data
on
nonresidential
starts
to
establish
a
relationship
between
residential
and
nonresidential
starts
from
which
current
nonresidential
activity
can
be
estimated.

2­
37
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Number
and
Value
of
Projects
EPA
analyzed
data
from
1980
through
1994
on
the
number
of
nonresidential
building
permits,

number
of
residential
building
permits,
the
value
of
nonresidential
buildings
put
in
place,
and
a
time
trend
to
estimate
a
statistical
relationship
that
could
be
used
to
predict
the
number
of
nonresidential
permits
issued
in
1997.
26
Table
2­
17
shows,
for
each
region
and
subregion,
the
results
from
EPA
 
s
analysis.
EPA
used
a
linear
regression
of
nonresidential
building
permits
on
the
remaining
three
variables
to
estimate
the
number
of
permits.

The
value
of
nonresidential
building
projects
is
reported
by
Census
in
the
Value
Put
in
Place
data
series.
Table
2­
17
also
shows
the
value
of
nonresidential
projects
constructed
in
1997
by
region
and
subregion.

26
EPA
assumes
that
there
is
a
one­
to­
one
correspondence
between
permits
and
projects
for
nonresidential
construction
activity.
Therefore,
the
predicted
number
of
nonresidential
permits
issued
in
1997
is
assumed
to
also
be
the
predicted
number
of
nonresidential
projects
for
that
year.

2­
38
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
17
Estimated
Number
of
Nonresidential
Building
Permits
for
1997,
by
Region
Region
Sub­
Region
Nonresidential
Permits
(
estimated)
Value
Put
in
Place
(
millions
of
dollars)

Northeast
New
England
26,936
$
1,034
Middle
Atlantic
51,530
$
2,482
Total
Region
78,466
$
3,516
Midwest
East
North
Central
62,193
$
8,606
West
North
Central
30,374
$
1,745
Total
Region
92,568
$
10,351
West
Mountain
27,696
$
2,187
Pacific
51,408
$
6,736
Total
Region
79,105
$
8,922
South
South
Atlantic
124,452
$
6,098
East
South
Central
20,340
$
3,228
West
South
Central
31,093
$
4,624
Total
Region
175,886
$
13,950
TOTALS
United
States
426,024
$
36,739
Figures
may
not
add
to
totals
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
.

As
shown
in
Table
2­
17,
the
number
of
nonresidential
building
projects
authorized
by
permits
in
1997
is
estimated
at
426,024.
The
South
had
the
highest
number
of
nonresidential
permits
in
1997,
with
175,886,
or
41.3
percent
of
the
total.
The
Northeast
had
the
fewest
nonresidential
permits
issued,
with
only
78,466,
or
18.4
percent
of
the
total.

The
total
value
of
nonresidential
building
projects
constructed
in
1997
was
$
36.7
billion.
As
with
nonresidential
permits,
the
South
had
the
highest
value
put
in
place,
with
$
13.9
billion
(
38.0
percent
of
total
value
put
in
place)
while
the
Northeast
had
the
lowest
value
of
projects
put
in
place
with
$
3.5
billion
(
9.6
percent
of
total)
.

2­
39
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.1.3
Heavy
Construction
Heavy
construction
encompasses
both
building
and
nonbuilding
construction
activities,
although
95
percent
of
the
work
performed
by
establishments
in
NAICS
234
(
Heavy
construction)
is
classified
as
nonbuilding
construction.
The
largest
component
of
heavy
construction
work
is
highway
and
street
construction.
These
activities
account
for
one­
third
of
the
value
of
construction
work
completed
by
the
heavy
construction
industries.
When
highway
and
street
construction
is
combined
with
bridge
and
tunnel
construction,
the
total
value
of
work
climbs
to
$
53.3
billion,
or
41.7
percent
of
the
industry
total.
Heavy
construction
activities
excluding
roads,
bridges,
and
tunnels
(
e.
g.
,
airport
runways,
sewers
and
water
mains,
transmission
lines)
account
for
the
remaining
58.3
percent
of
construction
value,
but
there
is
little
data
providing
further
detail
on
such
activities.
As
a
result,
this
section
focuses
principally
on
road,

highway,
bridge,
and
tunnel
construction.

The
Federal
Highway
Administration
(
FHWA)
publishes
the
most
detailed
report
on
highway,

bridge,
and
transit
systems
in
the
United
States.
The
1999
Report
to
Congress,
Status
of
the
Nation
 
s
Highways,
Bridges
and
Transit:
Conditions
and
Performance
(
C&
P
Report)
includes
not
only
information
on
the
condition
of
these
systems,
but
details
on
capital
expenditures
and
improvements
as
well.
The
sections
below
summarize
some
of
this
data.

Number
of
Projects
Table
2­
18
summarizes
information
from
the
C&
P
Report
on
the
number
of
miles
of
highway,

urban,
and
rural
roads
in
the
U.
S.
,
as
well
as
the
number
of
lane­
miles
represented
Highway
lane­

mileage
has
increased
by
an
average
of
only
0.3
percent
annually
over
the
period
1987­
1997.
Although
the
report
and
Table
2­
18
show
the
annual
capital
and
maintenance
expenditures
on
this
roadway
system,

nowhere
in
the
report
(
nor
in
any
other
data
reviewed
for
this
analysis)
does
FHWA
present
the
number
of
projects
funded
or
number
of
miles
of
new
road
completed.
As
a
result,
EPA
lacks
current
estimates
of
the
number
of
highway,
road,
bridge
or
transit
construction
projects
that
potentially
would
disturb
land.

2­
40
­
­

­
­

­
­

­
­

­
­

­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
number
of
rural
highway
road­
miles
(
as
distinguished
from
lane­
miles
)
declined
by
an
average
of
0.2
percent
annually
between
1987
and
1997.
During
the
same
period,
urban
highway
road­

miles
grew
by
an
average
of
1.7
percent
annually.
The
decline
of
rural
road
mileage
and
comparative
growth
in
urban
road
mileage
may
be
due,
at
least
in
part,
by
the
expansion
of
existing
urban
roadways
indicated
by
the
figures
above
for
lane­
mileage
growth
trends.
Some
areas
that
were
previously
classified
as
rural
may
also
have
been
reclassified
as
urban
during
that
10­
year
period
based
on
population
growth.
27
Table
2­
18.
Highway
Statistics
Statistic
1997
Data
1987­
1997
Average
Annual
Growth
(
percent)
a
Total
Rural
Highway
Miles
Total
Urban
Highway
Miles
Total
Highway
Miles
3.11
million
0.84
million
3.95
million
­
0.2
1.7
Total
Rural
Highway
Lane­
Miles
Total
Urban
Highway
Lane­
Miles
Total
Highway
Lane­
Miles
6.37
million
1.89
million
8.26
million
2.1
0.3
Total
Highway
Expenditures
(
All
Govts.
)

Total
Highway
Capital
Outlay
(
All
Govts.
)

Total
Highway
Capital
Outlay
Per
Lane­
Mile
Total
Highway
Capital
Outlay
Per
Road­
Mile
b
$
101.3
billion
$
48.7
billion
$
5,914
$
12,329­
$
12,360
­
­
Not
provided
a
Not
provided
for
all
statistic
categories.
b
Range
calculated
by
EPA
as
described
in
text.
Source:
FHWA
1999,
various
tables.

27
The
C&
P
Report
defines
 
rural
 
areas
as
areas
with
a
population
under
5,000.
.
 
Urban
 
areas
are
those
with
a
population
greater
than
or
equal
to
5,000.

2­
41
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Value
of
Projects
The
C&
P
Report
presents
highway
and
road
expenditures
by
all
levels
of
government
ownership.

Expenditures
are
further
classified
as
capital
and
non­
capital.
Non­
capital
expenditures
include
maintenance
and
service
outlays.
28
Maintenance
activities
are
not
expected
to
disturb
significant
amounts
of
land.
Capital
outlays
refer
to
activities
such
as
land
acquisition
and
other
right­
of­
way
costs;

preliminary
and
construction
engineering;
new
construction,
reconstruction,
resurfacing,
rehabilitation,
and
restoration
of
roadways,
bridges,
and
other
structures;
and
installation
of
guardrails,
fencing,
signs,
and
signals.
Capital
outlays
are
further
classified
according
to
whether
they
support
system
preservation,

system
expansion,
or
system
enhancement.
Definitions
for
these
are
as
follows:

 
System
Preservation
 
capital
improvements
on
existing
roads
and
bridges;
includes
reconstruction,
resurfacing,
pavement
restoration/
rehabilitation,
widening
of
narrow
lanes
and
shoulders,
bridge
replacement
and
bridge
rehabilitation;
does
not
include
routine
maintenance
costs
(
these
costs
are
captured
by
 
non­
capital
expenditures
 
)
.

 
System
Expansion
 
construction
of
new
roads
and
bridges,
as
well
as
costs
associated
with
adding
lanes
to
existing
roads;
includes
all
of
 
New
Construction,
 
 
New
Bridge,
 
 
Major
Widening,
 
and
most
costs
associated
with
 
Reconstruction
­
Added
Capacity.
 
 
System
Enhancement
 
includes
safety
enhancements,
installation
of
intelligent
transportation
systems,
and
environmental
enhancements.

Based
on
a
review
of
these
definitions,
EPA
concludes
that
the
activities
classified
as
capital
outlays
are
most
likely
to
result
in
land
disturbances.
In
1997,
capital
outlays
totaled
$
48.7
billion.
Table
2­
20
provides
a
more
detailed
breakdown
of
these
expenditures.

Another
1999
FHWA
report,
Our
Nation
 
s
Highways
,
shows
that
6.9
percent
of
total
state
disbursements
29
for
highways
in
1998
went
to
new
road
and
bridge
construction.
Another
36.3
percent
went
to
other
capital
improvements
on
existing
highways.
Between
1995
and
1997,
expenditures
(
from
all
jurisdictions)
for
system
expansion
grew
at
a
faster
rate
than
expenditures
for
either
system
28
Maintenance
outlays
cover
spot
patching,
crack
sealing
(
roads
and
bridge
decks)
,
and
maintenance/
repair
of
route
markers,
signs,
guardrails,
fencing,
signals,
and
lighting.

29
Total
state
disbursements
were
$
80.5
billion
in
1998.
This
figure
includes
Federal
Aid
for
highways.

2­
42
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
preservation
or
system
enhancements.
The
C&
P
report
shows
that
in
1997,
47.6
percent
of
capital
outlays
went
toward
system
preservation;
8.0
percent
went
toward
system
enhancement;
15.6
percent
went
toward
new
roads
and
bridges;
and
another
28.8
percent
went
toward
other
system
expansion.

The
FHWA
data
does
not
report
the
mileage
of
new
roads
constructed
versus
the
mileage
lost
(
removed
or
taken
out
of
commission
due
to
condition)
.
Some
data
is
available
for
capital
outlays
by
improvement
type
(
such
as
new
road
construction,
resurfacing,
etc.
)
.
This
information
is
presented
in
Table
2­
19.
30
30
The
data
in
Table
2­
19
is
based
on
a
sample
of
direct
State
expenditures
on
particular
improvements.
FHWA
then
used
this
state
data
to
estimate
a
national
average
for
roads
under
jurisdiction
of
all
governmental
units
(
local,
state,
federal)
and
for
all
roadway
systems.
The
 
Total,
State
Arterials
&
Connectors
 
is
based
on
the
direct
State
expenditures
data;
 
Total,
Arterials
and
Collectors,
All
Jurisdictions
 
is
estimated
based
on
the
State
data.
.
FHWA
reports
that
there
is
very
little
information
on
expenditures
for
local
functional
class
roads.
FHWA
assumed
that
the
expenditure
patterns
for
local
functional
class
roads
more
or
less
followed
the
expenditure
patterns
for
arterials
and
collectors
and
used
this
assumption
to
estimate
the
total
capital
outlay
by
all
government
units
for
all
road
systems
(
arterials,
collectors,
and
local
functional
class
roads)
.
These
expenditures
are
accounts
of
governmental
unit
spending
,
not
of
construction
contractor
spending,
though
it
may
be
assumed
that
since
the
majority
of
roads
are
owned
by
some
government
unit
(
local,
state,
federal)
,
any
costs
incurred
by
the
construction
contractor
would
ultimately
be
paid
for
with
government
funds.

2­
43
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
19.
Highway
Capital
Outlay
by
Improvement
Type,
1997
(
Billions
of
Dollars)

Expenditure
Item
System
Preservation
System
Expansion
System
Enhancemen
t
Total
New
Roads
&
Bridges
Existing
Roads
Direct
State
Expenditures
on
Arterials
and
Collectors
Right­
of­
Way
Engineering
New
Construction
Relocation
Reconstruction­
Added
Capacity
Reconstruction­
No
Added
Capacity
Major
Widening
Minor
Widening
Restoration
&
Rehabilitation
Resurfacing
New
Bridge
Bridge
Replacement
Major
Bridge
Rehabilitation
Minor
Bridge
Work
Safety
Traffic
Management/
Engineering
Environmental
and
Other
Total,
State
Arterials
&
Collectors
2.6
1.1
1.0
0.8
2.5
3.4
1.7
1.5
0.7
15.2
0.9
0.8
3.1
0.6
5.4
1.5
1.3
1.7
2.6
1.8
8.9
0.4
1.2
0.4
0.5
2.5
2.4
5.1
3.1
1.7
3.7
1.0
1.8
0.8
2.5
3.4
0.6
1.7
1.5
0.7
1.2
0.4
0.5
32.1
Total
Expenditures
on
Arterials
and
Collectors,
All
Jurisdictions
(
estimated)
a
Highways
and
Other
Bridge
Total,
Arterials
and
Collectors
13.7
4.9
18.5
5.3
0.8
6.0
11.2
11.2
3.1
3.1
33.2
5.6
38.
.
9
Total
Capital
Outlay
on
All
Systems
(
estimated)
b
Highways
and
Other
Bridges
Total
Capital
Outlay,
All
Systems
17.1
6.1
23.2
6.6
1.0
7.6
14.0
14.0
3.9
3.9
41.7
7.0
48.7
Percent
of
Total
Expenditures
47.6%
15.6%
28.8%
8.0%
100.0%

a
Improvement
type
distribution
was
estimated
based
on
State
Arterial
and
Collector
data.
b
Includes
expenditures
for
arterials
and
collectors
as
well
as
for
local
functional
class
roads.
Sources:
Highway
Statistics
1997,
Table
SF12­
A
and
unpublished
FHWA
data;
all
FHWA
1999
Exhibit
6­
13
2­
44
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.1.4
Characterization
of
Supply
This
section
discusses
the
characteristics
of
supply
in
the
C&
D
industry
such
as
market
structure,

barriers
to
entry,
and
supply
trends.

Market
Structure
Section
2.3
summarized
information
about
the
size
distribution
of
developers
and
builders,
based
on
employee
and
revenue
size
criteria.
As
shown
there,
the
industry
consists
predominantly
of
small
firms
and
sole
proprietorships
who
generally
operate
on
a
localized
basis
within
a
specific
geographic
market.
Anecdotal
information
indicates
that
a
large
number
of
small
firms
focus
on
niche
markets
that
are
not
as
easily
accessible
to
the
large­
scale
builders
(
Housing
Zone,
2001)
.

While
the
majority
of
firms
are
small,
a
small
number
of
large
operators
do
control
a
sizeable
share
of
the
market.
In
its
special
report
on
homebuilding,
for
example,
Census
reports
that
just
over
100
builders,
representing
only
0.3
percent
of
all
establishments,
accounted
for
90,772
new
single­
family
homes,
or
18.4
percent
of
the
total.
This
represented
an
average
of
865
homes
per
builder
(
see
Table
2­

20)
.
31
Assuming
an
average
sales
price
of
$
200,000,
builders
in
this
size
class
would
have
average
revenues
of
$
173
million,
substantially
above
the
overall
industry
average
of
$
1.0
million.
At
the
top
of
the
industry
are
builders
like
Pulte
Corporation
(
$
3.8
billion
in
housing
revenues)
,
Kaufman
and
Broad
(
$
3.7
billion)
,
and
Centex
Corporation
(
$
3.3
billion)
who
operate
nationwide
and
wield
considerable
market
power.
32
Discussions
with
representatives
of
the
homebuilding
industry
suggest
there
are
at
least
two
common
business
models
in
the
industry.
Most
projects
are
managed
by
either
a
single
land
developer
who
sells
improved
lots
to
individual
builders,
or
feature
a
developer­
builder
who
both
develops
the
land
and
builds
on
it
(
some
developers
may
sell
some
lots
and
retain
others
to
build
on
themselves)
.
Figure
2­

4
illustrates
these
two
alternatives.

31
These
data
are
based
on
a
subset
of
builders
that
are
100
percent
specialized
in
new
single­
family
home
construction.

32
http:
/
/
www.
housingzone.
com/
topics/
pb/
build/
giants2000/
2000400.
asp
accessed
3/
9/
01.

2­
45
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
20
Selected
Statistics
for
Establishments
by
Single­
Family
Housing
Starts
Size
Class:
1997
[
Detail
may
not
add
to
total
because
of
rounding
]

Source:
U.
S.
Bureau
of
the
Census,
Construction
Sector
Special
Study
Table
3a.
(
http:
/
/
www.
census.
gov/
ftp/
pub/
const/
www/
starts.
pdf)
Number
of
Housing
Starts
Establishments
Starts
Starts
per
Establishment
No.
%
of
Total
No.
%
of
Total
0
3,736
11.0%
0
0.0%
0.0
1­
4
14,781
43.6%
33,363
6.8%
2.3
5­
9
6,557
19.3%
42,175
8.6%
6.4
10­
24
5,411
16.0%
79,226
16.1%
14.6
25­
99
2,608
7.7%
109,258
22.2%
41.9
100­
499
720
2.1%
138,000
28.0%
191.7
500+
105
0.3%
90,772
18.4%
864.5
Total
33,918
100.0%
492,792
100.0%
14.5
Barriers
to
Entry
In
the
economics
literature,
barriers
to
entry
are
considered
to
exist
when
it
is
difficult
for
a
new
firm
to
enter
an
existing
market.
According
to
academics
who
have
studied
the
homebuilding
industry,

there
are
two
types
of
barriers
to
entry
for
new
homebuilding
firms
 
entry
costs
and
input
cost
differentials
(
Landis,
1986)
.

 
Entry
cost
differentials
are
the
additional
costs
a
new
homebuilder
must
incur
to
participate
in
a
given
market.
These
costs
may
be
manifested
in
the
form
of
local
development
fees,
abnormally
high
land
costs,
or
abnormally
high
wages.
In
the
short
run,
entry
cost
barriers
raise
the
cost
of
building
and
keep
builders
who
are
unable
or
unwilling
to
pay
the
extra
costs
out
of
the
market.
In
the
long
run,
builders
produce
at
less
than
their
optimal
scale
(
i.
e.
,
to
the
left
of
the
lowest
point
on
their
marginal
cost
curve)
to
avoid
holding
unsold
inventory
in
a
downturn.
Thus,
entry
barriers
flatten
the
industry
average
cost
curve
by
increasing
builders
 
exposure
to
 
cyclical
risk.
 
In
addition,
these
barriers
tend
to
reduce
the
advantage
of
high
volume
builders
over
the
long
term
(
Landis,
1986)
.

2­
46
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
 
Input
cost
differentials
are
exhibited
when
new
homebuilders
must
pay
higher
prices
for
inputs
than
existing
firms,
or
when
they
are
prevented
from
accessing
necessary
inputs.
Usually,
input
price
differentials
are
a
temporary
phenomenon
but
some
forms
of
regulation
can
create
permanent
price
differentials.

The
existence
of
entry
costs
also
increases
the
importance
of
up­
front
financing
for
home
building
projects.
The
builder
must
invest
more
funds
earlier
in
the
project
to
overcome
the
entry
barrier.

Firms
with
established
credit
may
be
able
to
borrow
some
of
this
up­
front
financing,
while
less
well­

established
firms
must
use
their
own
capital.
In
either
case,
the
opportunity
costs
of
the
investment
are
larger
so
regulatory
delays
and
environmental
compliance
requirements
become
more
burdensome
(
Landis,
1986)
.
Much
of
the
cost
of
building
regulation
is
the
interest
that
accrues
on
invested
funds
while
permits
and
variances
are
negotiated.
Luger
and
Temkin
(
2000)
estimate
that
the
costs
of
delay
for
a
25­
unit
subdivision
rise
from
$
3,692
per
month
in
the
approvals
stage
to
$
13,400
per
month
in
the
construction
phase.

Similar
issues
confront
non­
residential
and
heavy
construction
contractors.
Non­
residential
projects
are
generally
larger
than
residential
projects,
so
builder
financing
and
carrying
costs
are
proportionately
larger.
Since
fewer
firms
can
take
on
large
projects,
the
opportunity
for
incumbent
firms
to
maintain
barriers
to
entry
is
also
greater.
Most
heavy
construction
is
carried
out
under
government
or
utility
contracts
where
competitive
bidding
is
required.
This
may
tend
to
level
the
playing
field
for
entering
firms
who
can
overcome
the
basic
qualification
requirements.

2.
4
.
1
.
5
Supply
Trends
This
section
provides
a
brief
overview
of
trends
in
homebuilding
practices
that
could
potentially
influence
baseline
ESC
practices
or
the
adoption
of
ESC
options
proposed
by
EPA
under
the
effluent
guidelines.

The
National
Governors
Association
(
NGA)
recently
published
a
report
examining
a
concept
they
have
termed
New
Community
Design
(
NCD)
.
According
to
the
report,
NCD
encompasses
many
of
the
concepts
popular
in
residential
design
today:
New
Urbanism,
Traditional
Neighborhood
Development,
compact
development,
livable
communities,
master­
planned
communities,
and
neo­

2­
47
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
traditional
design.
NCD
has
been
described
as
 
neighborhoods
of
housing,
parks,
and
schools
within
walking
distance
of
shops,
civic
services,
jobs,
and
transit
 
a
modern
version
of
the
traditional
town
 
(
Peter
Calthorpe,
as
quoted
in
Hirschhorn
and
Souza,
2001,
p.
9)
.
This
and
other
types
of
design
such
as
low
impact
development
(
LID)
have
garnered
new­
found
attention
in
recent
years,
and
continue
to
be
key
topics
for
development
professionals.
Both
NCD
and
LID
are
discussed
in
more
detail
below.

New
Community
Design
NCD
is
a
development
design
philosophy
aiming
to
create
a
walkable,
multi­
purpose
community
structure
that
decreases
dependency
on
automobiles,
takes
advantage
of
public
transportation,

incorporates
parks
and
other
green
spaces,
and
uses
existing
infrastructure.
A
community
based
on
NCD
incorporates
residential,
commercial,
and
institutional
facilities.
Residential
communities
are
a
blend
of
single
and
multi­
family
housing,
and
often
blend
commercial
and
retail
facilities
with
housing
units
as
well.
According
to
the
NGA
report,
approximately
one­
third
of
potential
homebuyers
would
prefer
an
NCD
community
versus
a
traditional,
sprawl­
based
development
 
provided
that
the
option
existed.

Currently
less
than
one
percent
of
total
housing
construction
is
based
on
NCD
principles.
This
means
that
the
option
to
live
in
a
NCD
community
versus
a
traditional
sprawl
community
does
not
exist
for
many
potential
homebuyers.
NGA
identifies
the
following
factors
as
limiting
the
adoption
of
NCD
and
similar
concepts:

 
Local
zoning
codes
make
it
difficult
for
mixed­
use
communities
to
get
approved.

 
Lenders
favor
single­
use
residential
projects,
strip
malls,
and
suburban
office
parks.
This
favoritism
 
causes
conventional
real
estate
analyses
to
discount
the
long­
term
returns
of
NCDs,
making
them
difficult
to
finance
 
(
(
Hirschhorn
and
Souza,
p.
13)
.

 
Conventional
developers
and
builders
have
expertise
in
single­
use
projects
and,
as
a
result,
continue
doing
what
they
are
already
familiar
with.
In
many
cases
these
individuals
are
not
able,
or
prepared,
to
deal
with
the
increase
in
up­
front
costs
arising
from
the
increased
intensity
at
the
planning
and
design
stage
of
a
NCD
project.

A
survey
by
the
Canada
Mortgage
and
Housing
Corporation
compared
the
costs
and
benefits
of
a
conventional
development
(
4,505
dwellings)
with
an
NCD
alternative
(
6,875
dwellings)
.
The
incremental
savings
resulting
from
the
NCD
alternative,
on
a
per
housing
unit
basis,
were
as
follows:

roads,
$
3,054;
storm
water
management,
$
1,499;
transit,
$
1,330;
water,
$
1,099;
policing,
$
1,016;
and
2­
48
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
sanitary
services,
$
975.
The
total
infrastructure
savings
for
the
NCD
alternative
are
$
61.5
million
(
Hirschhorn
and
Souza,
p.
36)
.
The
NGA
report
offers
one
solution
to
the
lagging
supply
of
NCD
construction:
implement
parallel
building
codes.
Such
parallel
building
codes
may
serve
to
 
level
the
playing
field
 
with
conventional
subdivision
development
while
still
allowing
conventional
development
to
take
place.

Low­
Impact
Development
LID
is
a
development
design
strategy
that
aims
to
protect
the
natural
pre­
development
hydrological
function
of
a
site.
True
LID
shares
many
features
with
NCD,
such
as
smaller
lot
sizes
and
the
addition
of
greenspace
to
the
site
plan.
However,
whereas
NCD
focuses
on
mixed­
use
development,

LID
at
this
time
focuses
primarily
on
residential
development,
although
LID
concepts
may
be
easily
applied
to
other
types
of
development
(
e.
g.
,
commercial,
mixed­
use)
.

The
primary
goals
of
LID
are
to:
(
1)
minimize
development
impacts
by
reducing
impervious
surfaces,
maintaining
natural
site
drainage,
reducing
curb
and
gutter
construction,
and
reducing
clearing
and
grading;
(
2)
create
dispersed
runoff
controls
on
individual
lots
utilizing
swales,
flatter
slopes,
rain
gardens,
etc.
;
(
3)
maintain
pre­
development
hydrology;
and
(
4)
encourage
pollution
prevention
and
runoff
management
by
individual
property
owners
(
Coffman
et
al.
,
1998)
.

Conventional
site
design
relies
on
storm
water
controls
that
collect
and
convey
runoff
away
from
the
property
as
quickly
as
possible.
This
type
of
design
relies
on
pipes,
paved
surfaces,
drainage
ditches,

and
gutters
as
well
as
traditional
best
management
practices
(
BMPs)
such
as
ponds
and
sediment
basins.

Such
conventional
design
actually
amplifies
hydrologic
changes
(
increased
volume,
runoff
frequency,

and
discharge
rate)
as
 
natural
storage
is
lost,
the
amount
of
impervious
surfaces
in
increased,
the
time
of
concentration
is
decreased,
runoff
travel
times
are
decreased
and
the
degree
of
hydraulic
connection
is
increased
 
(
(
Prince
George
 
s
County,
1999)
.
In
addition,
while
many
conventional
storm
water
control
techniques
are
designed
to
 
maintain
the
peak
runoff
discharge
rate
at
predevelopment
levels
for
a
particular
design
storm
event,
 
only
the
runoff
rate
is
controlled,
leaving
the
runoff
volume,
frequency,

and
duration
to
increase
unchecked
(
Coffman
et
al.
,
1998)
.

2­
49
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
As
with
any
relatively
new
technology
or
approach,
33
there
are
many
concerns
surrounding
the
effectiveness,
costs,
and
benefits
of
LID
as
compared
with
conventional
site
design.
Developers
and
builders
want
to
know
how
using
LID
techniques
will
affect
financing
and
their
bottom
line,
while
consumers
want
to
know
how
it
will
affect
their
ability
to
purchase
a
new
house,
as
well
as
their
resale
value.

Many
in
the
construction
industry
have
found
that
they
face
lower
development
costs
with
LID
than
with
conventional
 
curb
and
gutter
 
design.
.
A
presentation
at
a
1999
Storm
Water
Workshop
for
the
Florida
Keys
Carrying
Capacity
Study
(
FKCC;
sponsored
by
the
U.
S.
Army
Corps
of
Engineers,

Jacksonville
Division)
demonstrates
how
LID
can
lower
overall
development
costs.
Table
2­
21
reproduces
the
construction
cost
table
presented
for
a
residential
development
in
Maryland.

Table
2­
21.
Construction
Cost
Comparison
for
Low
Impact
Development
Cost
Element
Conventional
Development
Low
Impact
Development
Grading/
Roads
$
569,698
$
426,575
Storm
Drains
$
225,721
$
132,558
SWM
Pond/
Fees
$
260,858
$
10,530
Bioretention/
Micro
$
252,124
Total
$
1,086,277
$
821,787
Unit
Cost
$
14,679
$
10,146
Lot
Yield
74
81
Source:
Coffman,
1999
As
shown
above,
construction
costs
associated
with
development
were
estimated
to
be
nearly
$
250,000
lower
for
a
LID
development
plan
than
for
a
conventional
plan.
In
addition,
the
LID
design
actually
increased
lot
yield
from
74
lots
to
81
lots.
This
is
only
one
example
of
reduced
construction
costs
and/
or
increased
lot
yield
achievable
though
LID
design.

33
The
term
 
relatively
new
 
is
used
quite
loosely
here.
.
LID
technologies
have
been
in
use
for
some
time,
although
such
designs
are
just
now
beginning
to
gain
mainstream
acceptance.

2­
50
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
major
additional
cost
developers
incur
when
choosing
LID
(
as
well
as
NCD)
,
is
the
increased
time
and
effort
often
needed
at
the
design
stage
of
a
project.
The
additional
planning
time
is
used
to
assess
site
hydrology,
design
runoff
controls
for
each
lot,
and
other
considerations.

Conservation­
oriented
design
 
creates
significant
upfront
costs
and
raises
questions
of
financial
viability
 
(
Mammoser,
2000,
p.
45)
.
These
costs
can
increase
more
if
structures
are
built
using
environmentally­

friendly
materials,
which
have
generally
higher
 
first
cost
 
compared
to
more
traditional
materials.
.
As
noted
by
Mammoser,
(
2000)
,
potential
lenders
may
be
wary
of
financing
a
LID
project.
As
more
LID
projects
prove
successful
and
profitable,
however,
lenders
may
become
more
accepting
of
such
 
alternative
 
forms
of
development
and
perceive
them
as
no
more
risky
 
and
perhaps
less
risky
 
than
conventional
developments.

2.4.2
Characteristics
of
Construction
Demand
This
section
describes
the
factors
and
characteristics
of
demand
in
the
C&
D
industry.
The
major
demand
factors
addressed
are:
housing
demand
and
demand
elasticity,
the
impact
of
regulation
on
demand
for
housing,
and
demand
for
nonresidential
and
heavy
construction.

2.4.2.1
Demand
Factors
Affecting
Construction
and
Development
Activities
According
to
a
recent
study
(
Luger
and
Temkin,
2000)
,
market
demand
is
one
of
the
three
major
factors
taken
into
consideration
by
a
builder/
developer
when
deciding
whether
or
not
to
propose
a
development.
Market
demand
includes
the
types
and
quantities
of
housing
units
the
public
wants,
and
is
affected
by
general
macroeconomic
conditions,
demographics,
and
consumer
tastes.
Other
factors
that
may
affect
demand
for
C&
D
activities
include
inflation
(
Henderschott,
1980)
,
transaction
costs
(
i.
e.
,

costs
associated
with
purchasing
a
new
home/
facility)
(
Haurin
and
Chung,
1998)
,
expected
length
of
tenure
(
Haurin
and
Lee,
1989)
,
mortgage
loan
to
house
value
(
Haurin
and
Lee,
1989)
,
and
borrowing
constraints
(
Linneman
et
al.
,
1997;
Zorn,
1993)
.
Changing
demographics
tend
to
have
a
fairly
large
effect
on
the
type
of
residential
housing
demanded
(
i.
e.
,
single­
family
versus
multifamily)
(
Hirsch,
1994;

Eppli
and
Childs,
1995)
.

2­
51
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.2.2
Housing
Demand
and
Elasticity
As
discussed
above,
housing
demand
is
largely
determined
by
macroeconomic
factors,

demographics,
and
consumer
tastes.
Changes
in
the
age
of
family
formation,
the
size
of
families,
and
their
perceived
needs
for
space
will
affect
the
market
 
s
demand
for
houses
of
various
sizes
and
styles.

Geographic
shifts
in
economic
activity
and
changes
in
worker
mobility
affect
where
people
wish
to
live.

As
these
market
factors
evolve,
an
increasing
number
of
buyers
find
that
existing
housing
does
not
meet
their
desires.
In
other
words
it
becomes
an
imperfect
substitute
for
new
housing
(
Landis,
1986)
.
As
an
illustration,
the
average
size
of
new
homes
has
been
increasing
in
the
U.
S.
,
even
as
family
sizes
have
diminished
or
remained
unchanged.
In
1995,
the
average
size
of
a
new
home
was
2,095
square
feet.
By
1999
the
average
had
risen
more
than
6
percent,
to
2,225
square
feet
(
Census,
2000c)
.
Existing
housing
does,
however,
act
as
a
check
on
the
prices
of
new
housing
(
Landis,
1986)
since
it
serves
as
the
default
alternative.

Demand
for
new
construction
may
be
viewed
as
the
outcome
of
a
four­
way
household
decision
process
in
which
households
decide
whether
to
buy
an
existing
home,
buy
a
newly
constructed
home,

improve
their
current
home,
or
do
nothing.
In
light
of
demographically­
driven
demand
and
the
existence
of
near
substitutes,
it
is
not
surprising
that
empirical
studies
find
a
somewhat
inelastic
demand
for
new
housing
(
DiPasquale,
1999)
.
Price
is
not
the
strong
determining
factor
in
housing
markets
that
it
is
in
more
commodity­
like
markets.
Luger
and
Temkin
(
2000)
report
that
this
inelasticity
is
more
pronounced
in
the
higher­
end
housing
markets.

Demographic
trends
are
local
as
well
as
national
phenomena.
Different
parts
of
the
country
grow
at
different
rates
and
as
the
size
and
make
up
of
the
local
population
changes
so
do
housing
tastes
and
preferences.
Location
is
a
key
aspect
of
housing
demand,
perhaps
more
significant
than
price.
As
a
result,
demand
for
homes
in
favorable
locations
is
far
stronger
than
demand
for
homes
in
less
desirable
locations.
Strong
demand
in
certain
regions
or
neighborhoods
will
be
reflected
in
a
less
elastic
demand
curve.

2­
52
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.2.3
Impact
of
Regulation
on
Housing
Demand
Increased
regulations
may
exert
upward
pressure
on
housing
prices
which
may,
in
turn,
price
some
potential
homebuyers
out
of
the
market
due
to
income
constraints.
Luger
and
Temkin
(
2000)
give
the
following
example:
if
regulations
on
the
construction
industry
increase
the
price
of
a
house
by
$
10,000,
a
household
would
need
$
2,500
more
in
annual
income
to
still
qualify
for
the
house.
The
authors
define
 
excessive
 
regulation
as
those
regulations
that
are
 
beyond
what
is
essential
 
to
accomplish
set
environmental
or
developmental
goals,
or
those
delays
that
are
longer
than
what
should
be
necessary
to
accomplish
a
fair
review
of
plans
(
Luger
and
Temkin,
2000)
.
Table
2­
22
illustrates
this
effect.

Table
2­
22.
Impact
of
Regulatory­
Driven
Delays
on
Housing
Affordability
Parameters
No
Delay/
No
Excessive
Regulation
With
Delays
and
Excessive
Regulation
House
Price
PITI
Payment
a
(
per
month)

Income
Needed
to
Qualify
for
Mortgage
$
175,000
$
1,377
$
55,000
$
185,000
b
$
1,437
c
$
57,500
a
Principal,
Interest,
Tax,
Insurance
Payment.
Assumes
an
80
percent,
30­
year
conventional
mortgage
at
8
percent
interest,
using
tax
and
insurance
data
from
New
Jersey.
b
Assumes
$
10,000
in
regulatory
costs
added
to
the
home
price.
c
Calculated
using
typical
mortgage
spending
limit
equal
to
30
percent
of
gross
income.
Source:
Luger
and
Temkin
2000,
pages
10­
11.

Housing
demand,
especially
in
the
higher­
end
market,
tends
to
be
fairly
inelastic.
This
inelasticity
results
in
the
appearance
of
a
multiplier
effect
with
regard
to
regulatory
costs
and
sales
price.

In
other
words,
a
one
dollar
increase
in
costs
to
the
builder
will
translate
into
a
more
than
one
dollar
cost
to
the
consumer
(
if
costs
are
passed
forward
as
they
tend
to
be
with
inelastic
markets)
.
Estimates
for
the
magnitude
of
this
multiplier
range
from
two
to
six,
with
the
average
being
approximately
four
(
Luger
and
Temkin,
2000)
.
The
potential
impact
of
this
proposed
rule
on
housing
prices
is
discussed
and
analyzed
in
Chapters
Four
and
Five.

2­
53
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.2.4
Trends
in
New
Homes
Sold
Table
2­
23
shows
the
number
of
new
one­
family
houses
sold
and
for
sale
from
1981
through
1999,
including
the
median
number
of
months
from
start
to
sale,
average
sales
prices,
and
median
sales
price.

Table
2­
23
New
One­
Family
Houses
Sold
and
For
Sale
Year
Total
(
Thousands)
Median
Months
Start
to
Sale
Average
Sales
Price
Median
Sales
Price
1981
436
5.1
$
83,000
$
68,900
1982
412
3.9
$
83,900
$
69,300
1983
623
2.9
$
89,800
$
75,300
1984
639
3.4
$
97,600
$
79,900
1985
688
3.9
$
100,800
$
84,300
1986
750
3.6
$
111,900
$
92,000
1987
671
3.9
$
127,200
$
104,500
1988
676
4.0
$
138,300
$
112,500
1989
650
4.3
$
148,800
$
120,000
1990
534
4.5
$
149,800
$
122,900
1991
509
4.4
$
147,200
$
120,000
1992
610
3.5
$
144,100
$
121,500
1993
666
3.6
$
147,700
$
126,500
1994
670
3.8
$
154,500
$
130,000
1995
667
4.3
$
158,700
$
133,900
1996
757
4.2
$
166,400
$
140,000
1997
804
3.7
$
176,200
$
146,000
1998
886
3.5
$
181,900
$
152,500
1999
907
3.3
$
195,800
$
160,000
Source:
Bureau
of
the
Census
(
2000c)
.

2­
54
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.2.5
Nonresidential
Demand
Characteristics
Demand
characteristics
affecting
the
nonresidential
and
heavy
construction
sectors
are
similar
to
those
affecting
the
residential
sector.
General
economic
conditions,
interest
rates,
and
past
industry
activity
all
have
an
effect
on
current
demand.
According
to
a
recent
press
release
by
CMD
(
2001b)
,
the
demand
and
supply
cycles
in
construction
are
highly
localized,
and
at
any
given
time
different
cities
across
the
nation
are
at
different
points
in
their
own
cycles.
For
example,
as
of
October,
2001,
office
markets
in
Washington
D.
C.
,
San
Diego,
Los
Angeles,
and
several
areas
in
New
York
were
experiencing
increasing
office
vacancies,
but
new
construction
was
still
occurring.
In
markets
such
as
Dallas,

Jacksonville,
Tampa,
and
Salt
Lake
City,
however,
there
has
been
low
or
even
negative
demand
growth.

While
buildings
in
progress
are
still
being
completed,
new
construction
starts
have
slowed
dramatically.

The
industrial
market
was
still
fairly
stable
in
October
and
had
not
yet
begun
showing
signs
of
substantial
decline
(
CMD,
2001b)
.

As
with
residential
construction,
general
population
growth
should
ensure
that
demand
for
all
building
types
will
continue
to
rise
in
the
future
(
CMD,
2001b)
.
The
rate
at
which
demand
increases,

however,
is
certainly
variable
and
may
not
be
the
same
for
all
markets
in
all
portions
of
the
United
States.

For
the
commercial
building
market
in
particular,
past
building
activity
has
affected
demand
through
recent
years.
The
Economic
Recovery
Tax
Act
of
1981
fueled
a
commercial
building
boom
that
ultimately
generated
severe
excess
capacity
in
the
market
(
CMD,
2001a)
.
This
caused
a
decrease
in
demand
for
new
commercial
construction
throughout
the
late
1980s
and
into
the
1990s
as
the
market
worked
to
absorb
some
of
the
excess
commercial
space.
The
growth
in
the
technology
sector
in
the
late
1990s
spurred
another
boom
in
the
office
market.
According
to
CMD
(
2001a)
,
approximately
20
million
square
feet
of
office
space
was
built
between
1998
and
2000
as
a
result
of
increased
demand
from
this
one
sector.
Vacancy
rates
increased
once
again
as
the
year
2000
brought
the
decline
of
the
technology
sector
and
associated
economic
downturn.

For
the
commercial
and
industrial
sectors,
increasing
vacancy
rates
tend
to
be
followed
by
a
decrease
in
new
construction
activity
as
the
market
tries
to
absorb
the
over­
supply
of
space.
The
demand
for
new
construction
in
these
sectors
is
heavily
influenced
by
the
performance
of
other
sectors,
as
evidenced
by
the
technology
sector
example
above.
A
 
boom
 
in
one
industry
necessitates
the
2­
55
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
acquisition
of
new
space
for
expansion;
if
the
market
does
not
have
a
ready
supply
of
the
type
of
space
needed,
then
new
construction
increases.
At
the
same
time,
a
 
bust
 
in
a
given
industry
will
free
up
space
in
the
market,
and
until
the
space
is
absorbed,
new
construction
will
slow.
As
with
residential
construction,
lower
interest
rates
may
increase
construction
activity,
while
higher
rates
will
tend
to
slow
activity.

2.4.2.6
Heavy
Construction
Demand
Characteristics
The
heavy
construction
industry
(
NAICS
234)
is
defined
by
the
U.
S.
Census
Bureau
to
include
those
establishments
that
are
 
engaged
in
the
construction
of
heavy
engineering
and
industrial
projects
(
except
buildings)
such
as
highways,
power
plants,
and
pipelines
 
(
(
U.
S.
Census
Bureau,
2000f)
.
Heavy
construction
projects
are
characterized
by
their
linear
nature,
as
many
projects
are
spread
along
a
horizontal,
rather
than
vertical,
plane
(
Ringwald,
1993)
.
Since
the
definition
of
heavy
construction
projects
excludes
buildings,
these
projects
are
much
more
weather­
sensitive
than
building
construction
and
there
are
fewer
days
suited
for
heavy
construction
projects
nationwide,
especially
in
the
northern
states
(
Ringwald,
1993)
.
The
general
trend
in
heavy
construction
through
the
1990s
was
toward
the
rehabilitation
of
existing
infrastructure
(
Ringwald,
1993)
.

In
addition,
the
majority
of
heavy
construction
projects
(
and
the
majority
of
the
value
of
construction
work)
is
performed
for
public,
rather
than
private,
owners
(
Ringwald,
1993;
U.
S.
Census
Bureau,
2000f,
p.
5)
.
As
Table
2­
24
shows,
more
than
50
percent
of
the
value
of
construction
work
in
NAICS
234
occurs
under
government­
owned
projects,
compared
with
less
than
25
percent
of
the
value
in
NAICS
233
(
Building,
developing,
and
general
contracting)
and
NAICS
235
(
Special
trades)
.
This
division
of
project
ownership
sets
the
heavy
construction
sector
apart
from
the
other
major
construction
sectors.

For
heavy
construction
firms,
work
done
for
a
public
entity
generally
entails
different
contractual
requirements
than
work
done
for
private
entities.
When
the
project
owner
is
a
public
entity
such
as
a
city,
state,
or
federal
government,
at
least
50
percent
of
the
contract­
related
jobs
are
generally
performed
by
the
prime
contractor,
or
conversely,
less
than
half
of
the
work
under
a
given
contract
will
be
2­
56
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
subcontracted
to
other
firms
(
Ringwald,
1993)
.
This
practice
provides
a
public
owner
with
more
easily
enforceable
specifications,
since
the
majority
of
the
work
is
done
by
the
primary
contractor
(
Ringwald,

1993)
.
On
the
other
hand,
80
to
100
percent
of
the
work
on
a
privately­
owned
project
may
be
subcontracted
to
firms
other
than
the
prime
contractor
(
Ringwald,
1993)
.

The
negotiated
contracts
often
used
in
private­
sector
construction
are
not
as
common
in
the
public
arena.
This
is
because
a
private
owner
generally
has
to
prove
the
cost­
effectiveness
of
the
contract
only
to
the
owner
 
s
satisfaction,
whereas
a
public
owner
may
be
called
on
to
demonstrate
the
cost­

effectiveness
of
such
contracts
to
large
numbers
of
taxpayers
(
Ringwald,
1993)
.
For
this
reason,
most
heavy
construction
contracts
let
by
public
entities
are
competitively
bid.
Often,
local
law
or
agency
regulations
require
the
use
of
competitive
bidding
for
public
projects.
There
is
a
sense
that
such
a
system
provides
fairness
in
the
awarding
of
contracts,
as
well
as
providing
value
to
the
taxpayers
(
ASCE,
2000)
.

2­
57
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
24.
Value
of
Construction
Work
by
Project
Ownership
(
1997,
$
thousands)

1997
NAICS
code
Description
Owned
by
Federal
Government
Owned
by
State/
Local
Govts.
Total
Govt.
Owned
Govt.
Owned
as
Percent
of
Total
Privately
Owned
Privately
Owned
as
Percent
of
Total
Total
Private
and
Government
233
Building,
developing,
and
general
contracting
$
14,362,134
$
43,472,528
$
57,834,664
15.2%
$
323,806,944
84.8%
$
381,641,608
234
Heavy
Construction
$
8,845,515
$
60,368,420
$
69,213,936
54.1%
$
58,627,664
45.9%
$
127,841,600
235
Special
Trade
Contractors
a
$
559,910
$
2,179,346
$
2,739,258
17.2%
$
13,171,513
82.8%
$
15,910,771
TOTAL
$
23,767,559
$
106,020,294
$
129,787,858
24.7%
$
395,606,121
75.3%
$
525,393,979
a
Covers
establishments
in
NAICSs
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000f)
,
1997
Census
of
Construction
.
Figures
may
not
add
to
totals
due
to
rounding.

2­
58
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.5
ECONOMIC
AND
FINANCIAL
CHARACTERISTICS
2.5.1
Value
of
Work
Done
For
the
C&
D
industries,
the
Bureau
of
Census
defines
the
value
of
construction
work
as
the
combined
value
of
completed
work
on
new
construction,
additions,
alterations,
reconstruction,
and
maintenance
and
repair.
In
addition,
the
Census
defines
the
value
of
business
done
as
the
sum
of
the
value
of
construction
work
plus
other
business
receipts,
which
include:
receipts
from
retail
and
wholesale
trade,
rental
of
equipment,
manufacturing,
transportation,
legal
service,
insurance,
finance,
rental
of
property
and
other
real
estate
operations,
and
other
non­
construction
activities.
While
the
value
of
construction
work
is
a
good
indicator
of
economic
performance
specifically
related
to
C&
D
activity,
the
value
of
business
done
measure
provides
a
better
overall
indicator
of
the
economic
performance
of
establishments
in
the
C&
D
industries.

In
addition
to
value
of
construction
work,
value
of
other
receipts,
and
value
of
work
done,
the
1997
Census
of
Construction
Industries
includes
three
other
measures:
value
of
construction
work
subcontracted
in
from
others,
net
value
of
construction
work,
and
value
added.
The
value
of
construction
work
subcontracted
in
from
others
includes
the
value
of
construction
work
done
by
reporting
establishments
as
subcontractors.
The
net
value
of
construction
work
is
calculated
by
subtracting
the
costs
of
construction
work
subcontracted
out
to
others
from
the
value
of
construction
work
done.
The
value
added
component
is
equal
to
the
value
of
business
done
minus
the
costs
of
construction
work
subcontracted
to
others
and
the
costs
for
materials,
components,
supplies,
and
fuels
(
see
Section
2.5.2
for
discussion
of
these
costs)
.

Table
2­
25
below
shows,
for
each
of
the
C&
D
industries,
the
dollar
value
of
business
done
(
or
total
revenues)
,
value
of
construction
work,
value
of
other
business
receipts,
value
of
construction
work
subcontracted
in
from
others,
net
value
of
construction
work,
and
value
added.
Overall,
the
total
value
of
business
done
(
or
revenues)
in
the
C&
D
industries
was
$
534.2
billion
in
1997.
This
represented
a
nominal
increase
of
57.8
percent
over
the
$
338.5
billion
in
business
done
in
1992.
NAICS
233
(
Building
and
Developing,
including
NAICS
2331)
accounted
for
$
386.9
billion
or
72.4
percent
of
the
total
in
1997.
The
value
of
business
done
by
heavy
construction
contractors
(
NAICS
234)
was
$
130.8
billion
2­
59
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
(
24.4
percent
of
the
total)
,
while
special
trade
contractors
(
NAICS
23593
and
23594)
earned
$
16.5
billion
(
3.1
percent
of
the
total)
.

The
total
value
of
construction
work
done
in
the
C&
D
industries
was
$
525.4
billion
and
represented
98.3
percent
of
total
business
done
in
1997.
This
represented
a
nominal
increase
of
58.9
percent
over
the
$
330.6
billion
in
construction
work
done
in
1992.
Again,
NAICS
233
(
Building,

developing,
and
general
contracting,
including
NAICS
2331)
accounted
for
the
largest
share,
completing
$
381.6
billion
(
or
74.7
percent)
of
the
total
value
of
construction
work
done
in
the
C&
D
industries
in
1997.
Construction
work
by
heavy
construction
contractors
(
NAICS
234)
was
valued
at
$
127.8
billion
(
24.3
percent
of
the
total)
.
Work
done
by
excavation
and
wrecking/
demolition
contractors
(
NAICS
23593
and
23594)
was
worth
$
15.9
billion
and
represented
3.0
percent
of
the
total
value
of
construction
work
done
in
1997.

In
addition
to
the
$
525.4
billion
in
construction
work
done,
the
C&
D
industries
also
subcontracted
in
$
43.0
billion
in
construction
work
from
others.
This
represented
a
nominal
increase
of
91.2
percent
over
the
$
28.2
billion
in
work
subcontracted
in
during
1992.
Although
NAICS
233
accounted
for
the
highest
share
of
construction
work
value,
NAICS
234
(
Heavy
construction)
earned
the
greatest
share
of
work
subcontracted
in,
totaling
$
28.4
billion
or
52.6
percent
of
the
total
construction
work
subcontracted
in
by
the
C&
D
industries
in
1997.

As
explained
above,
the
net
value
of
construction
work
is
calculated
by
subtracting
the
value
of
work
subcontracted
out
to
others
from
the
value
of
construction
work
done.
For
the
C&
D
industries,
this
measure
totaled
$
318.6
billion
in
1997,
a
nominal
increase
of
close
to
60
percent
over
the
1992
figure
of
$
199.3
billion.
Costs
for
materials,
components,
supplies,
and
fuels
can
be
further
subtracted
to
obtain
the
value
added
measure,
which
amounted
to
$
199.9
billion
in
1997,
a
nominal
increase
of
70.3
percent
over
1992.
Of
the
1997
total,
NAICS
233
(
including
NAICS
2331)
accounted
for
$
120.3
billion,
or
60.2
percent.
Establishments
in
NAICS
234
(
Heavy
construction)
accounted
for
$
68.8
billion,
or
34.4
percent
of
the
value
added
while
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
accounted
for
$
10.8
billion,
representing
5.4
percent
of
the
total.

2­
60
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
26
shows
the
value
of
construction
work
done
by
major
type
of
construction
(
building
construction,
nonbuilding
construction,
and
construction
not
specified
by
kind)
for
each
of
the
large
NAICS
categories
(
Building,
developing,
and
general
contracting;
Heavy
construction,
and
Special
trades)
.
The
largest
type
of
activity
for
both
building
contractors
and
special
trades
was
single­
family
house
construction.
Highways
and
street­
related
construction
were
the
largest
category
of
activity
for
heavy
construction
contractors,
followed
by
sewer
and
water
main
construction.
Table
2A­
3
in
Appendix
2A
contains
a
more
detailed
table,
showing
value
of
construction
work
done
by
specific
type
of
construction.

2­
61
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
25
Value
and
Net
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

NAICS
Description
Dollar
Value
of
Business
Done
a
(
$
1,000)
Value
of
const
work
b
(
$
1,000)
Value
of
other
business
receipts
c
(
$
1000)
Construction
work
subcontracted
in
d
(
$
1,000)
Net
value
of
construction
work
e
(
$
1000)
Value
added
f
(
$
1,000)

233,
except
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdivision
$
372,516,170
$
368,006,098
$
15,451,969
$
4,510,092
$
188,579,070
$
111,168,087
2331
Land
subdivision
and
land
development
$
14,409,755
$
13,635,521
$
774,235
$
272,860
$
10,247,820
$
9,154,633
234
Heavy
construction
$
130,794,520
$
127,841,600
$
2,952,920
$
28,386,274
$
105,639,352
$
68,775,976
235
g
Special
trade
contractors
$
16,497,584
$
15,910,770
$
586,814
$
9,845,092
$
14,130,038
$
10,818,550
TOTAL
$
534,218,029
$
525,393,989
$
19,765,938
$
43,014,318
$
318,596,280
$
199,917,246
a
Dollar
value
of
business
done
comprises
the
total
value
of
construction
work
and
other
business
receipts
from
1997.
b
Value
of
construction
work
includes
all
value
of
construction
work
done
during
1997
for
construction
work
performed
by
general
contractors
and
special
trade
contractors.
Included
is
new
construction,
additions
and
alterations
or
reconstruction,
and
maintenance
and
repair
construction
work.
Also
included
is
the
value
of
any
construction
work
done
by
reporting
establishments
for
themselves.
c
Other
business
receipts
include
receipts
from
retail
and
wholesale
trade,
rental
of
equipment,
manufacturing,
transportation,
legal
service,
insurance,
finance,
rental
of
property
and
other
real
estate
operations,
and
other
non­
construction
activities.
d
Value
of
construction
work
subcontracted
in
from
others
includes
the
value
of
construction
work
during
1997
for
work
done
by
reporting
establishments
as
subcontractors
e
Net
value
of
construction
work
is
derived
for
each
establishment
by
subtracting
the
costs
for
construction
work
subcontracted
to
others
from
the
value
of
construction
work
done.
f
Value
added,
derived
for
each
establishment,
is
equal
to
dollar
value
of
business
done
less
the
costs
of
construction
work
subcontracted
to
others
and
costs
for
materials,
components,
supplies,
and
fuels.
g
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
62
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
26
Value
of
Construction
Work
by
Type
of
Construction
(
Thousands
of
1997
Dollars)

Type
of
Construction
Building,
developing,
and
general
contracting
Heavy
construction
Special
trade
contractors
a
Total
Value
Pct.
Value
Pct.
Value
Pct.
Value
Pct.

Building
construction,
total
$
371,426,049
97.32%
$
5,218,782
4.08%
$
12,550,515
78.88%
$
389,195,346
74.08%

Nonbuilding
construction,
total
$
5,970,952
1.56%
$
121,763,483
95.25%
$
3,036,318
19.08%
$
130,770,753
24.89%

Construction
work,
n.
s.
k.
$
4,244,630
1.11%
$
859,210
0.67%
$
323,939
2.04%
$
5,427,779
1.03%

Total
value
of
construction
work
$
381,641,600
100.00%
$
127,841,600
100.00%
$
15,910,770
100.00%
$
525,393,970
100.00%

NA
=
Data
Not
Available
a
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
63
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.5.2
Selected
Costs
The
Census
of
Construction
reports
on
the
categories
of
costs
incurred
by
the
C&
D
industries,

including
costs
of
materials,
components,
and
supplies;
costs
of
construction
work
subcontracted
out
to
others;
costs
of
power,
fuels,
and
lubricants;
costs
of
machinery,
equipment,
and
buildings;
and
other
selected
purchased
services.
Costs
of
materials,
components,
and
supplies
reflect
the
costs
of
purchasing
all
materials,
components,
and
supplies,
except
fuels,
but
do
not
include
industrial
and
specialized
machinery
and
equipment
costs
such
as
printing
presses
and
computer
systems
nor
costs
of
materials
furnished
to
contractors
by
the
owners
of
projects.
Costs
of
construction
work
subcontracted
out
to
others
do
not
include
the
costs
of
purchasing
materials,
components,
and
supplies
provided
to
a
subcontractor
for
use
nor
costs
for
machinery
or
equipment
rental.
Included
in
the
costs
of
power,
fuels,

and
lubricants
are
the
costs
of
fuels,
lubricants,
and
electric
energy
purchased
from
other
companies
or
received
from
other
establishments
of
the
company,
plus
costs
for
natural
and
manufactured
gas,
fuel
oil,

coal,
and
coke
products.
The
selected
materials
costs
described
above
are
presented
in
Table
2­
27.

2.5.2.1
All
Costs
As
shown
in
Table
2­
27,
all
C&
D
establishments
incurred
costs
of
$
334.3
billion
in
1997
for
materials,
components,
work
subcontracted
out,
power,
fuels,
and
lubricants.
This
represented
a
nominal
increase
of
59.6
percent
over
the
$
209.5
billion
in
costs
incurred
in
1992.
Establishments
in
NAICS
233
(
Building
and
developing,
including
NAICS
2331)
accounted
for
$
266.6
billion,
or
79.7
percent
of
the
total.
Establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
incurred
costs
of
$
5.7
billion,
or
1.7
percent
of
the
total.

2.5.2.2
Machinery
and
Equipment
Costs
Machinery
and
equipment
costs
include
the
costs
to
rent
or
lease
construction
machinery
and
equipment;
transportation
equipment;
production
equipment;
office
equipment,
furniture
and
fixtures;

and
scaffolding;
and
the
costs
of
renting
or
leasing
office
space
and
buildings,
which
define
the
costs
of
2­
64
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
buildings.
The
Census
Bureau
also
reports
costs
of
selected
purchased
services,
including
communication
services
purchased
from
other
companies
or
from
other
establishments
of
the
company,

and
the
costs
of
all
repairs
made
to
structures
and
equipment
by
outside
companies
or
from
other
establishments
of
the
same
company.
These
machinery,
equipment
costs,
and
selected
services
costs
are
presented
in
Table
2­
28.

According
to
Table
2­
28,
establishments
in
the
C&
D
industries
spent
$
7.3
billion
on
machinery,

equipment,
and
buildings
in
1997.
This
represented
a
nominal
increase
of
43.1
percent
from
1992,
when
these
expenditures
totaled
$
5.1
billion.
Establishments
in
NAICS
234
(
Heavy
construction)
accounted
for
$
4.3
billion,
or
roughly
60
percent
of
the
total.
The
C&
D
industries
also
spent
$
7.7
billion
on
communication
services,
repairs
to
buildings
and
other
structures,
and
repairs
to
machinery
and
equipment.
NAICS
234
(
Heavy
construction)
accounted
for
$
4.2
billion
of
this
total.

2­
65
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
27
Selected
Costs
in
the
Construction
Industry
(
Thousands
of
1997
Dollars)

NAICS
Industry
Materials,
Components,
and
Supplies
a
Construction
Work
Subcontracted
out
to
Others
b
Selected
Costs
of
Power,
Fuels,
and
Lubricants
c
Total
Selected
Costs
Electricity
Natural
and
Manu
­
factured
Gas
Gasoline
and
Diesel
Fuel
Other,
Including
Lubricating
Oils
and
Greases
Total
Power,
Fuels,
and
Lubricants
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
subdivision
and
development
$
79,936,341
$
179,427,020
$
599,022
$
134,485
$
1,179,930
$
73,637
$
1,984,736
$
261,348,110
2331
Land
subdivision
and
development
$
1,778,171
$
3,387,700
$
31,244
$
9,068
$
46,600
S
$
89,251
$
5,255,122
234
Heavy
construction
$
36,655,772
$
22,202,246
$
340,172
$
160,257
$
2,409,752
$
250,340
$
3,160,521
$
62,018,540
235
d
Special
trade
contractors
$
3,254,362
$
1,780,731
$
38,952
$
12,973
$
540,227
$
51,789
$
643,942
$
5,679,034
TOTAL
$
121,624,646
$
206,797,697
$
1,009,390
$
316,783
$
4,176,509
$
375,766
$
5,878,450
$
334,300,806
a
Costs
to
reporting
establishments
during
1997
for
the
purchase
of
all
materials,
components,
and
supplies,
except
fuels.
Does
not
include
industrial
and
other
specialized
machinery
and
equipment
such
as
printing
presses
and
computer
systems,
and
materials
furnished
to
contractors
by
the
owners
of
projects.
b
Costs
during
1997
for
construction
work
subcontracted
out
to
other
contractors,
not
including
costs
of
purchasing
materials,
components,
and
supplies
provided
to
a
subcontractor
for
use
and
costs
for
machinery
and
equipment
rental.
c
Costs
include
fuels,
lubricants,
and
electric
energy
purchased
during
the
year
from
other
companies
or
received
from
other
establishments
of
the
company
and
costs
for
natural
and
manufactured
gas,
fuel
oil,
coal,
and
coke
products.
d
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
S
Withheld
because
estimate
did
not
meet
publication
standards
on
the
basis
of
either
response
rate,
associated
relative
standard
error,
or
a
consistency
review.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
66
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
28
Additional
Selected
Costs
in
the
Construction
Industry
(
Thousands
of
1997
Dollars)

NAICS
Description
Machinery,
Equipment,
and
Buildings
Selected
Purchased
Services
For
Machinery
and
Equipment
a
For
Buildings
b
Total
Communication
Services
c
Repairs
to
Buildings
and
Other
Structures
d
Repairs
to
Machinery
and
Equipment
e
Total
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdevelopment
$
1,403,930
$
901,176
$
2,260,517
$
1,260,796
$
203,102
$
1,060,589
$
2,521,488
2331
Land
subdivision
and
development
S
$
36,251
$
80,840
$
54,022
$
10,048
$
39,290
$
103,359
234
Heavy
construction
$
3,853,016
$
444,702
$
4,297,718
$
647,860
$
188,895
$
3,349,522
$
4,186,276
235
e
Special
trade
contractors
$
615,405
$
91,657
$
707,063
$
133,414
$
28,471
$
729,510
$
891,395
TOTAL
$
5,872,351
$
1,473,786
$
7,346,138
$
2,096,092
$
430,516
$
5,178,911
$
7,705,518
a
Includes
all
costs
during
1997
for
renting
or
leasing
construction
machinery
and
equipment,
transportation
equipment,
production
equipment,
office
equipment,
furniture
and
fixtures,
scaffolding,
etc.
b
Includes
all
costs
of
renting
or
leasing
office
space
and
buildings.
c
Includes
all
costs
during
1997
for
communication
services
purchased
from
other
companies
or
from
other
establishments
of
the
company.
d
Includes
the
cost
of
all
repairs
made
to
structures
and
equipment
by
outside
companies
or
from
other
establishments
of
the
same
company.
Only
costs
required
to
maintain
property
and
equipment
are
reflected
here.
e
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
NAICS
23594
(
Wrecking
and
demolition
contractors)
only.
S
Withheld
because
estimate
did
not
meet
publication
standards
on
the
basis
of
either
response
rate,
associated
relative
standard
error,
or
a
consistency
review.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
67
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.5.3
Capital
Expenditures
and
Depreciation
In
addition
to
the
materials
costs
discussed
above,
the
Census
of
Construction
reports
on
the
capital
expenditures
incurred
by
construction
establishments.
Among
these
capital
expenditures
are
the
costs
incurred
to
cover
the
acquisition,
construction,
and
the
major
alteration
of
the
establishment
 
s
own
new
and
used
buildings
and
other
structures,
and
the
acquisition
of
machinery
and
equipment.
Table
2­

29
presents
data
for
total
capital
expenditures
and
depreciation
for
buildings,
structures,
machinery,
and
equipment,
both
new
and
used.
34
Table
2­
29
presents
total
capital
expenditures
for
NAICS
233
(
Building
and
developing)
,
234
(
Heavy
construction)
,
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
.

Total
capital
expenditures
(
other
than
land)
were
$
9.5
billion
in
1997,
which
represented
a
51.6
percent
increase
over
the
$
4.9
billion
spent
in
1992.
Beginning
of
year
gross
book
value
of
depreciable
assets
totaled
$
70.6
billion
in
1997.
Of
this,
NAICS
233
(
Building
and
developing,
including
NAICS
2331)

accounted
for
$
20.3
billion
(
28.8
percent)
.
Establishments
in
NAICS
234
(
Heavy
construction)

accounted
for
60.0
percent
of
the
total
with
$
42.4
billion
and
establishments
in
NAICS
235
(
Special
trade
contractors)
accounted
for
11.2
percent
of
total
value
with
$
7.9
billion.
Depreciation
charges
during
the
year
totaled
$
7.8
billion,
with
NAICS
234
(
Heavy
construction)
accounting
for
$
4.6
billion,
or
59.3
percent
of
total
depreciation
charges.
NAICS
233
(
Building,
developing,
and
general
contracting,

including
NAICS
2331)
accounted
for
$
2.2
billion
(
27.9
percent)
and
NAICS
235
(
Special
trades
contractors)
accounted
for
$
1.0
billion
(
12.8
percent)
of
total
depreciation
charges.

34
The
1992
Census
of
Construction
presented
considerably
more
detailed
data
on
capital
expenditures,
first
dividing
capital
costs
into
those
for
(
a)
buildings
and
structures,
and
(
b)
machinery
and
equipment
and
then
further
subdividing
these
costs
by
 
new
 
and
 
used
 
categories.
.
The
1997
Census
of
Construction
reports
only
the
industry
 
s
total
capital
expenditure
figures.

2­
68
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
29
Capital
Expenditures
in
the
Construction
Industry:
Total
(
Thousands
of
1997
Dollars)
a,

NAICS
Description
Beginning­
of­
year
gross
book
value
of
depreciable
assets
Capital
expenditures,
other
than
land
Retirements
and
disposition
of
depreciable
assets
End­
of­
year
gross
book
value
of
depreciable
assets
Depreciation
charges
during
year
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdevelopment
$
18,737,612
$
2,761,153
$
940,445
$
20,558,320
$
2,021,179
2331
Land
subdivision
and
development
$
1,571,722
$
276,804
$
102,440
$
1,746,086
$
152,751
234
Heavy
construction
$
42,372,868
$
5,313,180
$
1,839,777
$
45,846,272
$
4,627,363
235
b
Special
trade
contractors
$
7,890,728
$
1,104,527
$
291,243
$
8,704,113
$
1,001,533
TOTAL
$
70,572,930
$
9,455,664
$
3,173,905
$
76,854,791
$
7,802,826
a
Capital
expenditures
refers
to
all
costs
actually
incurred
during
1997
which
were
or
would
be
chargeable
to
the
fixed
assets
accounts
of
the
reporting
establishments
and
which
were
the
type
for
which
depreciation
accounts
are
ordinarily
maintained.
These
expenditures
cover
the
acquisition,
the
construction,
and
the
major
alteration
of
the
reporting
establishment'
s
own
buildings
and
other
structures,
and
the
acquisition
of
machinery
and
equipment.
b
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2.5.4
Value
of
Inventories
The
Census
of
Construction
Industries
presents
data
on
establishments
 
end­
­
of­
year
inventories
of
materials
and
supplies.
A
total
of
47,841
establishments
in
the
C&
D
industries
reported
holding
inventories
of
materials
and
supplies
at
the
end
of
1997.
These
inventories
were
valued
at
$
7.0
billion
at
the
end
of
the
year.
An
additional
109,094
establishments
reported
no
inventories,
while
104,680
establishments
did
not
report
their
inventories.
Table
2­
30
presents
the
inventory
data
for
C&
D
establishments.

2­
69
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
30
Total
Value
of
Inventories
for
Construction
Industry
Establishments,
1997
(
$
1,000)

NAICS
Description
Establishments
with
Inventories
a
Establishments
without
Inventories
Establishments
not
Reporting
Number
Value
of
Construction
Work
b
End
of
year
Materials
&
Supply
Inventory
Beginning
of
year
Materials
&
Supply
Inventory
Number
Value
of
Construction
Work
b
Number
Value
of
Construction
Work
b
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdevelopment
33,100
$
89,182,562
$
5,648,406
$
5,015,102
81,735
$
196,519,085
76,268
$
82,304,448
2331
Land
subdivision
and
development
2,248
$
2,137,038
$
269,847
$
214,701
1,486
$
2,993,955
4,452
$
8,504,528
234
Heavy
construction
9,634
$
50,131,852
$
1,017,171
$
910,164
17,864
$
54,143,044
15,058
$
23,566,700
235
c
Special
trade
contractors
2,859
$
8,865,177
$
35,467
$
61,040
8,009
$
7,389,990
8,902
$
4,655,603
TOTALS
47,841
$
150,316,629
$
6,970,891
$
6,201,007
109,094
$
261,046,074
104,680
$
119,031,279
a
Inventory
includes
all
of
the
materials
and
supplies
that
are
owned
regardless
of
where
they
are
held,
excluding
materials
that
are
owned
by
others,
but
held
by
the
reporting
establishment.
b
Value
of
construction
work
includes
all
value
of
construction
work
done
during
1997
for
construction
work
performed
by
general
contractors
and
special
trades
contractors.
Included
is
new
construction,
additions
and
alterations
or
reconstruction,
and
maintenance
and
repair
construction
work.
Also
included
is
the
value
of
any
construction
work
done
by
reporting
establishments
for
themselves.
c
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
70
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Among
establishments
in
the
C&
D
industries
that
reported
inventories,
NAICS
233
(
Building,

developing,
and
general
contracting,
including
NAICS
2331)
accounted
for
$
5.9
billion
or
84.9
percent
of
the
total.
A
further
$
1.0
billion
was
reported
by
NAICS
234
(
Heavy
construction)
,
representing
14.6
percent,
while
NAICS
235
(
Special
trades
contractors)
held
$
35.5
million
in
materials
and
supplies
(
1.0
percent)
.

2.6
KEY
BUSINESS
INDICATORS
AND
RATIOS
Table
2­
31
below
presents
key
financial
characteristics
for
the
construction
industry
as
a
whole
(
i.
e.
,
not
just
C&
D
industries)
.
The
items
presented
in
the
table
are
taken
from
Dun
and
Bradstreet
 
s
(
D&
B)
Industry
Norms
&
Key
Business
Ratios
Desk­
Top
Edition
1999­
2000
.
D&
B
bases
this
report
on
more
than
one
million
financial
statements
of
U.
S.
corporations,
partnerships
and
proprietorships,
in
all
size
ranges,
including
more
than
800
business
sectors
defined
by
SIC
codes.
Though
the
Census
Bureau
is
now
using
NAICS
codes
for
most
reporting
of
industry
data,
Dun
&
Bradstreet
continues
to
use
SIC
codes.
Therefore,
Table
2­
31
differs
from
the
rest
of
this
profile
in
presenting
data
based
on
the
SIC
code
system.

In
addition
to
various
financial
terms,
Table
2­
31
also
presents
a
series
of
financial
ratios
for
solvency,
efficiency,
and
profitability.
The
table
also
notes
the
sample
size
of
the
financial
statements
used
to
estimate
the
values
in
each
SIC
code.
The
sample
size
for
SIC
15
(
General
building
contractors)

is
roughly
three
times
the
sample
size
for
this
SIC
in
1998
(
6,746
establishments
versus
2,138)
.
The
sample
size
for
SIC
16
(
Heavy
construction)
also
increased
from
1998,
from
2,135
to
2,847.
The
sample
sizes
for
SICs
1794
(
Excavation
work)
and
1795
(
Wrecking
and
demolition
work)
are,
as
expected,
much
smaller
than
the
sample
sizes
for
the
previous
two
SICs,
at
755
and
87
establishments,
respectively.

Solvency,
or
liquidity,
ratios
are
used
to
evaluate
a
company
 
s
ability
to
meet
short
and
long­
term
obligations
and
include
the
Quick
Ratio,
Current
Ratio,
Current
Liability
to
Net
Worth,
Current
Liability
to
Inventory,
Total
Liability
to
Net
Worth
,
and
Fixed
Assets
to
Net
Worth.
The
Quick
Ratio
is
defined
as
the
sum
of
cash
and
accounts
receivable
divided
by
total
current
liabilities
and
reveals
the
amount
of
liquid
assets
available
to
cover
each
dollar
of
current
debt.
The
larger
this
ratio,
the
greater
the
liquidity.

2­
71
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
Current
Ratio
is
calculated
by
dividing
current
assets
by
current
liabilities;
this
ratio
measures
the
margin
of
safety
available
to
cover
any
possible
shrinkage
in
the
value
of
current
assets.
The
quotient
of
current
liabilities
divided
by
net
worth
is
the
Current
Liability
to
Net
Worth
ratio
and
relates
the
funds
that
are
temporarily
risked
by
creditors
with
the
funds
permanently
invested
by
owners.
Another
ratio,

Current
Liability
to
Inventory,
is
obtained
by
dividing
current
liabilities
by
inventory,
and
is
an
indicator
of
the
extent
to
which
a
business
relies
on
funds
from
disposal
of
unsold
inventories
to
meet
its
debts.

Total
Liability
to
Net
Worth,
calculated
by
dividing
total
liabilities
by
net
worth,
can
be
used
to
determine
the
effect
of
long­
term
(
funded)
debt
on
a
business
when
compared
with
the
Current
Liabilities
to
Net
Worth
ratio.
The
final
solvency
ratio,
Fixed
Assets
to
Net
Worth,
is
calculated
when
fixed
assets
are
divided
by
Net
Worth
and
identifies
the
proportion
of
net
worth
that
consists
of
fixed
assets.
Chapter
Four
presents
the
financial
characteristics
of
model
firms
in
the
C&
D
industry
and
an
analysis
of
the
effects
of
the
proposed
rule
on
the
financial
health
of
the
model
firms.

2­
72
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
31
Key
Business
Statistics
and
Ratios
of
the
Construction
Industry
(
1999
)
a
SIC
15
1521
1522
1531
1541
1542
16
1611
1622
1623
1629
1794
1795
Item
Building
Constn.
General
Contrs.
and
Operative
Builders
General
Contrs.
­
­
Single­
Family
Houses
General
Contrs.
­
­
Residential
Buildings,
Other
Than
Single­
Family
Operative
Builders
General
Contrs.
­
­
Industrial
Buildings
and
Warehouses
General
Contrs.
­
Non­
residential
Buildings,
Other
Than
Industrial
Buildings
and
Warehouses
Heavy
Constn.
Other
Than
Building
Constn.
Contrs.
Highway
and
Street
Constn.
,
Except
Elevated
Highways
Bridge,
Tunnel,
and
Elevated
Highway
Constn.
Water,
Sewer,
Pipeline,
and
Communi
­
cations
and
Power
Line
Constn.
Heavy
Constn.
,
NEC
Excavation
Work
Wrecking
and
Demolition
Work
Sample
Size
b
6,746
1,780
283
112
870
3,701
2,847
959
159
1,086
643
755
87
Cash
245,212
102,836
250,363
425,696
309,137
323,254
277,028
333,899
385,604
238,632
247,547
132,318
137,765
Accounts
Receivable
374,595
112,769
364,659
318,378
579,430
532,241
459,331
536,775
461,613
444,349
384,015
247,424
371,096
Notes
Receivable
11,090
7,012
17,689
25,041
14,567
10,525
10,724
12,680
3,708
9,874
11,108
6,455
6,206
Inventory
71,469
84,138
57,148
1,087,493
24,278
30,070
37,533
46,492
31,516
27,978
44,431
17,212
31,028
Other
Current
Assets
247,675
108,094
303,429
790,579
313,992
315,737
257,368
278,954
317,010
245,215
228,504
96,818
162,587
Total
Current
Assets
950,041
414,849
993,288
2,647,187
1,241,404
1,211,827
1,041,984
1,208,800
1,199,451
966,048
915,605
500,227
708,682
Fixed
Assets
209,477
129,129
261,248
565,210
280,004
215,002
639,846
794,596
532,060
580,945
566,501
531,423
480,315
Other
Non­
current
72,701
40,317
106,132
364,883
97,111
76,678
105,450
109,891
122,355
98,744
104,731
44,106
52,128
Total
Assets
1,232,219
584,295
1,360,668
3,577,280
1,618,519
1,503,507
1,787,280
2,113,287
1,853,866
1,645,737
1,586,837
1,075,756
1,241,125
Accounts
Payable
312,984
92,903
327,921
293,337
424,052
457,066
266,305
336,013
292,911
230,403
231,678
112,954
142,729
Bank
Loans
8,626
7,596
10,885
60,814
3,237
7,518
8,936
10,566
3,708
6,538
9,521
7,530
7,447
Notes
Payable
54,218
49,665
83,001
525,860
38,844
36,084
64,342
73,965
40,785
57,601
66,647
59,167
71,985
Other
Current
Liabilities
272,319
170,614
459,906
1,019,525
310,756
275,142
298,476
321,220
339,257
291,295
271,350
204,394
245,743
Total
Current
Liabilities
648,147
320,778
881,713
1,899,536
776,889
775,810
638,059
741,764
676,661
585,882
579,196
384,045
467,904
Other
Long
Term
Debt
99,810
79,464
134,706
422,119
119,770
81,189
266,305
336,013
226,172
236,987
242,785
244,197
249,466
2­
73
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
31
Key
Business
Statistics
and
Ratios
of
the
Construction
Industry
(
1999
)
a
SIC
15
1521
1522
1531
1541
1542
16
1611
1622
1623
1629
1794
1795
Item
Building
Constn.
General
Contrs.
and
Operative
Builders
General
Contrs.
­
­
Single­
Family
Houses
General
Contrs.
­
­
Residential
Buildings,
Other
Than
Single­
Family
Operative
Builders
General
Contrs.
­
­
Industrial
Buildings
and
Warehouses
General
Contrs.
­
Non­
residential
Buildings,
Other
Than
Industrial
Buildings
and
Warehouses
Heavy
Constn.
Other
Than
Building
Constn.
Contrs.
Highway
and
Street
Constn.
,
Except
Elevated
Highways
Bridge,
Tunnel,
and
Elevated
Highway
Constn.
Water,
Sewer,
Pipeline,
and
Communi
­
cations
and
Power
Line
Constn.
Heavy
Constn.
,
NEC
Excavation
Work
Wrecking
and
Demolition
Work
Deferred
Credits
2,464
1,169
5,443
28,618
1,619
3,007
7,149
10,566
11,123
4,937
3,174
3,227
4,965
Net
Worth
481,798
182,884
338,806
1,227,007
720,241
643,501
875,767
1,024,944
939,910
817,931
761,682
444,287
518,790
Total
Liability
&
Net
Worth
1,232,219
584,295
1,360,668
3,577,280
1,618,519
1,503,507
1,787,280
2,113,287
1,853,866
1,645,737
1,586,837
1,075,756
1,241,125
Net
Sales
4,191,221
1,941,179
4,490,653
5,176,961
5,359,334
5,238,700
3,910,897
4,727,711
4,128,878
3,562,201
3,397,938
2,130,210
2,709,880
Gross
Profit
779,567
475,589
853,224
1,180,347
986,117
832,953
985,546
1,054,280
792,745
961,794
965,014
705,100
875,291
Net
Profit
After
Tax
138,310
77,647
157,173
62,124
182,217
157,161
175,990
203,292
156,897
167,423
152,907
104,380
124,654
Working
Capital
301,894
94,071
111,575
747,651
464,515
436,017
403,925
467,036
522,790
380,166
336,409
116,182
240,778
RATIOS
(
median)
SOLVENCY
RATIOS
Quick
Ratio
(
times)
1.1
0.8
1.0
0.2
1.2
1.2
1.2
1.2
1.3
1.2
1.1
1.1
1.2
Current
Ratio
(
times)
1.5
1.4
1.5
1.4
1.6
1.5
1.6
1.6
1.8
1.7
1.6
1.4
1.6
Current
Liability
to
Net
Worth
(
%
)
122.3
115.5
102.7
143.2
107.7
128.1
65.7
67.1
62.9
64.2
66.6
65.5
75.1
Current
Liability
to
Inventory
(
%
)
740.3
153.5
837.6
96.9
999.9
999.9
999.9
999.9
999.9
999.9
841.5
999.9
668.1
Total
Liability
to
Net
Worth
(
%
)
145.9
157.4
128.0
179.6
130.0
145.6
100.1
103.1
93.5
96.3
100.6
119.3
116.9
2­
74
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
31
Key
Business
Statistics
and
Ratios
of
the
Construction
Industry
(
1999
)
a
SIC
15
1521
1522
1531
1541
1542
16
1611
1622
1623
1629
1794
1795
Item
Building
Constn.
General
Contrs.
and
Operative
Builders
General
Contrs.
­
­
Single­
Family
Houses
General
Contrs.
­
­
Residential
Buildings,
Other
Than
Single­
Family
Operative
Builders
General
Contrs.
­
­
Industrial
Buildings
and
Warehouses
General
Contrs.
­
Non­
residential
Buildings,
Other
Than
Industrial
Buildings
and
Warehouses
Heavy
Constn.
Other
Than
Building
Constn.
Contrs.
Highway
and
Street
Constn.
,
Except
Elevated
Highways
Bridge,
Tunnel,
and
Elevated
Highway
Constn.
Water,
Sewer,
Pipeline,
and
Communi
­
cations
and
Power
Line
Constn.
Heavy
Constn.
,
NEC
Excavation
Work
Wrecking
and
Demolition
Work
Fixed
Assets
to
Net
Worth
(
%
)
25.9
37.0
23.1
17.1
27.6
23.0
68.5
75.4
51.7
66.1
68.6
105.0
77.8
EFFICIENCY
RATIOS
Collection
Period
(
days)
42.0
21.5
39.1
4.8
47.1
48.2
49.6
46.4
46.7
54.6
49.3
51.5
56.2
Sales
to
Inventory
(
times)
65.3
13.8
34.8
2.6
203.7
149.9
86.2
98.2
78.8
96.8
53.5
99.4
46.5
Assets
to
Sales
(
%
)
29.4
30.1
30.3
69.1
30.2
28.7
45.7
44.7
44.9
46.2
46.7
50.5
45.8
Sales
to
Net
Working
Capital
(
times)
12.5
12.1
10.5
6.6
11.8
12.9
9.0
9.5
7.7
8.5
8.9
9.7
8.3
Accounts
Payable
to
Sales
(
%
)
7.2
4.3
6.5
3.9
7.6
8.6
5.7
5.9
5.6
5.8
5.4
5.0
4.6
PROFITABILITY
RATIOS
Return
on
Sales
(
%
)
2.0
2.5
2.6
2.9
2.0
1.8
3.2
3.0
3.1
3.5
3.2
3.5
3.4
Return
on
Assets
(
%
)
6.5
8.0
6.7
4.4
6.5
6.0
6.6
6.5
6.4
6.9
6.6
6.7
9.0
Return
on
Net
Worth
(
%
)
18.3
27.5
22.7
16.8
15.1
16.4
15.5
14.8
12.9
16.4
15.0
17.7
24.2
a
The
dollar
figures
are
the
result
of
translating
the
common­
size
percentages
into
dollar
figures.
Common­
size
percentages
are
calculated
for
each
item
as
a
percentage
of
its
respective
aggregate
total.
The
dollar
figures
are
then
computed
by
multiplying
the
common­
size
percentages
for
each
statement
item
by
their
respective
total
amounts.
This
detailed
data
is
not
available
for
NAICS
655
b
Number
of
establishments
upon
which
calculations
are
based.
Source:
Dun
and
Bradstreet
Industry
Norms
&
Key
Business
Ratios
1999­
2000.

2­
75
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Efficiency
ratios
are
indicators
of
how
effectively
a
company
uses
and
controls
its
assets.
The
five
efficiency
ratios
presented
by
D&
B
are
Collection
Period,
Sales
to
Inventory,
Asset
to
Sales,
Sales
to
Net
Working
Capital,
and
Accounts
Payable
to
Sales.
The
Collection
Period,
measured
in
number
of
days,
is
calculated
by
multiplying
365
by
the
quotient
of
accounts
receivable
divided
by
sales.
This
measure
helps
determine
the
quality
of
the
receivables
of
a
company
when
compared
with
selling
terms
and
industry
norms.
Dividing
annual
net
sales
by
inventory
results
in
the
Sales
to
Inventory
ratio,
an
indicator
of
the
rapidity
with
which
merchandise
moves
and
the
effect
of
the
flow
of
funds
into
the
business.
Total
assets
are
divided
by
net
sales
to
obtain
the
Asset
to
Sales
ratio.
This
ratio
relates
sales
volume
to
the
total
investment
used
to
generate
those
sales.
Another
sales­
related
ratio,
Sales
to
Net
Working
Capital,
is
obtained
by
dividing
sales
by
net
working
capital.
This
is
an
indicator
of
whether
a
company
is
overtrading
or,
conversely,
carrying
more
liquid
assets
than
needed
for
its
volume.
Finally,

dividing
accounts
payable
by
annual
net
sales
yields
the
Accounts
Payable
to
Sales
ratio,
which
measures
how
the
company
is
paying
its
suppliers
in
relation
to
the
volume
being
transacted.

D&
B
also
reports
three
measures
of
profitability:
Return
on
Sales
(
also
known
as
Profit
Margin)
,

Return
on
Assets,
and
Return
on
Net
Worth
(
also
known
as
Return
on
Equity)
.
These
profitability
ratios
show
how
successfully
a
business
is
at
earning
a
return
for
its
owners.
The
Return
on
Sales
ratio
is
computed
by
dividing
net
profits
after
taxes
by
annual
net
sales;
this
measure
reveals
the
profits
earned
per
dollar
of
sales,
and
ultimately
is
an
indicator
of
the
operation
 
s
efficiency.
The
Return
on
Assets
ratio,
derived
by
dividing
net
profit
after
taxes
by
total
assets,
is
a
key
indicator
of
a
firm
 
s
profitability
as
it
matches
operating
profits
with
the
assets
available
to
earn
a
return.
The
final
financial
ratio
is
Return
on
Net
Worth,
or
the
value
of
net
profit
after
taxes
divided
by
net
worth.
This
ratio
can
be
used
to
analyze
the
ability
of
the
firm
to
achieve
an
adequate
return
on
the
capital
invested
by
the
owners.

Further
information
about
all
ratios
presented
in
D&
B
can
be
found
in
Appendix
2C.

2­
76
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.7
INDUSTRY
GROWTH
Table
2­
32
presents
annual
totals
for
private
housing
units
authorized
by
building
permits
for
1981
through
1999,
by
type
of
structure.
These
data
show
fluctuation
in
the
number
of
units
authorized
each
year,
increasing
from
985,500
units
in
1981
to
a
peak
of
1.8
million
units
in
1986.
The
period
of
1987
through
1991
was
marked
by
a
steady
decrease,
with
a
low
of
948,800
units
in
1991.
The
number
of
units
authorized
then
began
a
steady
increase
to
1.7
million
units
in
1999,
representing
an
annual
growth
rate
of
9.4
percent
from
1991
to
1999.
Table
2­
33
shows
national
growth
in
terms
of
value
of
housing
units
authorized
by
building
permits,
by
type
of
structure.
Valuation
of
units
authorized
has
grown
from
$
78.8
billion
in
1991
to
$
181.2
billion
in
1999
(
nominal)
,
with
an
annual
growth
rate
of
16.3
percent.

Total
value
of
new
privately
owned
housing
units
rose
steadily
from
1991
to
1994.
From
1994
to
1995,
total
value
of
new
privately
owned
housing
units
declined
slightly,
from
$
123.3
billion
to
$
120.8
billion.
This
decrease
was
realized
only
in
the
1­
unit
sector,
which
showed
a
decline
from
$
109.3
billion
in
1994
down
to
$
104.8
billion
in
1995;
the
remaining
sectors
actually
realized
continued
increases
in
value.

2­
77
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
32
New
Privately
Owned
Housing
Units
Authorized
by
Building
Permit
­
Annual
(
Number
of
Housing
Units)
,
1981­
1999
Year
Total
Units
Number
of
Units
by
Type
of
Structure
1
Unit
2
units
3
and
4
units
5
units
or
more
1981
985,500
564,300
44,600
57,200
319,400
1982
1,000,500
546,400
38,400
49,900
365,800
1983
1,605,200
901,500
57,500
76,100
570,100
1984
1,681,800
922,400
61,900
80,700
616,800
1985
1,733,300
956,600
54,000
66,100
656,600
1986
1,769,400
1,077,600
50,400
58,000
583,500
1987
1,534,800
1,024,400
40,800
48,500
421,100
1988
1,455,600
993,800
35,000
40,700
386,100
1989
1,338,400
931,700
31,700
35,300
339,800
1990
1,110,800
793,900
26,700
27,600
262,600
1991
948,800
753,500
22,000
21,100
152,100
1992
1,094,900
910,700
23,300
22,500
138,400
1993
1,199,100
986,500
26,700
25,600
160,200
1994
1,371,600
1,068,500
31,400
30,800
241,000
1995
1,332,500
997,300
32,200
31,500
271,500
1996
1,425,600
1,069,500
33,600
32,200
290,300
1997
1,441,100
1,062,400
34,900
33,600
310,300
1998
1,612,300
1,187,600
33,200
36,000
355,500
1999
1,663,500
1,246,700
32,500
33,300
351,100
Source:
Bureau
of
the
Census
(
2000e)
.

2­
78
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
33
Value
of
New
Privately
Owned
Housing
Units
Authorized
by
Building
Permit,
Annual
(
Millions
of
Dollars)

Year
Total
Value
Valuation
by
Type
of
Structure
1
unit
2
units
3
and
4
units
5
units
or
more
1991
$
78,772.2
$
69,772.7
$
1,169.6
$
1,061.6
$
6,818.3
1992
$
95,539.0
$
87,071.5
$
1,272.2
$
1,126.2
$
6,069.2
1993
$
106,801.0
$
97,118.6
$
1,478.6
$
1,281.7
$
6,922.0
1994
$
123,278.3
$
109,294.0
$
1,813.3
$
1,595.7
$
10,575.3
1995
$
120,810.7
$
104,738.7
$
1,910.4
$
1,713.3
$
12,448.4
1996
$
134,175.8
$
116,535.0
$
2,069.1
$
1,861.4
$
13,710.2
1997
$
141,004.4
$
121,194.5
$
2,304.0
$
2,057.7
$
15,448.2
1998
$
165,265.7
$
142,240.8
$
2,254.2
$
2,282.0
$
18,488.8
1999
$
181,245.7
$
157,123.5
$
2,319.9
$
2,317.5
$
19,485.2
Source:
Bureau
of
the
Census
(
2000e)
.

2.8
INTERNATIONAL
COMPETITIVENESS
Construction
activities
are
highly
localized,
with
most
activities
being
performed
either
within
the
state
the
establishment
is
located
in
or
within
neighboring
states.
Some
of
the
largest
builders
may
perform
work
nationwide.
The
Census
Bureau
reports
only
construction
activities
within
the
United
States;
no
data
is
reported
on
construction
work
by
U.
S.
establishments
that
takes
place
outside
the
U.
S.

(
Census,
2000a)
.
EPA
concludes
that
only
a
very
small
percentage
of
construction
work
done
by
U.
S.

construction
firms
is
conducted
outside
of
the
U.
S.

2­
79
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.9
REFERENCES
Ahulwalia
G.
,
J.
Chapman.
2000.
Structure
of
the
Residential
Construction
Industry.
Housing
Economics.
National
Association
of
Home
Builders.
38(
10)
:
7­
11.

ASCE.
2000.
Quality
in
the
Constructed
Project:
A
Guide
for
Owners,
Designers,
and
Constructors.
Second
ed.
Reston,
VA:
American
Society
of
Civil
Engineers.

CMD.
2001a.
Commercial
Real
Estate
Market
Weak,
but
Still
Fundamentally
Sound.
CMD
Press
Release.
October
22,
2001.
Available
at:
http:
/
/
www.
cmdg.
com/
press_
release/
list.
cgi.

CMD
2001b.
Demand/
Supply
Cycles
and
Capital
Markets
Impact
Office,
Industrial,
Labor
Forecast.
CMD
Press
Release.
October
22,
2001.
Available
at:
http:
/
/
www.
cmdg.
com/
press_
release/
list.
cgi.

Coffman
L.
S.
1999.
Low
Impact
Development:
A
New
Paradigm
for
Storm
Water
Management.
Florida
Keys
Carrying
Capacity
Study
Storm
Water
Workshop;
1999
Sep
23­
1999
Sep
24;
U.
S.
Army
Corps
of
Engineers,
Jacksonville
Division.

Coffman
L.
S.
,
M.
L.
Clar,
N.
Weinstein.
1998.
New
Low
Impact
Design:
Site
Planning
and
Design
Techniques
for
Storm
water
Management.
1998
National
Planning
Conference.
AICP
Press.

Dun
and
Bradstreet
2000.
Dun
and
Bradstreet
Industry
Norms
&
Key
Business
Ratios
1999­
2000.

Eppli
M.
J.
,
M.
J.
Childs.
1995.
A
Descriptive
Analysis
of
U.
S.
Housing
Demand
for
the
1990s.
Journal
of
Real
Estate
Research
10(
1)
:
69­
86.

FHWA
(
Federal
Highway
Administration)
.
1999.
Status
of
the
Nation'
s
Highways,
Bridges
and
Transit:
Conditions
and
Performance,
Report
to
Congress.
U.
S.
Department
of
Transportation.

FHWA
(
Federal
Highway
Administration)
.
1998.
Our
Nation'
s
Highways.
U.
S.
Department
of
Transportation.

Haurin
D.
R.
,
E.
­
C.
Chung.
1998.
The
Demand
for
Owner­
Occupied
Housing:
Implications
From
Intertemporal
Analysis.
Journal
of
Housing
Economics
7(
1)
:
49­
68.

Haurin
D.
R.
,
K.
Lee.
1989.
A
Structural
Model
of
the
Demand
for
Owner­
Occupied
Housing.
Journal
of
Urban
Economics
26(
3)
:
348­
60.

Henderschott
P.
H.
1980.
Real
User
Costs
and
the
Demand
for
Single­
Family
Housing.
Brookings
Papers
on
Economic
Activity
2:
401­
52.

Hirsch
A.
A.
1994.
Residential
Construction
From
a
Long­
Run
Perspective.
Survey
of
Current
Business
74:
30­
41.

2­
80
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Hirschhorn
J.
S.
,
P.
Souza.
2001.
New
Community
Design
to
the
Rescue:
Fulfilling
Another
American
Dream.
Washington,
D.
C.
:
National
Governors
Association.
Available
at:
http:
/
/
www.
nga.
org/
Center.

Housing
Zone.
2001.
Perfect
Fit:
Small
Builders
Zero
in
on
Personal
Touches
and
Niche
Markets.
San
Diego
Union­
Tribune,
Available
at:
http:
/
/
www.
housingzone.
com.

Joint
Center
.
(
Joint
Center
for
Housing
Studies
of
Harvard
University)
.
2001.
Remodeling
Homes
for
Changing
Households.

Kone,
D.
L.
2000.
Land
Development
9
th
ed.
Home
Builder
Press
of
the
National
Association
of
Home
Builders,
Washington,
DC.

Landis
J.
D.
1986.
Land
Regulation
and
the
Price
of
New
Housing:
Lessons
From
Three
California
Cities.
APA
Journal
52:
9­
21.

Linneman
P.
,
I.
F.
Megbolugbe,
S.
M.
Wachter,
M.
Cho.
1997.
Do
Borrowing
Constraints
Change
U.
S.
Homeownership
Rates?
Journal
of
Housing
Economics
6(
4)
:
318­
33.

Luger
M.
I.
,
K.
Temkin.
2000.
Red
Tape
and
Housing
Costs.
New
Brunswick,
New
Jersey:
CUPR
Press.

Mammoser
A.
P.
2000.
Let
It
Flow.
Urban
Land(
June)
:
42­
5.

Prince
George'
s
County
(
Maryland)
.
1999.
Low
Impact
Design
Strategies:
An
Integrated
Design
Approach.
Prepared
by
Prince
George'
s
County,
Maryland
Department
of
Environmental
Resources
Programs
and
Planning
Division.
Also
published
ast
EPA­
841­
B­
00­
003,
January
2000
and
available
on
EPA
website
at:
http:
/
/
www.
epa.
gov/
owow/
nps/
urban.
html.

Rappaport
B.
A.
,
T.
A.
Cole.
(
U.
S.
Census
Bureau,
Manufacturing
and
Construction
Division)
.
2000.
Construction
Sector
Special
Study:
Housing
Starts
Statistics­
­
A
Profile
of
the
Homebuilding
Industry.

Ringwald,
Richard
C.
1993.
Means
Heavy
Construction
Handbook.
Kingston,
MA:
R.
S.
Means
Company,
Inc.

U.
S.
Census
Bureau.
2000a.
1997
Economic
Census:
Construction,
United
States.
Various
Reports.
Available
at:
http:
/
/
www.
census.
gov/
epcd/
ec97/
us/
US000_
23.
HTM.

U.
S.
Census
Bureau.
2000b.
Current
Construction
Reports,
Series
C30­
­
Value
Put
in
Place.
Available
at:
http:
/
/
www.
census.
gov/
ftp/
pub/
const/
www.
c30index.
html.

U.
S.
Census
Bureau.
2000c.
Current
Construction
Reports,
Series
C25­
­
Characteristics
of
New
Housing.
Available
at:
http:
/
/
www.
census.
gov/
const.
html.

U.
S.
Census
Bureau.
2000d.
Current
Construction
Reports,
Series
C20­
­
Housing
Starts.
Available
at:
http:
/
/
www.
census.
gov/
ftp/
pub/
const/
www/
c20index.
html.

2­
81
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
U.
S.
Census
Bureau.
2000e.
Current
Construction
Reports,
Series
C40­
­
Building
Permits.
Available
at:
http:
/
/
www.
census.
gov/
ftp/
pub/
const/
www/
c40index.
html.

U.
S.
Census
Bureau.
2000f.
1997
Economic
Census,
Construction:
Industry
Summary.
Available
at:
http:
/
/
www.
census.
gov/
epcd/
www/
econ97.
html
U.
S.
Census
Bureau.
1998a.
County
Business
Patterns,
1997.
Available
at:
http:
/
/
www.
census.
gov/
epcd/
cbp/
view/
cbpview.
html.

U.
S.
EPA.
2002a.
Development
Document
for
the
Effluent
Guidelines
for
the
Construction
and
Development
Point
Source
Category.
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.
EPA­
821­
R­
02­
007.
Available
at:
http:
/
/
www.
epa.
gov/
waterscience/
guide/
construction/
.

U.
S.
EPA.
2002b.
Environmental
Assessment
of
Effluent
Guidelines
for
the
Construction
and
Development
Point
Source
Category.
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.
EPA­
821­
R­
02­
009.
Available
at:
http:
/
/
www.
epa.
gov/
waterscience/
guide/
construction/
.

U.
S.
EPA.
2001a.
Our
Built
and
Natural
Environments:
A
Technical
Review
of
the
Interactions
Between
Land
Use,
Transportation,
and
Environmental
Quality.
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.
EPA
231­
R­
01­
002.
Available
at:
http:
/
/
www.
smartgrowth.
org.

U.
S.
EPA.
2001b.
Revised
C&
D
Site
Size
and
Permit
Distribution.
Memo
from
Jesse
Pritts,
U.
S.
EPA,
to
John
Swanson
and
Jim
Collins,
Tetra
Tech.
Received
by
ERG
on
November
6,
2001.

U.
S.
EPA.
1999.
Economic
Analysis
of
the
Final
Phase
II
Storm
Water
Rule.
U.
S.
Environmental
Protection
Agency,
Office
of
Wastewater
Management.

U.
S.
Small
Business
Administration.
1998.
Statistics
of
U.
S.
Businesses:
Firm
Size
Data
[
HTML
Files
]
.
Available
at:
http:
/
/
www.
sba.
gov/
advo/
stats/
data.
html.

Zorn
P.
M.
1993.
The
Impact
of
Mortgage
Qualification
Criteria
on
Households'
Housing
Decisions:
An
Empirical
Analysis
Using
Microeconomic
Data.
Journal
of
Housing
Economics
3(
1)
:
51­
75.

2­
82
