A request for proposals (RFP) is the document that a public agency or other organization uses to invite consultants to bid on a project. An economic impact study estimates the jobs, income, and tax revenue that an organization, project or event supports in a region. Much of the work at Zenith Economics starts with an RFP for this type of study.
A clear RFP will help collect multiple bids competing on the same scope. If the RFP is not clear, each consultant must guess what you want, preventing your team from comparing bids in an apples-to-apples fashion.
A clear economic and/or fiscal impact study RFP tells consultants:
- the decision that the study will help you make
- the intended audience of the study
- the region(s) that will be studied, such as a county or a state
- the activities to include, such as your operations or the spending of your visitors
- the data that your organization can supply
- the reports and presentations that you need, and when you need them by
- your budget range
Sections to include in the RFP
| Section | What to write |
|---|---|
| Purpose and audience | Who will use the results, such as legislators, your board or grant reviewers, and the decision that the results will support |
| Study question | The impact you want to measure. For example: the yearly impact of your operations, the one-time impact of a construction project, the impact of an event, or the effect on a city or county budget |
| Geography | Each area that needs results, such as a city, a county, a region, the state or legislative districts |
| Activities to include | For example, your operations, your construction projects, and spending by your visitors, students or retirees. Also list anything to leave out |
| Results to report | Jobs, labor income, gross domestic product (GDP), economic output, and tax revenue. Say if you need tax revenue by level of government, or survey results |
| Data you can provide | Financial statements, payroll, employment headcount, payments to vendors, and attendance or enrollment counts. Say which of these data you do not have |
| Surveys | Any surveys you expect, such as surveys of visitors or tenants. Say if your staff can help distribute the survey(s) |
| Method | The economic model you require, if any, or permission for the consultant to choose one. Ask how the consultant will exclude spending that would occur without your organization. Ask for one-time and yearly impacts in separate results |
| Deliverables | For example, a report, an executive summary, slides, a spreadsheet of results, a presentation to your board, and one-page fact sheets for legislative districts |
| Schedule | Any fixed date, such as a board meeting, a hearing, or a grant deadline |
| Budget | A budget range or a maximum amount |
| Scoring | The grading rubric with which all bids will be fairly evaluated |
Sample scope language
You can copy this paragraph into your RFP and change the words in brackets:
The consultant will estimate the yearly economic and fiscal impact of [organization] on [geographies] for [fiscal year]. The study will include [organization]'s operations and the spending of its [visitors / students / retirees / construction]. Results will show jobs, labor income, GDP and economic output, divided into direct, indirect and induced effects, and tax revenue by level of government. Construction spending will be reported separately as a one-time impact. The consultant will explain how the study excludes spending that would occur without [organization]. A methodology appendix will list the data sources, the model, the study areas, and the assumptions.
Mistakes to avoid
The most common mistake in drafting an economic impact study RFP is to leave out the budget. Without a budget range, one consultant can price a short memo while another prices a complex, multi-regional analysis with a 100 page technical report. You cannot compare those bids. As a guide, Zenith Economics' studies of a single organization often cost between $8,000 and $25,000, while complex statewide studies can cost as much as several hundred thousand, depending on the specifics of the analysis. Our cost guide explains what drives these ranges.
Some RFPs ask for one total impact figure. A single total often adds one-time construction spending to yearly operating spending, which can mislead about recurring operational impacts generated by your organization. Ask for one-time and yearly impacts to be reported separately.
RFPs for events often ask for the impact of all spending at the event. But local residents would probably spend most of that money at other local businesses if the event did not occur. For that reason, a careful event economic impact study counts only the spending of visitors from outside the region that would not have visited if not for the event. Write in the RFP that you expect this approach.
If you require a specific economic model, say why in the RFP. Even a newer version of the same model can prevent a direct comparison of economic impact studies done by the same consultant of the same organization, simply due to improvements in input-output modeling standards over time.
Scoring the proposals
In the view of Zenith Economics, methodology is the single most important factor to consider in scoring proposals. A good proposal names the economic model and the study areas in a high level of detail. It explains how the consultant will exclude spending that would occur anyway. It also says how it will report one-time and yearly impacts.
Ask for published studies by the people named in the proposal. Check their credentials where you can. For example, IMPLAN lists its certified economists on its website. Ask each consultant to disclose any financial interest in the result of the study. A fixed fee for a defined scope is easier to compare than an hourly estimate.
The questions in our guide to evaluating an economic impact report are also useful for scoring proposals.