Fiscal and scenario modelling
A fiscal model or fiscal impact analysis turns assumptions into a public decision. DDA builds models that connect population, housing, land, infrastructure, cost, timing, and revenue. Then we test which assumption carries the result and at what value the decision changes.
01 What the model connects
Growth starts as a population number. That number becomes households, and households become housing demand. Housing needs land and services. Services need capital, and capital needs revenue. Each link has its own delay and its own error.
DDA builds the chain in the order that causation runs and keeps each link visible. A model that jumps from population to revenue hides the steps where assumptions live. Each step gets a source, a unit, and a status.
02 The timing problem
Cost arrives before revenue. A municipality builds a trunk sewer and a water main years before the new homes pay property tax. A connection charge can cover part of the cost. It covers a defined list of works. The tax base carries the rest.
DDA models the cash flow year by year. The average over twenty years can look sound while a five-year gap forces borrowing or delay. The model shows the peak of the gap, the year it occurs, and the reserve or debt that it needs.
A model also tracks stocks. Reserves, debt, and infrastructure condition change through inflows and outflows. An asset can look adequate on a balance sheet while its renewal cost sits years ahead. Book value uses historical cost and understates the price of replacement. DDA reports both.
03 The assumptions register
Every model has assumptions. The assumptions register lists each one with its value, its source, its status, and the result's sensitivity to it. A status of ACTUAL, PROXY, or FLAG shows how much evidence stands behind the number.
Some inputs have no public source. The register says so and states the assumption used. The client sees which inputs carry weight and which do not. That view tells the client where better evidence has value.
04 Scenarios that change decisions
A scenario is a coherent set of assumptions. It is more than a different forecast number. Population growth, housing completions, and servicing cost move together, so a scenario changes them together.
DDA builds few scenarios. Each one exists because a plausible change in an input changes the decision. A scenario that only changes the size of the answer adds noise. The analysis also solves for breakeven values: the growth rate, cost, or revenue at which a project stops paying for itself or a reserve runs out.
Where inputs have known ranges, a probabilistic run shows how often the decision fails. A probabilistic run helps when the range is known and misleads when it hides an unknown. DDA says which case applies.
05 Formulas and thresholds
Some results depend on a formula with a threshold. A royalty that steps up at a price, a tax that changes at an assessment class, and a debt limit that ties to controllable revenue all behave this way. The result moves slowly, then jumps. DDA models the threshold directly and reports the distance from the current position to the jump.
Tax changes also move through firms. A tax on services reaches a small firm and a large firm differently, because each passes on a different share. DDA models the pass-through, the timing, and the firm response, and reports who pays.
06 What the work can produce
The work can produce a fiscal impact model, a growth and capacity model, a capital and reserve plan, a scenario set with breakeven values, an assumptions register, and a sensitivity summary for decision-makers. Each product names the assumption that most changes the answer.
For sector versions, see Public finance and capital planning, Housing and municipal planning, and Energy and electricity.
07 Bring the model
Send the existing model, the growth forecast, the capital plan, or the budget that depends on a forecast. DDA will find the assumption that carries the result and test how far it can move.