As discussed in the last lesson, Applicants must always obtain FEMA approval for any scope of work change, even if the total project cost is not affected. Any change in the project that affects the scope or cost of work can only be approved by FEMA. Applicants should not begin work associated with the scope change before FEMA review and approval, or Public Assistance funding will be jeopardized.

To seek approval for a change in the scope of work, an Applicant must provide a written request to the Recipient Public Assistance Representative. The request should include detailed justification and documentation to support the eligibility of the requested change in scope of work. If the request involves previously unreported damage, the Applicant must also provide documentation demonstrating how the incident caused the damage.

If the Recipient agrees that the requested change is justified, the Recipient will forward the request to the applicable FEMA regional office or Program Delivery Manager. FEMA will evaluate the changes for potential special considerations impact and ensure that the changes in the scope of work are eligible for Public Assistance Program funding. FEMA will also engage subject matter experts for technical assistance when necessary to reach a determination of whether the requested change is eligible.

For large projects, when a change in scope or a need for additional funding is discovered, the Applicant should notify the Recipient as soon as possible. The Applicant should never assume that such costs can be reported at the end of the project and that the additional funds will be approved automatically. The request should contain justification for the eligibility of the additional work or costs.

If additional damage to the facility is involved, the Applicant must show how that damage is disaster-related. The Recipient forwards the request to FEMA with a written recommendation. To determine eligibility, FEMA and the Recipient, in cooperation with the local representatives, may conduct a site visit. The timing of the request should be such that the damaged element can be inspected before it is repaired. FEMA will evaluate and notify the Recipient either with an amended project for additional funding or a written denial of the request via Determination Memo.

Small projects are handled differently. If there is a gross error or omission in the scope of work of a small project, the Applicant should make a request for a change as described for a large project.

Cost overruns are not handled on a project-by-project basis; rather, the Applicant may request supplemental funding for a net cost overrun on all small projects by submitting a Net Small Project Overrun Appeal through the Recipients to FEMA.

In the last lesson, three types of capped project options were discussed. Each type of capped project has a different set of approval requirements.

For Improved Projects, the Applicant must obtain approval from the Recipient. If the Improved Project significantly changes the pre-disaster configuration of the facility, the Recipient must forward the request to FEMA to ensure that the Improved Project complies with appropriate Environmental and Historic Preservation laws, regulations, and executive orders.

If FEMA approves the request, the Applicant will need to submit a written revised scope of work to the Recipient. If the Recipient agrees with the new scope of work, the Recipient will submit the written request to FEMA along with a letter of recommendation. The Applicant must receive FEMA approval for beginning work on the project.

Here is an example of an Applicant who followed the correct approval process for an Improved Project scope change:

As the result of a Nor'easter that struck Catastrophe County, the Catastrophe County Airport Hangar sustained damages to the roofing system as well as the aluminum roofing panels. Heavy wind caused separation at the heel and bottom chords of the timber Truss system and at the seams of the corrugated aluminum roofing panels. The original approved scope of work allowed the County to replace the damaged roofing panels.

The County had an engineering firm do a structural analysis of the roof to ensure it was safe for entry and to prepare for repairs. After receiving cost estimates, the County decided to replace the hangar rather than restore the damaged roof. The existing structure was built in the 1970's under old building codes and standards, and the County felt it would be more prudent to replace the structure.

The County submitted a letter to the State detailing reasons for the change in the project. The requested changes included building the new hangar to present codes and standards and turning the hangar sideways for safer aircraft access. The letter stated that the function of the hangar would not change, and the proposed new scope of work was cost effective.

The county summitted the scope of work change to the State. The State forwarded the request to FEMA along with a letter of recommendation. Once FEMA received the letter, they approved the expanded scope of work as a capped improved project because work had not begun, and FEMA was able to consider environmental and historic preservation impacts and conditions. The project scope of work was revised, and the County was able to begin construction for the project.

The scope change approval process for Alternate Projects is similar to the process for Improved Projects. The Applicant must submit a scope change request to the Recipient, and the Recipient will forward the request to FEMA if it agrees with the change.

If FEMA approves the scope change request, the Applicant will have to provide an updated scope of work and submit it to the Recipient. If the Recipient agrees with the updated scope of work, the Recipient will forward the new scope of work to FEMA.

If the Alternate Project involves construction, the Applicant must obtain FEMA approval prior to the start of construction.

Here is an example of an Applicant who followed the correct approval process for an Alternate Project scope change:

The City of Hazard's fire station annex was damaged after a hurricane caused heavy winds and high tidal surges along the Hazard River and coastal areas. The building was inundated with water and damaged beyond repair.

The City evaluated the productivity of the fire station annex, and after consulting their long term community plan determined that rebuilding the structure did not meet the needs of the community. They determined those funds would better meet the needs of the community if they were used to modernize the fleet of school buses operated by the City. They have requested an Alternate Project to purchase three new school buses.

Upon further talks with the City Council, the City decided to abandon the replacement of the fire station annex building and purchase new school buses. The City sent a letter to the State summarizing its plan to purchase the new equipment, along with reasoning to support the lack of need for the annex building. The State received this letter and submitted it to FEMA along with a letter of recommendation.

After receiving approval from FEMA, the City drafted a scope of work change detailing the variations they were making to the project. That letter was submitted to the State and subsequently sent to FEMA with a State support and recommendation letter. Once FEMA received the letter and an Environmental and Historic Preservation review was completed, the project was approved. The Project was revised, and the City was able to begin contracting the purchase of the new buses.

For Alternative Procedures, FEMA, Recipient, and the Applicant must reach agreement on the capped amount within 12 months of the declaration date. Upon request from the Applicant, FEMA may approve a time extension on a project-by-project basis. The Applicant's request must include the circumstances that justify the extension and demonstrate progress on reaching an agreement. In complex or catastrophic incidents, upon request from the Recipient, FEMA may approve an extension for all Applicants.

FEMA, Recipient, and the Applicant document the agreed upon capped amount with either a Fixed Cost Agreement Letter or a Letter of Undertaking, as appropriate. Once the Applicant signs and submits either the Fixed Cost Agreement Letter or the Letter of Undertaking, the Applicant may not revert to project funding based on actual costs.

If FEMA, Recipient, and the Applicant cannot agree on the fixed estimate by the deadline, the project will not be eligible for the Alternative Procedures and FEMA will process it using standard procedures.

For an Alternative Procedures Project with an estimated Federal share of at least $5 million, upon the Applicant's request, FEMA provides a FEMA-funded, independent validation of the cost estimate. The validation is conducted by an expert panel independent of FEMA, Recipient, and the Applicant. FEMA may also direct estimates to the panel for review.

If the Applicant requests this validation, the panel:

• Conducts its review before the Applicant's acceptance and before FEMA's obligation of funds
  
• Limits its review to issues pertaining to the estimated cost (the panel will not make decisions related to the eligibility of the damage or scope of work); however, it may make determinations regarding incorporation of cost elements relating to project execution that could affect the scope of work
  
• May review cost documentation for completed work, if applicable and necessary

If the estimated amount deemed appropriate by the expert panel is less than the Applicant is willing to accept as a capped amount, the Applicant may forgo the Alternative Procedures and request that FEMA process the project using standard procedures. In these cases, FEMA obligates the project based on the estimated amount determined by the expert panel and final funding is based on actual eligible costs.

Details regarding the process for participating in, and preparing projects under, Alternative Procedures, along with templates of the Fixed Cost Agreement Letter and Letter of Undertaking are provided at  the Alternative Procedures link.

To determine eligibility for Permanent Relocation projects, FEMA looks at several things, one of which is to determine whether the project is cost effective. If the cost to relocate the facility is less than the eligible cost to replace the facility at its original location, then the project is cost effective. Note that the value of the land at the original site is not included as part of this evaluation.

An applicable Federal, State, or local code or standard, such as a floodplain management regulation, may also require that a damaged facility be relocated away from a hazardous area, such as a floodway. If the facility is destroyed and eligible for replacement, FEMA will determine whether relocation is cost-effective in the same manner as described previously.

If the facility is eligible for repair, FEMA may evaluate cost effectiveness using its Benefit-Cost Analysis process and software to compare the benefits of the damage prevented to the facility at its original location against the cost of replacement and relocation at the new location.

If relocation is not feasible or cost effective, the Applicant may request an Improved, Alternate, or Alternative Procedure Project.