A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the Applicant makes the decision to incur the cost.

The Applicant is responsible for providing documentation to demonstrate its claimed costs are reasonable. If FEMA determines any of the costs to be unreasonable based on its evaluation, FEMA may disallow all or part of the costs by adjusting eligible funding to an amount it determines to be reasonable.

FEMA determines reasonableness by evaluating whether:

• The cost is of a type generally recognized as ordinary and necessary for the type of facility or work
• The cost is comparable to the current market price for similar goods or services based on:
• Historical documentation
• Average costs in the area
• Published unit costs from national cost estimating databases