Lesson 3 Overview and Objectives

This lesson covers cost estimates, including the requirements for using an Applicant's cost estimate, the information necessary for FEMA to develop the cost estimate, and the review and approval processes for cost estimates.

Upon completion of this lesson, participants will be able to:

  • Identify necessary information for developing cost estimates
Defining the Cost Estimate

The cost estimate is developed in tandem with the scope of work because it provides approximate costs for the work that has been determined necessary by the Applicant in conjunction with FEMA.

Options for Developing Cost Estimate

As mentioned in the previous lesson, the Applicant may choose to develop the cost estimate independently and submit to FEMA for review and approval, or the Applicant may choose to have FEMA develop the cost estimate on their behalf. The Program Delivery Manager asks the Applicant about who will develop the cost estimate when completing the Development Guide Questions.

Documentation requirements differ based on whether the Applicant or FEMA develops the cost estimate. FEMA typically manages the scoping and costing, but there are instances where the Applicant may prefer to conduct the process themselves.

The Applicant's options for developing the cost estimate are as follows:

  • If the Applicant lacks the resources, it may request technical assistance from FEMA to develop the cost estimates. FEMA may make use of commercial estimating software to develop the cost estimate, but generally the Applicant will be required to provide documentation to support the process
  • The Applicant may develop the cost estimate themselves, as with the scope of work. An Applicant contracting the development of the cost estimate would be included within this category
FEMA-Developed Cost Estimate

If the Applicant decides that they do not have the capabilities to complete the cost estimate or they do not have a contractor to develop the cost estimate, they can request that FEMA develops the cost estimate.

Once the Applicant makes their decision to have FEMA develop the cost estimate, the Program Delivery Manager sends the Applicant's project electronically to the Consolidated Resource Center through FEMA Grants Manager. There, the Costing Specialist reviews the Applicant documentation and develops a cost estimate for the scope of work using either:

  • Historical documentation
  • Average costs in the area
  • Published unit costs from national cost estimating tools

In order for the Costing Specialist to make an accurate cost estimate, the Applicant must upload documentation to Grants Portal that aligns with their project. Most, if not all, of the documentation should have fallen under Essential Elements of Information.

  • This lesson further discusses documentation needed for a cost estimate later
Applicant-Developed Cost Estimate

Although the Applicant has the option to develop their own cost estimate, there are certain criteria that must be met for FEMA to review and approve it. The criteria are as follows:

  • Estimate was prepared by a licensed Professional Engineer or other estimating professional, such as a licensed architect or certified professional cost estimator who certifies that the estimate was prepared in accordance with industry standards
  • Estimate includes certification that the estimated cost directly corresponds to the repair of the agreed upon damage
  • Estimate is based on unit costs for each component of the scope of work and not a lump sum amount
  • Estimate contains a level of detail sufficient for FEMA to validate that all components correspond with the agreed-upon scope of work
  • Estimate is reasonable

Along with meeting the above criteria, the Applicant must also submit documentation that supports their cost estimate. FEMA validates the Applicant-developed cost estimate with the provided documentation.

Documentation Required for a Cost Estimate: Force Account Labor

The Applicant must submit documentation to support costs for their project. One type of documentation the Applicant provides is labor documentation for the work completed.

For Applicant (Force Account) labor:

  • Name
  • Job title and function
  • Type of employee (e.g., full-time exempt, full-time non-exempt, part-time, temporary, prisoner)
  • Days and hours worked
  • Pay rate and fringe benefit rate
  • Description of work performed with representative sample of daily logs or activity reports, if available
  • Representative sample of timesheets
  • Fringe benefit calculations
  • Pay policy
Humacao police provide protection to properties in the Santa Maria neighborhood near Humacao, Puerto Rico, after Hurricane Maria.
Documentation Required for a Cost Estimate: Force Account Equipment

Another type of documentation the Applicant may need to provide to FEMA is documentation pertaining to Force Account equipment. If the Applicant used any of their equipment to conduct work, FEMA will more than likely request documentation supporting its use.

For Applicant-owned (Force Account) equipment:

  • Type of equipment and attachments used, including year, make, and model
  • Size/capacity (e.g., horsepower, wattage)
  • Locations, days, and hours used with usage logs
  • Operator name
  • Schedule of rates, including rate components
  • Rented or purchased equipment
  • Rental or lease agreements, invoices, receipts
  • Days used
A bulldozer removing debris from Hurricane Ike
Documentation Required for a Cost Estimate: Supplies

If the Applicant uses supplies to complete the work, they must provide documentation to FEMA showing what supplies they used and how much was used. Supply documentation also includes:

Supplies from stock:

  • Historical cost records (if such work was done in the past, how much did it cost previously?)
  • Inventory records
  • Types of supplies and quantities used, with support documentation such as daily logs
  • Purchased supplies
  • Receipts or invoices
Members of the Virgin Islands Police Department in Cruz Bay help distribute water to survivors ten days after the island was devastated by Hurricane Irma, a Category 5 storm.
Documentation Required for a Cost Estimate: Contracts

If the Applicant decides they cannot complete the work with their own Force Account labor, equipment or supplies, then they may contract the work to an entity that can complete the work. In order to create or validate a cost estimate for contracts, the Applicant must provide contract documentation.

Documents should include:

  • Contracts
  • Procurement policy
  • Procurement and bid documents
  • For procurements more than the simplified acquisition threshold, a cost/price analysis
  • Contracts, change orders, and invoices
  • Dates worked
  • For time and materials contracts, monitoring documentation
Contracted assistance uses front loaders to remove debris from a beach. By pre-bidding their contracts, Carolina Beach was able to rapidly deploy heavy equipment for debris removal, speeding the recovery process significantly.
Documentation Required for a Cost Estimate: Mutual Aid

An Applicant who requests mutual aid to complete work may also have to provide the documentation so FEMA can review the work performed and include any eligible costs in the cost estimate.

Required documents for mutual aid work:

  • Written agreement
  • Services requested and received
  • Same information listed for labor, equipment, and supplies above
  • Invoices
Documentation Required for a Cost Estimate: Donated Resources

If the Applicant received donated resources to complete the work, the donated resources factor into the cost estimate. FEMA may request that the Applicant provide documentation on the donated resources the Applicant has or will receive.

Donated Resources:

    • For each individual
      • Name
      • Days and hours worked
      • Location of work and work performed
    • Equipment
      • Same information listed under Applicant-Owned Equipment
      • Who donated each piece of equipment?
    • Supplies or materials
      • Quantity
      • Donor
      • Location(s) used
Volunteers separate items at the First Baptist Church where residents impacted by the recent tornado can come to get supplies.
Documentation Required for a Cost Estimate: Vendor Provided Cost Estimates

Another type of documentation the Applicant should provide are any vendor provided cost estimates that they receive.

Cost Estimates:

    • Cost estimate for the agreed-upon statement of work developed with unit costs
    • Qualifications of the company or individual who prepared the cost estimate
Documentation Required for a Cost Estimate: Cost Reasonableness

The Applicant should also provide FEMA with any documentation on cost reasonableness for their cost estimate.

Cost reasonableness may include (if requested by FEMA):

    • Documentation showing current market price for similar goods or services, historical documentation, average costs in the area, or published unit costs from national cost estimating databases
    • Documentation supporting necessity of unique services or extraordinary-level of effort
    • Documentation supporting shortages, challenging procurement circumstances, and length of time shortages or procurement challenges existed
    • For Direct Administrative Costs:
      • Specific description of administrative task performed by individual
      • Skill level and position description of individual performing task
      • Hourly cost including fringe benefits of the individual
Select this link for a full image description.
Please refer to appendix 3-1
Documentation Required for a Cost Estimate: Other

The Applicant may also have to provide FEMA with some miscellaneous documentation:

    • Documentation regarding cash donations or other funding received
    • Cost comparisons and source documentation, if applicable
    • Actual insurance proceeds, if available
Project Documentation Maintenance

The Applicant must maintain all source documentation supporting the project costs. To facilitate closeout and audits, the Applicant should file all documentation pertaining to each project with the corresponding project as the permanent record of the project.

The Applicant must keep all financial and program documentation for three years after the date of the Recipient's final Financial Status Report (FEMA Form 112-0-1). Records are subject to audit by State auditors, FEMA, the U.S. Department of Homeland Security Office of Inspector General, and the U.S. Government Accountability Office.

Lesson 3 Summary

In this lesson, participants learned about the information required by FEMA to develop cost estimates.

The next lesson covers the review and approval of scope of work and cost estimates in Grants Portal.