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. This is in accordance with 2 Code of Federal Regulations 200.404 Reasonable costs.

FEMA determines reasonableness by evaluating whether:

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