Sneak Preview: FEMA Plans To Update Cost-Estimation Guidance

Jerry Ashworth
February 14, 2020 at 07:41:17 ET
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(The following was excerpted from a recent article in the Federal Grants Management Handbook.) The Department of Homeland Security (DHS) Federal Emergency Management Agency (FEMA), in response to a recent recommendation from the Government Accountability Office (GAO), is updating its Public Assistance cost-estimation guidance as it deliberates appropriate federal funding levels for projects to help Puerto Rico recover from two major hurricanes that caused billions of dollars in damage to the island in 2017.

In its hurricane recovery plan, which was developed prior to the destructive earthquakes that hit the island in recent months, Puerto Rico estimated that $132 billion in funding from 2018 to 2028 will be needed to repair and reconstruct the infrastructure damaged by the hurricanes. Working with government officials from Puerto Rico, FEMA provided Public Assistance grant funding for a range of eligible response and recovery activities. As of September 2019, FEMA had obligated about $6 billion in Public Assistance program funding for 1,558 projects across the island, and Puerto Rico had expended about $3.9 billion of that funding to reimburse subrecipients for completed work.

While much of these funds went to emergency repair work, about $39 million went to permanent work projects, which require more-detailed procedures that aim to reduce costs to the federal government, increase flexibility in the administration of the Public Assistance program, expedite the provision of assistance under the program, and provide financial incentives to recipients of the program for timely and cost-effective project completion. FEMA maintains different policy guides for different types of projects (e.g., emergency repair, permanent work). “Permanent work projects take time to identify, develop and ultimately complete as they represent the longer-term repair and restoration of public infrastructure,” GAO said.

GAO found that FEMA and Puerto Rico have sought to reach mutual agreement on fixed cost estimates for permanent work projects, which have included developing exceptions to FEMA’s cost-estimation guidance. However, the process to appoint members to discuss these estimates was challenging and created delays. In addition, other delays stemmed from the large number of sites requiring damage assessments, project development and mutually agreed-upon fixed cost estimates. As of October 2019, FEMA and Puerto Rico were still working to establish specific time frames for the completion of fixed cost estimates, according to GAO.

(The full version of this story has now been made available to all for a limited time here.)

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