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The Role of Accurate Cost Data in the Nation’s Natural Disaster Recovery

By Gordian

In the wake of Hurricanes Harvey and Irma, FEMA is gearing up for disaster recovery efforts on two fronts. The first is in Public Assistance, the program that provides funds to local governments and non-profits to rebuild public facilities and infrastructure. The second is Individual Assistance, the program that provides funds to make individual homeowners whole after catastrophic loss of home and contents.

Individual Assistance is the first wave of support because FEMA recognizes the importance of providing families with immediate financial relief and maximum flexibility in how they use those funds. To efficiently calculate the amounts due to individuals impacted by a disaster, FEMA requires an unusual merging of residential construction assemblies; for example, combining removal and replacement of drywall and insulation with costs of household furniture and other contents on top of boat repair and replacement.  FEMA acquires this custom configuration of data for loading into tablet devices, enabling timely assessments of damage and rapid financial assistance. You can see in the early days after a disaster, Individual Assistance claims are the first to come rolling in.

The bigger and longer game of disaster recovery is Public Assistance. It accounts for the lion’s share of recovery efforts and is consequently more strategic in approach and stringent in estimating and tracking costs. This assistance is not only responsible for repairing public infrastructure but also improving it to better withstand future disasters using principles of resiliency. These efforts can often take years.The Role of Accurate Cost Data in the Nation's Natural Disaster Recovery 1

Public Assistance is a government-to-government process that taps deep building (and estimating) expertise at Federal and local levels. FEMA fulfills its mission by granting funds to local public bodies (states, cities, counties, tribal governments and some non-profits) and provides an appropriate amount of autonomy in project procurement and execution. However, costs must be validated, and all funds must be accounted for when quantifying and managing federal grants for rebuilding.

There are two knowledgeable stakeholders here: FEMA, the steward of taxpayer dollars which has established clear guidelines regarding eligible costs, and the local government which has more intimate knowledge of the structures affected and of the local market. RSMeans data from Gordian provides an independent data source to support this collaborative scoping and costing process.

A Short History of the Cost Estimating Format

In 2000, the Disaster Mitigation Act (Section 205e[3]) directed FEMA to “establish a methodology, consistent with industry practices, for estimating the cost to repair, restore or replace eligible public facilities that are damaged during a major disaster.” FEMA convened a panel of cost estimating experts, and the Cost Estimating Format (CEF) for Large Projects was developed. While more streamlined processes were allowed for small projects like debris removal and immediate minor repairs, FEMA recognized rigor was required for larger projects (defined as any project over $123,100 in total costs). Refined over the years, the CEF became the agency standard in 2013. FEMA has continued to improve the process with alternative pilot program procedures following Hurricane Sandy. While these alternatives are focused on streamlining the process, they still require unit price rigor by grantees, subgrantees and their costs consultants in conjunction with unit price validation by FEMA. For instance, at least six of the 10 largest line items must be checked against a localized industry standard data resource, and 25 percent of remaining line items must be validated.

FEMA continues to improve its expertise and technology, as well. After an exhaustive business process re-engineering effort, the Public Assistance program made the decision to shift ultimate estimate accountability to newly implemented Consolidated Resource Centers (CRCs). Estimating has traditionally been accomplished at the more temporary and disaster-specific Joint Field Offices (JFOs). While JFOs will continue to play an important role in scoping and informing cost estimating, it was recognized that cost estimating is a specific and sophisticated skillset. There is tremendous value in having well-trained experts oversee and validate the process.

Technology is evolving and improving the process, too.  FEMA is now beginning to consolidate cost data on online platforms, enabling easier collaboration and sharing of estimating assets between JFOs and CRCs. While the CEF was based on Excel forms, advanced reporting features can now be leveraged to automate the calculation of various factors and allowable markups. And predictive analytics capabilities has the potential to provide more accurate cost forecasts in volatile local markets, post-disaster.

We are proud of our evolving support of FEMA and its important mission. While we mourn the impact of disasters, we stand ready to serve FEMA and local governments in the important rebuilding effort.

About Gordian

Gordian is the leading provider of Building Intelligence™ Solutions, delivering unrivaled insights, robust technology and expert services to fuel customers’ success through all phases of the building lifecycle. Gordian created Job Order Contracting (JOC) and the industry-standard RSMeans Data. We empower organizations to optimize capital investments, improve project performance and minimize long-term operating expenses.

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