Because of the nature of the Public Assistance Program, applicants may find that in most instances  cost estimates are approved by FEMA prior to the completion of the associated work. On occasion, the actual costs incurred by the applicant during performance of the work exceed the approved estimate. This situation is known as a Cost Overrun. Cost overruns are usually caused by one of the following:

 Hidden damage: additional disaster damage  may become evident.

 Variations in unit pricing: The unit prices used in the cost estimate may have been  lower than  those the applicant was actually charged.

 Change in the scope of work: While performing the work, the applicant may find that additional eligible work or changes  in the prescribed work are necessary.

 Delay in starting or completion times: Problems beyond  the applicant’s control may contribute to delays in starting  or completing work.

The  applicant should  evaluate  cost overruns on large  projects.  If the additional costs are justified, the applicant can request additional funding. The applicant should  contact the State as soon as possible to ensure that proper guidelines for documenting any additional costs are followed. The State will forward requests for additional funding to FEMA. Such requests must contain documentation to support that the additional costs were incurred during the performance of eligible work. If the need  for additional work is discovered during the performance of work on the project,  the State must be notified and must notify FEMA so that FEMA may inspect  the site, if necessary.

Small projects are handled differently. If there is a gross error or omission in the scope of work, the applicant should  make a request for a change as described for large projects.  Otherwise, cost overruns are not handled on a project-by-project basis; rather, the applicant may request supplemental funding for a significant  net cost overrun on all small projects by submitting an appeal  through the State to FEMA. An appeal  should  be submitted only when the  total costs for all small projects  exceed  the  total cost approved for all small projects.  The appeal  must be submitted within 60 days of the completion of that  applicant’s last small project.  The appeal  must include documentation of actual costs correlated to each line item in the scopes of work. This includes  projects  with underruns as well as those  with overruns. An explanation of all cost and quantity differences with the approved scopes of work should  be included (see Appeals).

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