Validation of Applicant-Provided Cost Estimates

• FEMA checks a representative sample for reasonable costs. Unreasonable items send the estimate back for revision.
• All items must be eligible; FEMA removes ineligible items and documents why.
• All work activities must be quantified with unit costs. Lump sums that need to be converted to unit prices send the estimate back.
• The correct locality adjustment factor from the cost publication must be applied to each line item. Where historical costs were used, no locality adjustment is applied, but escalation factors are added.
• Cost items are checked against local weighted average unit prices or industry cost data: at least six of the ten largest items (or all items if fewer than ten), individually, and at least 25 percent of the rest must be within 10 percent. If not, the estimate is returned for revision.
• The reviewer records the review date, any information requests, and signs the checklist.

Backup for your largest cost items, local weighted average unit prices or cost data references, the locality adjustment factors used, and escalation factors where you used historical costs.

• Step 3: FEMA determines whether unit costs come from an approved industry-standard source and whether current publications were used. If not, the estimate is returned for revision.
• Step 4: FEMA checks the components of the unit costs. Each unit cost should be a complete, in-place cost including all labor, equipment, materials, small tools, incidentals and hauling for that element of work.
• FEMA checks whether general contractor and subcontractor overhead and profit are included in the unit costs and not duplicated elsewhere in the estimate or in the Cost Estimating Format, or whether they are duplicated.
• Surveying, construction inspection and permit compliance fees must not appear both within a unit cost and separately.
• If there isn’t enough information on unit cost components, FEMA requests more from you.

The name and edition of the cost data source used, local cost data or recent contract unit prices if used, and a breakdown showing what each unit cost includes and where overhead, profit, surveying, inspection and permit fees appear.

• FEMA PA staff must use this checklist to review applicant cost estimates for large permanent work projects, and may use parts of it for emergency work.
• Step 1: verify the estimate is prepared by a licensed professional engineer or other estimating professional (licensed architect or certified professional cost estimator) who certifies it follows industry standards; certifies the cost directly corresponds to repairing the agreed damage; is based on unit costs for each scope component, not a lump sum; and is detailed enough to validate every component against the agreed scope.
• Step 2: verify only eligible items are included, based on the agreed damage description and dimensions. If ineligible items are found, FEMA removes them and documents why, or returns the estimate to you to revise.

A signed estimate from a licensed professional engineer, licensed architect or certified professional cost estimator, with a certification that it follows industry standards and corresponds to the agreed damage; unit costs for each scope component; and the agreed damage description and dimensions.