Chapter 9 › II.E.2–4 Applicant Estimates; FEMA Estimates; Insurance Reductions

Will FEMA accept our own cost estimate, and how does FEMA build its own?

FEMA term

Applicant-submitted estimates; FEMA estimates (Cost Estimating Format); insurance reductions

Short answer

Yes, if a licensed engineer, architect or certified cost estimator prepares it on unit costs (not a lump sum), certifies it matches the agreed damage, and it is detailed and reasonable. When FEMA writes the estimate for a large permanent work site less than 90 percent complete, it uses the Cost Estimating Format (CEF). Either way, FEMA reduces the estimate for actual or expected insurance proceeds.

What FEMA requires

FEMA accepts an applicant estimate that meets all the criteria in the table. Include foreseeable contingency costs such as security and staging.
FEMA evaluates applicant estimates for reasonableness under the reasonable cost criteria in Chapter 6.
For permanent work sites less than 90 percent complete with total costs expected to meet the large project threshold, FEMA uses the Cost Estimating Format under the CEF Instructional Guide, which sets factor ranges. Only FEMA Headquarters can approve factors outside those ranges or additional factors.
For capped projects (improved and alternate projects), FEMA includes only the CEF contingency factor “Applicant Reserve for Change Orders,” with no other factors or risk premiums.
FEMA reduces the estimate for insurance: actual proceeds if known, otherwise anticipated proceeds under your policy.

<table class="pt-table"><thead><tr><th>FEMA accepts your estimate if it…</th><th>Required?</th></tr></thead><tbody><tr><td>Is prepared by a licensed PE, licensed architect or certified professional cost estimator who certifies it meets industry standards</td><td>Yes</td></tr><tr><td>Certifies the cost corresponds directly to repairing the agreed damage</td><td>Yes</td></tr><tr><td>Uses unit costs for each scope component, not a lump sum</td><td>Yes</td></tr><tr><td>Is detailed enough for FEMA to match every component to the scope</td><td>Yes</td></tr><tr><td>Reflects the current design or construction phase and known costs</td><td>Yes</td></tr><tr><td>Includes actual costs for work already completed</td><td>Yes</td></tr><tr><td>Is reasonable</td><td>Yes</td></tr></tbody></table>

Documentation

A unit-cost estimate signed by a licensed professional engineer, licensed architect or certified professional cost estimator, with a certification that it was prepared to industry standards and corresponds directly to repairing the agreed damage; the current design or construction phase and known costs; actual costs for work already done; and your insurance policies and any proceeds.

Watch out · Govstar practitioner advice

A lump-sum estimate is the quickest way to have yours rejected. Build in foreseeable contingencies such as security and staging, because FEMA judges reasonableness line by line under the Chapter 6 reasonable cost rules.

Govstar summarizes FEMA’s Public Assistance Program and Policy Guide in plain language and links to the official text. Govstar is independent and not affiliated with FEMA. This is general guidance, not legal advice.