Appendix L › Step 5 Validate Completeness and Reasonableness

How does FEMA decide whether our estimate’s costs are reasonable?

FEMA term

Validating completeness and reasonableness (10 percent test)

Short answer

FEMA samples the estimate. At least six of the ten largest cost items, and at least 25 percent of the rest, must each be within 10 percent of local weighted average unit prices or industry cost data. FEMA also checks that every activity has a unit cost (no lump sums), the right locality factors are applied, and every item is eligible. Failing items send the estimate back for revision.

What FEMA requires

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.

<table class="pt-table"><thead><tr><th>Check</th><th>Pass</th></tr></thead><tbody><tr><td>Largest items</td><td>At least six of the ten largest cost items (or all, if fewer than ten), each within 10% of local weighted average unit prices or industry cost data</td></tr><tr><td>Remaining items</td><td>At least 25% of the remaining items within 10%</td></tr><tr><td>Unit pricing</td><td>All work activities quantified with unit costs, no lump sums</td></tr><tr><td>Locality</td><td>Correct locality factor applied to published costs; for historical costs, no locality factor but escalation added</td></tr><tr><td>Eligibility</td><td>Every item of work is eligible</td></tr></tbody></table>

Documentation

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.

Watch out · Govstar practitioner advice

Put your best backup behind the ten largest line items, since that is where FEMA looks hardest. If you used historical costs, add escalation and don’t also apply a locality factor; mixing the two is a common error the checklist catches.

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.