Small Projects and Fixed Costs
Most Public Assistance projects are small projects, and small projects are already funded the way reformers want all projects funded: on the estimate, not on final invoices. Get the estimate right and the money is yours to manage. Get it wrong and there is only one narrow way back.
1How small projects work
Section 422 of the Stafford Act lets FEMA use simplified procedures for projects below a dollar threshold. FEMA raised that threshold to $1 million in 2023 and adjusts it every year for inflation. For major disasters and emergencies declared on or after October 1, 2026, the small project maximum is $1,130,900, a 3.4% increase. FEMA also sets a minimum project amount each year; work below it is not funded.
The threshold that applies is the one in effect on the declaration date, not the date you write the project. FEMA's Simplified Procedures policy (FP-104-23-001) covers small projects for emergency work, permanent work and debris removal under Sections 403, 406, 407 and 502. It does not cover management costs or donated resources.
The estimate is the grant
Once FEMA obligates a small project, it does not true it up to actual cost. The estimate is treated as reasonable and eligible unless FEMA finds fraud, waste, abuse or noncompliance.
You carry the cost risk
If the work costs less, the savings stay with you. If it costs more, you absorb it unless your small projects as a group qualify for a net overrun appeal.
2Small projects vs. large projects
| Topic | Small project | Large project |
|---|---|---|
| Threshold | Below $1,130,900 (disasters declared on or after October 1, 2026) | $1,130,900 or more |
| Funding basis | Obligated estimate, or actual costs if the work is already complete | Estimate at obligation, reconciled to documented actual costs |
| Payment | Recipient may pay the full federal share once the project is obligated | Recipient pays as work progresses and costs are documented |
| Cost overrun | Applicant absorbs it, unless a Net Small Project Overrun appeal succeeds | Eligible, documented actual costs can be funded at reconciliation |
| Cost underrun | Applicant keeps the savings | Funding is reduced to actual cost |
| Closeout | Completion certification; no reconciliation to actual cost | Full reconciliation of actual costs |
| Estimate review | Certified estimates are accepted subject to FEMA review | Appendix L validation and the Cost Estimating Format for most permanent work |
3Building an estimate that holds
Because the estimate becomes the funding, every gap in scope or price is permanent. The Simplified Procedures policy describes what FEMA accepts as cost support.
Force account labor
Estimated staff hours times average pay rates, with fringe benefits under your established policies.
Equipment and materials
FEMA equipment rates for your own equipment. Purchase orders, rental agreements or the lowest of three quotes for the rest.
Contract work
Bids received, or historical costs from recent, competitively procured contracts for similar work.
Professional estimates
Construction estimates must come from a licensed professional or certified estimator. Applicants may submit certified estimates for FEMA review.
Actual costs
If the work is already finished when the project is written, it is funded on documented actual costs.
Common reasons small projects come up short
- Scope missing items found later, such as hidden damage, code-required work or access costs.
- Unit prices from before the disaster, without escalation for post-disaster market conditions.
- Insurance reductions not anticipated in the estimate.
- Mitigation left out, even though it can be added to a permanent work project if it is cost-effective.
Building cost estimates FEMA will accept → · Applicant and FEMA cost estimates →
4Savings and overruns
Keep the savings
FEMA does not reduce a small project to actual cost. FEMA's policy encourages applicants to use excess funds for activities that reduce future risk or improve future disaster operations.
Net Small Project Overrun appeal
If the combined actual cost of all your small projects in a disaster significantly exceeds the combined obligated amount, you may appeal. The appeal is due within 60 days of the latest work completion date among those projects and needs actual cost documentation for each.
5Closing out small projects
- 1
Finish the work
Complete the approved scope within the period of performance, or request an extension in time.
- 2
Certify completion to the recipient
Subrecipients certify that work is complete within 90 days of the latest work completion date.
- 3
Recipient certifies to FEMA
The recipient submits a Small Project Completion Certification within 180 days for subrecipient projects, or 90 days for its own projects. Extensions can be requested from the FEMA Regional Administrator.
- 4
Keep the records
Retain cost, procurement and completion records for the full record retention period. Audits can still find noncompliance after closeout.
6Rules that still apply
Simplified procedures change how a small project is costed and closed. They do not change the rest of the program.
- Eligibility. The applicant, facility, work and cost must still be eligible.
- Procurement. Contracts must follow 2 CFR 200 procurement standards; noncompliant contracts can be disallowed.
- Environmental and historic review. Required before work starts, except where an exemption applies.
- Insurance. FEMA reduces funding by actual or anticipated insurance proceeds, and obtain-and-maintain requirements still apply.
- Scope changes. Tell your recipient before changing the approved scope or doing alternate work.
- Records and audits. Documentation and record retention rules apply in full.
7Practical tips
Estimate as if it is final
Because it is. Include escalation, access, code work and a realistic contingency.
Think about project grouping
How sites are combined decides whether a project falls under or over the threshold. Ask your recipient before splitting or combining work.
Record the completion date
The latest work completion date starts both the 60-day overrun appeal clock and the 90-day certification clock.
Track actuals anyway
You will need them for a net overrun appeal, for audits and to plan the use of any savings.
Check the threshold year
Use the threshold in effect on the declaration date. It changes every October 1.
Plan the savings
Decide early how you would use any underrun, such as for risk reduction or future disaster readiness.
8Where small projects fit in the move to fixed costs
Small projects are the oldest fixed-cost tool in Public Assistance. Section 428 extends the same idea to large permanent work through capped grants. The proposed Section 409 grants and Small Disaster Block Grants in H.R. 4669, and the Review Council's RAPID formula grants, would push it further. Skills built on small projects, especially estimating and cost tracking, carry over to every one of those models.
| Model | Status | Who carries overruns |
|---|---|---|
| Small projects | In effect | Applicant, unless a net overrun appeal succeeds |
| Section 428 fixed-cost grants | In effect | Applicant |
| Section 409 grants (H.R. 4669) | Proposed | Applicant, after one allowed adjustment |
| Small Disaster Block Grant (H.R. 4669) | Proposed | State |
| RAPID (Review Council) | Proposed | State and its subrecipients |
How FEMA Public Assistance funding is changing → · Section 428 fixed-cost projects →
9Sources
- FEMA Policy FP-104-23-001, Public Assistance Simplified Procedures
- FEMA Notice of Adjustment of Disaster Grant Amounts (disasters declared on or after October 1, 2026)
- 44 CFR 206.203, Federal grant assistance
- Stafford Act Section 422 (42 U.S.C. 5189), Simplified procedures
- FEMA, Public Assistance Program and Policy Guide, Version 5.0
GovStar is an independent Public Assistance resource and is not affiliated with FEMA. This page is general guidance, not legal advice. Confirm thresholds, deadlines and requirements for your disaster with your recipient and FEMA.