Buildings & Equipment: Mastering Category E

Issue 15 What is Category E? Category E encompasses a wide range of facilities and their contents: from buildings and mechanical equipment, to library books and animals. FEMA defines Category E — Buildings and Equipment — to include the following: • Buildings, structural components, interior systems such as electrical or mechanical work, equipment such as vehicles, and contents including furnishings; • Pre-disaster quantities of consumable supplies and inventory; • Library books and publications; • Stabilization of damaged or lost files; • Extraordinary damage caused by the disaster to applicant-owned EDI TOR’S NOTE In response to requests from our readers, this issue of Disaster Recovery Today authored by Judy Wolf of Adjusters International focuses on Category E projects — Buildings and Equipment. It is not surprising that readers have expressed interest in greater coverage of this category of work. According to Federal Emergency Management Agency (FEMA) statistics,1 on average, Category E project worksheets (PWs) make up nearly onethird of all large PWs written for permanent work per declaration — and nearly 20 percent of all large PWs written per declaration in all categories of work. Combine this with the fact that many of the most complicated issues that arise during a recovery are related to public facilities — both in terms of grant funding requirements and longterm recovery considerations — and the need for a thorough examination of relevant issues becomes apparent. Your comments about this article and other suggested topics are appreciated — and your continued feedback is welcome. Sheila E.Salvatore Editor By Judy Wolf Buildings and Equipment: Mastering One of the Most Complex Categories of Work

2 D I SAS T E R R E COV E RY T ODAY. COM D I S A S T E R R E C O V E R Y T O D A Y 17.0 20.8 17.8 8.1 18.5 10.4 7.4 29.8 16.7 11.9 28.5 13.1 Average % Large PWs by Declaration PermanentWork Average % Large PWs by Declaration All Work Categories equipment performing eligible disaster work; • Removal of mud, silt or other accumulated debris (provided it does not pose an immediate threat, but its removal, along with any cleaning and painting, is necessary to restore the building); • Stabilization — and sometimes additional treatment — of a culturally significant collection or object to return it to pre-disaster function (replacement is not generally considered an eligible cost for these items due to their one-of-a-kind nature); and • Certain animals, birds, fish and insects (all of which are treated as contents). Issues regarding Category E projects that will be discussed in this article include codes and standards, hazard mitigation, FEMA’s 50 Percent Rule, equipment replacement, and insurance considerations, among others. What to Do Pre-Loss Questions that will arise post-disaster regarding buildings, contents and equipment are similar to those in any other category of work: Is the facility the legal responsibility of the applicant? Was it damaged by the declared event? Are the claimed damages accurate? To what extent (if any) were there any preexisting damages? Are the associated costs valid and reasonable? It is an applicant’s responsibility to demonstrate that claimed damages were caused by the declared event rather than by a failure of maintenance or some other avoidable issue unrelated to the disaster. Applicants are also responsible for demonstrating that quantities claimed (e.g., lost/damaged inventory) are detailed and accurate. Roads & Bridges — 28.5 Water Control Facilities — 13.1 Public Buildings — 29.8 Public Utilities — 16.7 Recreational or Other — 11.9 Debris Removal — 17.0 Protective Measures — 20.8 Roads & Bridges — 17.8 Water Control Facilities — 8.1 Public Buildings — 18.5 Public Utilities — 10.4 Recreational or Other — 7.4 Current as of 12-11-2012

ADJUSTERS INTERNAT I ONAL . COM 3 D I S A S T E R R E C O V E R Y T O D A Y The simplest way to position your organization to respond to these inevitable questions is to be prepared prior to a disaster through a systematic and documented maintenance program, the performance of regular inventories, and regular photo documentation of the existence and condition of facilities, equipment and inventories. These best practices are easily built into existing routines and will prove valuable not only post-disaster, but also in the case of other types of losses such as insurance claims. Another best practice to consider is keeping a backup of these records in a safe, off-site location where they can be accessed in a timely manner even if key facilities themselves have been destroyed. Just as your organization regularly reviews hazards and their potential impact as part of its planning process, it is useful to consider and become knowledgeable of the potential impact to facilities that may be caused by various types of disasters. For example, flooding can cause air, soil and water contamination; mold growth; and weakening of foundations. Earthquakes can cause — in addition to the obvious destruction — latent damage such as foundation fractures that may not be immediately apparent, but can lead to long-term shifts and instability in a facility’s substructure and, eventually, visible cracking and settling. Educating yourself and your team in advance about the less-obvious potential damages associated with different types of disasters can help to more efficiently identify and address these issues after the fact. It is also helpful to establish, using your standard procurement process, preexisting standby contracts with firms whose expertise can be called upon in the event of an emergency. This includes establishing a pool of architectural and engineering firms that can assist with assessing the true extent of damages and establishing accurate scopes of work as the basis for realistic cost estimates (the importance of this step will be discussed later in this article), as well as developing relationships with firms that provide damage restoration, document preservation, debris management, grant management, insurance adjusting, and construction project management services. Buildings Codes and Standards A standard project is intended to restore a facility exactly as it was the moment before the disaster event occurred (“as it was”). However, FEMA recognizes that the repair or replacement of a building frequently triggers codes and standards requirements that have been put in place since the building was originally “It’s an applicant’s responsibility to demonstrate that claimed damages were caused by the declared event rather than by a failure of maintenance or some other avoidable issue unrelated to the disaster.”

4 D I SAS T E R R E COV E RY T ODAY. COM D I S A S T E R R E C O V E R Y T O D A Y constructed. Thus, FEMA considers eligible those upgrades required to meet current reasonable codes and standards related to the facility’s repair or replacement. Eligible codes and standards include local, state and federal requirements related to repairs and/or new construction of facilities. The standard must be triggered by the damages; for example, if a particular upgrade is required for new construction, but not for repairs, it would only be eligible for FEMA funding if the facility was being replaced. In the case of repairs, FEMA generally pays only for upgrades related directly to the portion of the facility damaged by the event, even if the repair activity triggers a code requirement that impacts the entire building (e.g., installation of a full facility sprinkler system when only a portion of the building was damaged) — unless the code was required based on the amount of repair, in which case it would be considered for funding. It is important to note that the human factor enters into the equation here. In many cases, such as the sprinkler system example just provided, a determination regarding whether FEMAwill fund a code upgrade will depend on its interpretation of whether the action and costs are reasonable relative to the type and extent of the repair. This is where proof of codes adoption, previous code enforcement activities and, if available, a benefit-cost analysis, will prove useful. Applicants should keep in mind federal building codes that are required of all projects funded using federal dollars. These include EO 12699, Seismic Safety of Federal and Federally Assisted or Regulated New Building Construction, which requires that “all eligible construction of new buildings under the PA Program use appropriate seismic design and construction standards and practices. This is true regardless of the cause of the declared disaster and even if the applicant does not have applicable local or State seismic codes. … If a damaged building is eligible for replacement, the costs of meeting required and reasonable seismic codes are also eligible.” These federal codes also include the Americans with Disabilities Act (ADA), which applies to the restoration of damaged facilities under the Stafford Act and “requires that any building or facility that is accessible to the public or any residence or workplace be accessible to and useable by disabled persons. … FEMA will provide funds to comply with ADA when replacing a facility, whether or not the facility met compliance prior to the disaster. “FEMA considers as eligible those upgrades required to meet current reasonable codes and standards related to the facility’s repair or replacement.”

ADJUSTERS INTERNAT I ONAL . COM 5 D I S A S T E R R E C O V E R Y T O D A Y … For buildings eligible for repair, FEMA will fund the cost of ADA compliance requirements to the damaged elements of the facility. … In addition, FEMA may fund ADA compliance requirements for non-damaged elements associated with a path of travel for a primary function area that is damaged.”2 Floodplain management ordinances adopted to comply with National Flood Insurance Program (NFIP) criteria may also trigger certain building requirements. These considerations are discussed in greater detail later in this article. Mold Remediation Mold remediation can be an issue in events where buildings are flooded or exposed to wet/humid conditions for an extended period of time. This may be a direct result of flooding or other water infiltration, or may be caused by a prolonged power outage or disaster-related damage to a facility’s HVAC system. It is the applicant’s responsibility to take appropriate remediation action to prevent the spread of mold contamination — or, if this is not possible, to document and justify why reasonable measures were not taken (e.g., power outage, facility underwater, lack of access, insufficient resources). If the mold is a result of the declared event, the following may be eligible for reimbursement: •Cost of mold sampling, both pre- and postremediation (provided that evidence of mold contamination exists pre-remediation and the sampling reveals the presence of disaster-related mold). •Costs to perform eligible remediation, either through force account or contract labor: Wet vacuuming, damp wiping, or HEPA vacuuming of the interior space; Removal of contaminated gypsum, plaster (or similar wall finishes), carpet or floor finishes, and ceilings or permanent light fixtures; Cleaning of contaminated heating and ventilation (including ductwork), plumbing, and air conditioning systems, or other mechanical equipment.3 Hazard Mitigation In addition to upgrades required by codes and standards, FEMA separately considers and funds measures taken to protect the facility against the impact of future similar disasters. The benefits of hazard mitigation are clear: A 2005 study by the Multihazard Mitigation Council of the National Institute of Building Sciences found that “on average, a dollar spent by FEMA on hazard mitigation (actions to reduce disaster losses) provides the nation about $4 in future benefits. In addition, FEMA grants to mitigate the effects of floods, hurricanes, tornadoes, and earthquakes between 1993 and 2003 are expected to save more than 220 lives and prevent almost 4,700 injuries over approximately 50 years.” There are two main funding programs associated with hazard mitigation: • Section 404 Hazard Mitigation Grant Program, which is made available based on a percentage of the statewide amount of federal disaster relief funding and is intended to fund projects that appear on the state’s long-range mitigation plan; and • Section 406 hazard mitigation funding under the Public Assistance Program, which allows mitigation measures above and beyond standard repair/replacement and code-related upgrades to be applied, typically, to the damaged portions of facilities impacted by the disaster event, as well as certain more robust campus-wide approaches (as of 2010 FEMA policy).4 These two programs are distinct, but complementary, and are intended to provide protection from subsequent events. There are also other mitigation programs worth noting such as the Pre-Disaster Mitigation (PDM) and Flood Mitigation Assistance (FMA) programs. The 404 and 406 programs, however, are directly associated with and made available via declared disaster events. Many times communities find it useful to coordinate 406 and 404 projects, including multi-jurisdictional 404 mitigation

6 D I SAS T E R R E COV E RY T ODAY. COM D I S A S T E R R E C O V E R Y T O D A Y projects, to optimize available funding and eliminate unnecessary redundancies. Keep in mind that all costs must be tracked to each separate funding source, whether this involves a 406 hazard mitigation or 404 HMGP project — or some combination thereof. Repair vs. Replacement (50 Percent Rule) This topic was covered in depth by Disaster Recovery Today Issue #12, but it is well worth mentioning in an overview of considerations related to Category E projects, since it can be one of the most important determinations that will be made regarding a facility’s disaster funding. The determination is made using an equation that puts the estimated cost to repair (numerator) over the estimated cost to replace (denominator). The equation is weighted to favor repair by not including in the numerator the cost of upgrades of other elements triggered by codes and standards, or the design costs associated with upgrades, whereas these costs are included in the denominator. Neither includes demolition of the entire facility (although repair cost may include demolition essential to the repair of the damaged elements), site work, applicable project management costs, contents, and/or hazard mitigation measures. Once the calculation is made, the amount of eligible costs can be determined. For example, if the repair costs exceed 50 percent of the estimated replacement cost, then the facility’s actual replacement cost is eligible. If the repair costs do not exceed 50 percent of the replacement cost, but upgrades are triggered by codes and standards, the repair of eligible damages plus the mandatory upgrade costs are both eligible for funding; however total eligible costs are capped at the estimated replacement cost. Another consideration that may come into play for structures located in a Special Flood Hazard Area (SFHA) is whether the damages constitute substantial damage, defined by “Essentially, the 50 Percent Rule is intended to determine whether it will be more cost-effective to repair the damaged facility or to tear down and replace the entire facility.”

ADJUSTERS INTERNAT I ONAL . COM 7 D I S A S T E R R E C O V E R Y T O D A Y the NFIP as damage that results in costs to restore the structure that are 50 percent or more of the market value of the structure prior to the event. The local floodplain manager will make a substantial damage determination, not FEMA or the state, so it will be important to coordinate with your floodplain manager if the facility is in an SFHA. If the facility is determined to be substantially damaged, the Advisory Base Flood Elevation will be used to design the replacement facility and to determine eligible costs. If the 50 Percent Rule calculation indicates repair, however, the total eligible project cost including the cost to elevate or flood-proof the structure will be capped at the lesser of either the cost of repairs plus meeting applicable codes or the replacement cost. This means replacement may still present the most cost-effective, or in some cases — such as the inability to meet relevant codes at the current location — the only option for a substantially damaged facility. It is important to keep in mind that a substantial damage determination is not the same thing as FEMA’s 50 Percent Rule, despite the fact that these are often confused in the field. Improved/Alternate Projects and Related Cost Estimating Considerations The FEMA Public Assistance (PA) program was designed to be flexible, while at the same time ensuring good stewardship of public funds. The PA program will reimburse applicants for the repair or replacement of a facility to pre-disaster design, capacity and functional use, taking into account applicable codes and standards. However, the disaster event may present an applicant with an opportunity for improvements and changes more in keeping with the local community vision or long-term recovery plan. In this case, applicants may opt to undertake what are defined within the PA program as Improved and Alternate Projects. An Improved Project is one that has the same function and at least the equivalent capacity as the pre-disaster facility, but includes improvements (e.g., an expanded fire station or rearranged classroom space) that go above and beyond what FEMAwould normally fund. An Alternate Project is one in which the applicant decides that rather than restore the damaged facility, the public welfare would be best served by utilizing a portion of those eligible funds for another project. Unlike a standard large project, which is reimbursed based on actual costs, funding for Improved Projects is capped at the federal share of the eligible costs that would have been associated with repairing or replacing the facility back to its pre-disaster design, capacity and function (“as it was”), along with code compliance requirements (“as it has to be”). Similarly, Alternate Projects are capped at 90 percent of the federal share of these same eligible costs (except in the case of private non-profits, which are capped at 75 percent of the federal share, or for applicants who elect to pursue their project under the Alternative Procedures Pilot Program authorized by the Sandy Recovery Improvement Act of 2013, which allows full payment of the federal share for “Alternate Projects”). Because neither type of project is paid based on actual cost, as a standard large project would be, both of these options rely heavily on the accuracy and completeness of the damage assessment, scope of work and cost estimate of the original, standard (“as it was” plus “as it has to be”) project. The importance of developing a complete and accurate scope of work cannot be overemphasized, and proper use of FEMA’s Cost Estimating Format (CEF) — a forward pricing methodology — is important for taking into account not only construction costs such as labor and materials, but also soft costs including post-disaster inflation. (Following hurricanes Katrina and Rita, use of well-prepared CEFs for one applicant in Mississippi increased funding an average of 60 percent versus utilizing a more static tool such as RSMeans —making a difference for this applicant of tens of millions of dollars in funding.) Use of the CEF is required by FEMA for all category C-G large projects that are less than 90 percent complete at the time of inspection.

8 D I SAS T E R R E COV E RY T ODAY. COM D I S A S T E R R E C O V E R Y T O D A Y Funding Considerations During Construction/ Project Implementation Applicants must obtain approval for an Improved Project from the state prior to construction, and approval for an Alternate Project from FEMA before construction. In the case of a significant change within one year of the kickoff meeting (e.g., new location, footprint, function or size) to an Improved Project facility, the project must also be approved by FEMA prior to construction. In addition, it is important to note that FEMAwill only pay for repairs included in the PW scope of work — and any changes to the scope will require FEMA approval and the preparation of a new PW version to reflect those changes. These requirements become particularly important during the construction phase of the recovery process. Once all the projects are formulated and the PWs written and documented, it is easy to assume that the grant management portion of the recovery is under control, and thus not revisit these issues until closeout and audit. This is a mistake that too many applicants have made, to their detriment. In fact, it is common for previously undiscovered damages to be revealed during construction and cumulative changes in scope to occur through innocuous-seeming change orders — all common practice during a normal capital project, but having unintended consequences in a FEMAfunded endeavor. All too often, this results in a “standard” (“as it was” plus “as it has to be”) project — which was originally supposed to be paid based on actual costs — being declared an Improved Project at closeout and thus retroactively capped at the original project estimate, which may not have been as carefully prepared as it would have been were an Improved Project the initial plan. This can be avoided by insisting on a methodical approach to preparing all large project estimates from the outset. Assigning or hiring a FEMAPAgrant manager to work closely with the construction management team can go a long way toward reducing the occurrence of unintended Improved Projects and other funding-related mistakes that can occur during project implementation. Management and Administrative Costs For the fullest reimbursement of staff time and contract labor costs, it is also important to understand the policies related to (1) supervision and management of force account labor, (2) project management, and (3) grant management costs. (1) Supervision and Management of Force Account Labor Regular time of a subgrantee’s employees for direct supervision of force account employees performing eligible emergency work generally is not an eligible cost. However, the regular and overtime [labor costs] for the same direct supervision of force account employees performing eligible permanent work generally is eligible. “Grant management costs are split into two types of costs: indirect/ management costs and direct costs.”

ADJUSTERS INTERNAT I ONAL . COM 9 D I S A S T E R R E C O V E R Y T O D A Y (2) Project Management Project management is the oversight of an eligible project from the design phase (when necessary) to the completion of the work. Eligible project management activities are those activities that the subgrantee would have performed in the absence of Federal funding. They include: 1. Direct management of projects in the concept and design stages that are being designed by a subgrantee’s in-house staff, or by an architectural/ engineering firm retained to analyze and design the repair or replacement of damaged facilities; 2. Procurement activities for architectural/engineering services and performance of work. 3. Review and approval of the project design regardless of who performs the design work. 4. Oversight: – Reasonable straight- or regular-time and overtime contractor costs are eligible costs if the subgrantee is using contractors for oversight. – If the subgrantee is using its own regularly employed staff for oversight of emergency work, it may claim overtime costs but not straight- or regular-time costs. – If the subgrantee is using its own regularly employed staff for oversight of permanent work, it may claim overtime costs and straight- or regulartime costs if the costs are tracked. 5. Comprehensive project management activities of the construction phase that may be included in an architectural/engineering contract or may be performed by a subgrantee’s own staff. … 6. Construction inspection activities that are usually of a limited scope. … 7. Testing and other procedures that may be mandated by State or local standards.5 (3) Grant Management Grant management costs are split into two types of costs: indirect/management costs and direct costs. Indirect costs are defined as “costs a grantee or subgrantee incurs for a common or joint purpose benefiting more than one cost objective that are not readily assignable to the cost objectives specifically benefited (See 44 CFR §207.2).” Management costs are defined as “any indirect costs, administrative expenses, and any other expenses that a grantee or subgrantee reasonably incurs in administering and managing the PA grant that are not directly chargeable to a specific project. (See 44 CFR §207.2).” These costs are included in the administrative allowance to the state, which can then decide to pass on a portion to its subgrantees. Direct administrative costs are “costs incurred by the grantee or subgrantee that can be identified separately and assigned to a specific project. (See 44 CFR §207.6(c)). … Such costs can include staff’s time to conduct an initial inspection, prepare and submit a Project Worksheet (PW), and make interim and final inspections of the project.”6 These costs are included directly on PWs as part of the project and should be reimbursed like any other project-related expense. Understanding and effectively tracking each of these cost centers can result in a significant difference in reimbursement for force account and contract labor expenses. Equipment Replacing Equipment and Supplies As defined in 44 CFR §13.3, equipment is “tangible, non-expendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit,” and supplies are “all tangible personal property other than equipment.” As of September 2009, FEMA’s policy on funding the replacement of damaged equipment, vehicles and supplies became more flexible, no longer limiting replacement to the same number of items of similar age, capacity, and condition, as previous policy had required. While funding is still capped at the cost to replace destroyed equipment, vehicles and supplies with the same number of items of approximately the same age, condition, and capacity that existed at the time of the disaster as determined using “blue book” values or similar price guides, applicants may now replace these items with ones for use for the

10 D I SAS T E R R E COV E RY T ODAY. COM D I S A S T E R R E C O V E R Y T O D A Y same general purpose. (One simple, yet surprisingly common mistake to avoid in determining replacement costs: be sure the costs provided to FEMA are not based on the depreciated values kept by your accounting department, which are often significantly lower than market value.) In addition, “the cost to replace the same number of destroyed equipment, vehicles and supplies with new items may be eligible if applicants can provide written justification that a used item is not reasonably available, or does not meet applicable national consensus standards.”7 This is a consideration particularly in situations where a large area has been impacted by a disaster — for example, widespread flooding —where similar used replacement equipment that would normally be available in the surrounding areas may have been similarly compromised. Damage to Equipment Performing Emergency Work When accounting for disaster-related damages to equipment, it is worth noting that equipment rates used by FEMA for reimbursement for the use of applicantowned equipment include “parts and labor for normal maintenance and periodic equipment overhaul. These rates are expected to cover most damage to equipment used under emergency conditions. However, when equipment sustains unusual damage or requires extraordinary maintenance as a result of emergency use under severe conditions (e.g., high water or very rough terrain), and such damage cannot be reasonably avoided, repair and/or maintenance costs may be eligible for reimbursement.”8 The referenced policy contains examples of eligible and ineligible costs associated with this policy. Insurance Insurance Coverage and Settlements FEMAfunding is secondary to all other sources of available funding, including insurance. This means that your anticipated and/or actual property insurance claim settlement(s) will be one of the major considerations impacting your FEMAgrant. To protect against duplication of benefits, “once the amount and availability of coverage have been determined, an appropriate reduction in eligible project costs can be made based on anticipated insurance proceeds. If an applicant has already received an insurance payment at the time of project approval, FEMAwill review the settlement. … [and] may limit funding if the applicant’s policy provides coverage which should be pursued from the insurer.”9 Anticipated insurance proceeds are typically determined by an insurance specialist hired by FEMA and placed in the Insurance Special Considerations queue to review PWs. Keep in mind that these specialists, typically former insurance adjusters of some kind, will have a stack of PWs to work through and — not having had the opportunity to examine the loss themselves — will have only the policy information, damage description and scope of work provided. This means that thorough documentation and clarity of presentation are critical. Mandatory NFIP Reductions In addition, for an insurable facility located in a special flood hazard area that incurs damage from a declared disaster and is not covered by flood insurance, the StaffordAct requires that the federal assistance which would otherwise be available for restoring this facility be reduced by the maximum amount of insurance that would have been available if the facility had been covered by flood insurance, or the value of the facility at the time of the disaster, whichever is less. The maximum amount of NFIP coverage for commercial properties is currently $500,000 per building and $500,000 for contents — for a total potential reduction in FEMAPublic Assistance funding on an uninsured facility of $1 million. Obtain and Maintain Requirements Insurance issues become, if possible, even more complicated after funding has been received. This topic is discussed in detail in Disaster Recovery Today Issue #11, but is touched on here as an important consideration for Category E grant management decisions. Applicants must, as a condition for receiving Public Assistance funding for permanent work, obtain and maintain insurance on the impacted and funded facility for (at minimum) the amount of the estimated

ADJUSTERS INTERNAT I ONAL . COM 11 D I S A S T E R R E C O V E R Y T O D A Y “The maximum amount of NFIP coverage for commercial properties is currently $500,000 per building and $500,000 for contents – for a total potential reduction in FEMA Public Assistance funding on an uninsured facility of $1 million.” eligible damages and type of hazard that caused them. This includes the costs of any Section 406 hazard mitigation projects for that facility. Failure to obtain and maintain insurance — in perpetuity — in the amount and of the type required will result in that facility being ineligible to receive any future federal disaster relief funding. This is true regardless of how much — or how little (from $5,000 up) — funding is involved. For example, one facility for which an applicant had received federal funding for just over $5,000 in damages resulting from a declared disaster a decade prior to 2005 then incurred nearly $1 million in damages following hurricanes Katrina and Rita. Unfortunately, the applicant had neither obtained nor maintained insurance for the $5,000 in previous federal assistance, and the facility was deemed ineligible for funding. It may be possible to obtain a waiver from your state insurance commissioner if the appropriate type and extent of coverage is not reasonably available and/or adequate to protect against a similar future loss to the property. The Stafford Act requires that “In making a determination with respect to availability, adequacy, and necessity… the President shall not require greater types and extent of insurance than are certified to him as reasonable by the appropriate state insurance commissioner responsible for regulation of such insurance.”10 Each state handles this issue differently, and it is worth contacting your state’s insurance commissioner and emergency management office to make sure they are aware of the state’s right to waive obtain and maintain requirements. The realities of obtaining and maintaining insurance, especially given the typically increased costs of insurance following a disaster of any magnitude, can mean that in some cases, it may make more sense to forego current federal funding if the short-term gain does not balance out the long-term costs. A close partnership between your organization’s FEMA grant management decision makers and the risk management department will help to facilitate these sorts of determinations.

DISASTER RECOVERY TODAY is published as a public service by Adjusters International, Inc. It is provided for general information and is not intended to replace professional insurance, legal or financial advice for specific cases. DRT13 4014 D I S A S T E R R E C O V E R Y T O D A Y CORPORATE OFF ICE 126 Business Park Drive Utica, New York 13502 800-382-2468 Outside U.S. (315) 797-3035 FAX: (315) 272-2054 [email protected] WEB ADDRESSES www.AdjustersInternational.com www.DisasterRecoveryToday.com PUBL ISHER Ronald A. Cuccaro, SPPA EDI TOR Sheila E. Salvatore Copyright © 2013 Adjusters International, Inc. Adjusters International ® and the AI logo are registered trademarks of Adjusters International, Inc. Follow Disaster Recovery Today on Facebook & Twitter: Facebook.com/AdjustersInternational Twitter.com/DRToday Summary PA grant management is a complicated endeavor with multiple steps and considerations, especially when it comes to Category E losses. A team effort will be required at every stage of your recovery — from reviewing leases for legal responsibility and ensuring that procurement is properly handled, to educating your facilities and public works staff who will be managing the construction phase, to coordinating with the emergency management and risk management departments to ensure that funding is optimized without duplication. Decisions will need to be made about the efficiencies of using force account labor versus contractors, and a comprehensive strategy developed for how best to formulate and present your projects to FEMA in order to best accomplish your long-term recovery plans. Understanding all the elements and policy considerations that go into developing and implementing all Category E projects — which make up an average of 30 percent of all large projects for permanent work — will go a long way toward ensuring that your recovery is a smooth one. ____________________ 1 http://www.fema.gov/average-number-small-and-large-project-worksheets-work-category. 2 FEMA 322 Public Assistance Guide, June 2007, Chapter 2: Eligibility; also see FEMA Policy 9527.1 Seismic Safety — New Construction, November 21, 2007, and FEMA Policy 9525.5 Americans with Disabilities Act (ADA) Access Requirements, October 26, 2000. 3 FEMA Policy 9580.100 Mold Remediation, November 7, 2006. 4 FEMA Policy 9526.1 Hazard Mitigation Funding Under Section 406 (Stafford Act). 5 FEMA Policy 9525.6 Project Supervision and Management Costs of Subgrantees, April 22, 2001. 6 FEMA Policy 9525.9 Section 324 Management Costs and Direct Administrative Costs, March 12, 2008. 7 FEMA Policy 9524.10 Replacement of Equipment, Vehicles, and Supplies, September 8, 2009. 8 FEMA Policy 9525.8 Damage to Applicant-Owned Equipment Performing Emergency Work, December 17, 2008. 9 FEMA 322 Public Assistance Guide, June 2007, Chapter 4: Special Considerations. 10 Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended by Public Law 106-390, October 30, 2000, §5154 {Sec. 311(a)(2)}. Judy Wolf Adjusters International Is there a topic you would l ike to see covered in an upcoming edition of Disaster Recovery Today? You can make topic suggestions, contact the editor, request free subscriptions and browse our back issues all from our convenient website — www. DisasterRecoveryToday.com. We look forward to hearing from you!

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