Key Points
Capped Project Funding
Prior to work commencing, the Applicant must receive approval of a copped project. Once FEMA caps the funding, the type of capped project impacts the maximum Federal funding the Applicant can receive.
Improved Project Funding:
Federal funding for an Improved Project is limited to the lesser of the following:
- The Federal share of the approved estimated cost to restore the damaged facility to its pre-disaster design and function; or
- The Federal share of the actual costs of completing the Improved Project.
FEMA only increases eligible funding for an Improved Project if the Applicant identifies an error or omission in the original statement of work or cost estimate related to restoring the facility to its pre-disaster design and function
Alternate Project Funding:
Federal funding for an Alternate Project is capped at the lesser of:
- Ninety percent (75 percent for private nonprofits) of the Federal share of the estimate to restore the original facility; or
- The Federal share of the actual cost of completing the Alternate Project
Alternative Procedures Project:
An Alternative Procedures Project is capped at the Federal share of the estimate to restore the original facility. If the Applicant does not expend all of those funds, it may use the excess funds for approved purposes.
Detailed Discussion
Capped Projects
FEMA provides three options that provide flexibility for the Applicant to use Public Assistance funding differently than restoring the pre-disaster design and function of the facility. FEMA caps the amount of Public Assistance funding based on the estimated amount to restore the damaged facility to its pre-disaster design and function, including applicable and federally required codes and standards.
The three capped project options are:
- Improved Project
- The Improved Project is a project that aims to restore the pre-disaster function and capacity of the damaged facility, while also incorporating improvements or changes to its pre-disaster design that are not required by eligible codes or standards.
- Alternate Project
- Funds may be allocated to a project that fails to reinstate the damaged facility's pre-disaster function. If the Applicant determines the public welfare would not be best served by restoring a damaged facility or its function, it may use the funds toward a different facility that benefit the same community.
- Alternative Procedures Pilot Program for Permanent Work Project
- Funds from the Large Project can be allocated to either the restoration of the facility to its pre-disaster design and function, or to a project that would otherwise qualify as an Improved or Alternate Project.
FEMA caps the amount of Public Assistance funding based on the estimated amount to restore the damaged facility to its pre-disaster design and function, including applicable and federally required codes and standards.
The capped amount may include a reasonable amount of Direct Administrative Costs and soft costs based on the scope of work to restore the facility to its pre-disaster design and function. However, the capped amount does not include costs that are only related to, or only triggered by, changes to the pre-disaster design or function of the damaged facility. These include, but are not limited to, costs related to:
- Additional engineering and design
- Environmental and historic preservation compliance
- Work required by applicable and federally required codes and standards
For Alternative Procedures Projects specifically, FEMA does not adjust the capped amount even if the Applicant discovers hidden damage during the course of completing previously approved work.
If the Applicant's actual costs exceed the capped amount, FEMA does not approve additional funds. More detailed information is available in the IS-1005: Public Assistance Alternative Procedures course.
Capped Project Approval
Improved Project:
For improved projects, the Applicant must obtain approval from the Recipient. If the improved project significantly changes the pre-disaster configuration of the facility, the Recipient must forward the request to FEMA to ensure that the improved project complies with appropriate environmental and historic preservation laws, regulations, and executive orders.
Alternate Project:
For Alternative Procedures Projects, FEMA, Recipient, and the Applicant must obtain approval from FEMA. If the Alternate Project involves construction, the Applicant must obtain FEMA approval prior to the start of construction.
Alternative Procedures Project:
For Alternative Procedures Projects, FEMA, the Recipient, and the Applicant must reach agreement on the capped amount within 12 months of the declaration date. Upon request from the Applicant, FEMA may approve a time extension on a project-by-project basis. The Applicant's request must include the circumstances that justify the extension and demonstrate progress on reaching an agreement. In complex or catastrophic incidents, upon request from the Recipient, FEMA may approve an extension for all Applicants.
Capped projects may involve significant changes to the pre-disaster configuration of a facility (e.g., location, footprint, or size). As with all projects, the Applicant needs to obtain FEMA approval prior to the start of construction so that FEMA can ensure that the project complies with appropriate environmental and historic preservation laws, regulations, and executive orders. If the Applicant starts construction prior to FEMA's completion of this review, it may jeopardize Public Assistance funding for the entire project.
Insurance:
FEMA will reduce the amount of the fixed estimate to account for insurance coverage based on:
- Actual insurance proceeds, if known; or
- Anticipated insurance proceeds based on the Applicant's insurance policy, if the amount of actual proceeds is unknown.
Upon completion of the project, FEMA adjusts the fixed estimate to account for actual insurance proceeds as described in the Public Assistance Program and Policy Guide (Chapter 2, page 41).