1. Cost- Effectiveness

2. Technical Feasibility
PA 406 Project Overview
Other Considerations
Cost-Effectiveness
Technical Feasibility
Eligible Project

3. TRUE or FALSE?
“All well-designed mitigation projects reduce future damages and losses and thus all are cost-effective projects.”

4. TRUE or FALSE?
“All well-designed mitigation projects reduce future damages and losses and thus all are cost-effective projects.”

5. Is It Worth $1 Million To . . .?
Probably
Probably
Not
1. Protect one doghouse or one outhouse?
2. Protect one shed that floods infrequently?
3. Protect a flood-prone hospital, city hall, school, and other important buildings?
4. Protect 150 flood- prone University buildings?

6. Is It Worth $1 Million To . . .?
Probably
Probably
Not
1. Protect one doghouse or one outhouse?
2. Protect one shed that floods infrequently?
3. Protect a flood-prone hospital, city hall, school, and other important buildings?
4. Protect 150 flood- prone University buildings?

7. Cost-Effective What does cost-effective mean?
The expected avoided damages exceed the mitigation project costs, or
The benefit-cost ratio is greater than one

8. What Does Cost Effectiveness Tell You?
Is the project a good investment: does the mitigation project reduce the risk sufficiently to justify the cost?
Does the project meet the statutory requirement for cost-effectiveness?

9. Determining Cost Effectiveness
15% Rule
100% Rule (Appendix A)
Benefit-Cost Analysis
Refer to 
FEMA Policy – HAZARD MITIGATION FUNDING UNDER SECTION 406 (STAFFORD ACT)

10. Applying the Policy
HM costs may amount up to 15% of the total eligible repair cost(s) to the damaged element(s).
HM measures in Appendix A costs may amount up to 100% of the total eligible repair cost(s) to the damaged element(s).
If HM exceeds the above or is not on Appendix A list, an acceptable benefit/cost analysis is required.

11. 15% & 100% Rule
For determining cost effectiveness under both the 15% and 100% rule
Costs are the additional cost associated with the HMP (above the project cost)
Benefits are based on the cost(s) to repair the damaged element(s)
For damaged windows, include affected building contents

12. Damaged Element Direct Damages and Losses Avoided
1 Day Mitigation Course for Public Assistance Field Personnel
Damaged Element Direct Damages and Losses Avoided
* Direct Damages and Allowable Benefits might represent ineligible costs for Public Assistance
Damaged Element used to determine “benefits” with 15% and 100% rule.
Damaged Element discussed in
Review Damaged element example in Policy Digest (FEMA 321)
Damages to contents if related to element

13. Cost Element Example
Case: A damaged road has 10 sites with blown culverts, 5 of those sites have a HMP.
The cost effectiveness of the proposals is based upon which of the following?
A) Total overall repair cost on PW
B) Total overall repair cost at 5 sites with HMPs
C) Eligible repair cost at each site.

14. Cost Element Example
Case: A damaged road has 10 sites with blown culverts, 5 of those sites have a HMP.
The cost effectiveness of the proposals is based upon which of the following?
A) Total overall repair cost on PW
B) Total overall repair cost at 5 sites with HMPs
C) Eligible repair cost at each site.

15. Mitigation Project Benefits
The project benefits calculation is based on three key elements:
Hazard frequency and severity
Damages and losses before mitigation
Damages and losses after mitigation

16. The Benefit-Cost Model
B E N E F I T S
= BC R A T I O
C O S T S

17. Benefit-Cost Analysis Process
DEVELOP A QUALITATIVE FEEL FOR THE PROJECT
STEP 1:
STEP 2:
GATHER NECESSARY DATA
DETERMINE IF MEETS THE 15% RULE
STEP 3:
IF FAILS 15% RULE, LOOK IN APPENDIX A
STEP 4:
IF FAILS 100%, CONSIDER BC MODEL
STEP 5: