Benefit-Cost Analysis

Benefit-Cost Analysis Methodology

Applicants and Sub-Applicants must use FEMA-approved methodologies and software to demonstrate the cost-effectiveness of their projects. This will ensure that the calculations and methods are standardized, facilitating the project evaluation process.

FEMA has developed a suite of Benefit-Cost Analysis (BCA) software for a range of major natural hazards: earthquake, fire (wildland/urban interface fires), flood (riverine, coastal A-Zone, Coastal V-Zone), Hurricane Wind (and Typhoon), and Tornado.  Sometimes, however, there is not enough technical data available to use the BCA software.

When this happens, or for other common, smaller-scale hazards or more localized hazards, BCAs can be done with the Frequency Damage Method (i.e., the Riverine Limited Data module), which is applicable to any natural hazard as long as a relationship can be established between how often natural hazard events occur and how much damage and losses occur as a result of the event. This approach can be used for coastal storms, windstorms, freezing, mud/landslides, severe ice storms snow, tsunami, and volcano hazards.

Alternative BCA software may also be used, but only if the FEMA Regional Office and FEMA Headquarters approve the software.

FEMA is piloting a simplified, alternate, FEMA-approved methodology to conduct the  Benefit-Cost Analysis (BCA) for certain repetitively flooded properties currently insured under the National Flood Insurance Program (NFIP).

For information in the Pilot Alternative Determination of Cost-effectiveness for Certain Insured Repetitive Loss Properties, click here.

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Benefit-Cost Analysis Toolkit

Version 3.0 of the Mitigation Benefit-Cost Analysis (BCA) Toolkit Compact Disk (CD) was released in July 2006.  The CD includes all of the FEMA mitigation BCA software, technical manuals, tools, BC Training course presentation, BCA Guidance and other supporting materials for BCA.  Version 3.0 includes updated BCA modules for Coastal A Flood (Version 6.0.2 May 2, 2006), Coastal V Flood (Version 6.0.3, May 2, 2006) and a new Hurricane Wind Hazard Damage Function tool (Version 1.1.0, April, 2006). 

These versions are intended to improve the functionality of these modules as well as to improve the accuracy of BCA results.  The modifications do not represent a change in BCA methodology and were done to ensure modules function as originally intended.  In addition, the new Hurricane tool will serve as a valuable resource to assist in project development of some wind retrofit measures. 

The information contained on the BCA Toolkit CD applies to and is valid for all FEMA Mitigation Grant Programs, including: 

FEMA strongly encourages the immediate use of the most recent modules and tools on Version 3.0 of the BCA Toolkit CD to support development of all mitigation projects.  Release of this CD supersedes the FY2005 Mitigation BCA Toolkit, Version 2.0, and any previous versions of the Mitigation BCA Toolkit should be discarded.

The BCA Toolkit is available through FEMA’s Benefit-Cost Analysis Technical Assistance Helpline. The following documents from the BCA Toolkit may also be downloaded from the FEMA Information Resources Library:

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Benefit-Cost Analysis Technical Assistance

FEMA’s Benefit-Cost Analysis Technical Assistance Helpline is available to provide BCA software, technical manuals, and other BCA reference materials as well as to provide technical support regarding the preparation of a BCA.

The BCA Technical Assistance Helpline can be reached from 9 am - 5 pm (ET) Monday through Friday via a toll-free number:  1-866-222-3580 or e-mail: bchelpline@dhs.gov.

For further technical assistance, Applicants or Sub-Applicants may contact their FEMA Regional Office or State Mitigation Officer (see links in upper right hand corner).

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Last Modified: Friday, 11-Jan-2008 13:34:45 EST

Fast Facts

The BCA Toolkit is available through FEMA’s toll-free Benefit-Cost Analysis Technical Assistance Helpline:  1-866-222-3580 or e-mail: bchelpline@dhs.gov.

References

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