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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 4.5.5 of the Mitigation Benefit-Cost Analysis (BCA) Toolkit was released in August of 2009.  The toolkit includes all of the FEMA BCA software, technical guides and tools to conduct a Benefit Cost Analysis.  Version 4.5.5 represents a major update to the modules and methodologies for flood, wildfire, seismic, hurricane, tornado and the damage frequency assessment. The new BC Toolkit 4.5.5 is intended to improve the functionality over the previous BC Toolkit version 3.0 as well as to improve the accuracy of BCA results.  The information contained on the BCA Toolkit 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 available in the version 4.5.5 of the BCA Toolkit to support development of all mitigation projects.  Release of this toolkit supersedes any previously released versions of the Mitigation BCA Toolkit and is required for analysis for applications made under disaster declarations after June 1, 2009 and for the FY2010 HMA programs.

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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: Wednesday, 18-Nov-2009 14:42:38 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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