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Benefit-Cost Analysis Helpline

Frequently Asked Questions (FAQs) - General Questions


Q: What is a BCA?

A: To be eligible for Federal funding assistance, a mitigation project must be considered cost-effective. The FEMA Benefit-Cost Analysis (BCA) is the method used to determine the cost-effectiveness of a proposed mitigation project.

Q: What is a BCR?

A: The Benefit-Cost Ratio (BCR) is a numerical expression of the cost-effectiveness of a project and is calculated as: total project benefits divided by total project cost. Projects with BCRs of 1.0 or greater have more benefits than costs, and are therefore considered cost-effective.

Q: Why is FEMA changing the BCA?

A: The initial BCA program was developed in the early 1990’s. Since then, interim updates have been created to address specific issues. FEMA made the decision to update the program to account for changes in technology and in response to user requests for a simplified and more efficient approach to completing the BCA.

Q: Who has been involved in these changes?

A: FEMA has collaborated with many applicants and subapplicants on enhancements that would make the software more simplified and efficient. So far, more than 200 stakeholders have participated in workshops and meetings used to develop and design the new BCA software, including:

Q: Has the FEMA Mitigation BCA Toolkit been updated?

A: Yes, the new toolkit is more comprehensive and is arranged for ease of use. Additionally, dynamic help within the software will include specific information so the user does not have to search for it.

Q: Is the new software available to download?

A: The latest version of the software can be found online.

Q: Is the new BCA software easier to use?

A: Yes, the new BCA software is designed to simplify the BCA application process so you can complete the application with speed, ease, and confidence. Much like today’s popular tax software package that automates your tax preparation needs by asking simple questions and calculating values, the new BCA software will do much of the same; it will save you time by asking questions pertaining to your project and will calculate values for you based on your data entry and responses to questions. In addition, new features such as a dynamic help window will offer assistance to users by providing links, definitions, and answers to topics and/or content within the BCA.

Q: Where can I find a list of acronyms that are commonly used in BCA?

A: A list of acronyms can be found online on the FEMA.GOV website.

Q: What are some of the changes/improvements made to BCA?

A: The BCA reengineering effort consists of five major components:

Some of the improvements to each component include:

Damage Estimation Methodologies

Risk Analysis

Cost Estimation

Software

Training

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Q: Have the BCA modules changed?

A: The original BCA program consists of methodologies and software modules for a range of major natural hazards, including:

The new tool incorporates all the same hazards, but has enhanced and consolidated them to allow for a more streamlined approach for meeting the FEMA cost-effectiveness requirements and for the user to address multiple hazards in a single BCA module run.

Q: Have the calculations been updated? How?

A: Yes, the calculations have been updated in several ways. Here are a few examples:

Q: Is it possible to include multiple structures within a project to obtain an aggregate Benefit-Cost Ratio (BCR)?

A: Aggregation is the process of combining two or more buildings and functions (i.e., roads and utilities) in a single BCA. One of the most important features in the new software is the ability to combine multiple structures within a single project and calculate the overall (aggregated) project BCR.

The Hazard Mitigation Assistance (HMA) Unified Guidance for FY 2010 states the following:

Some mitigation activities may reduce future losses for more than one hazard. In these cases, all benefits resulting from the mitigation activity may be combined to determine the BCR.

If the project is addressing the mitigation of two hazards for one structure, the project will be evaluated on the aggregate BCR. Multiple hazards can be analyzed by selecting two mitigations for the same structure. To include multiple mitigations for a single structure, select a hazard on the mitigation information screen for the structure (i.e., flood), analyze that mitigation, and then go back to the mitigation information screen for the same structure to select the other hazard (i.e., hurricane wind). Once the benefits have been calculated for both hazards, return to the Project Structures Summary screen to view the aggregate BCR.

Two separate structures, each with a different mitigation activity may not be included within a single subapplication according to the HMA Guidance with the exception noted above. In this case, each structure should be addressed in two separate subapplications each with a unique BCA.

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Last Modified: Friday, 17-Sep-2010 07:39:32 EDT