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Benefit-Cost Analysis

This page provides information on FEMA’s Benefit-Cost Analysis (BCA) program guidelines, methodologies, and tools for the Hazard Mitigation Assistance (HMA) and Public Assistance (PA) grant programs.

About Benefit-Cost Analysis

Benefit-Cost Analysis (BCA) is the method by which the future benefits of a hazard mitigation project are determined and compared to its costs. The end result is a Benefit-Cost Ratio (BCR), which is calculated by a project’s total benefits divided by its total costs. The BCR is a numerical expression of the "cost-effectiveness" of a project. A project is considered to be cost effective when the BCR is 1.0 or greater, indicating the benefits of a prospective hazard mitigation project are sufficient to justify the costs.

FEMA requires a BCA to validate cost effectiveness of proposed hazard mitigation projects prior to funding. There are two drivers behind this requirement: (1) the Office of Management and Budget’s (OMB) Circular A-94 Revised, “Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs” and (2) the Stafford Act.

The goal of Circular A-94 is to promote efficient resource allocation through well-informed decision-making by the Federal Government. FEMA’s BCA Toolkit has been developed to meet the guidelines published in Circular A-94.

The Stafford Act authorizes the President to establish a program to provide technical and financial assistance to state and local governments to assist in the implementation of hazard mitigation measures that are cost effective and designed to substantially reduce injuries, loss of life, hardship, or the risk of future damage and destruction of property.

Benefit-Cost Analysis Methodology

Applicants and subapplicants must use FEMA-approved methodologies and tools to demonstrate the cost-effectiveness of their projects.  FEMA has developed the BCA Toolkit to facilitate the process of preparing a BCA. Using the BCA Toolkit will ensure that the calculations are prepared in accordance with OMB Circular A-94 and FEMA's standardized methodologies. It is imperative to conduct a BCA early in the project development process to ensure the likelihood of meeting the cost-effectiveness eligibility requirement.

The BCA Toolkit consists of modules for a range of major natural hazards and project types including:

  • Flood
  • Tornado Safe Room
  • Hurricane Wind
  • Hurricane Safe Room
  • Earthquake
  • Wildfire
  • Drought
  • Landslide

A non-FEMA BCA methodology may only be used when it addresses a non-correctable flaw in the FEMA-approved BCA methodology or it proposes a new approach that is unavailable using the FEMA BCA Toolkit. The non-FEMA methodology must be approved by FEMA in writing prior to submission of the project application to FEMA.

The Greatest Savings to the Fund (GSTF) approach is no longer allowed to determine cost-effectiveness for Severe Repetitive Loss (SRL) properties.

BCA Toolkit 6.0

On July 23, 2019, FEMA released the BCA Toolkit Version 6.0. Version 6.0 replaces previous versions of the BCA Toolkit with the exception of the seismic building retrofit BCAs (see note below).

Some major features of Version 6.0 include:

  • Excel-based platform
  • Compatible with both Windows and Macintosh operating systems
  • Streamlined user interface and improved user experience
  • Reduction in the number of manual-input data fields
  • Improved help content
  • Improved report formatting

Update December 2019:  Users may now utilize Version 6.0 for seismic retrofit projects (structural and non-structural).

Version 6.0 and version 5.3 may be installed on the same machine at the same time.  However, there is no way to import or export projects between version 5.3 and version 6.0.  Version 5.3 is planned to be sunset in April of 2020 and will no longer be updated or supported.  After March 1, 2020, all BCAs submitted to FEMA must be developed using version 6.0 or later.

Installation and Launch Instructions

The BCA Toolkit 6.0 may be used in the desktop version of Excel (Excel 2013 or later) or in Excel Online.  Please see the appropriation section below for instructions.

Excel Desktop and non-FEMA machines

  1. Download the .xlsx file at this link and open it.
  2. In the Insert tab, in the Add-ins section, click on My Add-ins.
  3. Select the Store option and search for FEMA Benefit-Cost Analysis Calculator.  Click Add.
  4. You should now see the FEMA BCA V6.0 icon in the upper righthand ribbon bar on the home tab.
  5. To launch the toolkit, click on the FEMA BCA V6.0 button and a sidebar will open.
  6. Click Open Calculator to begin your BCA.
  7. The add-in window will open and take you to the home screen.  From here you can start a new project by clicking Add Project.
  8. To save your work, click "Finish" on the second screen, close the add-in window, and save the Excel file, renaming it if desired.

Excel desktop on FEMA machines

FEMA machines require Office 365 to use BCA Toolkit 6.0. If you have not updated already, go into the Software Center and install Microsoft Office O365 Pro Plus 1808.

  1. Download the .xlsx file at this link and open it.
  2. In the Insert tab, in the Add-ins section, click on My Add-ins.
  3. With Admin Managed selected, click on FEMA Benefit-Cost Analysis.
  4. You should now see the FEMA BCA V6.0 icon in the upper righthand ribbon.
  5. To launch the Toolkit, click on the FEMA BCA V6.0 button. A sidebar will open.
  6. Click Open Calculator to begin your BCA.
  7. The add-in window will open and take you to the Home screen. From here you can start a new project by clicking Add Project.
  8. To save your work, click “Finish” on the second screen, close the add-in window, and save the Excel file, renaming it if desired.

Excel Online

If using a FEMA machine, you will need to use Firefox as your browser.

  1. Download the .xlsx and .zip files (the first two files) at this link and save them to your machine.
  2. If you do not already have one, create an Office 365 account at https://www.office.com/. This is free to set up.
  3. Once logged in, open Excel Online by clicking on the Excel icon under Apps.
  4. Open the file BCA_Toolkit_6.xlsx in Excel Online by clicking Upload a Workbook.
  5. In the Insert tab, click Office Add-ins.
  6. Click on the Upload My Add-in link.
  7. Browse to where the .zip file was saved, open it, select the BCAToolkitAddin.prod file, and click open.
  8. You should now see the FEMA BCA button in the top righthand side.
  9. To launch the Toolkit, click on the FEMA BCA button. A sidebar will open.
  10. Click Open Calculator. You may be asked if you want to allow your browser to open another window. Click Allow.
  11. The add-in window will open and take you to the Home screen. From here you can start a new project by clicking Add Project.
  12. To save your work, click “Finish” on the second screen and close the add-in window. IMPORTANT: You must make sure to save a copy of the file to your local machine by clicking File, Save As, Download a Copy, and choosing the “Open with Microsoft Excel” option. Once the file opens, click File, Save As, and save a copy to your local machine. To reopen the file in Excel Online, click Upload a Workbook and navigate to the file on your local machine.

For technical assistance, please contact the BCA Helpline. You may also refer to the Help content in the BCA Toolkit or see the BCA Toolkit 6.0 User Guide for tips and other FAQs.

BCA Toolkit 5.3

Version 5.3 will be sunset in April 2020 and will not be updated or supported.  All BCAs submitted to FEMA on or after March 1, 2020 must use Version 6.0.

If you need to install Version 5.3, please contact the BCA Helpline.

Pre-Calculated Benefits

To streamline the grant application process, FEMA has released several benefit-cost efficiencies to provide pre-determined cost effectiveness values. Using pre-calculated benefits eliminates the requirement for applicants to conduct a separate BCA for eligible projects:

The pre-calculated benefits and benchmark costs are not intended to drive actual project costs or to serve as detailed project cost estimates; individual project cost estimates must be based on industry standards, vendor estimates or other acceptable sources. Projects must still meet all other grant requirements.

Other Reference Materials

Training

FEMA provides both classroom and online independent study courses for FEMA, state, local, territorial, and tribal staff to learn BCA fundamentals.

To see upcoming offerings and register for the classroom BCA course (E0276), visit the FEMA training website and search the course catalog for “Benefit-Cost Analysis.”

The training materials used in the classroom course may be accessed here.

Technical Assistance

FEMA’s BCA Helpline is available to provide assistance using the BCA Toolkit. The BCA Helpline cannot review or perform benefit cost analysis. Assistance requests in reviewing or performing BCA and eligibility or policy questions should be directed to the local State Hazard Mitigation Officer.

The Helpline’s hours are 9 a.m. – 5 p.m. (EST) Monday through Friday.  Questions to the BCA Helpline can be directed to bchelpline@fema.dhs.gov or by calling toll free at 1-855-540-6744.

Privacy Statement

FEMA does not see, collect, or store any data you enter into the FEMA BCA Calculator (Toolkit) unless the file is submitted as part of a Hazard Mitigation Assistance (HMA) or Public Assistance (PA) project application. Any and all information you enter into the BCA Toolkit 6.0 is stored in the Microsoft Excel file on your machine or server and not on FEMA’s website or server.

The BCA Toolkit 6.0 uses a Leaflet Application Programming Interface (API) for property address lookup and standardization. (FEMA does not endorse any non-Federal government entities or products.) The Leaflet API may use your IP address for geolocation purposes, but does not collect any personal information.

Last Updated: 
02/14/2020 - 10:55