The Cost Estimating Format (CEF)

The Cost Estimating Format, or CEF, is the tool FEMA uses to estimate the full cost of a large permanent work project that is not yet complete. FEMA's Public Assistance Program and Policy Guide (PAPPG) describes when the format applies and how its factors work, and refers to a separate instructional guide and standard operating procedure for the detail; the PAPPG is the main source for this page.

The format matters to applicants because it is where much of the money on a large project is decided: on top of base construction costs it adds factors for contingency, inflation and locality, and under the alternative procedures its result can become a fixed cost offer that is generally fixed once accepted, apart from the insurance and approved mitigation-scope adjustments described below.

When the format is used

FEMA's guide describes three conditions. The work is permanent work — emergency work, apart from debris removal and emergency repairs, is often hard to estimate in advance because its scope is not known and unit prices are not established, whereas permanent work is estimated from an agreed damage description and scope. The work is less than 90 percent complete — where work is finished, FEMA funds large projects on documented actual costs, falling back on an estimate only when the cost records are not readily available and the completed scope is documented. And the project is large, meaning at or above the dollar threshold FEMA sets each federal fiscal year, which our page on small and large projects describes. The guide adds that when FEMA develops the scope of work, it develops the cost estimate too, and the CEF is the format its estimators use.

The format also appears in the guide's discussion of reasonable costs. When FEMA compares claimed costs with published unit costs from national estimating databases, it prepares the comparison in the CEF with the appropriate locality adjustment, and the guide notes that the format uses a nationally recognized inflation factor.

Factors and contingencies

FEMA's guide describes the CEF as a set of factors — percentages applied to a project, each with a range set in the instructional guide. On top of base construction costs the format adds contingency for hidden damage, unforeseen environmental and permitting requirements and other unidentified circumstances; an inflation factor; a locality adjustment when the estimate is built from national unit costs; and a reserve for change orders.

Control over the factors is tightly held. The instructional guide defines the factors and the percentage ranges FEMA may apply; a factor may in rare cases be reviewed or adjusted, with technical help available at FEMA headquarters; and only headquarters may approve a factor outside its range or an additional one. For capped projects — improved and alternate projects — the guide says FEMA includes only the contingency factor it calls the Applicant Reserve for Change Orders, and no additional factors or risk premiums.

The CEF in fixed cost offers

Under the alternative procedures for permanent work, FEMA engages engineers, architects, cost estimators and construction managers to develop or validate estimates for large projects and transmits the result as a fixed cost offer. Once FEMA, the recipient and the applicant agree, the amount is not adjusted except for insurance and approved changes to the hazard mitigation scope; the guide's stated reason is that the CEF already includes contingency for hidden damage and unforeseen requirements. If the work costs more, FEMA does not add funds; if it costs less, the applicant may use the excess as the guide allows. Our page on Section 428 alternative procedures describes the arrangement, including the periods for agreeing and accepting an offer and the limits on appeals. Under the standard procedures, by contrast, a large project funded on a CEF estimate is reconciled to documented actual costs when the work is complete, unless it is a capped project.

Estimates prepared by the applicant

FEMA's guide accepts an estimate the applicant submits when it meets the conditions the guide lists: it is prepared by a licensed professional engineer or another estimating professional who certifies that it was prepared to industry standards (an appendix of the guide also accepts demonstrated professional estimating experience); it certifies that the cost corresponds to repairing the agreed damage; it is built from unit costs for each component of the scope rather than a lump sum; it has enough detail for FEMA to check each component against the scope; it reflects the current stage of design or construction, including actual costs for completed work; and it is reasonable under the guide's cost chapter. The guide also expects foreseeable contingencies, such as security and staging, to be included.

FEMA validates such an estimate under the guide's appendix on applicant-provided estimates: whether it uses recognized cost resources — industry references, local cost data or recent contract unit costs — whether each unit cost is a complete in-place cost covering labor, equipment, materials and incidentals, and whether overhead and profit appear once rather than both inside the unit costs and again as separate factors.

Reading a CEF estimate

An estimate built in the format shows which factors were applied and at what percentages, and FEMA's guide describes where those percentages come from and who can change them. Insurance proceeds, actual when known and anticipated otherwise, reduce the estimate. And on a project that becomes a fixed cost offer, the guide expects disagreements about damage, scope or cost to be settled before the offer is accepted, because afterwards the ordinary adjustments and appeals are largely unavailable.