PROGRAMS AND PLANS--Time and Cost Estimates for Flood-Insurance Studies

In Reply Refer To:                               September 6, 1988
WGS-Mail Stop 415


Subject:  PROGRAMS AND PLANS--Time and Cost Estimates for Flood-
                              Insurance Studies

Following are excerpts from a letter sent to the U.S. Geological
Survey (USGS) by the Federal Emergency Management Agency (FEMA).

On September 24, 1987, I sent a letter indicating that
the FEMA Inspector General had conducted an audit of the
flood study process and with findings that Interagency
Agreements for flood studies have been awarded based on
inadequate cost analysis.  Along with that letter was
enclosed a revised form to be used by your agency when
developing time and cost estimates.

The form was used by your agency for studies initiated
in Fiscal Year 1988 and the results were generally good.
However, we find that there are three items needing
additional definition, namely Labor Rates, Labor
Overhead, and General and Administrative Costs.

Enclosed is a Time and Cost Estimate form with some
minor revision from September 1987 and an instruction
sheet that gives guidance on what each agency should
include in its' instruction to their field offices.

I want to thank you for your continued support of the
National Flood Insurance Program which celebrates its'
twenty year anniversary beginning in August 1988.  All
emergency program communities needing studies will be
initiated in Fiscal Year 1988, which is an important
milestone.  The future of the flood studies program will
consist of restudying communities whose flood plains
need reassessment because of development pressures, more
advanced technology and alteration of water courses.

FEMA also has sent the following instructions for completing time
and cost forms for FEMA flood-insurance studies.  Districts are
asked to follow these instructions when preparing time and cost
estimates.  Please contact Ernest Cobb at FTS 959-5319 if you have
questions about this.

Instructions for Completing
FIA Form 1500.2    Time and Cost Estimate

(1)  Item III, A., Labor Category.--The hourly rate is computed by
dividing annual salary, for the applicable grade and step, by
2087 hours.

(2)  Item III, B., Fringe Benefit Costs.--Fringe benefit costs are
computed by multiplying a percentage factor by the total
direct labor cost.  The percentage factor is derived from
Government-contributed benefits such as health insurance and
retirement, and generally ranges from 5 to 18 percent.  It is
determined by each agency, either agency wide or for an
appropriate agency subdivision, and should be the same as
used in budget justifications.  Please note that adjustments
for annual and sick leave are not to be made since they are
already included in the annual salary.

(3) Item III, J., General and Administration (G&A) Costs.--G&A
costs are a percentage of the total direct labor costs and
are to be computed only when extra costs are incurred that
are indirectly related to the project.  This category may not
be applicable to all agencies.  For instance, all items such
as rent and utilities included in an agency's appropriation
should not be included again in reimbursable work.  Whatever
costs are included in this category should be listed and jus-
tified under remarks.

                                       Ernest F. Hubbard, Jr.
                                       Acting Chief, Office of Surface


WRD Distribution:  B, FO