The recovery effort for any emergency
event is a complex process. From addressing the initial impact to
completing final repairs, many different entities are involved in
restoring assets back to their pre-event state.
Clients have expressed frustration over
coordination efforts among the various parties performing the recovery
work including insurance carriers, government agencies such as FEMA, and
other related parties.
Given the speed and nature of emergency
work, clients need to protect themselves from unwarranted pricing
submitted for payment, unsupported charges and other financial exposures.
In fact, a critical issue in any recovery effort is reviewing and tracking
emergency repair costs at a level that will satisfy the parties that will
fund repairs or reimburse funds for recovery efforts.
What follows is a general overview of
Federal Emergency Management Agency (FEMA) funding:
FEMA provides grants and other
assistance for entities seeking to receive funds for damages sustained as
a result of a Presidentially declared disaster.
In order to participate FEMA requires
that applicants (affected parties) develop accurate and complete scopes of
work and costs estimates and maintain detailed project records.
Entities seeking to apply for federal
funding may seek up-front funding (referred to as Immediate Needs
Funding-INF) that must be paid within 60 days following the
declaration of a disaster.
The importance of maintaining a complete
and accurate set of records for each project cannot be overemphasized.
This will facilitate the validation, approval and funding processes. FEMA
requires that detailed labor, equipment, material and other related
records be kept for a period of 3 years after the declared event.
Also important is that expenditures are
tracked regularly so that expenses may be eligible for funding. There are
time limits set for completing the work:
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For debris clearance – 6 months
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For emergency work – 6 months
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For permanent work – 18 months
Documents required for demonstrating
losses to insurance carriers include:
Insurance carriers typically require
very detailed cost tracking for expenditures associated with a damaged
asset. Typical documents required include: itemization of time and
materials, invoices for materials, time sheets, rental equipment invoices,
pre-loss contracts with agreed pricing for vendors.
It is important to track repair
expenditures by location because there may be different insurance
coverages for different asset locations, for example.
RW Block Consulting’s Emergency
Response Financial Management Oversight (ERFMO) methodology is a proven
solution that helps clients gather, review, and proactively manage the
financial aspects of a recovery effort. Our methodology is currently
being used to address insurance carriers’ requirements for reimbursing
costs, FEMA’s requirements to track expenditures, and to track the
internal controls required by the impacted party. Organizations that do
not keep good records or do not address financial issues in real-time as
their emergency recovery work is being done will find it much more
difficult to recover costs from insurance carriers and FEMA.
Features of our methodology include:
Creating and tracking cost and
work-breakdown categories typically required of FEMA as well as insurance
carriers:
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FEMA work type category (e.g.
emergency, repair, permanent)
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Location of work (if there were
several buildings/assets impacted)
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Type of work performed (building
envelope, interior, roads, work in the open, bridges)
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Cost category:
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For Contractors: Labor, materials,
equipment, subcontractor, mobilization, and travel
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For Consultants: Billing rates, travel
costs, hours expended
Performing a comprehensive review of
invoiced costs:
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For each submitted invoice we review
supporting documentation including:
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Timesheets, payroll, job cost,
material and equipment invoices
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Reasonableness of submitted costs
(e.g. using bluebook to test equipment rates)
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For each invoice we developed a
variance tracking mechanism to track submitted costs versus supporting
costs, providing the client with a full disclosure of cost information
Preparation of management reports
highlighting:
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Submitted versus supported costs by
invoice
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Number of invoices submitted and
process in a given period
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Value and type of disputed cost (e.g.
labor costs, equipment rental, etc).
Based on our experience, we can
implement this type of process within 5-7 business days of a
notice-to-proceed. We are able to implement quickly because:
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We hold invoice submittal orientation
session within 4 days from notice-to-proceed and issue pre-formatted
electronic invoicing templates (based on FEMA requirements) to all
invoicing parties
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We have developed similar templates
for parties needing to track their own workforce efforts in the recovery
effort
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We provide real-time review of all
submitted invoices and real-time resolution to questioned charges
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We have extensive experience reviewing
construction costs in the public and private sector.
Contact R. W. Block Consulting to discuss
your needs. Our staff is Florida-based and is ready to assist you during
the recovery effort.
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