Emergency Response Financial Management Oversight (ERFMO) Services
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:
- For debris clearance – 6 months
- For emergency work – 6 months
- 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:
- FEMA work type category (e.g. emergency, repair, permanent)
- Location of work (if there were several buildings/assets impacted)
- Type of work performed (building envelope, interior, roads, work in the open, bridges)
- Cost category:
- For Contractors: Labor, materials, equipment, subcontractor, mobilization, and travel
- For Consultants: Billing rates, travel costs, hours expended
Performing a comprehensive review of invoiced costs:
- For each submitted invoice we review supporting documentation including:
- Timesheets, payroll, job cost, material and equipment invoices
- Reasonableness of submitted costs (e.g. using bluebook to test equipment rates)
- 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:
- Submitted versus supported costs by invoice
- Number of invoices submitted and process in a given period
- 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:
- 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
- We have developed similar templates for parties needing to track their own workforce efforts in the recovery effort
- We provide real-time review of all submitted invoices and real-time resolution to questioned charges *
- 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.
