Loss Measurement: A careful approach will ensure a successful

The foundation of a successful financial recovery following a catastrophic event is an accurate and timely measurement of loss. From the initial stages of cleanup through the rebuilding process, a Subrecipient is faced with the daunting task of determining and proving their loss to both their insurer and relief granting agencies such as FEMA. During the planning phase discussed in issue #4000 of Disaster Recovery Today, “Lack of Teamwork Could Be the Real Disaster,” it is important to assign personnel with the ability to begin such documentation from“zero-hour.”1 It is equally important to ensure that these personnel have the support of participating departments on a daily basis. Trying to recreate portions of a loss several weeks Loss Measurement A careful approach will ensure a successful financial recovery Disaster Preparedness and Recovery Consulting IN THIS ISSUE Following up the first issue of Disaster Recovery Today, which focused on pre-disaster planning, this issue details step two of the nine-step process: Loss Measurement. Accurately measuring your losses in a timely fashion will set the foundation of your financial recovery. The following is a recap of the nine-step process identified by Tidal Basin to respond to a declared disaster. 1. Develop a management approach 2. Loss measurement 3. Categorize your losses 4. Determine eligibility 5. Develop a rebuilding plan 6. Develop a funding approach 7. Implement the plan 8. Final inspection and closeout 9. Audit process We hope you find this to be helpful and informative reading.

2 D I SAS T E R R ECOVE RY TODAY.COM operations and allowing a Subrecipient sufficient time to procure such services in accordance with FEMA policy found in Part 200 of 2 CFR. While FEMA is generally more flexible during the emergency period, the Subrecipients’ costs are often challenged as a result of inappropriate contracting methods and/or costs that appear unreasonable. Regardless of who performs these activities, it is imperative to keep accurate records from the very beginning. If a contractor is being used, they should be monitored to ensure they are performing within contract parameters. If staff is being used, they need to consistently document what they are doing, where they are doing it and for how long. While these measures may appear onerous, they are necessary for a successful financial recovery. Along with accurate records, Subrecipients need to make a photo diary of the ongoing response. Whether video or stills, this method of record-keeping will become vital in proving the need for what was done, along with proof of an item’s existence that may have been thrown away. As a rule of thumb, all activities should be photographed before, during and after the disaster as part of the documentation. or even months after an event is not only frustrating but may not fulfill requirements of the insurers or FEMA. With this in mind, we will discuss each portion of the recovery and the proper techniques for estimating and/or documenting the loss. We will focus on major loss elements including those that are not considered directly eligible for FEMA funding since they are insured. We will also discuss the calculations that will be made to allocate insurance proceeds, to ensure that reductions are only made on that insurance that corresponds to FEMA eligible losses. Emergency Costs Emergency Costs are the first to be incurred and generally the first to be reimbursed. Activities ranging from damage prevention to emergency cleanup are handled quickly and generally without regard to record-keeping. When possible, an organization can prepare for these costs during the emergency planning phase by preselecting contractors to perform specific activities such as clean-up and debris removal. This approach serves multiple purposes by allowing the costs to be captured and invoiced by the contractor, freeing staff to focus on day-to-day “As a rule of thumb, all activities should be photographed before, during and after the disaster as part of the documentation.”

T IDALBAS INGROUP.COM 3 Activities falling under Emergency Costs may include: Loss mitigation measures (sandbagging, pumping water, etc.) Emergency debris removal Temporary relocation costs Emergency equipment purchases or rentals Emergency transportation costs Emergency communication costs EOC activities Outreach activities Since these activities are either ongoing or completed, a Subrecipient will be able to prove these loss elements with records of actual costs. In doing so, a Subrecipient needs to collect and maintain items such as: Timesheets, payroll documents, etc., for staff members Contracts, invoices and payment information Leases, rental records, etc. Before and after inventories if available Equipment logs Volunteer logs Outside agency assistance records Records of disposition of hazardous items or materials Emergency costs are incurred when a Subrecipient is under some measure of duress that is often hard to document in a suitable fashion. FEMA and insurers, however, require an accurate demonstration of these costs for renumeration or reimbursement. Therefore, any measures that can be implemented for a smooth compilation of related records will enhance and expedite this portion of your recovery. Equipment/Stock: One of the most difficult and timeconsuming segments of claim preparation is that involving property and equipment. Both FEMA and the insurer will want to know what was lost, when it was purchased, for howmuch and the current replacement cost. Ideally an organization has an established inventory control system for capitalized items valued at or above a certain amount. With this in hand, a post-loss inventory can be conducted and compared to establish the basis for loss. This, in tandemwith any photo-documentation for the larger items and any department head inventories for the non-capitalized items, such as consumables, should be sufficient. In many cases, however, an inventory system is not available, or is not properly maintained. In this instance, an organization is forced to compile a complete listing of the items being claimed

4 D I SAS T E R R ECOVE RY TODAY.COM by conducting a physical inventory of the lost items. Where possible, photos should be used to support the list. In cases where items have been removed (for safety or mitigation), or destroyed, it will be necessary for each department to compile a list frommemory and to augment it with any available support documentation. In extraordinary cases, a modeling system may need to be used. When developing inventories from memory, solicit help from those most familiar with the area. An assistant may have a better idea of an office’s contents than the supervisor who occupies it. In addition, organizations must also track items taken from stock being used during the recovery. Again, an inventory control system is the recommended approach, but at the very least a day-to-day logging system should be implemented. Regardless of how the inventory is generated, at a minimum it should contain: Item description Make and model number Date purchased Purchase amount Replacement item description Make and model number Replacement cost When pricing equipment and inventory/ supply losses, attach any available data such as: Original invoice Inventory system entry Pricing tools Catalogue entry Written quotes Name and phone number of provider (for telephone quotes) Web address Photographs Revenue Losses While not directly reimbursable from FEMA, business interruption insurance plays an important role in an organization’s financial recovery and in any FEMA reimbursement calculation. If an insurance recovery includes reimbursement for lost revenues under a blanket policy, e.g., lost revenues for a damaged municipal parking garage that is damaged; then the amount paid for the lost revenue needs to be separated from the property portions of the claim, before the insurance recovery amount is deducted from the FEMA grant covering the property damage. “When assessing damages to buildings or other items (FEMA defines these as a ‘facility’), an applicant needs to approach the task in three phases: As it was, as it has to be, and as we want it to be.”

T IDALBAS INGROUP.COM 5 Building/Other Physical Damages When assessing damages to buildings or other items (FEMA defines these as a “facility”), an applicant needs to approach the task in three phases: As it was, as it has to be, and as we want it to be. “As ItWas” The basis of all claims (regardless of whether insurance applies) is “as it was.” What was there immediately prior to the event will first be evaluated. Ideally a Subrecipient will have a set of plans, drawings or at the very least photodocumentation that pre-dates the triggering event. In addition, maintenance records, documentation of changes that occurred after the original data was compiled and any other related data should be available for review. It is recommended that a Subrecipient should not provide their original documents but rather copies and that they be aware that documents provided could later be subject to a FOIA (Freedom of Information Act) request made to FEMA. If the documents provide sensitive data, it is recommended that discussions commence immediately and that accommodations be made. In some instances, FEMA has asked Subrecipients to stamp sensitive materials with “not subject to FOIA requests,” based on their internal policies and regulations. “As It Has to Be” Due to code compliance issues such as ADA (Americans with Disabilities Act), floodplain management (Executive Order 11988), NFPA 101 Life Safety Code etc., a Subrecipient must also demonstrate “what it has to be.”What is allowable varies per insurance policies and is also subject to FEMA scrutiny. Building codes and local standards may be used to allow the funding of a repair to a damaged facility if specific criteria are met, as follows: • Applies to the type of restoration required; • Is appropriate to the pre-disaster use of the facility; • Is reasonable, in writing, formally adopted and implemented by the Subrecipient on or before the declaration date, OR is a legal federal requirement;2 • Applies uniformly; and • Was enforced during the time it was in effect. Additionally, only the portions of the facility affected by the event qualify for this additional reimbursement.

6 D I SAS T E R R ECOVE RY TODAY.COM “AsWeWant It to Be” A Subrecipient may want to upgrade or completely change a facility based on current needs. FEMA has various programs that allow for these changes which will be further outlined in future Disaster Recovery Today issues that include: Improved Projects Alternate Projects Section 406 Hazard Mitigation Section 404 Hazard Mitigation Although the loss compilation may seem onerous, the better the loss is documented the better chance of a successful reimbursement, in the least amount of time. As discussed in issue #4000 of Disaster Recovery Today, “Lack of Teamwork Could Be the Real Disaster,”any measures that can be undertaken pre-loss will reduce the time associated with completing the above tasks after an event. In the next issue of Disaster Recovery Today we will focus on how FEMA categorizes loss elements and the strategies for applicants to employ during project development. “Although the loss compilation may seem onerous, the better the loss is documented the better chance of a successful reimbursement, in the least amount of time.” ____________________ 1 If an organization does not have personnel on staff to fill these positions, it may be necessary to use outside consultants and/or professionals. 2 For buildings, electric power, roads, bridges, potable water supply, and wastewater, FEMA requires that Applicants incorporate specific codes, specifications, and standards in accordance with FEMA Recovery Interim Policy FP 104-009-11 Consensus-Based Codes, Specifications and Standards for Public Assistance.

T IDALBAS INGROUP.COM 7 Public Assistance Program Applicant Quick Guide Last Updated: November 13, 2018 Page | 1 Developing a Damage Inventory This Quick Guide explains how Applicants identify and report disaster-related damage and why a Damage Inventory is important to the success of FEMA Public Assistance grant development. What is a Damage Inventory? A Damage Inventory is a detailed list of debris removal, emergency work activities, and damaged facilities for which an Applicant is seeking Public Assistance reimbursement. Federal regulations require that all debris removal, emergency work activity, and disaster-related damage must be identified and reported within 60 days of the Recovery Scoping Meeting to be reimbursed. The Public Assistance Program Delivery Process Why is a Damage Inventory important? A Damage Inventory is the basis for Public Assistance grants. A FEMA Program Delivery Manager uses the Damage Inventory to logically group damage line items into Public Assistance projects, schedule site inspections for incomplete work, and determine what supporting documents an Applicant will need to provide. FEMA cannot continue the grant development process until items have been entered in the Damage Inventory. An Applicant has up to 60 days after the Recovery Scoping Meeting to identify and report disaster-related damage and emergency work activities. A Program Delivery Manager will work with an Applicant throughout the 60-day period to draft, develop, and finalize their Damage Inventory. How does an Applicant create a Damage Inventory? Applicants begin recording damage in the Damage Inventory template, an Excel spreadsheet that can be downloaded from Grants Portal or provided by the Program Delivery Manager. Applicants are encouraged to start documenting items in the spreadsheet as soon as possible, even if damage is still being identified. Applicants bring a draft Damage Inventory to the Recovery Scoping Meeting to discuss and develop it with their Program Delivery Manager. Once finalized, within 60 days of the Recovery Scoping Meeting, the Damage Inventory must be uploaded to Grants Portal. Applicant-Driven Operational Planning Document Damage Develop Project Have an Exploratory Call with FEMA Have a Recovery Scoping Meeting with FEMA and Recipient Approve Damage Description and Dimensions FEMA Staff or Applicant formulate Scope of Work and Cost Estimate FEMA staff and Recipient validate documents and conduct compliance reviews Approve final grant and agree to terms Disaster declared Attend Applicant briefing Submit Request for Public Assistance RPA Conduct a Site Inspection with FEMA and Recipient Develop and submit Damage Inventory within 60 Days Grants Portal will prompt an Applicant to sign the Damage Inventory at day 61 after the Recovery Scoping Meeting. Any changes after 60 days need to be approved by FEMA field leadership. Applicant State, local, tribal, or territorial government or eligible private non-profit entity submitting a request for assistance under the Recipient’s Federal award. Project A logical grouping of disaster damage, the scope of work an Applicant will complete to address the damage, and the estimated funding. 3

DRT03 4001-R4 CORPORATE OFFICE 126 Business Park Drive, Bldg 2 Utica, New York 13502 800.382.2468 Outside U.S. (315) 797.3035 Editor@DisasterRecoveryToday.com Copyright © 2022 Rising Phoenix Holdings Corporation. All Rights Reserved. Tidal Basin and the Tidal Basin logo are registered trademarks of Rising Phoenix Holdings Corporation. Follow Disaster Recovery Today on Facebook & Twitter: Facebook.com/TidalBasinGroup Twitter.com/DRToday DISASTER RECOVERY TODAY is published as a public service by Tidal Basin. It is provided for general information and is not intended to replace professional insurance, legal or financial advice for specific cases. WEB ADDRESSES TidalBasinGroup.com DisasterRecoveryToday.com PUBLISHER Daniel A. Craig, MBA EDITOR Sheila E. Salvatore Is there a topic you would like to see covered in an upcoming edition of Disaster Recovery Today? You can make topic suggestions, contact the editor, request free subscriptions and browse our back issues all from our website — DisasterRecoveryToday.com. We look forward to hearing from you. Public Assistance Program Applicant Quick Guide Page | 2 What information should be included in a Damage Inventory? Each line item in a Damage Inventory should contain the following information: Name of the Damage: A clear and distinctive title, indicating the type of facility and uniquely identifying it (example: “Mills Road” rather than “Damaged Road” and “Smith Creek Culvert” rather than “Culvert”). Location: Address, City, State, ZIP code and latitude/ longitude coordinates for the facility. Description of Damage in Line Item: A summary of the damage and/or work performed, including: o Type of facility o Damaged component(s) of the facility and what caused the damage o Extent of damage to the facility (example: if affected by flooding, include the length of time the facility was underwater) o Work completed (example: temporary repairs, items removed from facility). Example: 10,000 square foot, 2 story brick building. HVAC in basement was impacted by floodwaters. Up to 4 feet of floodwater throughout the facility. Building remained flooded for 2 days. Flooring, carpet, and drywall were removed to prevent molding. Primary Cause of Damage: Type of event that caused the damage (e.g. hurricane, flood, severe storm, tornado). Approximate Cost: Estimate of how much the anticipated work or repairs will cost. Unless work is complete, this may be a rough estimate. Category of Work: The category of work that has been or will be completed. FEMA regulations define seven categories of eligible work: Category A – Debris removal Category B – Emergency protective measures Category C – Roads and bridges Category D – Water control facilities Category E – Buildings and equipment Category F – Utilities Category G – Parks, recreational, other facilities. Type of Labor: How will repairs be completed: by a contractor, by an Applicant’s own employees (also called Force Account labor), through a Mutual Aid Agreement, or using Donated Resources? Additional information includes: o Whether an Applicant has received Public Assistance funding to restore the facility in the past o Estimated percentage of work that has been completed already o Level of priority the Applicant assigns to restoring the facility. The Quick Guide series is a set of documents that explain the roles and responsibilities of Recipients and Applicants in key steps in FEMA’s Public Assistance Program delivery process. The Public Assistance Program provides Federal grant funding to help communities quickly respond to and recover from major disasters or emergencies declared by the President. Read more about Public Assistance Program delivery in other Quick Guides, the Public Assistance Program and Policy Guide, and resources available on Grants Portal. Public Assistance Program Applicant Quick Guide Page | 2 What information should be included in a Damage Inventory? Each line item in a Damage Inventory should contain the following information: Name of the Damage: A clear and distinctive title, indicating the type of facility and uniquely identifying it (example: “Mills Road” rather th n “Damaged Road” and “Smith Creek Culvert” rather than “Culvert”). Location: Address, City, Stat , ZIP code a d latitude/ longitude coordinates for the facility. Description of Damage in Line Item: A summary of the damage and/or work performed, including: o Type of facility o Damaged component(s) of the facility and what caused the damage o Extent of damage to the facility (example: if affected by flooding, include the length of time the facility was underwater) o Work completed (example: temporary repairs, items removed from facility). Example: 10,000 square foot, 2 stor brick building. HVAC in basement was impacted by floodwaters. Up to 4 feet of floodwater throughout the facility. Building remained flooded for 2 days. Flooring, carpet, and drywall were removed to prevent molding. Primary Cause of Damage: Type of event that caused the damage (e.g. hurricane, flood, severe storm, tornado). Approximate Cost: Estimate of how much the anticipated work or repairs will cost. Unless work is complete, this may be a rough estimate. Categ ry of Work: The category of ork t a as been or will be completed. FEMA regulations define sev n categories of eligible work: Category A – Debris removal Category B – Emergency protective measures Cat gory C – R ads and bridges Category D – Water control facilities Category E – Buildings and equipment Category F – Utilities Category G – Parks, recreational, other facilities. Type of Labor: How will repairs be completed: by a contractor, by an Applicant’s own employees (also called Force Account labor), through a Mutual Aid Agreement, or using Donated Resources? Additi nal information includes: o Whether an Appli ant has received Public Assistance funding to restore the facility in the past o Esti ated percentage of work that has been completed already o Level of priority the Applica t assign to restoring the facility. The Quick Guide series is a set of documents that explain the roles and responsibilities of Recipients and Applicants in key steps in FEMA’s Public Assistance Program delivery process. The Public Assistance Program provides Federal grant funding to help communities quickly respond to and recover from major disasters or emergenci s decl red by the President. Read more about Public Assistance Program delivery in other Quick Guides, the Public Assistance Program and Policy Guide, and resources available on Grants Portal. The Quick Guide series is a set of documents that explain the roles and responsibilities of Recipients and Applicants in key steps in FEMA’s Public Assistance Program delivery process. The Public Assistance Program provides Federal grant funding to help communities quickly respond to and recover from major disasters or emergencies declared by the President. Read more about Public Assistance Program delivery in other Quick Guides, the Public Assistance Program and Policy Guide, and resources available on Grants Portal. ³Grantee.fema.gov. FEMA approved access is required. Eligible applicants participating in a declared disaster will have access in order to submit their eligible disaster expenditures for reimbursement.

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