De-Mystifying Benefit-Cost Analysis
What is Benefit-Cost Analysis (BCA)? FEMA’s method for evaluating cost-effectiveness: Does the project prevent more damage than it costs?
FEMA’s Expectations
• Well-defined project scope
• Alignment between budget, scope, and BCA • Clear explanation of risk reduction
How It Works: • Benefits: damages avoided in the future • Costs: design and construction expenses • BCR = Benefits ÷ Costs • A BCR of 1.0 or higher indicates eligibility
BCA is not complicated math. It’s a straightforward demonstration of how today’s investment saves money and
Two Approaches: • Pre-Calculated Benefits (using FEMA’s standard values) • Full BCA (tailored to the specific project)
Compounding Benefits: occur when one mitigation project prevents losses multiple times, across multiple events, over its useful life
mitigates future disaster impacts.
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