Benefit Cost Analysis (BCA)

Benefit-cost analysis (BCA) is a standardized, systematic way to measure all of the significant direct benefits of a mitigation project against the costs.

Benefit-cost analysis (BCA) is a standardized, systematic way to measure all of the significant direct benefits of a mitigation project against the costs. It is a quantitative analysis used to assess the benefits and costs of a hazard mitigation project by comparing the disaster impacts avoided by the mitigated project to the cost of the project. A BCA always involves looking at damages and losses twice: before mitigation (the “as-is” situation) and after mitigation (completed project). All mitigation grant program applications require a completed Benefit Cost Analysis (BCA) to be submitted with the application for funding.

Table of Contents

BCA Overview

FEMA provides BCA software to help sub-applicants determine the cost-effectiveness of their proposed mitigation projects. To be eligible for federal funding assistance through FEMA’s Hazard Mitigation Grants programs, a mitigation project must have a benefit-cost ratio of 1.0 or greater according to FEMA’s BCA software.

BCA Toolkit Version 6.0

On July 29, 2019, FEMA announced the release of the new version of the Benefit-Cost Analysis (BCA) Toolkit, Version 6.0, available to the public, and as of the release date may be used for project applications. Version 6.0 features an improved user experience and 80% reduction in data inputs compared to the previous version (V5.3). To utilize Version 6.0, open the Microsoft Excel file at this link below and install the Microsoft Excel Add-in by following these directions:

  1. Go to: https://www.fema.gov/media-library/assets/documents/179903
  2. With Microsoft Excel open, go to the Insert tab, in the Add-ins section, click on My Add-ins.
  3. Select the Store option and search for FEMA Benefit-Cost Analysis Calculator. Click Add.
  4. You should now see the FEMA BCA V6.0 icon in the upper right-hand ribbon bar.
  5. To launch the Toolkit, click on the FEMA BCA V6.0 button. A sidebar will open.
  6. Click Open Calculator to begin your BCA.
  7. The add-in window will open and take you to the Home screen. From here you can start a new project by clicking Add Project.
  8. To save your work, click “Finish” on the second screen, close the add-in window, and save the Excel file, renaming it if desired.
  9. Please also see the Version 6.0 Release Notes at the above link for important information.

If users need additional assistance with installing the Excel Add-in for the Benefit Cost Analysis Calculator, Microsoft provides detailed step-by-step directions here:

https://support.office.com/en-us/article/get-an-office-add-in-for-excel-d3df5854-0a4e-4169-9cc3-25177a288d3d#ID0EAABAAA=Newer_versions

If a user does not have Microsoft Excel installed, they can use Microsoft Excel online for free and will still be able to install the add-in. 

What’s New in the BCA Toolkit Version 6.0:

  1. Excel-based platform
  2. Compatible with both Windows and Macintosh operating systems
  3. Streamlined user interface and improved user experience
  4. Reduction in number of manual-input data fields
  5. Improved help content
  6. Improved report formatting
  7. Google Maps-based address lookup and standardization

Major Differences from Version 5.3:

  1. Version 5.3 has the Damage Frequency Assessment (DFA) methodology as a separate module. In Version 6.0, the DFA methodology is built into all the hazard modules.
  2. Version 6.0 does not allow the user to attach files within the Toolkit or alert the user that required documentation for FEMA Hazard Mitigation Assistance (HMA) grant applications is missing.
  3. Version 5.3 saves all the user’s projects in one location. Version 6.0 saves projects within the .xlsx file, allowing the user to define their own file management protocol.
  4. For more information, please see the BCA Toolkit 6.0 User Guide.

Important Notes:

  1. Users should continue to use Version 5.3 for seismic building retrofit projects (structural and non-structural). Seismic retrofit projects for non-buildings (i.e. utilities or roads/bridges) or other seismic retrofit projects performed using either the Historical or Professional Expected Damages approach may be analyzed in Version 6.0. An update to Version 6.0 is planned for release later in 2019 that will include an improved methodology for seismic building retrofit BCAs.
  2. There is no way to import or export projects between Versions 5.3 and 6.0.
  3. For more information, and a list of known issues, please see the BCA Toolkit 6.0 User Guide.

FEMA has developed a BCA Toolkit 6.0 User Guide for this new BCA version release, available for download: FEMA Benefit-Cost Analysis Toolkit Version 6.0 User Guide (May 2019)

Additional Software Documents:

FEMA Benefit-Cost Analysis (BCA) Toolkit 6.0 Release Notes (First Issuance)

FEMA Benefit-Cost Analysis (BCA) Toolkit 6.0 Release Notes (July 31, 2020)

Version 5.3 of the BCA toolkit has been phased out and can no longer be used in application submissions, or in any mitigation project sub-application already been awarded by FEMA that require an updated BCA in support of a scope of work modification or a cost overrun. If there are any questions related to the BCA Version 5.3 Toolkit, please contact MEMA's Mitigation Unit.

Links to Hurricane Hazard and Earthquake Hazard datasets are provided on FEMA’s main BCA page (www.fema.gov/benefit-cost-analysis) and are required when performing analysis for hurricane wind retrofit projects or seismic retrofit projects.

For assistance installing or using the BCA Toolkit, please contact the BCA Helpline at bchelpline@fema.dhs.gov or 1-855-540-6744. For more information about FEMA’s BCA program, see www.fema.gov/benefit-cost-analysis.

Cost-Effectiveness Policy Changes (2024)

FEMA has announced that they have streamlined the Benefit-Cost Analysis to facilitate access to make more communities resilient to natural hazards and the effects of climate change. This addresses long-standing barriers certain communities – particularly those that are underserved – have had accessing mitigation grants through the through the Hazard Mitigation Assistance grant programs and Public Assistance mitigation funding.

FEMA is reducing the discount rate from 7% to 3.1% to make it easier for states, Tribal Nations, territories and local governments to demonstrate cost-effectiveness of hazard mitigation projects when completing a Benefit Cost Analysis. It also aligns with updated federal guidance A-94 Circular, Guidelines and Discount Rates for Benefit Cost Analysis of Federal Programs, released by the White House Office of Management and Budget (OMB). FEMA’s Benefit Cost Analysis toolkit has the discount rate built into its calculations and has been updated. Applicants do not need to perform separate calculations or redownload the toolkit to use the new discount rate.

This policy also includes streamlined cost-effectiveness determination methods, such as allowing subapplicants to submit a cost-effectiveness narrative, rather than a BCA, for projects costing less than $1 million.

FEMA has also simplified the BCA requirements by implementing distributional weights in determining the cost-effectiveness of a hazard mitigation project. The distributional weights will automatically adjust the Benefit-Cost Analysis results by increasing the building replacement value for properties located in census tracts with household incomes below the national median. These benefits will make it easier for projects in disadvantaged communities to be eligible for mitigation grant funding.

Additional Resources

BCA Training

Check MEMA’s Training Registration System to find out when BCA classroom training is available. The training courses IS-276.A: Benefit Cost Analysis Fundamentals , the 2019 version of the Introduction to Benefit-Cost Analysis course (E/L 0276), and IS-277.A: Benefit Cost Analysis Entry Level are also available online.

In addition, FIRM and FIS trainings are available online, including: IS-273: How to Read a Flood Insurance Rate Map (FIRM) and IS-274: How to Use a Flood Insurance Study (FIS).

MEMA BCA Training Workshop/Webinar information can be found on the MEMA Hazard Mitigation Technical Assistance and Webinars/Briefings page.

Additional Resources

Ecosystem Service Benefits

In September 2015, FEMA released three new activities eligible for the Hazard Mitigation Assistance (HMA) programs: Aquifer Storage and Recovery, Floodplain and Stream Restoration, and Flood Diversion and Storage, known as the Climate Resilient Mitigation Activities (CRMA). FEMA has developed BCA tools to calculate benefits for drought mitigation and/or ecosystem services for mitigation projects. In addition, FEMA developed pre-calculated benefits for cost effectiveness evaluation of soil stabilization, flood diversion, and reforestation projects in wildfire impacted areas to support expedient implementation of post-wildfire mitigation actions. BCA tools:

Additional Resources

Precipitation Frequency Data

The NOAA’s National Water Center has released updated precipitation frequency estimates for Massachusetts. These estimates (published in Atlas 14, Volume 10) are used in many infrastructure design and planning activities, and are available for download through the Precipitation Frequency Data Server (PFDS).

The Northeast Regional Climate Center (NRCC) and the Natural Resources Conservation Service (NRCS), through a joint collaboration, have developed a web-based platform that allows users access to updated extreme rainfall analyses for New York and New England. The website provides a subset of users access to extreme rainfall statistics through the most recent year (i.e., there will be an automatic update of the rainfall statistics on an annual basis). In future years, these updates will provide the necessary information for considering subsequent updates and provide a readily available source of updated statistics. The website can be found at: http://precip.eas.cornell.edu/ .

Available through the NOAA National Severe Storms Laboratory (NSSL), a federal research laboratory under NOAA's Office of Oceanic and Atmospheric Research, the Multi-Radar/Multi-Sensor (MRMS) system was developed to produce severe weather, transportation, and precipitation products for improved decision-making capability to improve hazardous weather forecasts and warnings, along with hydrology, aviation, and numerical weather prediction. The MRMS project utilizes an automated system that rapidly and intelligently integrates data from multiple radars and radar networks, surface observations, numerical weather prediction (NWP) models, and climatology to generate seamless, high spatio-temporal resolution mosaics. The MRMS Operational Product Viewer displays a rolling archive of real-time operational MRMS products dating back to October 2020.

For help with FEMA’s benefit-cost analysis, call the BCA Helpline at 1-855-540-6744 or email bchelpline@fema.dhs.gov.

Additional Resources

What is a Benefit?

The benefit of a mitigation project is simply the difference in expected damage and loss before and after the project is completed. Benefits of a proposed mitigation project can be sorted into four main categories:

Avoided Physical DamageBuildings
Contents
Infrastructure
Landscaping
Site Contamination
Vehicles
Equipment
Avoided Loss-of-Function CostsDisplacement costs for temporary quarters
Loss of rental income
Loss of business income
Lost wages
Disruption time for residents
Loss of public services
Economic impact of loss of utility services
Economic impact of road/bridge closures
Avoided CasualtiesDeaths
Injuries
Illnesses
Avoided Emergency Management CostsEmergency operations center costs
Evacuation or rescue costs
Security costs
Temporary protective measure costs
Debris removal and cleanup costs
Other management costs

Additional Resources

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