Following its final inspection of each Large Project Final Accounting (LPFA) for the PWs, FEMA adjusted the PWs to include DAC that it found the Applicant had substantiated, but denied funding for indirect travel costs in each PW, in accordance with its January 6, 2017 letter. In the RFI Responses, the Applicant also explained that it had allocated all of CDM Smiths travel expenses in accordance with the Expense Allocation Methodology, including DAC travel costs and Project Coordination travel costs. The following are the costs associated with the projects. As a result of Hurricane Rita, declared a major disaster on September 24, 2005, the Cameron Parish School Board (Applicant) suffered damage to its Administrative Office Building and the South Cameron High School (Facilities). The Applicant is appealing the Department of Homeland Securitys Federal Emergency Management Agencys (FEMA) decision to deny the re-classification of. This post is another in the series on PMP Study Notes to help make your concepts crystal clear and give you confidence as you go into the PMP exam. The FEMA Region II Regional Administrator (RA) denied each of the Applicants First Appeals in decisions dated August 20, 2018 (First Appeal Determinations). CDM Smiths employees often traveled to the Applicants jurisdiction and worked on multiple projects during each trip or billing period. The Applicant is appealing the U.S. Department of Homeland Securitys Federal Emergency Management Agencys (FEMA). Dir., Nassau Cty. On May 11, 2018, the Grantee transmitted the Applicants First Appeals to FEMA Region II, expressing support for them. Nassau County (Applicant) hired project management contractors, including Camp Dresser McKee & Smith (CDM Smith), to assist with the administration of multiple Public Assistance (PA) grants. Dir., Nassau Cty. Between April 16, 2018 and June 1, 2018, the Applicant responded to the Final RFIs (RFI Responses). OMB, at 2 (Jan. 6, 2017) (FEMA will not amend the PWs to include apportioned travel expenses spread across multiple PWs as DAC.). and Operation expenses. The Applicant is appealing the U.S. Department of Homeland Security's Federal Emergency Management Agency's (FEMA) decision to uphold a partial denial of funding for certain travel expenses claimed as Direct Administrative Costs (DAC) under Project Worksheets 1853 and 4113. For example, this could include hiring specialised contractors, buying software licences or commissioning your new building. FEMA issued a Final Request for Information (Final RFI) for each of the PWs via letters dated between June 19, 2018 and June 28, 2018. Glad you found it useful. Here, the Applicant attempts to claim as DAC and/or contract costs certain travel expenses that its contractors incurred, despite its acknowledgment that CDM Smiths employees worked on several PWs over the course of each trip at issue. Costing Elements. CDM Smith allocated these expenses on a pro rata basis according to the eligible hours worked by a given employee (Expense Allocation Methodology). These can include direct and indirect costs. Following its final inspection of each LPFA, FEMA adjusted the PWs to include DAC that it found the Applicant had substantiated, but denied funding for indirect travel costs in each PW, in accordance with its January 6, 2017 letter. FEMA captured the replacement of the Applicants Administrative Office Building in Project Worksheet (PW) 533 and the replacement of South Cameron High School in PW 2397. Eligible PM activities are those that include oversight of an eligible project from design phase to the completion of work. One such example was the direct management task description activities related to developing the scope of work component for one specific project worksheet.. The Applicant hired project management contractors, including Camp Dresser McKee & Smith (CDM Smith), to assist with the administration of multiple Public Assistance (PA) grants. [31] Since the travel expenses at issue benefitted more than one PW, they are indirect costs. The use of this material is free for learning and education purpose. As an example, in PW 4113, the Applicant claims a CDM Smith employee spent 234.5 hours performing work on 27 projects which has been individually tracked and documented on CDM Smiths invoice #3.. As an example, in PW 2608, the Applicant claims a CDM Smith employee spent 234.5 hours performing work on 27 projects which has been individually tracked and documented on CDM Smiths invoice #3.[30] This employee incurred a total of $9,097.10 in travel, lodging, and meal expenses during the period covered by CDM Smiths invoice #3. Direct costs. Such costs are only reimbursable as management expenses, if at all. Environmental & Historic Preservation Guidance, Real Estate, Lending or Insurance Professionals, State, Local, Tribal or Territorial Governments, Preparedness Activities, Research & Webinars, Voluntary & Community-Based Organizations, Environmental Planning & Historic Preservation, National Business Emergency Operations Center, From October 27, 2012, to November 9, 2012, Hurricane Sandy caused damage in the State of New York. During the period in which FEMA initially obligated these PWs, the Applicant, the New York State Division of Homeland Security and Emergency Services (Grantee), and FEMA met and discussed the division of certain CDM Smith disaster consulting work into the following three categories: (1) Direct Administrative Costs (DAC), (2) project management, and (3) project coordination. This work included, for example, preparing for and attending meetings with FEMA to present supporting documentation. 200.404 (2014); also Applicants First Appeals, at 3. The Applicant stated that it believed that, since project coordination and project management were both contract costs, travel expenses assigned to these categories should also be eligible for PA funding as contract costs. By letters dated between May 11, 2018 and May 24, 2018, the Applicant transmitted its first appeals to the Grantee (Applicants First Appeals). [1] See Letter from Dir. Conclusion: Nassau Countys (Applicant) contractors employees did not incur travel expenses for specific projects, and instead such expenses benefitted more than one Project Worksheet (PW). [13] Since a FEMA designee never signed a PW approving the requested transfer of costs, the Agency does not find merit in the Applicants argument concerning reliance on prior FEMA communication. Direct costs are expenses tied directly to the product or the project. 200.110 (2014); 79 Fed. FEMA awarded PW 4653 for all PM costs with no cap. Between June 25, 2013 and December 8, 2015, FEMA obligated several Project Worksheets (PWs) to document emergency protective measures and disaster-related repairs. Any costs that are directly attributable to the work on the project. OMB (June 19, 2018 and June 28, 2018), issuing Final RFIs for PW 4113 and PW 1853, respectively (collectively, Final RFIs). See also DAP 9525.11, Payment of Contractors for Grant Management Tasks, at 1 (Apr. See also Letter from Regl Admr, FEMA Region VI, to Deputy Dir. FEMA provides PA funding for administrative costs related to managing the PA Program and PA projects. [6], Table of Eligible Costs and Ineligible Travel Expenses by PW. Direct Costs in Construction. Finally, in an attachment containing an undated position paper, the Applicant noted that assignment/allocation of consultant expenses as DAC was a continuing source of contention, and disputed FEMAs consistent interpretation of DAP 9525.9. 200.405, since 2 C.F.R. The Applicant claimed that Section 207.6 (c) of Title 44 of the Code of Federal Regulations (44 C.F.R. 12, 2018 and Mar. From October 27, 2012, to November 9, 2012, Hurricane Sandy caused damage throughout the. 22, 2001) (although grantees may receive reimbursement for all eligible contractor costs, including travel and per diem, [t]here is no similar provision for subgrantees because all of their grant management and administrative costs are required by statute to be considered under the Statutory Administrative Costs allowance (also known as the subgrantees Administrative Allowance or sliding scale).). State of New York. The costs at issue in this appeal relate to work Hoffpauir performed to persuade FEMA that the changes to the approved scopes of work for PWs 533 and 2397 were eligible for funding (e.g., preparing for/attending meetings with the Grantee and FEMA, and providing documentation upon request). Accordingly, this appeal is denied. The article is Written By Prachi Juneja and Reviewed By Management Study Guide Content Team. Hello Gerald,Thanks for your feedback. Accordingly, the costs are not eligible DAC. Costs that change in proportion to the amount of time and material that are spent on produced in the project. In November 2015, the Applicant formally requested that FEMA re-classify DAC costs pertaining to the review and documentation of change orders for PWs 533 and 2397 to PM costs and move them to PW 4653. [1] Specifically, CDM Smith calculated an hourly travel expense rate for each of its employees per billing period by dividing the employees total travel expenses by the total number of hours the employee worked on Applicant-related projects during the billing period. The Applicant is appealing the U.S. Department of Homeland Securitys Federal Emergency Management Agencys (FEMA) decision to uphold a partial denial of funding for certain travel expenses claimed as Direct Administrative Costs (DAC) under PWs 2214, 2608, 2609, 2671, 2909, 3640, 3988, and 4001, on the basis that such expenses were indirect costs, and ineligible for reimbursement as DAC. Of Mgmt. al. Direct costs are those that can be identified separately and assigned to a specific project, such as staff time to conduct an initial inspection, prepare and submit PWs, and make interim and final inspections of the project. 225 (2012) (codifying OMB CIRCULAR A-87, which sets forth the applicable cost principles for the Applicant in FEMA-4085-DR-NY based on the October 30, 2012 declaration date). [7] In its first appeal requests, the Applicant argued that costs it was claiming as DAC directly correspond to the number of labor hours an employee spent working on a specific project,[8] per the Expense Allocation Methodology described in the Expense Analysis Memo. With the exception of the procedural background of each appeal, the accompanying administrative record indices, and the examples of how the Applicant applied the Expense Allocation Methodology in each PW (found on page 2 of the First Appeal Determinations), the First Appeal Determinations are otherwise identical. Budget Dir., Nassau Cty. 206.201(i)(1), (j); 206.206(a). Indirect Costs: The costs that are indirectly related to the project. Throughout the project, the cost planner is responsible for using cost management strategies to ensure that costs do not exceed the budget. If you have other examples of direct and indirect costs that are not listed here, please contribute them to this post by using the comments section below. Re: Second Appeal Nassau County, PA ID 059-99059-00, FEMA-4085-DR-NY, Project Worksheets (PWs) 2214, 2608, 2609, 2671, 2909, 3640, 3988, 4001 , Direct Administrative Costs Project Management Costs. , expenses allocated to every task for all PWs in proportion to the hours worked on the task are not eligible as DAC. The costs at issue are DAC rather than PM costs because they relate to work the Applicants contractor performed to support the eligibility of changes to the approved scopes of work. [7] The memorandum includes a non-exhaustive list of DAC eligible work, such as [a]ctivities related to developing the scope of work component for one specific project worksheet[and] [a]ctions carried out to support FEMA and the grantees determination of the sub-applicant, facility, work and cost eligibility for one specific project.[8]. Bd. The Applicant hired project management contractors, including Camp Dresser McKee & Smith (CDM Smith), to assist with the administration of multiple Public Assistance (PA) grants. To allocate these expenses, the Applicant first divided the total travel expenses by the hours worked during the invoice period to obtain an hourly expense rate for that period ($38.79/hour). FEMA awarded PW 4831 for all DAC/COI costs with a 3 percent funding cap. ), read in conjunction with DAP 9525.9, allows applicants to claim, as DAC, those costs which can be identified separately and, In this supplemental narrative, the Applicant also explained that it had allocated all of CDM Smiths travel expenses in accordance with the Expense Allocation Methodology, including DAC travel costs and Project Coordination travel costs. [19] First Appeal Determinations, at 5 (citing 2 C.F.R. However, [n]o field employee can commit the [A]gency to pay more than the statute and regulations require[11] and FEMA must approve a scope of eligible work and costs before funding an project. [19] Further, the RA found that the Applicant had not substantiated its contention that travel expenses associated with project coordination tasks should be treated as contract costs, since DAP 9525.9 and the DAC Guidance specifically define[] DAC as including costs associated with the preparation and submission of PWs.[20]. 75,867, 75,872 (Dec. 19, 2014). [15] Letters from Dep. [17] Id. [18] See Public Assistance Guide, FEMA 322, at 62 (June 2007). 2013); see also Office of Personnel Management v. Richmond, 496 U.S. 414 (1990) (Payments of money from the Federal Treasury are limited to those authorized by statute, and erroneous advice given by a Government employee to a benefits claimant cannot estop the Government from denying benefits not otherwise permitted by law.). Cost planning is an essential part of the project management process. See, e.g., Letter from Dep. This is in response to letters from your office dated September 10, 2018, which transmitted the referenced second appeals on behalf of Nassau County, New York (Applicant). Share sensitive information only on official, secure websites.. Therefore, monitor your direct costs to control product price and taxes calculation. Applicable FEMA guidance makes clear that activities related to developing the scope of work component for one specific PW and actions carried out to support the request for federal assistance, i.e., FEMAs determination of the work and cost eligibility for one specific project, are DAC, not PM costs. On November 7, 2017, FEMA issued a Request for Information (RFI), seeking information that satisfied regulatory appeal requirements. Prior to these submissions, however, FEMA had informed the Applicant by letter dated January 6, 2017 (DAC Determination Memo) that CDM Smiths travel expenses associated with direct administrative and project coordination tasks were indirect costs, and not eligible for reimbursement as DAC. ) or https:// means youve safely connected to the .gov website. [13] Letter from Section Chief, Appeals & Audits, Recovery Div., FEMA Region II, to Dep. [22] By contrast, costs a grantee or subgrantee incurs for a common or joint purpose benefitting more than one cost objective that are not readily assignable to the cost objectives specifically benefitted[23] are indirect costs. There should be a measurement of the costs involved and their variances tracked, if any. Reg. It also noted the multiple times, starting in 2012, that Hoffpauir told the Grantee and FEMA of its concerns over costs incurred from continuing discussions on the eligibility of the changes to the approved scopes of work, and therefore its request to have its work classified as PM costs, not DAC. The 5 costs they cover are: Direct cost Indirect cost Fixed cost Variable cost Sunk cost Let's look at each of these in turn. 16 through June 1, 2018). [7] In its first appeal requests, the Applicant argued that costs it was claiming as DAC directly correspond to the number of labor hours an employee spent working on a specific project,[8] per the Expense Allocation Methodology described in the Expense Analysis Memo. [4] Letter from N.Y. Sandy Branch Chief, FEMA Region II, to Dep. The Applicant hired project management contractors, including Camp Dresser McKee & Smith (CDM Smith), to assist with the administration of multiple Public Assistance (PA) grants. This has to be constantly monitored and tweaked, depending on changing circumstances. New York State Division of Homeland Security and Emergency Services. It requested the re-classification of those costs because expenses captured in the DAC/COI PW were subject to the 3 percent cap, whereas PM costs were fully reimbursed. As part of this process, FEMA informed the Applicant by letter dated January 6, 2017 that CDM Smiths travel expenses associated with direct administrative and project coordination tasks were not eligible for reimbursement as DAC. Direct costs are those that can be identified separately and assigned to a specific project, such as staff time to conduct an initial inspection, prepare and submit PWs, and make interim and final inspections of the project. As an example, in PW 2608, the Applicant claims a CDM Smith employee spent 234.5 hours performing work on 27 projects which has been individually tracked and documented on CDM Smiths invoice #3.. The Applicant claimed that Section 207.6 (c) of Title 44 of the Code of Federal Regulations (44 C.F.R. Such work included preparing for and attending meetings with FEMA to present documentation in support of the eligibility of the changes to the approved scopes of work. A lock ( However, as noted, a pro rata allocation of expenses across every task for all PWs on the basis of hours worked on the task does not make such expenses eligible for reimbursement as DAC. The FEMA Region II Regional Administrator (RA) denied each of the Applicants First Appeals in decisions dated July 9, 2018 (First Appeal Determinations). In response, a Grantee representative instructed Hoffpauir to continue with its effort so that the Grantee could use it as precedence for other applicants. Separately, PM activities, such as procurement, document . However, as noted, a pro rata allocation of expenses across every task for all PWs on the basis worked on the task does not make such expenses eligible for reimbursement as DAC. Direct costs. [4] During the period in which FEMA initially obligated these PWs, the Applicant, the New York State Division of Homeland Security and . Section 324 Management Costs and Direct Administrative Costs. FEMA awarded PW 4831 for all DAC/COI costs with a 3 percent funding cap. Fixed Costs: The costs that are fixed throughout the project. [9] Since the Applicant has not demonstrated Hoffpauirs work and related costs pertain to eligible PM activities (i.e., oversight of an eligible project from the design phase to the completion of the work, including architectural and engineering design work), these are not eligible PM costs. [1] Specifically, CDM Smith calculated an hourly travel expense rate for each of its employees per billing period by dividing the employees total travel expenses by the total number of hours the employee worked on Applicant projects during the billing period. The following are the costs associated with the projects. Any costs that are directly attributable to the work on the project. Hosp. In this post, well learn about the difference between direct costs and indirect costs in project management with detailed examples and explanation. The Applicant is appealing the Department of Homeland Securitys Federal Emergency Management Agencys (FEMA) decision to deny the re-classification of $512,258.75 to project management (PM) costs. Additionally, the Applicant stated that a FEMA representative indicated he had authority to consider moving the DAC charges incurred during the version review timeframe for PWs 533 and 2397 to the PM PW. [7] Letter from Asst Admr Recovery Directorate, FEMA, to Dir., GOHSEP, at 1, 3 (June 12, 2012) (stating that FEMA will also apply the Memorandum from Asst Admr Disaster Assistance Directorate, FEMA, to Regl Admrs, et. OMB, to Commr, NYSHSES (May 11, 2018 and May 24, 2018) (collectively, Applicants First Appeals). FEMA issued a Final Request for Information (Final RFI) for each of the PWs via letters dated between June 19, 2018 and June 28, 2018. . [30] DAP 9525.9, at 2 4; DAC Guidance, at 3 and Attachment; City of Duluth, FEMA-4069-DR-MN, at 4. In a 2017 determination, FEMA denied the request, concluding the change orders eligibility work was DAC, not PM. You can use direct costs as production inputs in the next period, which makes them easier to forecast and manage than indirect costs. In addition to the underlying projects, FEMA funded the Applicants project management (PM) and direct administrative costs (DAC)/close-out incentive (COI) costs for all disaster projects in two separate PWs. v. FEMA, 708 F.3d 893, at 899 (7th Cir. and Emergency Preparedness (GOSHEP), at 2 (Nov. 30, 2015) (clarifying a January 9, 2014 letter from FEMA, by confirming that [t]he [Applicant] may receive more than three percent for eligible DAC/COI on a single project, as long as the total DAC/COI obligation does not exceed of the [Applicants] aggregate pre-reduction value of all eligible projects.). [31] See 2 C.F.R. From October 27, 2012, to November 9, 2012, Hurricane Sandy caused damage throughout the. The labor cost is referred to all the employees that work on the eBooks in order to make it a success. CDM Smiths employees often traveled to the Applicants jurisdiction and worked on multiple projects during each trip or billing period. [32], The Applicant also relies on the indirect cost allocation under 2 C.F.R. [15] Letters from Section Chief, Appeals & Audits, Recovery Div., FEMA Region II, to Dep. 200 as December 26, 2014); 79 Fed. Under FEMA Disaster Assistance Policy (DAP) 9525.9. these expenses are therefore indirect costs and are not eligible for reimbursement as Direct Administrative Costs (DAC). In the RFI Responses, the Applicant also explained that it had allocated all of CDM Smiths travel expenses in accordance with the Expense Allocation Methodology, including DAC travel costs and Project Coordination travel costs. The appeal is accordingly denied. Commr, NYSHSES and Dep. On July 5, 2017, the Applicant submitted a first appeal requesting FEMA include the charges for work done to support the changes to the approved scopes of work for PWs 533 and 2397 in PM PW 4653. Since the cost of lunch is directly attributable to the project, it is direct cost. This is in response to letters from your office dated October 23, 2018, which transmitted the referenced second appeals on behalf of Nassau County (Applicant). As explained in the enclosed analysis, I have determined that since the travel expenses at issue benefitted more than one Project Worksheet, they are indirect costs under FEMA Disaster Assistance Policy 9525.9, Section 324 Management Costs and Direct Administrative Costs, and the Applicant cannot allocate or assign such expenses to individual projects as DAC. ), Costs of equipment shared by multiple projects (like shared printers). Governors Office of Homeland Sec. Thanks for sharing your experience, Joel.Is there any part of the post that you do not agree with or are you trying to support it with more details from your experience? 44 C.F.R. [6] See Letters from Pub. The Applicant timely filed second appeals, reiterating its arguments from its first appeals. Start free trial 200.405(d)) (emphasis from original omitted). Dir., Nassau Cty. I missed answering this question earlier. Bidding as an Essential Skill for Project Managers, Time/Material Billing & Fixed Cost Billing, Why Project Managers Should Not Overpromise and Underestimate at the Same Time, The Need for Person Independence in Software Project Management, The Importance of Ethics in Project Management, Why Most Projects Run into Problems and How to Avoid them and What to do about it, Why Project Managers Must Master the Art of Dealing with Disruptions, Why Project Managers Must Focus on Last Mile Connectivity to Ensure Success, How Project Managers Can Benefit from Knowledge Management Systems, Why Project Managers Must be Prepared to Deal with Disruptions of All Kinds, Transitioning to Agile? The Applicant also relies on the indirect cost allocation under 2 C.F.R. management, general administration, rental and utility costs. [5] Response and Recovery Policy (RRP) 9525.6, Project Supervision and Mgmt. the travel expenses at issue benefitted more than one PW, they are indirect costs under FEMA Disaster Assistance Policy (DAP) 9525.9. CDM Smith allocated these expenses on a pro rata basis according to the eligible hours worked by a given employee (Expense Allocation Methodology). 200.405, since 2 C.F.R. Please inform the Applicant of my decision. In the memorandum, the Grantee cited to predisaster PM and post-disaster DAC policies to show that the costs are closely related. [2] See Expense Analysis Memo (The expenses and hours incurred on the project are totaled for each team member then divided by the total hour value for each team member.). pt. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url. ) or https:// means youve safely connected to the .gov website. 207.2, 207.6(c)). Accordingly, I am denying the appeal. Sometimes also referred to as "unburdened" or "bare" costs, direct costs include: Material; Labor; Equipment; and; Subcontractor costs Additionally, the Applicant stated that a FEMA representative indicated he had authority to consider moving the DAC charges incurred during the version review timeframe for PWs 533 and 2397 to the PM PW. Budget Dir., Nassau Cty. What are Direct Costs in Project Management? The Applicant stated it believed that, since project coordination and project management were both contract costs, travel expenses assigned to these categories should also be eligible for PA funding as contract costs. pt. This determination is the final decision on this matter pursuant to 44 C.F.R. The Applicant states Hoffpauir relied on an instruction from a Grantee representative to continue the discussions on the changes to the approved scopes of work. On July 5, 2017, the Applicant submitted a first appeal requesting FEMA include the charges for work done to support the changes to the approved scopes of work for PWs 533 and 2397 in PM PW 4653. The RA also determined that FEMA had not committed to approving the re-classification request. Basically, Direct costs vs indirect costs is an important concept that every project manager should know. 207.2, 207.6(c)). A distinction can be made depending on the nature of the product and business. By December 8, 2015, FEMA had obligated funds under Project Worksheet (PW) 4100 for disaster-related repairs to the Facility totaling $1,037,810.13, including $31,437.50 in direct administrative costs (DAC). The Applicant submitted its second appeals via letters dated September 10, 2018 and reiterated its prior arguments from its first appeals. New York State Division of Homeland Security and Emergency Services, Re: Second Appeal Nassau County, PA ID 059-99059-00, FEMA-4085-DR-NY, Project Worksheets (PWs) 1853, and 4113 Direct Administrative Costs Project Management Costs. Between June 25, 2013 and September 4, 2014, FEMA obligated several Project Worksheets (PWs) to document emergency protective measures and storm-related repairs. They also kept records of time spent working on each project task by assigning different codes to different projects, tasks, and categories of tasks. Please inform the Applicant of my decision. Commr, NYSHSES and Dep. and Budget (OMB), to Commr, NYSHSES, at 2 (June 1, 2018) [hereinafter PW 2214 RFI Response] (Regardless of the eligibility or ineligibility of a specific task on a specific project, Travel Expenses [sic] are allocated based on the actual work performed on said project in accordance with the methodology established in the expense analysis memo.). Reg. Under FEMA Disaster Assistance Policy (DAP) 9525.9, these expenses are therefore indirect costs and are not eligible for reimbursement as Direct Administrative Costs (DAC). The budget at completion or BAC should have all the components of the costs included like direct and indirect costs, fixed and variable costs etc along with the cost at each phase or milestone of the project. Travel expenses related to one specific PW qualify as DAC, while travel expenses related to general support and not directly tied to one specific project are indirect costs. The milestones for this project would be requirements, design, coding, testing and implementation. [15] In its RFI Responses, the Applicant provided meeting notes, email correspondence, and various memoranda, and stated that the Project Coordination category of work was the creation of FEMA, in order to capture certain expenses from CDM Smiths employees as contract costs, rather than DAC. [21] Letter from Dep. [17] 2 Letters from Regl Admr, FEMA Region II, to Dep. Direct costs are expenses that an organization can easily associate with a specific cost object, which can be a specific product, department, or project. By letters dated between January 18, 2018 and April 5, 2018, the Applicant transmitted its first appeals to the Grantee (Applicants First Appeals). OMB, to Commr, NYSHSES (Jan. 18, 2018 through Apr. of its concerns over costs incurred from continuing discussions on the eligibility of the changes to the approved scopes of work, and therefore its request to have its work classified as PM costs, not DAC. answered 12 years ago by dimple (2,920 +1 0 [30], The Applicant also relies on the indirect cost allocation under 2 C.F.R. The Applicant filed second appeals for PW 1853 and PW 4113, reiterating its arguments from its first appeals. Management Study Guide is a complete tutorial for management students, where students can learn the basics as well as advanced concepts related to management and its related subjects. The costs at issue in this appeal relate to work Hoffpauir performed to persuade FEMA that the changes to the approved scopes of work for PWs 533 and 2397 were eligible for funding (e.g., preparing for/attending meetings with the Grantee and FEMA, and providing documentation upon request). According to the Project Management Body of Knowledge, project managers can look at costs in three ways: Planned value - The value of the . They also kept records of time spent working on each project task by assigning different codes to different projects, tasks, and categories of tasks. The changes orders related to additional work beyond that previously approved, such as the installation of additional electronic and fire safety equipment. Sch. LockA locked padlock This is an addition to my 80+ Commonly Confused Concepts for PMP Certification. This determination is the final decision on this matter pursuant to 44 C.F.R. The costs at issue pertain to work the Applicants contractor performed to support the eligibility of changes to the approved scopes of work for two specific PWs; these are DAC rather than PM costs. They have direct links to specific outputs or services, and you can assign them to a single customer or product. Share sensitive information only on official, secure websites.. Hurricane Rita damaged several of the Cameron Parish School Boards (Applicant) facilities. Accordingly, the costs are not eligible DAC. Direct costs directly benefit a particular project where indirect costs benefit multiple project. Commr, NYSHSES and Dep. Bd., at 1 (Nov. 7, 2017) (citing Title 44 Code of Federal Regulations (44 C.F.R.) 200.110 expressly excludes all disasters declared prior to December 26, 2014 from the allocation principles codified in 2 C.F.R. OMB, at 2 (Mar. Major classification of construction projects costs are: Project direct costs Project Indirect Costs Total Project Cost = Project Direct Costs + Project Indirect Costs Direct Costs of Construction Project The costs and expenses that are accountable directly on a facility, function or product are called as direct costs. 200.110 expressly excludes all disasters declared prior to December 26, 2014 from the allocation principles codified in 2 C.F.R. On December 11, 2017, the Grantee transmitted the Applicants response and accompanying documentation to FEMA. Share sensitive information only on official, secure websites.. In an attached memorandum, the Grantee requested that FEMA provide additional rationale for its denial to allow the Applicant to provide responsive supplemental documentation. [24] During administration of the projects, CDM Smith utilized a methodology to allocate travel expenses across multiple projects (Expense Allocation Methodology), described in a Memorandum dated January 8, 2013 (, Between June 28, 2017 and February 7, 2018, the Grantee submitted to FEMA the Applicants Large Project Final Accounting (LPFA) for the PWs (. [17] The RA found that DAP 9525.9 limits reimbursement for travel costs (as DAC) to those costs that relate to one specific project.[18] The RA also rejected the Applicants reliance on Title 2 Code of Federal Regulations (2 C.F.R.) The Applicant reiterated that Hoffpauir spent significant time and effort on discussing the changes to the approved scopes of work with FEMA and the Louisiana, Governors Office of Homeland Security and Emergency Preparedness (, It also noted the multiple times, starting in 2012, that Hoffpauir told the Grantee and FEMA. to each PW and denied funding for the types of travel costs that it had previously found to be indirect costs, as those indirect costs were ineligible for reimbursement as DAC or as contract costs. Accordingly, the appeal is denied. This CDM Smith employee claimed 5.5 hours of work eligible as DAC (or, in the alternative, as contract costs) during the period covered by invoice #3, and therefore the Applicant seeks reimbursement for $213.36 ($38.79/hour x 5.5 hours) in travel expenses for this employee that it associates with PW 4113. In accordance with FEMA Disaster Assistance Policy (DAP) 9525.9, Section 324 Management Costs and Direct Administrative Costs, DAC includes costs incurred by a grantee or applicant "that can be tracked, charged, and accounted for directly to a specific project, such as staff time to complete field inspections and preparation of a PW ." Pub. The Grantee found that certain task descriptions of work performed after March 2011, all of which the Applicant had previously categorized as direct management tasks, should be considered for a move to the PM PW. Sch. The Applicant is appealing the U.S. Department of Homeland Securitys Federal Emergency Management Agencys (FEMA) decision to uphold a partial denial of funding for certain travel expenses claimed as Direct Administrative Costs (DAC) under Project Worksheets 1853 and 4113. The overhead costs for this project are the office setup and shared services. 206.206(a) (2004)). [1] Email from N.Y. St. DR-4085 PA Operations Lead, to N.Y. Sandy Branch Chief, FEMA Region II, (Oct. 4, 2016); CDM Smith Memorandum, Determination and Allocation of Expense Portion of Project Costs. This is in response to a letter from your office dated September 11, 2019, which transmitted the referenced second appeal on behalf of the Cameron Parish School Board (Applicant). (Jan. 8, 2013) [hereinafter Expense Analysis Memo]. Based on this instruction, Hoffpauir continued the above-referenced work. Dir., Nassau Cty. FEMA awarded PW 4653 for all PM costs with no cap. ProjectManager is a cloud-based project management software with online Gantt charts and resource management features that give you control over your project costs. . Accordingly, under DAP 9525.9, the Applicant cannot allocate or otherwise assign such expenses to individual projects as DAC or contract costs. The FEMA Region VI Regional Administrator (RA) denied the appeal, finding that the costs were DAC rather than PM because the work involved eligibility discussions. Conclusion: Nassau Countys (Applicant) contractors employees did not incur travel expenses for specific projects, and instead such expenses benefitted more than one Project Worksheet (PW). Because the costs at issue pertain to work the Applicants contractor performed to support the eligibility of changes to the approved scopes of work, they are DAC rather than PM costs. Finally, the Applicant noted that in February 2016, the Grantee performed an analysis of its request and generally concurred with re-classifying the costs. Accordingly, this appeal is denied. 200.110 (2014) (specifying the effective date for the Uniform Rules under 2 C.F.R. The Applicant appealed FEMAs LPFA determinations, arguing that the Expense Allocation Methodology was permissible under its interpretation of applicable regulations and FEMA policy, and that the travel costs so allocated were eligible for reimbursement as either DAC or contract costs. The direct cost for the eBook project includes: Labor costs, subcontractor cost (outside labor), material cost , equipment and facilities cost. The re-classification would remove those costs from the 3 percent DAC cap. OMB (Mar. 207.6(c)), read in conjunction with DAP 9525.9, allows applicants to claim, as DAC, those costs which can be identified separately and assigned to a specific project, if such costs can be and are attributed to individual projects.[9] The Applicant supported this argument by pointing to a pair of U.S. Office of Management and Budget (OMB) regulations,[10] which encourage applicants to allocate reasonable costs[11] among multiple projects, if said costs benefit two or more projects in proportions that can be determined without undue effort or cost.[12], Between January 25, 2018 and April 13, 2018, the Grantee transmitted the Applicants First Appeals to FEMA Region II. labor, raw materials, and equipment rental costs. [17] The Applicant claimed that FEMA and the Applicant had agreed that the Applicant would record the expenses associated with Project Management and Project Coordination tasks as contract costs, rather than DAC. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. Learn the difference between Discrete Effort, Apportioned Effort and Level of Effort (LOE) in project duration estimation for PMP certification. These can include the salaries paid to the resources, the billing rate of the resources and costs of the software and hardware that are used for building the website. [5] Ineligible PM activities include those necessary in requesting and obtaining Federal disaster subgrants, such as attending Grantee and FEMA meetings or completing documents to request assistance. Common direct cost examples in project management are: Labor costs of wages of employees on project management team Contracted fees of labor involved in project Any raw resources. Between June 25, 2013 and December 8, 2015, FEMA obligated several Project Worksheets (PWs) to document emergency protective measures and disaster-related repairs. By letters dated between May 11, 2018 and May 24, 2018, the Applicant transmitted its first appeals to the Grantee (Applicants First Appeals). 1 are the types of direct costs Identified in this case. During administration of the projects, CDM Smith utilized a methodology to allocate travel expenses across multiple projects (Expense Allocation Methodology), described in a Memorandum dated January 8, 2013 (Expense Analysis Memo). In other words, indirect costs are those for activities or services that benefit more than one project. LockA locked padlock [5] During the period in which FEMA initially obligated these PWs, the Applicant, the New York State Division of Homeland Security and Emergency Services . Environmental & Historic Preservation Guidance, Real Estate, Lending or Insurance Professionals, State, Local, Tribal or Territorial Governments, Preparedness Activities, Research & Webinars, Voluntary & Community-Based Organizations, Environmental Planning & Historic Preservation, National Business Emergency Operations Center, Direct Administrative Costs Project Management Costs. This is in response to a letter from your office dated September 11, 2019, which transmitted the referenced second appeal on behalf of the Cameron Parish School Board (Applicant). It can be measured by using a Cost Performance Index or CPI which measures the ratio of the Earned value with regards to the Actual cost incurred on the project. 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