A contingency cost is an allowance in the total budget to cover situations that cannot be fully defined when the budget is prepared but will likely result in additional eligible costs. Allowances for major project scope changes, unforeseen risks or extraordinary events may not be included as contingency costs.
For project applications, budgets may include contingencies; however, the recommended total contingency range is 1% to 5%. Contingency costs may be raised to 7% for historic properties as defined under the National Historic Preservation Act.[224] Recipients who request contingencies above these amounts must include a cost analysis that documents the percentage is reasonable.
Contingency costs must be included as a line item (cost category) in the budget of a project application if contingency costs have been identified. As with other line items in the budget, the subapplicant should justify the contingency estimate based on the nature of the proposed project. The total project cost, which may include contingencies, will be used to compute the BCA.
Contingency assistance is not automatically available for use. Prior to its release, contingency assistance must be rebudgeted to another direct cost category. Post-award changes to the budget to access contingency assistance require prior written approval from FEMA. The written request should demonstrate what unforeseen condition related to the project arose that required the use of contingency assistance.