Author Description

Alternative procedures for obtaining Public Assistance from the Federal Emergency Management Agency allow an applicant to bundle projects together and to not build back to the same state as predisaster. Cost overruns are the applicant's responsibility, and cost savings can be invested in other mitigation and risk reduction activities. In most cases, current construction costs are a good proxy for future costs, accounting for inflation. In the case of Puerto Rico's recovery from Hurricane María, the scale of the recovery efforts relative to the size of the economy means that these efforts are likely to fundamentally change the economy in terms of labor, materials, and equipment. As a result, in this project, the authors aimed to develop estimates of future construction costs and build multiplicative factors that cost estimators can apply to current costs to reflect the future cost of construction. To do this, they developed a disaster recovery expenditure simulator based on historical obligations; created a model to estimate expenditure scenarios' effect on prices of labor, materials, and equipment; devised an econometric approach to estimate substitutability of labor; and developed a labor demand estimator. This report documents their approach, data, findings, and recommendations.