NSW Disaster Recovery Funding Arrangements: employee, project management, equipment and other costs
This page provides guidance to asset owners and relevant NSW State agencies on the application of Disaster Recovery Funding Arrangements 2018 (DRFA) as they apply to certain components of expenditure under Category B assistance measures.
Expenditure related to restoration works must satisfy eligibility criteria for reimbursement under the NSW Disaster Assistance Guidelines (DAG), the DRFA and each of the sub-categories of Emergency Works, Immediate Reconstruction Works, and Essential Public Asset Reconstruction (EPAR) Works identified in the NSW Eligible Disaster Essential Public Asset Restoration Guidelines (NSW EPAR Guidelines).
This guidance only applies for NSW councils who have opted-in to Day Labour Co-Funding Arrangements, and for State agencies that manage or own essential public assets, such as Transport for NSW. For councils that have not opted-in to the Day Labour Co-Funding Arrangements, a number of exceptions will apply as per the NSW EPAR Guidelines. When reconstructing essential public assets, as per DRFA clause 4.3.2.d and the NSW EPAR Guidelines, the asset owner must develop an estimated cost for (EPAR) works. The estimated cost can include eligible expenditure for construction, design, project management, contingency and cost escalation.
Expenditure related to the full cost of salaries and wages for personnel where they are directly involved in the delivery of the reconstruction works, such as where they are directly involved in the construction, project design or project management, would be eligible. This includes existing staff, contractors or temporary (fixed-term) employees. Eligible personnel expenditure includes undertaking tasks which are required for the specific project/s to be completed. Typically, this would include roles undertaking tasks such as;
- geotechnical investigations
- survey and set out of works
- engineering design and design review
- environmental assessments and approvals
- preparation of applications and supporting information for any statutory licences, permits and approvals
- preparation of site-specific quality, safety and environmental management plans
- tendering and procurement processes
- management of contracts and contractors involved in the delivery of the project
- contract claim assessment and verification and contractor direct supervision
- construction works and site supervision and surveillance
- certification and quality assurance for construction works
- project scoping and cost estimating
- project planning and coordination
- purchasing of materials and equipment hire required for the project
- project level resource planning and coordination
- communications required to inform the community of the impacts of project delivery
- legal matters associated with access to property where required to facilitate project delivery
- project level financial management and reporting.
Personnel costs for those directly engaged in the delivery of the project/s are not required to be incremental or additional costs to the regular budget but would be eligible only for the actual time they were engaged on those eligible activities.
Ineligible personnel expenditure includes indirect personnel costs, i.e. personnel undertaking work that is a step removed from the actual delivery of the eligible works and where that role is not required for the specific project/s delivery. These personnel costs are considered indirect (and therefore ineligible) under Category B.
This is the case for roles that provide overall DRFA program level management, oversight and direction, and DRFA audit, assurance and program administration roles, e.g. Works Managers, Directors and Executive Managers, Chief Financial Officers, Human Resource Officers, Accountants and Administrative Officers who are not directly engaged in the restoration of essential public assets.
Even if these costs are incremental or additional costs to the regular budget, costs would be considered as indirect or administration overheads and therefore not eligible under the DRFA and the NSW EPAR Guidelines.
Establishing Project Management and Delivery Teams
Where a team of personnel is established by an asset owner in response to an eligible disaster event specifically for the delivery of eligible works, the asset owner will need to provide adequate supporting documents to demonstrate the nexus between the expenses incurred and the eligible works being carried out.
This documentation will need to cover the role/s of existing staff, contractors or temporary (fixed-term) employees and would typically include an organisational chart, position descriptions for the specific roles, and the cost build up for the rates used. The documentation should also include identification of staff working full time on eligible works and staff working for a portion of their time on eligible works and the means of recording the split between time spent on eligible works and other work.
The overall projected costs of the team delivering the eligible works is to be used as the basis for the cost estimates included for construction, design and project management when developing the estimated reconstruction cost of an EPAR using the State’s controls and the Form 306. The design and project management cost estimate should be shown as a separate line item for the overall EPAR in the Form 306. The actual eligible costs incurred must then be recorded against individual EPARs over the life of the project/s either directly or by apportionment.
The council or agency must ensure that the methodology to demonstrate how costs are apportioned to each EPAR, along with the evidence to demonstrate that the staff have been engaged directly on eligible tasks is kept in accordance with the State’s DRFA controls and the State Records Act 1998 No 17. It is not acceptable for councils or agencies to seek reimbursement of eligible personnel, project management, equipment and other costs using alternate claims formats outside the EPAR claims process, including:
- adding a general % overhead cost to direct costs instead of using actual costs
- requesting lump sum payments for project management costs separate to EPARs
- submitting a separate EPAR claim for project management costs only
- requesting reimbursement of claims with no supporting information.
The guidance provided is directed towards the typical level of effort required to deliver the reconstruction of essential public assets following a declared eligible disaster and should provide adequate information to assist councils and agencies to establish the resources necessary for the delivery of eligible works.
Where significant extraordinary expenses are required for a portfolio of eligible works, or there is any doubt over a specific cost or circumstance, asset owners should seek early advice from the administering agency to ensure that these are eligible, can be justified, and are not excessive.
This may include situations where a considerable number of additional staff are deemed necessary, or extraordinary office space and associated utilities and consumables are required, or significant additional software licence fees are required where the delivery team is expected to manage a significant volume of eligible works.
Eligibility of salaries, wages and associated on-costs
Works type: Emergency Works (EW) and Immediate Reconstruction Works (IRW) and Essential Public Asset Reconstruction (EPAR) works
Expense detail:
- Budgeted, ongoing staff including salaries, wages, associated oncosts and overtime.
- Employment costs for contractors, consultants, hired labour, casual or temporary (fixed-term) employees.
- Other costs such as travel expenses, allowances, accommodation, and oncosts such as superannuation entitlement and workers compensation.
Eligibility status: Eligible
Time period for expenses: 3 months from date site is accessible, or later if Allowable Time Limit (ATL) extension approved for EW and IRW. Approved completion date for EPAR works.
Note: Applies to both NSW State agency and council employees. Includes staff directly engaged in the construction, project management, design and delivery of the eligible works.
On-cost* calculations must apply the methodology developed by NSW Government. See NSW RA Fact Sheet on On-Costs for relevant financial year.
*When both NSW state agency and council employees undertake eligible reconstruction works under the DRFA, they are not permitted to charge a profit margin or a corporate overhead (%).
Works type: EW, IRW and EPAR works
Expense detail:
- Existing staff, contractors, consultants or temporary (fixed term) personnel engaged in program management and administration of eligible works.
Eligibility status: Ineligible
Time period for expenses: N/A
Note: Applies to both NSW State agency and council employees.
Eligibility of plant and equipment costs
Works type: EW, IRW and EPAR works
Eligibility status: Eligible
Time period for expenses: 3 months from date site is accessible, or later if ATL extension approved for EW and IRW. Approved completion date for EPAR works.
Note: This applies to internal plant and equipment used for eligible works and maintenance costs required as a direct consequence of using internal plant and equipment.
Rates should be on a cost recovery basis only which includes:
- Fuel and oil
- Tyres and tubes
- Parts and repairs
- Depreciation
The following costs* are ineligible and should be excluded:
- Insurance
- Licenses
- Profit margin
- Garaging costs
- Risk allowances
- Opportunity costs
- Administration
*When both NSW state agency and councils utilise internal plant and equipment to undertake eligible reconstruction works under the DRFA, they are not permitted to charge a profit margin or a corporate overhead (%). A breakdown of the rate applied for internal plant and equipment may be requested to demonstrate the above.
Works type: EW, IRW and EPAR works
Eligibility status: Ineligible
Time period for expenses: N/A
Note: Purchase of any plant items, tools, signage or equipment used for eligible works.
Eligibility of other costs
Works type: EPAR works
Eligibility status: Eligible
Note: This applies only where additional rented office space is required, above and beyond what is currently available to the council or agency, solely for the purpose of accommodating personnel managing delivery of eligible works. These costs can only be incurred during the life of the eligible works. Costs can be apportioned using an appropriate pro rata methodology or as incurred. If the space is shared, then only the portion of the cost associated with the program of eligible works is eligible. Asset owners should seek early advice from the administering agency for any extraordinary costs.
Works type: EW, IRW, EPAR works
Eligibility status: Ineligible
Note: The use of existing premises, or any premises owned by the entity, is not eligible to be claimed. In addition, the loss of revenue due to use of a premises that would otherwise generate rental income is not eligible to be claimed.
Works type: EPAR works
Eligibility status: Eligible
Note: This applies only where these costs are not capital expenditure and are used solely for the purpose and duration of the eligible works, are considered reasonable costs in the delivery of the eligible works, and are in addition to any cost that would have been incurred if there was not a disaster.
Works type: EW, IRW, EPAR works
Eligibility status: Eligible
Note: Notifications to community and road users, tender and procurement notifications and other communications associated with eligible works, that are in addition to any cost that would have been incurred had the eligible works not occurred.
Works type: EPAR works
Eligibility status: Eligible
Note: This applies for site specific inductions and training that is required for the eligible work sites, and which would not have been undertaken, had the eligible works not occurred. This does not include training for DRFA administration or general staff development.
Works type: EW, IRW, EPAR works
Eligibility status: Eligible
Note: This applies for additional insurance that is required specifically as part of a contract for the delivery of eligible works. It does not include general insurance costs for a council or state agency that would have been incurred had the eligible works not occurred. Note that any claims against existing insurance policies must be made before seeking assistance for eligible works. The estimated reconstruction cost for an EPAR is to be reduced by the amount of any insurance payments made to the entity, excluding any excess payable by the entity as these are not eligible for reimbursement.
Works type: EW, IRW, EPAR works
Eligibility status: Eligible
Note: Where required for eligible staff directly engaged in delivery of eligible works. See salaries, wages and associated on-costs above.
Works type: EW, IRW, EPAR works
Eligibility status: Eligible
Note: Where required for eligible staff directly engaged in delivery of eligible works. See salaries, wages and associated on-costs above.
Works type: EW, IRW, EPAR works
Eligibility status: Eligible
Note: Where required for eligible staff directly engaged in delivery of eligible works. See salaries, wages and associated on-costs above.
Works type: EW, IRW, EPAR works
Eligibility status: Eligible
Note: Where required for eligible staff directly engaged in delivery of eligible works. See salaries, wages and associated on-costs above.
Works type: EW, IRW, EPAR works
Eligibility status: Eligible
Note: This applies for expenses for eligible works on a cost recovery basis. See salaries, wages and associated on-costs above.
Works type: EW, IRW, EPAR works
Eligibility status: Eligible
Note: This applies for expenses for eligible works on a cost recovery basis. Excludes any NSW Waste Levy charges reimbursed to the asset owner and any profit margin applied to gate fees.
Works type: EW, IRW, EPAR works
Eligibility status: Eligible
Note: Where required for eligible staff directly engaged in delivery of eligible works. See salaries, wages and associated on-costs above.
Cost apportionment
Councils and State agencies can use one of the following methods to apportion eligible costs to an EPAR project over the life of the eligible works:
Applying costs directly to an EPAR
Eligible costs can be directly applied to eligible EPARs over the life of the eligible work. For example, staff that are engaged to work on specific projects can charge the costs associated with their time to those eligible works, as they are incurred. This method is preferred, but it is acknowledged there are circumstances where tracking time or costs against specific EPARs will not be practical or will create an unreasonable additional administrative burden. In these cases, the cost apportionment method described below can be used.
Applying costs to generic cost centre and apportioning to EPARs
Eligible costs may be charged to a generic administration cost centre. The costs can then be apportioned across a portfolio of eligible projects. Ideally the only costs charged to the generic cost centre would be for DRFA related projects. Where non-DRFA related projects are occurring at the same time using the same resources and charged to the generic cost centre, eligible costs will need to be apportioned over both DRFA and non-DRFA projects in accordance with the allocation of resources across the projects. Expenses can only be incurred as long as necessary over the life of the portfolio of eligible works and cannot be charged to a project beyond its completion and acquittal date.
The rate or amount applying to each EPAR project should be indicated, along with the methodology that has been used to determine the calculation. Evidence is required for each cost charge (transaction level) as well as each apportionment process (journal level) and should support the costs and their required duration over the life of the eligible work and as delivery progresses.
Evidence requirements
Evidence should justify the need for incurring eligible costs, support the time and work undertaken, and how the eligible costs are apportioned to each eligible project.
Evidence requirements apply to EW, IRW and EPAR works. A direct link needs to be shown to demonstrate the eligible costs are directly related to the construction, design and project management of the eligible works.
Evidence could include:
- transaction listing or general ledger
- organisation structure
- position description
- job advertisement
- Award supporting staff grade that is charged
- employment contract
- activity register or approved time sheet
- diary records of tasks and projects
- de-identified payslip
- contract/agreement
- tax invoices identifying location of works and activities undertaken
- journal records and apportionment calculation sheets.
Other forms of detailed records providing an equivalent level of supporting information equal to those referred to above are also acceptable. Records need to be focused on showing evidence of cumulative hours worked on eligible projects, and evidence of costs that are extraordinary to normal business as usual costs and how they specifically relate to the delivery of eligible works and nominated EPARs.