Regional governance in the context of globalisation: reviewing governance mechanisms & administrative costs The first systematic and evidence-based mapping of the administrative workload and costs of the implementation of ERDF and Cohesion Fund for Member State public authorities A study for DG Regio CONTRACT NO 2008.CE.16.0.AD.056 / CCI NO 2008CE160AT090 – 092 COCOF meeting - 30 June 2010 Dr Kai Böhme, SWECO

Purpose: Review governance and administrative structures at the national and regional levels for ERDF and Cohesion Fund programmes during the 2007-2013 period. The focus is on administrative costs. Results: This study establishes for the first time systematic and evidence-based information on the administrative workload and costs of the implementation of ERDF and Cohesion Fund for Member State public authorities. The results cover the whole of the EU. The study is not an evaluation and the information on administrative costs are not a comment on the efficiency or effectiveness of the administration. 2

Differences between Member States administrative bodies involved. Country Total eligible expenditure in EUR ERDF & CF funding in EUR No. of Operational Programmes No. of bodies involved in programme management No. of bodies involved in programme certification No. of bodies involved in programme audit AT 1 276 780 733 680 066 021 9 20 2 1 BE 2 403 876 316 990 283 172 4 6 3 BG 6 624 538 988 5 488 168 381 5 7 CY 579 606 868 492 665 838 CZ 26 503 627 152 22 528 083 056 14 24 DE 26 396 199 001 16 107 961 527 18 90 23 DK 509 577 240 254 788 620 EE 3 611 579 771 3 011 942 552 16 ES 39 001 563 519 26 600 405 159 200+ FI 2 103 523 445 977 401 980 60 FR 22 690 079 887 8 054 673 061 30 73 GR 20 172 569 973 15 846 461 042 10 100 HU 25 049 482 420 21 292 060 049 13 IR 938 897 096 375 362 372 IT 44 092 710 694 21 027 307 507 28 50 26 25 LT 7 068 539 664 5 747 186 096 LU 85 107 216 25 243 666 LV 5 096 599 364 3 979 793 917 15 MT 856 615 354 728 123 051 NL 1 968 601 000 830 000 000 PL 70 617 533 404 55 514 676 992 74 17 PT 23 512 385 699 14 899 172 647 46 RO 18 916 024 612 15 528 889 094 34 SE 2 026 189 558 934 540 730 8 SI 3 935 705 031 3 345 349 266 SK 11 674 087 288 9 861 016 794 UK 11 088 825 121 5 416 019 735 Differences between Member States administrative bodies involved. total eligible budgets

Administrative workload over time Administrative workload assuming similar workload cycles for all programme periods Administrative workload over time The programming period is rather front-loaded with 2009 being the most work intensive year (dark blue line). There are time overlaps in the administration of different programming periods. 2008 and 2015 are peak years if all programming periods are taken together.

Administrative workload over time Administrative workload considering a one year delay of the closure of the 2000-2006 period Administrative workload over time The programming period is rather front-loaded with 2009 being the most work intensive year (dark blue line). There are time overlaps in the administration of different programming periods. 2009 and 2015 are peak years if all programming periods are taken together.

Total administrative costs EU Cohesion Policy –administrative workload (in person years per million EUR total eligible expenditure) EU Cohesion Policy – administrative costs (in EUR per million EUR total eligible expenditure) Full programme cycle 2007-2013, from preparation of national framework documents to programme closure: Administrative workload: approx. 170,000 person years Variation between countries mainly in the range of 0.3 to 0.8 person years per million EUR of total eligible expenditure Administrative costs: approx. EUR 12.5 billion Variation between countries mainly in the range of EUR 23,000 to 56,000 per million EUR of total eligible expenditure Administrative costs of beneficiaries and final beneficiaries are not included.

Administrative costs of national coordination National policy level Administrative workload (in person years per Member State) Administrative costs (in EUR per Member State) Workload over time Full programme cycle 2007-2013, incl. preparation of NSRF, NSR and national coordination activities: Administrative workload: approx. 5,800 person years Variation between countries mainly in the range of 10 to 300 person years per Member State Administrative costs: approx. EUR 800 million Variation between countries mainly in the range of EUR 850,000 to EUR 16.5 million per Member State National co-ordination efforts vary considerably. The preparation of the NSRF and NSR represents only a minor part of the coordination in most Member States. Annual workload as share of the total workload of this function.

Administrative costs of programme preparation Programme preparation Administrative workload (in person years per programme) Administrative costs (in EUR per programme) Workload over time Drafting of the programmes, ex-ante evaluation, designation of authorities and creation of management and control systems: Administrative workload: approx. 3,500 person years Variation between programmes mainly in the range of 3.5 to 14 person years per programme Administrative costs: approx. EUR 370 million Variation between programmes mainly in the range of 300,000 to 1 million EUR per programme Preparation of the OPs and creation of the management and control systems are the main tasks. Annual workload as share of the total workload of this function.

Administrative costs of programme management Programme management Administrative workload (in person years per million EUR total eligible expenditure) Administrative costs (in EUR per million EUR total eligible expenditure) Workload over time Full programme cycle 2007-2013, incl. all tasks related to the programme management: Administrative workload: approx. 136,000 person years approx. 40% of which by Intermediate Bodies Variation between programmes mainly in the range of 0.2 to 0.8 person years per million EUR of total eligible expenditure Administrative costs: approx. EUR 9.7 billion Variation between programmes mainly in the range of EUR 17,000 to 48,000 per million EUR of total eligible expenditure Project selection and verification of deliverables and compliance are the main tasks. Annual workload as share of the total workload of this function.

Administrative costs of certification Certification Administrative workload (in person years per million EUR total eligible expenditure) Administrative costs (in EUR per million EUR total eligible expenditure) Workload over time Full programme cycle 2007-2013, incl. all certification tasks: Administrative workload: approx. 10,600 person years Variation between programmes mainly in the range of 0.01 to 0.04 person years per million EUR total eligible expenditure Administrative costs: approx. EUR 580 million Variation between programmes mainly in the range of EUR 500 to 2,000 per million EUR of total eligible expenditure The certification of statements of expenditure and expenditure declarations are the main tasks. Annual workload as share of the total workload of this function.

Administrative costs of audit Audit Administrative workload (in person years per million EUR total eligible expenditure) Administrative costs (in EUR per million EUR total eligible expenditure) Workload over time Full programme cycle 2007-2013, incl. all audit tasks: Administrative workload: approx. 14,100 person years Variation between programmes mainly in the range of 0.02 to 0.06 person years per million EUR of total eligible expenditure Administrative costs: approx. EUR 1 billion Variation between programmes mainly in the range of EUR 500 to 4,500 per million EUR of total eligible expenditure The audit of samples is the main task, followed by the audit of the management and control system. Annual workload as share of the total workload of this function.

Final recipients The administrative costs vary considerably. One explanatory factor is the type of actions funded. Some estimations based on information from 149 projects are: Infrastructure investment projects: 1 – 2% of the eligible expenditure Business development support: 3 – 13% of the eligible expenditure Establishment of (social) platforms: 8 – 27% of the eligible expenditure Studies and investigations: 2 – 18% of the eligible expenditure The response rate from the beneficiaries is very low and many had difficulties to fully indicate their administrative costs. Therefore, these figures are only indications which have to be treated with great care.

Understanding the variations There is considerable variation in administrative workload and costs. Differences in the level of complexity are a key reason including: budgetary volume of programmes and projects thematic orientation programme geography The costs are also influenced by the different salary levels. Differences in management and implementation systems play only a minor role. 13

Budgetary volume The budgetary volume of the programmes and the funded actions influence the administrative workload and costs. Programmes with small budgets tend to have a higher administrative workload and costs per million EUR of total eligible expenditure than larger ones. Also the financial size of the funded actions influence a programme’s administrative costs. Programme management – administrative costs by financial prog. volume * (in EUR per million EUR total eligible expenditure) * This overview does not over European Territorial Cooperation Programmes.

Thematic orientation Based on a classification of programmes (own classification based on programme titles). The administrative workload per million EUR of total eligible EU expenditure rises with the complexity of the thematic orientations of the programmes. Administrative workload for the programme management (in person years per million EUR total eligible expenditure)

Geographical coverage Administrative workload and costs per million EUR of total eligible expenditure are lower for programmes with national rather than regional coverage. Reasons for this include the generally larger budgetary volumes associated with national programmes and the stronger orientation to specific sectors. Territorial Cooperation Programmes have very complex structures and often comparably small budgets. Viewed per million EUR of total eligible expenditure, they therefore have the highest administrative workload and costs. Administrative workload Administrative costs (in person years per million EUR total eligible expenditure) (in EUR per million EUR total eligible expenditure)

Management and implementation systems Variation in administrative workload is minor between different management and implementation systems. Advantages and disadvantages of different systems balance each other out. Administrative workload for programme management (in person years per million EUR total eligible expenditure)

Main conclusions The administration of programmes requires approx. 3 to 4 % of the total eligible budget. There are considerable variations regarding the administrative costs and workload. These are mainly due to programme geographies, the financial volume of the programmes and their funded actions, and the thematic orientation of the programmes. The choice of the management and implementation system has only a limited effect on the administrative workload and costs. The administration costs and workload of EU Cohesion Policy vary considerably over time. The financial management and control systems are issues of concern and there are various proposals for improvements. There is considerable uncertainty about the regulations in this field. This partially explains national ’gold plating’ and the statement that ”no changes to the regulations would be the best improvement”.

Issues for further investigation Data improvements relating in particular to overheads, the involvement of Intermediate Bodies and staff costs. The administrative costs associated with co-funding procedures in some Member States. Extent of national ‘gold plating’ and reasons for this practice. The administrative costs of regional policies not funded through EU Cohesion Policy. Inertia and the costs of changes to the regulations. Proposals for improvements and simplifications.

The project team The study has been carried out by SWECO in collaboration with a European-wide team of experts: ADT Consulting (FR), Archidata (IT), AUREX (SK), Berman Group (CZ), BGI Consulting (LT), ECORYS (NL), E-Cubed (MT), EPRC (IR, UK), EUROREG (PL), Infyde (ES), IPoP (SI), LG Consulting (RO), LKN (CY, GR), LogiPlan (HU), NetEffect (FI), ÖIR (AT), PhDB Consultant (BE), ProInfraConsult (BG), Spatial Foresight (LU), SWECO (DK, EE, SE), TAURUS-ECO (DE, PT), University of Latvia (LV). Contact: Dr Kai Böhme SWECO +46 730 39 73 30 kai.boehme@sweco.se