The Preparation Phase: Part III: financial issues Juras Ulbikas

Proposal writing - Resources to be Committed Essentially a budgeting exercise Many researchers don’t know how to do that The Commission will never increase the budget The Commission may reduce the budget, so don’t budget too tightly Value for money

Proposal writing - Resources to be Committed Estimating costs and preparing the budget Direct vs. indirect costs Direct = directly attributable to the project Indirect = overheads Majority of the costs are for personnel (time x salary) Overheads are not allowed on subcontracting costs

Proposal writing - How to substantiate costs General principles Break down costs into categories Depreciate equipment costs according to normal accounting principles Justify levels of human resources Different countries are expected to charge different rates If any cost is not clear, review! Poor justification of costs = storing up problems

Budgeting - Eligible Costs incurred during the project directly linked to the work as defined in the grant agreement actual, i.e., really incurred and paid for determined according to usual accounting and management principles consistent with the principles of efficiency and effectiveness exclusive of non-eligible costs (e.g. VAT)

Budgeting - Direct Costs Directly attributable to the work in the project such as: salaries for people who work directly on the project costs for materials, components, and consumables that will be purchased solely for the project costs for equipment for the percent of time used in the project it must have a book value travel and subsistence costs within reason

Budgeting - Indirect Costs Indirect costs (Overheads) not directly attributable to the work in the project necessary to support the overall project, such as: Salaries for support personnel Facilities costs including rent, insurance, utilities, IT infrastructure, etc. Equipment not used directly in the project w ork

Budgeting – Personnel costs Base the hourly rate for the project on the workable hours Concept of “workable hours” (Example) 52 weeks x 40 hrs = 2080 hrs Vacation = 200 hrs National holidays = 80 hrs Sickness leave + other (estim) = 120 hrs 400 hrs Workable hours: 1680 hrs

Budgeting – Personnel costs Calculation example Salary = 16,800 EUR/year Workable hours = 1680 hrs or: 1 Person Month = 1680/12 = 140 hrs Hourly rate = 16,800 EUR / 1680 = 10 EUR/hr Overheads: 25 % over the eligible direct costs = 2.5 EUR per hour declared to the project A higher salary is beneficial for the institute?

Budgeting – Calculation example 20 Person Months Travelling: 5 travels of average 800 EUR 25% overhead rate Budget Personnel: 20 x 140 hrs x 10 EUR/hr = 28,000 EUR Travel: 5 x 800 EUR = 4,000 EUR Overheads: 25% x (28,000 + 4,000) = 8,000 EUR Total = 40,000 EUR (costs)

Budgeting – Calculation example

Budgeting – Calculation example (x1000 Euro) Direct Indirect Total Fund% Total Funding Uni-1 100 25 125 70% 87.5 SME 160 40 200 140 LE 50 250 175 Uni-2 Mgt 10 35 700 875 - 612.5

Budget – Management costs Project management costs NOT scientific management 100% or 70% reimbursable depending on project type Rule of thumb: ~7% (as in FP7) Include costs of compulsory CFS Co-ordinators: consider employing full-time professional project manager

Proposal writing - Project Management section The management capability of the coordinator is critical Basis is a sound work plan with feasible and measurable deliverables Describe aspects: project organisation and decision making structure communication between partners progress monitoring project documentation

Proposal writing – Project Management Structure (example)

Work-package Co-ordinator Project Management Co-ordinator Project Board Project Office Feedback and Control Reporting Work-package Co-ordinator A basic principle of good EC Project Management is to decide carefully upon what is the role of good management in such a project. The key role of management in an EC project is to perform the tasks and deliver the contractual deliverables in an efficient and timely manner. It could be said, it is about allowing the scientists to get things done or to do the science. But the scientists will also have a clear role in this and they should be clear about their role in the project. Having said that, it is important, where possible, to assign management functions to people who have experience of managing an EC project, whether they be dedicated management professionals or scientists with experience of managing an EC project. So what does this diagram show? This project has a designated Project Office - this is where the project managers will be. Their role will be to carry out the project effectively in terms of the contractual requirements (which remember are to ensure that the deliverables (Basically defined by the reporting schedule) are met and on time. The flow of reporting is shown also. Clearly, the Project Office will assist the Coordinator. Since the coordinator can get help from the Project Office, but ultimately the Coordinator is the one responsible for making sure the reports are met. The decision making is also clear from this diagram. The Coordinator is represented here in a project board. The Project Board will normally be the decision making body. They will have representatives of each partner. Finally The 2 key things to remember, which go back to the previous slide, is that the decision making and organisational structure must be clear to the assessors. In addition, the communications structure (which is key part of the decision making) has been made clear. In your proposal narrative, you would use a diagram like this along with a few sentences describing the roles of the Project Board and the other bodies illustrated. You would also make clear who does what. Contractor Contractor Contractor Source: UKRO

Proposal writing – PUDF PUDF = Plan for the Use and Dissemination of Foreground A kind of Business Plan exploitation (using the results) dissemination (spreading the results) Use and dissemination of the project results If weakly described, the applicants suggest that the project is proposed for academic satisfaction purposes, and this is not where H2020 is for!