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6 - Resource Allocation and Budgeting

6 - Resource Allocation and Budgeting. H2020 Finance - Key Data. Core Contract – provides details of contract finances Annex II Grant Agreement (or GA ) – provides general financial terms and conditions EU Financial Guidelines Website address to search for a key document:

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6 - Resource Allocation and Budgeting

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  1. 6 - Resource Allocation and Budgeting

  2. H2020 Finance - Key Data • Core Contract – provides details of contract finances • Annex II Grant Agreement (or GA) – provides general financial terms and conditions • EU Financial Guidelines • Website address to search for a key document: • http://ec.europa.eu/research/participants/portal/desktop/en/funding/reference_docs.html MED-Dialogue Training - www.MED-Dialogue.eu

  3. H2020 Funding Instruments • Reimbursement of Costs – ‘Co-operation’ Pillar • The same rate for all beneficiaries and all activities: • Up to 100% for Research and Innovation actions • Up to 70% for innovation (non-profit entities up to 100%) MED-Dialogue Training - www.MED-Dialogue.eu

  4. Funding Schemes Two basic principles govern all FP7 cooperation projects: Collaboration Cost Sharing Collaborative: “All the beneficiaries (partners) together form a consortium with equal rights and obligations” “Partners are allowed to transfer budget between different activities and between themselves.” MED-Dialogue Training - www.MED-Dialogue.eu

  5. Funding Schemes: Collaborative What does this mean for the budget ? It is indicative, i.e. stating the foreseen costs and funding. The total funding requested is the maximum amount that can be paid by the EC. It is in no way a guaranteed payment. The budget can be changed between cost categories and partners. MED-Dialogue Training - www.MED-Dialogue.eu

  6. Funding Schemes: Collaborative What does this mean for the work to be done ? The partners decide who is doing what, defined in the Description of Work (DoW) - a contractually binding document. The partners can jointly decide to change this DoW and seek approval from the EC. If one partner fails, the rest of the consortium has to find an appropriate remedy. MED-Dialogue Training - www.MED-Dialogue.eu

  7. Funding Schemes: Cost Sharing Cost Sharing: The costs incurred for implementing the project are “shared” between the partners and the EC on the basis of the funding rate. Only real costs can be claimed ! If you spent less than planned you will receive less funding. Example: You estimated 5000 Euro for travelling, on 70% funding this would mean 3500 Euro from the EC. You only spent 3000 Euro at the end of the project, so you can only claim 2100 Euro. MED-Dialogue Training - www.MED-Dialogue.eu

  8. H2020 Cost Model – Eligible Costs • The cost of personnel assigned to the project. Working time to be charged must be recorded by any reasonable means (e.g. timesheets). • Travel cost and subsistence allowances for staff taking part in the project. • The purchase costs of durable equipment (depreciated cost, the portion of the equipment used in the project may be charged). • The cost of consumables and supplies. • Subcontracting (if defined in the contract). • Non-deductible VAT. NEW Anything else is not eligible MED-Dialogue Training - www.MED-Dialogue.eu

  9. Financial Issues - Depreciation The national tax laws of a partner determine if equipment has to be depreciated and over which time. For example: A H2020 contract for a 36-months project is signed in March 2014. Equipment is purchased in May 2014 for €100,000, with a depreciation period of 36 months. The equipment would be used 34 months, and therefore, 34/36 financially depreciated, i.e. €94,444.44 can be claimed as cost. If the equipment is only used partially in the project (e.g. 50%), only that share can be claimed as cost. Equipment bought before the start of the contract can not be charged to the project ! MED-Dialogue Training - www.MED-Dialogue.eu

  10. H2020 Cost Model – Indirect Cost • Indirect costs (overheads) are all those structural and support eligible costs of an administrative, technical and logistical nature: • which cannot be identified as being directly attributed to the project. • which can be identified and justified by its accounting system as being incurred in direct relationship with the eligible direct costs attributed to the project. • which are cross cutting for the operation of the beneficiary body’s various activities and cannot therefore be attributed in full to a specific project. MED-Dialogue Training - www.MED-Dialogue.eu

  11. H2020 Cost Model – Indirect Cost • In H2020 there is only one method for calculation of indirect costs: • A Flat Rate of 25% of total direct costs, excluding subcontracting, costs of third parties and financial support to third parties • If provided in WP, lump sum or unit costs MED-Dialogue Training - www.MED-Dialogue.eu

  12. Calculating Staff Time • Calculate “Number of Productive Hours” per year • Determined by deducting holidays, national holidays, sick leave and other entitlements e.g. training • 365 days/year – 104 days of weekends – 30 days of holiday leave – 15 days of statutory holidays – 6 days of sick leave = 210 productive days x 8 working hours/day = 1680 productive hours per year • Hourly Rate = Annual gross salary / 1680 hours MED-Dialogue Training - www.MED-Dialogue.eu

  13. Time Recording Q. Who needs to do this? • Any staff member working on a project, unless full-time on the project Requirements as are follows: • Record actual (not estimated) hours including time spent on all projects • Record either start and end time, or number of hours each day N.B. If total hours exceed annual amount, hourly rate will be reduced, thus best to work standard hours MED-Dialogue Training - www.MED-Dialogue.eu

  14. EC Financial Contribution • Maximum contribution cannot be exceeded and includes: • Single Pre-Financing (see slides below) • Interim payments following each Reporting Period • Final Payment plus any prior period adjustments • EC withhold 10% retention until date of last payment so pre-financing and interim payments shall not exceed 90% MED-Dialogue Training - www.MED-Dialogue.eu

  15. Pre-Financing 1 • Only 1 pre-financing (or advance) payment to be made at the beginning of project. • To be transferred from the EC not later than 30 days of contract start date (unless special clause) • Coordinator must distribute to members:- • Once all members have signed and returned Form A (accession form) MED-Dialogue Training - www.MED-Dialogue.eu

  16. Pre-Financing 2 General Rule for projects with more than 2 reporting periods (RPs) - 160% of average EU funding per RP less 5% Guarantee Fund For projects with 1 or 2 RPs – between 60%-80% of the total EC contribution (specified in contract) Reasons for variations to Pre-Financing: • Project with heavy initial investment – increased • Project with low expenditure in 1st period - decreased MED-Dialogue Training - www.MED-Dialogue.eu

  17. Guarantee Fund • Aims to cover financial risks incurred by EC and participants during project • 5% of the total EC contribution retained by the EC and transferred to separate EC fund at time of pre-financing payment • Paid into EC bank account and interest earned should cover risks of non reimbursement of amounts due by project members • Returned to beneficiaries via Coordinator at point of final payment. • Maximum deduction of 1% of EC contribution may be permanently retained excluding public bodies MED-Dialogue Training - www.MED-Dialogue.eu

  18. Pre-Financing Example 1 Project running over 3 reporting periods (RPs) with total EC contribution of €3,000,000 • Average EC contribution = €1,000,000 (i. e. 3,000,000 / 3 years) • 160% of average contribution = €1,600,000 • Contribution to Guarantee Fund @ 5% = €150,000 • Pre-financing to Coordinator = €1,450,000 MED-Dialogue Training - www.MED-Dialogue.eu

  19. Pre-Financing Example 2 Project running over 18 months with 1 RP with total EC contribution of €900,000 • Pre-financing 75% as stated in EC contract = €675,000 • Contribution to Guarantee Fund @ 5% = €45,000 • Pre-financing to Coordinator = €630,000 MED-Dialogue Training - www.MED-Dialogue.eu

  20. Interim Payments • EC will pay all accepted costs of previous Reporting Period as next interim payment • Does not require Audit Certificate unless total accepted costs have reached €375,000. • Interim payments continue during life of project up to threshold of 85% of total budget (10% retention, 5% guarantee fund) MED-Dialogue Training - www.MED-Dialogue.eu

  21. Cash Flow in the project How is the cash flow in the project over it’s entire duration, until the final payment has been made ? MED-Dialogue Training - www.MED-Dialogue.eu

  22. Cash-flow Example Example calculation for one partner of a project MED-Dialogue Training - www.MED-Dialogue.eu

  23. Cash-flow Example End of Project For well over 15 months negative cash flow (15% = 76 kEuro) MED-Dialogue Training - www.MED-Dialogue.eu

  24. Project Reporting 1 • All contractually defined reports (= Deliverables) • Periodic Reports – due within 60 days after end of each Reporting Period Consortium Requirements: • Overview of progress towards objectives • Explanation of use of resources • Financial statement – FORM C for each partner plus consolidated report (Annex IV). MED-Dialogue Training - www.MED-Dialogue.eu

  25. Project Reporting 2 • Final Reports – due within 60 days after end of project Consortium Requirements: • Final summary report of results, conclusions etc. • Report covering wider societal implications, dissemination plans etc. Plus: Coordinator must submit report on distribution of EC contribution to partners 30 days after receipt of final payment MED-Dialogue Training - www.MED-Dialogue.eu

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