Finance for Beginners in European research FP7$and$H2020) · TN1302: BESTPRAC “Finance for beginners”, Training school, Verona, Italy 18 – 20 April, 2016 BESTPRAC Training School:

TN1302: BESTPRAC

“Finance for beginners”, Training school, Verona, Italy 18 – 20 April, 2016

BESTPRAC Training School: Finance for Beginners in European research and innovation projects (FP7 and H2020):

Budgeting at the proposal stage

Wolfram Rieneck Medical University Innsbruck

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Medical University Innsbruck •  Founded 2004 – former Faculty of Medicine University of Innsbruck (founded 1669)

•  approx. 2.900 students •  1800 employees •  Yearly budget approx. 260M€ (2014) •  Approx. budget. 38 M€ (2014) running external funded research projects

•  Approx. 20 M€ funding from FP7/H2020 unPl 2015 •  92 applicaPons H2020 •  Service Center Research: 4,5 + 2 persons

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Wolfram Rieneck •  1989 -‐ MSc Microbiology •  1995 -‐ PhD Microbiology / Biotechnology •  1998 – 2002 – Technology Transfer specialist at InnovaPon Relay

Centre Austria (Enterprise Europe Network) •  1998 – 2010 -‐ Regional Contact Point for FP4, FP5, FP6, FP7, H2020

at BEP – Bureau for European Programmes •  2002 – 2007 -‐ NaPonal Contact Point ”Health” 6th Framework

Programme •  From 2011 -‐ Medical University Innsbruck, Deputy Head of Service

Center Research, Project manager responsible for internaPonal projects and cooperaPon projects with industry

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Agenda •  Main changes in Horizon 2020 •  Key proposal budget steps •  Cost declaraPon in the project proposal – where? •  Forms of costs

–  Actual –  Unit costs –  Lump sums –  Flat rates

•  Eligible and non-‐eligible costs •  Cost categories

–  Personnel costs –  Other direct costs

•  Travel and subsistance •  Consumables •  Durable equipment

–  SubcontracPng –  Indirect costs

•  Proposal budgets – for the individual beneficiary and the consorPum •  MSCA & ERC AcPons •  Tipps and Hints

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Budget – main changes in H2020 Same reimbursement rate for all beneficiaries and all acPviPes in one project

•  Research and InnovaPon AcPon (RIA): up to 100% reimbursement of eligible costs •  InnovaPon AcPons (IA): up to 70% reimbursement of eligible costs (excepPon: for

non-‐profit organisaPons which will receive a maximum of 100% •  One single flat rate of 25% for Indirect Costs (Overheads) •  MSCA AcPons: lump sums for

–  Living Allowance, Mobility Allowance, Family Allowance –  Training costs –  Management and overheads

•  ERC Grants: Budget depends on the experience of the PI – three different stages •  SME Instrument

–  Phase 1: lump sum (50.000,-‐€) –  Phase 2: 70% of eligible costs

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Budget – main changes in H2020

•  Three opPons to calculate annual producPve hours

•  Clearer and simplier obligaPons on Pme records

•  More flexibility for average personnel costs •  Provisions on addiPonal renumeraPons •  Eligibility of non-‐deducPble VAT

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Key proposal budget steps

•  IdenPfy relevant cost items •  Determine costs per unit for each item •  EsPmate the number of units for each item •  Check the total budget against available funding

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Where to start – two opPons

•  Top-‐down

•  Bonom-‐up ê é vs.

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Top-‐Down budget planning Coordinator defines global budget and budget share for each beneficiary Examples: Allocate equal share of the budget to the partners Assign an arbitrary budget to each partner (keeping the largest part for yourself – of course)

Good? Not at all! UnrealisPc for the evaluators Unfair concerning workload in the project for the different partners Some partners may not be willing or even economically able (e.g. SMEs) to carry the same workload a others Discussion, negoPaPon and communicaPon as crucial part of the cooperaPon is completely missing

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Top-‐Down budget planning

Responsible esPmaPon of each partner´s needs and resulPng budget figures only by the coordinator

Good? Bener but: You need to know each partners internal procedures (e.g. DepreciaPon periods, working laws etc.) You need to search for the country specific personnel costs You need to know the prizes in each country Partners may not agree with your esPmated costs

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Bonom up budget planning

•  This method looks at the individual components that will make up the costs for the project and adds them together

•  Partners develop their own cost esPmates based on their understanding of what they will be doing on the project and their knowledge about their internal rules, the country-‐specific rates and exisPng resources

•  This is a much more detailed and accurate way to esPmate the cost of a project

•  From experience the accumulated budgets reaches much higher amounts than originally envisaged or possible

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Best pracPce to develop the budget •  A combinaPon of both! •  The main danger of the pure bonom-‐up approach is that partners could try to blow up their figures so that they have excess money to work with

•  Therefore a Top-‐Down element is urgently needed •  Final budget esPmates are developed through an iteraPve approach based on what the project can afford – managed and moderated by the coordinator

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Where will the budget be presented in the project proposal?

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Part A – SecPon 3 (1st stage)

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Part A – SecPon 3 (2nd or single stage)

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Part B 1.  Excellence

1.  ObjecPves 2.  RelaPon to the work programme 3.  Concept and approach 4.  AmbiPon

2.  Impact 1.  Expected impacts 2.  Measures to maximise impact

1.  DisseminaPon and exploitaPon of results 2.  CommunicaPon acPviPes

3.  ImplementaPon 1.  Work plan -‐ Work packages, deliverables and milestones 2.  Management structure and procedures 3.  ConsorPum as a whole 4.  Resources to be commined

4.  Members of the consorPum 1.  ParPcipants (applicants) 2.  Third parPes involved in the project (including use of third party resources)

5.  Ethics and Security 1.  Ethics 2.  Security

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Part B – SecPon 3.4

3.4 Resources to be commi<ed •  Please make sure the informa1on in this sec1on matches

the costs as stated in the budget table in sec1on 3 of the administra1ve proposal forms, and the number of person/months, shown in the detailed work package descrip1ons.

•  Please provide the following: –  a table showing number of person/months required (table 3.4a) –  a table showing ‘other direct costs’ (table 3.4b) for parPcipants where those costs exceed 15% of the personnel costs (according to the budget table in secPon 3 of the administraPve proposal forms)

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Forms of costs

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Forms of costs -‐ applicability

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•  General: •  Fixed sum per unit •  Possible unit cost in „standard projects“ (RIA, IA):

•  Personal costs for SME owners without income •  “Average personnel costs“ („Personnel costs declared on the basis of the beneficiary's usual

cost accoun1ng prac1ces” ) •  Other unit costs only are possible if there is an„opPon“ specified in the

GA(e.g. clinical trials, access to research infrastructure…)

•  CalculaIon: •  Number of units x cost per unit •  e.g. 100 Units à 50 € = 5.000 €

• JusIficaIon: •  ConnecIon to the acIon, incurred during the duraPon of the acPon •  Numbers of units used must be documented

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Unit Costs

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Examples

•  Owners of SMEs who do not draw a salary are eligible to claim costs as a unit rate cost (amount per hour to be established)

•  Natural persons who do not draw a salary are eligible to claim costs as a unit rate cost (amount per hour to be established)

•  Third party and in-‐kind costs an be deemed as eligible costs, such as seconded personnel, equipment, infrastructure, contributed goods and services

•  Not for profit organisaPons can claim the payment of a supplement of up to €8,000 per year for personnel (If this is a normal payment forming part of the remuneraPon package)

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• Flat rate •  Specified percentage of certain costs •  Recently only flat rate of 25% for indirect costs •  NO jusPficaPon necessary

• CalculaIon of flat rate for indirect costs: •  Direct eligible costs (except subcontracPng and costs for third party

costs not ocurring at the site of the beneficiary) x 0,25 •  AutomaPcally calculated in the A-‐form and the financial statement

•  Lump sums •  Global budget – only when indicated in the grant agreement •  Recently NO Lump sums forseen in „standard projects“

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Flat rates & Lump sums

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Eligible costs •  (i) they must be actually incurred by the beneficiary; •  (ii) they must be incurred in the period set out in ArPcle 3, with the excepPon of

costs relaPng to the submission of the periodic report for the last reporPng period and the final report (see ArPcle 20);

•  (iii) they must be indicated in the esPmated budget set out in Annex 2; •  (iv) they must be incurred in connecPon with the acPon as described in Annex 1

and necessary for its implementaPon; •  (v) they must be idenPfiable and verifiable, in parPcular recorded in the

beneficiary’s accounts in accordance with the accounPng standards applicable in the country where the beneficiary is established and with the beneficiary’s usual cost accounPng pracPces;

•  (vi) they must comply with the applicable naPonal law on taxes, labour and social security, and

•  (vii) they must be reasonable, jusPfied and must comply with the principle of sound financial management, in parPcular regarding economy and efficiency.

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Non-‐Eligible costs •  (i) costs related to return on capital; •  (ii) debt and debt service charges; •  (iii) provisions for future losses or debts; •  (iv) interest owed; •  (v) doubxul debts; •  (vi) currency exchange losses; •  (vii) bank costs charged by the beneficiary’s bank for transfers from the

[Commission][Agency]; •  (viii) excessive or reckless expenditure; •  (ix) deducPble VAT; •  (x) costs incurred during suspension of the implementaPon of the acPon

(see ArPcle 49); •  (xi) costs declared under another EU programme

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The beneficiary proposal budget

•  Average Person Month Cost – For staff typically working on project

•  EsPmate of person months per task •  EsPmate of consumables per task •  EsPmate of travel days with overnight stays •  Equipment to be used/purchased •  SubcontracPng •  Other third party costs

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The consorPum proposal budget Bringing all parts together, checking consitency The coordinator also has to consider •  Costs for management

–  Coordinator –  Partners (travel, reporPng etc.)

•  Costs for Training •  CerPficates of financial statements •  IPRs •  PublicaPon and DisseminaPon costs

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Main Cost Categories

–  Personnel costs – Other direct costs

•  Travel and subsistance •  Consumables •  Durable equipment •  ”Minor tasks” •  others

–  SubcontracPng – Other third party costs –  Indirect costs

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Personnel Costs •  Rough and generous esPmaPon (average costs of involved staff members / categories)

•  Include annual income increases (e.g. 2,5% p/a) •  Part B: only indicaPon of personnel effort in form of person months – must be consistent in all tables and with Part A

•  Hours per person month: annual producPve hours / 12 •  Costs per person month: hourly rate * hours per PM •  e.g. 1720 annual producPve hours -‐> 143,33 hours per person month

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Personnel costs – hourly rates

A: General case Hourly rate calculated

as defined in the model GA (Art. 6.2.A)

ê B: if you use average personnel costs:

Hourly rate calculated by the beneficiary in

accordance to its usual accounting

practices

ê C: if you are a SME owner without a salary or a natural person without a

salary:

Hourly rate formula fixed by the Commission

Unit Costs

Actual Costs

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Personnel costs – actual costs OpPons for calculaPng the annual producPve hours •  1720 hours

–  Standard model (part-‐Pme: aliquot share) –  For each beneficiary

•  Individual annual producPve hours-‐ calculaPon: –  Annual workable hours of the person (defined by naPonal laws,

collecPve contracts, working contracts with consideraPon of holidays, public holidays etc.

–  OverPme and absence •  Standard annual producPve hours

–  CalculaPon according the usual pracPse from the beneficiary –  At least 90% of annual workable hours

It is not possible in ANY case to get more hours reimbursed than the respecPve annual producPve hours!

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Personnel costs – actual costs Personnel costs cover the enPrety of costs incurring for the employer and depend on •  Staff grade / personnel category •  Actual salary for this category •  Taxes paid •  Pension contribuPon •  Social insurances costs •  Country-‐specific regulaPons (e.g. Holiday payment, Christmas payment etc.)

•  Other related costs and payments

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Personnel costs – calculaPon •  For Hourly Paid Staff •  Number of producPve hours per month for staff member

•  The producPve hours have to be clearly jusPfied and must match the underlying Pme recording system

Working days per year x hours worked per day 12

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Personnel costs – calculaPon •  Typical Figures: •  Working days

Total days in year – Weekends – Statutory holidays – Holidays – Sick leave allowance

e.g. 365 – 105 – 9 – 20 – 6 = 225

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Personnel costs – calculaPon •  CalculaPng working hours per month:

– Working days – 225 – Working hours/day – 8 hours – Working hours per year – 1.800 OR (1,720)

Working Hours/month: 1,800 / 12 = 150

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Personnel costs – calculaPon CalculaPng personnel cost per month:

•  Staff category: senior post-‐doc •  Total salary cost per year= € 70.810,-‐ •  Working hours per year = 1.800 •  Hourly cost = € 39,34 •  Cost per month = hourly cost x hours worked in a month

€ 39,34 x 150 = € 5.901,-‐

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Personnel costs – calculaPon CalculaPng average personnel cost per month: 4 year project •  Category 1: Senior Postdoc -‐ € 5.901,-‐ •  Time on project 48 person months = € 283.248,-‐ •  Category 2: BMA -‐ € 3.582,-‐ •  Time on project 24 person months = € 85.968,-‐ •  Category 3: Postdoc -‐ € 5.351,-‐ •  Time on project 36 person months = € 192.636,-‐ •  Total cost = € 516.852,-‐ for 108 person months

Average project cost per person month and beneficiary: € 516.852 / 108 = € 4.786,-‐

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Personnel costs addiPonal renumeraPons •  Only for Non-‐Profit organisaPons, max. € 8.000,-‐ per year (full-‐Pme

contracts)

•  Prerequisits: –  Clear connecPon to the parPcipaPon at the project –  Only for addiPonal tasks or experPse –  ObjecPve and general criteria –  Consistant applicaPon based on usual pracPces –  Wrinen documented renumeraPon system –  Independent of the financial source (dedicated rules „only for EU

projects“ are not eligible) –  RegulaPons cannot be set that the addiPonal renumeraPons only will

be paid when regular budget not completely spent

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Example Salary of Researcher A (yearly total costs, 1720 total producPve hours):

Salary: 50.000 € Head of department payment (naPonal law): 16.000 € AddiPonal renum. leader of H2020-‐Project 2.000 €

AddiPonal renum. Internal project: 1.000 €

Eligible if according to the rules for addiPonal renumeraPon

Non-‐eligible for H2020 funding

Salary of researcher – hourly costs: 50.000,-‐ + 16.000,-‐ / 1720

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Examples Regular salary for AddiIonal remuneraIon for Eligible?

Training Research yes

Research Principal InvesPgator (ERC) yes

Laboratory research Field research yes

Research Management of research team or infrastructure

yes

Research (internal projects) Research (internaPonal cooperaPve projects)

yes

Research (internal projects) Research (EU-‐funded projects)

no

Research Working language English no

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AddiPonal renumeraPons

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Travel and subsistance Based on actual cost of travel event and normal working pracPces of the beneficiary. •  First Class Rail and Economy Air is normal pracPce •  For proposal, esPmate the number of meePngs needed per

parPcipant per acPvity and mulPply by a standard rate. •  Possible travel opportuniPes:

–  Project meePngs –  Conferences –  Company visits (exploitaPon of results) –  etc.

•  E.g. € 300 per return flight per person

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Travel and subsistance •  Subsistance: •  Includes – AccommodaPon and Subsistence (meals, transportaPon etc.)

•  2 Choices: (based on usual pracPces) –  Actual Costs – MUST keep all receipts –  Flat Rate – No need to keep subsistence receipts

•  For Proposal: Best to esPmate based on Flat Rates •  Typically use:

–  € 100,-‐ per night for accommodaPon –  € 30,-‐ per full day for subsistence

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Travel and subsistance

•  For a typical project meePng: – No of meePng days – 1, arrive the night before, leave the day a~er

– One return plane fare –  Two nights at hotel –  Two days subsistence

•  € 300,-‐ Flight – (EsPmated flat rate) •  € 200,-‐ Hotel – (2 x € 100,-‐) •  € 60,-‐ Subsistence (2 x € 30,-‐) •  Total = € 560,-‐ per meePng

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Consumables Per beneficiary build up as follows: •  EsPmate the consumables required per WP/Task •  Typical consumables:

–  Materials –  Equipment specifically for the project that can not be used elsewhere (Eg; strain gauges, prototype tooling etc.)

–  Project-‐specific computer so~ware licenses –  „Minor tasks“

•  AnenPon: standard equipment like notebooks, standard so~ware (office tools), office equipment must be covered by indirect costs!

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Durable equipment

Per beneficiary build up as follows: •  EsPmate the Equipment required per WP/Task

– New Purchases – To be depreciated over the project duraPon

–  ExisPng Equipment -‐ Can also be claimed if not already depreciated in the accounPng system

•  O~en durable equipment is also used for other purposes / projects -‐> calculate the project share

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Durable equipment -‐ example

•  Durable Equipment – AmorPsed over 5 years •  Bought at beginning of 2nd year of a 5 year project •  Used the rest of the Pme for project (4 years) work as share of 50% for the remainder of the project –  Equipment Cost -‐ € 100.000,-‐ –  Allowable project cost is – 4 years as 50% used on the project

–  Therefore 4 years depreciaPon cost – €80.000,-‐ at 50% usage = € 40.000,-‐

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CerPficate of financial statement Max. one CFS necessary (at the end of the project)

–  Only at max. EU contribuPon > € 325.000,-‐ –  CalculaPng of the threshold including average personnel costs –  Other unit costs, flat rates / lumpsum are not included in this threshold

–  Per beneficiary build up as follows: –  Depending on size of EU contribuPon and usual pracPce

•  Fixed rate e.g. 2.000,-‐ -‐ 5.000,-‐ •  Percentage of EU contribuPon (or threshold value) e.g. 1,5%

–  Also included in ”other goods and services), not subcontracPng anymore (like in FP7)

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SubcontracPng, Third parPes •  Ensure best value for money and avoid conflict of interests •  SubcontracPng between beneficiaries is not allowed.

SubcontracPng to affiliates is generally not allowed either •  EsPmated costs and tasks must be idenPfied in the budget

and in Annex 1 •  NEW: if not idenPfied in Annex 1, Commission may sPll

approve them (beneficiary bears the risk of rejecPon) •  E.g.: Laboratory TesPng described in Annex 1 as acPon task

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Indirect costs Costs connected with infrastructures and the general operaPon of the organisaPon such as:

–  Hiring or depreciaPon of buildings and plant –  Water/gas/electricity –  Maintenance –  Insurance –  Supplies and peny office equipment –  CommunicaPon and connecPon costs –  Postage

Costs connected with horizontal services such as: –  AdministraPve and financial departments –  Human resources –  Training –  Legal advice –  DocumentaPon, etc.

Flat rate 25% on all direct costs except SubcontracPng and Third Party costs

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Useful Tipps

•  AddiPonally to the tables and explanaPon / jusPficaPon in the project descripPon also use graphical presentaPon of the budget -‐> „why this budget is necessary for the acPon“

•  Avoid disPncPve features and if needed explain them pro-‐acPvely

•  Provide relevant addiPonal informaPons (maybe also as graphical illustraPons) like –  Budget share dedicated to SMEs –  Budget distribuPon on research, innovaPon, disseminaPon, exploitaPon, training, etc

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Example: graphical presentaPon

Personnel costs 57%

Other direct costs 14%

SubcontracPng 6%

Third parPes 5%

Indirect costs 18%

Cost Categories

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Useful Tipps •  Calculate well-‐balanced (not too cheap – not too generous), esPmate the

costs realisPcally (evaluaPon!!!) -‐> the budget must fit to the project! •  Explain clearly for which purposes the money will be used •  Get familiar early enough with the regulaPons set out in the model grant

agreement •  Discuss and esPmate realisPcally if and how subcontractors and third

party contribuPons need to be implemented in the acPon . Explain this part clearly in the decripPon of the acPon

•  In any case avoid discrepances / different figures in the parts A (forms) and B (descripPon of the acPon) concerning costs and staff effort

•  Use clear and self-‐explaining elucidaPons – graphical presentaPons help you and the evaluators!

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MSCA AcPons -‐ ETNs

Relevant changes in H2020 •  Maximum researcher months increased from 500 to 540 on ETN •  Up to 15 full Pme (36 months each) ESRs in the network •  Only living allowance linked to County CorrecPon Coefficients •  Management and indirect costs now at a fixed per month rate •  No specific costs allocated for consorPum management •  Country CorrecPon Coefficients have changed (Serbia 0.671) •  ERs are not eligible to receive funding in ETNs •  2 Party EID – 180 researcher months! •  RenumeraPon of MSCA AcPons is based on lump sums

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MSCA AcPons – Costs based on PM AcIon Researcher/ Unit costs per PM InsItuIonal unit costs per PM

Living allowance country coeff.!!

Mobility allowance

Family allowance

Research, training & networking

Management & Overheads

ITN 3.110 600 500 1.800 1.200

IF 4.650 600 500 800 650

RISE 2.000 1.800 700

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ERC grants Three categories •  ERC StarPng grant: 2-‐7 years a~er first PhD, max. 5 years duraPon

–  Max. EU contribuPon: 1,5 M€ –  AddiPonally: 0,5 M€ start-‐up costs or major equipment or access to large

infrastructures •  ERC Consolidator grant: 7-‐12 years a~er first PhD, max. 5 years duraPon


infrastructures •  ERC Advanced grant: ≥ 12 years a~er first PhD, max. 5 years duraPon


infrastructures

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ERC grants -‐ budget

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ERC grants – budget

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Thank you very much for your anenPon

Any quesPons ?

Documents

Finance for Beginners in European research FP7$and$H2020) · TN1302: BESTPRAC “Finance for beginners”, Training school, Verona, Italy 18 – 20 April, 2016 BESTPRAC Training School: