COSTS CALCULATIONS IN A FP7 PROJECT

Leonardo Piccinetti EFB

Main Principles

• • • • • • Funding is a non repayable grant to a project All payments are considered advance Acceptance of cost is done with the final payment All costs have to be economic, efficient, and effective Reimbursement is done according to the type of organisation, action and/or activity Understanding of the financial rules is very important

Applicable Schemes

• • • • • • Collaborative Projects; Networks of Excellence (NoE); Coordinating and support actions (CSA); Individual projects; Training and carrier development activities and networks; Targeted activities for specific groups - SMEs

Maximum funding rates

• • • • Research and technological development activities: – eligible costs except for: Public bodies (non-profit): –

75%

Secondary & higher education establishments: –

75%

Research organisations (non-profit): –

75% Small and Medium sized Enterprises - SMEs

: –

75%

50% of Demonstration activities: – Other activities: – 50% of eligible costs 100% including e.g. consortium management

Coordination and support actions

–

100%

Eligible Costs

• • Eligible Costs are: • actual • during duration of project • in accordance with its usual accounting and management principles • recorded in the accounts of beneficiary • used for the sole purpose of achieving the objectives of the project Total costs = direct + indirect costs

Non-eligible Costs

• • • • • • • identifiable indirect taxes including VAT duties interest owed, provisions for possible future losses or charges, exchange losses, cost related to return on capital, costs declared or incurred, or reimbursed in respect of another Community project, (avoiding double funding), debt and debt service charges, excessive or reckless expenditure

Direct and Indirect Costs

• • Direct costs are those costs which are directly related to a project, can be clearly identified and justified by the normal accounting rules and principles of the beneficiary and are shown as direct costs in the organisation’s own annual financial reports: – Staff or Personnel Costs; – Equipment; – Consumables; – Subcontracting; – Business trips – Others ….

Indirect costs (Overheads)

Personnel Costs

• • • • • • • Temporary and permanent staff; Cost of employment = salary + employers contribution + any accountable benefits (car, mobile telephone, pension, etc.) Staff cost is total of cost: gross salary and additional taxes, social insurance payments; Only real performed working hours are payable!

Records for the working time in a time sheet is mandatory.

Average personnel costs may be used if consistent with above and do not differ significantly from actual Do not use overestimated monthly rates!

Indirect Costs

• • • • Indirect Costs are known as overheads Indirect Costs are costs that an organisation incurs and that can not be directly attributed to a particular project or another productive process of the organisation.

Indirect Costs are added to the Direct Costs Examples of indirect costs: – Costs for general administration and management; – Office or laboratory space, including rent or depreciation of buildings and equipment and all related expenditures such as water, electricity; maintenance ; insurance and safety costs – Communication expenses, network connection charges, postal charges and office supplies; – Depreciation of common office equipment such as PC’s, laptops, office software; – Various consumables

• •

Indirect Costs – Actual indirect costs

Analytical Accounting system: – Overheads can be identified for each department, cost centre or individual member of personnel.

Simplified method: – total indirect costs (overheads) can only be determined at the level of the entity as a whole. i.e. the beneficiary is not able to identify its indirect costs at department or individual personnel member level.

Indirect Costs – Flat Rate

• • • Flat rate is 20% of direct costs minus subcontracting and 3rd parties not used on the premises of the beneficiary. Transition flat rate – For non profit Public Bodies, Secondary and Higher Education establishments, Research Organisations and SME’s unable to identify their real indirect costs per project, – flatrate of 60% of direct costs for funding schemes with RTD until end of 2009 (shall be used beyond tht date).

For CSA : reimbursement of indirect eligible costs limited to 7% of direct costs

Equipment costs

• • Depreciation is applied The Formula: (A/B) * C * D, where A is the period of months during which the durable equipments is used for the project after invoicing; B is the normal depreciation period; C is the actual cost of the durable equipment D is the percentage of usage of the durable equipment for the project Example: Lap Top: (24/36)*1000*30% =200 Euro

Other costs

• • • • • IP protection – patent searches; filing of patent (or other type of IPR) applications, etc.; Dissemination activities – publications; conferences; workshops; web-based activities; Studies on socio-economic aspects – assessments of impact of the knowledge generated; analyses of the influence factors (e.g. standardization; ethical or regulatory aspects); Promotion of exploitation of results – plan for knowledge use and dissemination; feasibility studies; “take-up activities” to promote early or broad application (assessment; trial and validation of promising but not fully established technologies and solutions); Training activities – can include salary costs for those providing training but not for those being trained

Subcontracting

• • • • • Relate to a minimum part of the project Duly justified and limited to specific cases and specialised jobs.

The beneficiary remains fully responsible for carrying out the project, retains the IPR and ensures that certain provisions of the GA are reflected in the agreement with the subcontractor Subcontracts are given to legal entities Subcontracting between beneficiaries is not possible

Cost Estimation and Planning for Proposals • • • • • • Work Package planning to define PM/WP Define Cost per Person Month (average) – Average salary of people expected to work on the project Define overall labour cost Travel costs: number of travels expected * fixed amount (example 500 € ) Other costs: Equipment, subcontracts Indirect costs

Thank you!

Leonardo Piccinetti