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FP6 Financial Info & FAQs --> Proposal --> Financial Budget

There are differences between the type of Instrument and the Cost Model. This section is purely an overview of the things to be taken into account. Please note that there are no predefined rates or costs. Budgeting should be done on expected actual costs to be incurred.

 

Items common to all cost models

It is vitally important for each participant to involve an accountant experienced in FP6 rules to determine the best Cost Model for the organisation. If the organisation has existing FP6 contracts, it should continue to use the chosen model. However it is possible, within certain constraints, to use a different model.

 

The accountant should also calculate, for budgetary purposes, the man rate or rates to be used for this participant for this proposal. This rate is made up of two distinct parts: the salary and the other costs of employment. The gross salary should be a future estimate with allowance for inflation built in. Added to that should be non-salary costs of employment such as employers social security, any payroll tax, retirement plan, insurance, provision for severance pay, car or other benefit. Each of those is of course highly dependent on the norm for the individual country. These two parts together make up the base cost of employment.

 

For this purpose we assume that the number of man months or man days that the participant is entitled to for each activity that he will contribute has been agreed within the consortium.

 

The calculation of labour cost should be straight forward, if the number of man months and their costs are already known.

 

Other costs should now be addressed. The principal of those will be international travel, equipment and sub-contracts. The travel to be expected should be calculated by number of expected trips per activity and the normal cost of a trip which comprises travel, accommodation and living expenses. The acceptable levels for those would be those recognised within each country by the tax authorities.

 

Sub-contracts are somewhat different in that they include projected audit costs as well as other sub-contracts as justified in the proposal and not related to core activities of the project. Such work should be minimised.

 

In addition to the above other costs such as material should be identified and taken into account. It is also important from an administrative point of view to have a split of all costs by activity type.

 

Finally AC and FCF participants should add 20% for unspecified overheads to everything except sub-contracts. FC participants – see below

 

The AC Model participant

Main point to remember for AC is that labour cost of permanent members of staff generally cannot be funded unless it is part of the 7% management cost. AC participants should add 20% for unspecified overheads to everything except sub-contracts.

 

Don’t forget that AC participants should claim 100% of above costs. This leads to an interesting ploy as companies can only claim say 50% of their costs for RTD. It has been known for necessary sub-contracts to be issued via an AC participant as otherwise only 50% of it would be reimbursable. This is acceptable if it is justifiably related to that participants activity. Same goes for large capital expenditure and say large material costs.

 

The FCF Model participant

Main point here is first to have a check undertaken to ensure you are not better off using the FC model. As the FCF overhead is only 20%, if you can justify say 30% on FC, you would be better off. In case of doubt, you may wish to postpone the use of an external expert to determine your potential FC overheads until your proposal is accepted. In those cases, we would advise to claim FC and put down some rate such as 50%, as thought appropriate. During contract negotiations, when you more or less know you will get funded you can always request less and even revert to FCF. The point being, when you establish in a proposal a budget, it is very difficult to get it increased. It is relatively easy to give some back! However, in the latter case, try increasing your budgeted manpower to use up available budget! Most people underestimate to keep proposal costs low.

 

The FC Model participant

The Commission says it will accept the current practice in a company for computing of R&D overheads. Most companies do not have such a system set up, so this is an opportunity to establish one of maximum benefit to you with respect to what you can claim via FC. A danger is that a company may be participating in other external funded R&D programs with their own more restrictive rules. There is no compulsion to use this in calculating your overheads.

 

Note on NoE budgeting

Although the overall grant requested will be calculated by the number of researchers integrated the Joint Program of Activities should be costed as per other types of projects. If for no other reason than to justify the requested funding.

 

Note on SSA budgeting

The A3 form is unclear for FC participants. They should fill in the cost using their full calculated overheads but when calculating the EC contribution only use 20% rate. Even though this appears as they are not then getting 100% funding, they are in fact claiming 100% with the 20% overhead.

Financial Budget FAQs


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