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FP6 Financial Info & FAQs --> Proposal --> Cost Models

In FP6 only two cost models are permitted (with one variant): The Additional Cost model (AC) and the Full Cost model (FC/FCF).


Cost Model


Type of Organisation


Additional cost flat rate overhead

Physical person must use this, non commercial or international non profit organisations with accounting system incompatible with FC


Full cost

Any organisation except physical person


Full cost flat rate overhead

SME, non commercial and non profit organisations

A contractor may choose a cost model according to the table shown above to identify its eligible cost following the description given in Annex II of the model contract. The contractor should use the same cost model already used in other contracts with the Commission or if it is a new comer as contractor, it should select a cost model and maintain it for all its participation in the contracts of the FP6. Where organisations submit proposals from various departments, it is essential that the first approved proposal basis is used by all departments in future proposals.


Certain exceptions are possible for SMEs entering the FP6 on the FCF cost model and non commercial and non profit organisations entering on AC cost model and subsequently wish to move to FC (or FCF) model or when a legal entity changes its legal status, for example:

1.       SME becoming a large enterprise or the reverse (following a re-organisation of a large enterprise);

2.       Public body (or part of it) through a privatisation process becoming a private enterprise. 

3.       Private enterprise becomes a public body.


The replacement of the FF cost model by FCF model in FP6 has affected SMEs by decreasing the recognised overheads without justification from 80% to 20%. On the positive side, the overhead now applies to all expenses except sub-contracts and not just labour as in the past. It is also possible to include non-technical staff such as administrators etc., directly working on the project. However, this still would leave most SMEs far short of the previous funding levels. On the other hand, if an SME chooses the FC model, it should be possible to exceed FCF funding levels in most cases. It is possible that even for micro-companies. i.e. 5 or 10 staff it should be possible to come up with a model that could justify overheads of more than 20%. Some accountants are able to come up with a legal creative model to maximise benefits of FC usage by SMEs.

Additional Cost Model (AC)
Full Cost Model (FC & FCF)
Differences between FCF, FC and AC
When To Use FCF, AC or FC
Changing Cost Models
Correct FC Calculation

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