Mina Stareva and Mathilde Chadorge

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How to prepare a good budget ? March 28th
2008 Belgrade
Mina Stareva and Mathilde Chadorge www.europroject
.bg
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OUTLINE OF THE PRESENTATION

• GENERAL IDEAS
• BUDGET ELABORATION
• Example of Gueorgiev, repainting his laboratory
• Example of real project in Agri food
• CONCLUSIONS

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HOW DOES IT WORK ? - Basic principles

• 1) You estimate your budget
• How much implementing activities will cost
  your organisation
• - It defines the EC contribution how much
  your organisation can receive - maximum amount !!
• 2) You implement your project and report real
  costs
• how much implementing the activities has cost
  you
• 3) If the EC approves your technical report and
  your financial report - is awarded to your
  organisation

2008
2009
2011
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IMPORTANT DEFINITIONS (1)

• Budget (or total cost)
• how much your organisation needs to carry out
  the activities
• Eligible costs
• how much for the EC funding
• Maximum EC contribution
• maximum amount of that can be awarded by the
  EC

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IMPORTANT DEFINITIONS (2)

• Budget (or total cost)
• Direct costs Indirect costs ( of the direct
  costs)
• Eligible costs
• May vary from the budget according to specific
  rules
• ex in Specific Support Action, eligible
  indirect costs 7 of direct costs
• Maximum EC contribution
• of eligible costs
• This depends on
• 1) the type of project (CSA, Large research
  project etc.)
• 2) the type of organisation (university, private
  company etc.)
• 2) the type of activity (research, training,
  management etc..)

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BUDGET ITEMS

• Direct costs
• Personnel costs (reimbursement of the time spent)
• Travel and subsistence costs
• Durable equipment
• Consumables
• Sub-contracting
• Other direct costs
• Indirect costs
• Four options (Actual indirect costs, flat rate
  (20), transitional rate (60), CSAs)

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COSTS ELIGIBILITY

• To be eligible, costs must be
• Actual
• Incurred by the beneficiary
• During the project duration
• Compliant with accounting rules
• Used to reach objectives
• Indicated in the budget estimation

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OUTLINE OF THE PRESENTATION

• GENERAL IDEAS
• BUDGET ELABORATION
• Example of Gueorgiev, repainting his laboratory
• Example of real project in Agri food
• CONCLUSIONS

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Ex Prof. Gueorgiev repainting his laboratory (1)

• Prof Gueorgiev is willing to paint his
  laboratory.
• Employees will do the work
• It has a cost for the organisation
• These costs will be covered at 75 by a bank
• His basics needs are (project definition)
• Someone to do the painting
• A ladder, a paint roller
• Jugs of paint
• Someone to supervise the work done
• Electricity
• How will he make his budget ?
• Category of expenses per category

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Ex Prof. Gueorgiev repainting his laboratory (2)

• Cost categories
• Someone to do the painting personnel cost
• A ladder, a paint roller durable equipment
• Jugs of paint consumables
• Someone to supervise the work personnel cost
• Electricity indirect cost

Directcosts
Indirect costs
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Ex Prof. Gueorgiev repainting his laboratory (3)

• Cost category 1 Personnel costs
• Principle
• 1) Identify who will perform the work (category
  of personnel)
• 2) Estimate the time required (hours, days,
  month)
• Multiply by the salary ( total amount on the
  payslip)

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Ex Prof. Gueorgiev repainting his laboratory (4)

• Cost category 1 Personnel costs
• Example
• Lab technician cost for 1 month 1100
• Lab technician cost for 1 day 1100/20 55
• Director cost for 1 month 1700
• Director cost for 1 day 1700/20 85
• Task 1 Conception
• Time for task 1 0.5 day for lab technician
  0.5 day for director
• Cost for task 1 0.5 (day) 55 (/day)
  0.5 (day) 85 (/day)
• 27.5 42.5 70 euros

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Ex Prof. Gueorgiev repainting his laboratory (5)

• Cost category 2 Durable equipment
• Principle
• Durable equipment will stay after the end of the
  project
• Example ladder, paint roller
• The eligible cost takes into account the
  depreciation and the used

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Ex Prof. Gueorgiev repainting his laboratory (6)

• Cost category 2 Durable equipment
• Example
• Cost of 1 ladder 150
• Cost of 1 paint roll 30
• Depreciation over 30 days
• It will be used during 3 days
• Eligible cost ladder 150 3/30 15
• Eligible cost paint roll 30 3/30 3
• Note in this example, he should better borrow a
  ladder from a friend !!

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Ex Prof. Gueorgiev repainting his laboratory (7)

• Cost category 3 Consumables
• Principle
• Necessary for the implementation of the project
• Purchased during the project
• Example
• 4 jugs of paint 80 (12 m2/l, 2,5l/jug, 120 m2
  laboratory)

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Ex Prof. Gueorgiev repainting his laboratory (8)

• Indirect costs (also called overheads)
• Principle
• - Cost which ca not be identified as directly
  attributed to the project
• - A of the direct costs (except
  sub-contracting)
• - Choice between the four methods of calculation

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Ex Prof. Gueorgiev repainting his laboratory (9)

• Budget translation
• Direct costs
• Personnel costs
• A lab technician 3,5 daysdaily salary 3,555
  195
• A supervisor and conceiver 1 day (1 85) 85
• Durable equipment
• A ladder 15
• A pain roller 3
• Consumables
• 4 jugs of paint 80 (12 m2/l, 2,5l/jug, 120 m2
  laboratory)
• Indirect costs Electricity, Rent

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Ex Prof. Gueorgiev repainting his laboratory (10)

• Budget elaboration file

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Ex Prof. Gueorgiev repainting his laboratory (11)

• Budget output in EPSS (A3 form)

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SUB-CONTRACTING

• Rule Sub-contracting should not be a core part
  of the project
• M. Gueorgiev can sub-contract a consulting (color
  choice), but not the painting
• Hypothesis He sub-contracts the conception (150
  euros)

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SCENARII OF FAILURE

• Scenario 1 M. Gueorgiev has overestimated
  personnel costs (3400 / month instead of 1700
  for the director and 2200 /month instead of 1100
  for the technician)
• Risk Bank disagrees and asks why they needed 7
  days instead of 3,5...
• Scenario 2 Prices of the painting have increased
• Risk Not enough budgeted on consumables
• Scenario 3 he use painting that he already had
• Risk it is not eligible (not purchased during
  the implementation)

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OUTLINE OF THE PRESENTATION

• GENERAL IDEAS
• BUDGET ELABORATION
• Example of Gueorgiev, repainting his laboratory
• Example of real project in Agri food
• CONCLUSIONS

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Ex AGRIPOLICY

• Agripolicy
• CSA
• Aim support the formulation of EU agricultural
  policies
• Means Networking, policy making support,
  analytical capacities
• Participants 24
• Work packages 7
• Personnel costs 209,5 MM (785,5 M euros)
• Total budget 998,2 M euros

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Ex AGRIPOLICY
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Ex AGRIPOLICY
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OUTLINE OF THE PRESENTATION

• GENERAL IDEAS
• BUDGET ELABORATION
• Example of Gueorgiev, repainting his laboratory
• Example of real project in Agri food
• CONCLUSIONS

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GENERAL HINTS TO PREPARE A GOOD BUDGET (1)

• Begin with a detailed work programme Identify
  the cost for each task
• When designing the work-plan, you should identify
  the type of activity and cost category of each WP
  (task)
• Consult the Guide for applicants and the
  information required in EPSS for the A3 form
  (category, activity ?)

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GENERAL HINTS TO PREPARE A GOOD BUDGET (2)

• Type of activities for a research project
• 1) RTD (EC contribution 50 or 75 of eligible
  costs)
• 2) Demonstration (EC contribution 35 of
  eligible costs)
• 3) Training (EC contribution 100 of eligible
  costs)
• 4) Management (EC contribution 100 of eligible
  costs)
• 5) Other
• Type of activities for a Support action
• 1) Support (EC contribution 100 of eligible
  costs)
• 2) Other (EC contribution 100 of eligible
  costs)
• 3) Demonstration (EC contribution 100 of
  eligible costs)

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GENERAL HINTS TO PREPARE A GOOD BUDGET (3)

• Cost categories that you need to present
• 1) The personnel cost
• 2) Sub-contracting
• 3) Other direct costs ( consumables travel
  durable equipment)
• 4) Indirect cost

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GENERAL HINTS TO PREPARE A GOOD BUDGET (4)

• Stick to a real scenario for personnel costs
  estimation
• Start with real salaries
• Add a margin (anticipate reasonable salary
  increases)

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WHERE TO FIND INFORMATION ?

• Guide to Financial Issues
• http//cordis.europa.eu/fp7/find-doc_en.html
• Section  Guidance documents 

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WHERE TO FIND INFORMATION ?
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CONTACT DETAILS

• EUROPROJECT LTD
• Mina Stareva mina.stareva_at_europroject.bg
• Mathilde Chadorge mathilde.chadorge_at_europroject.b
  g
• europroject_at_europroject.bg
• 359 2 976 11 43
• 359 886 391 543