financial management of h2020 projects€¦ · economics and business administration social...

TN1302: BESTPRAC

BESTPRAC Training School: "Finance for beginners". Belgrade, Serbia 4 - 6 June, 2018

BESTPRAC Training School: "Finance for Beginners"

Per Inge AndresenSenior adviser

NTNU ‐ Norwegian University of Science and Technology

Financial management of H2020 projects

TN1302: BESTPRAC


NTNU – Norwegian University of Science and Technology

TN1302: BESTPRAC


TRONDHEIM GJØVIK ÅLESUND

NTNU – 3 cities

TN1302: BESTPRAC


NTNU – Profile

• Main profile in science and technology

• Academic breadth: humanities, social sciences, medicine, health sciences, science of education, architecture, fine arts and performing arts

• Headquarters in Trondheim with campuses in Gjøvik and Ålesund

TN1302: BESTPRAC


NTNU – Key figures

• 8 faculties, 55 departments and NTNU University Museum

• 7 134 full‐time equivalent staff (2017)• Over 40 000 students (2017)• 6,800 completed bachelor’s and

master’s degrees (2016)• 366 doctoral degrees (2016)• Budget of ≈ € 875 Mill. (2017), of which

≈ € 210 Mill. from external sources (at current exchange rate)

TN1302: BESTPRAC


NTNU – Students

The seven largest education areas

Over 40 000 students:o Trondheim: 85 %o Gjøvik: 10 %o Ålesund: 5 %

• Just over half are women

• 9 % international, from 121 countries

• Most first‐priority applicantsin Norway, almost 23 000 in 2017

• The university that recruits most nationally

‐ 2 000 4 000 6 000 8 000 10 000 12 000

Nursing education

Economics and Business Administration

Social Sciences

Engineering

Humanities

Matematics and Natural Sciences

Technology

TN1302: BESTPRAC


NTNU – Research• Participating in 106 Horizon 2020 projects as of end of April 2018• Granted ≈ € 55 million from the Horizon 2020 programme so far. • Is the institution that is awarded the most funding from the

Research Council of Norway• Host or partner for 35 major research centres (SFF, SFI, and FME)• 366 doctoral degrees completed in 2016, of which 42% by

international PhD candidates• Internal initiatives to develop and recruit top researchers• Strategic research areas and enabling technologies in 2014 – 2023:

NTNU BIOTECHNOLOGY

NTNU DIGITAL NANO@NTNUENERGY HEALTH OCEANS SUSTAINABILITY

TN1302: BESTPRAC


Per Inge Andresen – Personal background

• BA in Environmental and Resources Studies and Comparative Development Studies (Joint Major)

• MSc in Economics and Business Administration• 22 years' professional experience in different fields of

research administration and management• Two periods as elected internal auditor of EARMA

(http://www.earma.org/)• MC member and member of WG Finance of the

BESTPRAC COST Action

TN1302: BESTPRAC


Agenda

• Where are we in the project life‐cycle?• Preparing for project implementation• Setting up the project in your system(s)• Payment transfers of EU funding (monitoring)• Internal project follow‐up (monitoring)• Consortium project follow‐up• Budget reallocations• Questions?

TN1302: BESTPRAC


Project implementation – Where are we in the project's life ?

• The linear project stage model• The project life‐cycle model

TN1302: BESTPRAC


The implementation stage in thelinear project stage model

•Cost estimate•Budget

Pro‐posal

•Cost update•Budget update

Grant preparation

• Project account setup

• Info on proce‐dures

• Pre‐finance

Project start

•Book‐keeping

• Time recording

•Cost vs budget follow‐up

•Periodic report

•Budget re‐allocations

• Interim payment

Imple‐men‐tation

•Final report•Audit•Closing of accounts•Eva‐luation

Project end

TN1302: BESTPRAC


Implementation in the project life‐cycle model

Proposal

Grant preparation

Project start

Implemen‐tation

Project end

• Cost estimate• Budget

• Cost update• Budget update

• Project account setup• Info on procedures• Pre‐finance

• Book‐keeping• Time recording• Cost vs budget follow‐up• Periodic report• Budget reallocations• Interim payment

• Final report• Audit• Closing of accounts• Eva‐luation

TN1302: BESTPRAC


Grant preparation stage

• Consortium Agreement– Financial provisions– Also for MSCA's

• Financial validation• MSCA

– Fellow recruitment

TN1302: BESTPRAC


Project startup ‐ beneficiary

• Providing banking information to the Coordinator

• Establishing the project in the accounting system– Tag/label/identifier in the accounting system facilitating tracing of all project costs

• Timesheet procedures• Receiving prefinance

TN1302: BESTPRAC


Project startup – consortium

• Collecting banking information from the beneficiaries

• Distributing prefinance• Agreeing on internal reporting arrangements

– Unless it is decided in the Consortium Agreement

• Agreeing on monitoring/follow‐up procedures• Unless it is decided in the Consortium Agreement

TN1302: BESTPRAC


Implementation stage – Key tasks

• Time recording (timesheeets)• Bookkeeping• Internal monitoring/follow‐up• Reporting• Payments of EU funding

TN1302: BESTPRAC


Payments – Transfers of EU funding

• Where does the EU funding flow?• EU payment schedule• Consortium payment schedule• Simplified cash flow model

TN1302: BESTPRAC


Where does the EU funding flow?

TN1302: BESTPRAC


Categories of EU payments (H2020)Category Why? How much? When?Pre‐financing

Provide a "float" (improved cash‐flow)

Usual practise (no fixed rule):

. Exception:Projects with only 1 period* 5% of max Grant is deducted from pre‐financing for Guarantee Fund

Latest of <30 days after:a) EU signature of GAb) 10 days before starting date

of action

Interim payments

Fund costs/activities for a reporting period

Reimbursement rate * (multiplied by) approved amounts for the reporting period• Eligible costs• Flat rates• Lump sums

≈ 5 months (150 days) after end of period:1. Reporting deadline: 60 days

+2. EU report approval deadline:

90 days

Payment of the balance (final payment)

• Release funding that has been retained (withheld)

• Fund remainingcosts/activities

Retained funding:Guarantee Fund allocation (5%)Final 10% of grant (90% limit)Any remaining funding beyond this (calculation as for interim payments)

≈ 5 months (150 days) after end of action (project):1. Reporting deadline: 60 days

+2. EU report approval deadline:

90 days

TN1302: BESTPRAC


Costs and payments ‐ ExampleMaximum EU contribution (€) 3 000 000Project duration (years) : 4Number of reporting periods: 3Guarantee Fund retention rate 5 %Funding retained until EU approval of final report 10 %

Reporting periods:Start month no.

End month no.

Approved funding

P1 1 18 1 100 000 P2 19 36 1 200 000 P3 37 48 700 000 P4 ‐

Month No. 1 6 12 18 24 30 36 42 48 54 60M1 M6 M12 M18 M24 M30 M36 M42 M48 M54 M60 Total

Prefinance 1 000 000 Transfer to Guarantee Fund 150 000 Funding equivalent of approved costs for the period 350 000 350 000 400 000 400 000 400 000 400 000 350 000 350 000 3 000 000 Funding previously released by the EU 1 000 000 1 000 000 1 000 000 1 000 000 2 100 000 2 100 000 2 100 000 2 700 000 2 700 000 3 000 000 Retained by the EU for the period ‐ ‐ ‐ ‐ ‐ ‐ 600 000 ‐ 700 000 ‐ Released from the Guarantee Fund ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 150 000 ‐ Released after approval of final report ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 300 000 ‐ Funding transferred by the EU for the 850 000 ‐ ‐ ‐ 1 100 000 ‐ ‐ 600 000 ‐ 450 000 ‐ 3 000 000

TN1302: BESTPRAC


EU Payments vs. costs per period

‐

200 000

400 000

600 000

800 000

1 000 000

1 200 000

M1 M6 M12 M18 M24 M30 M36 M42 M48 M54 M60

Cash flow ‐ costs vs. EU funding

Funding equivalent of approved costs for the period Funding transferred by the EU for the period

TN1302: BESTPRAC


Cumulative, net "cash flow"

‐1 000 000

‐500 000

‐

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

3 500 000

M1 M6 M12 M18 M24 M30 M36 M42 M48 M54 M60

Costs, EU funding and net EU transfer

Cumulative funding equivalent of approved costs Cumulative funding transferred by the EU Net funding balance

TN1302: BESTPRAC


Consortium payment schedule

• EU rules:– "The coordinator must distribute …without unjustifieddelay"

• BUT, the guidelines also say:– "How and when the payments are distributed is in principle an internal matter for the consortium"

– This is for the Consortium Agreement• This concerns the timing:

– Periods for payments, instalments, pre‐conditions for payments• …and the amounts allocated to each beneficiary:

– "distribution of the funding which is different from the costs claimed"

TN1302: BESTPRAC


Consortium payment schedule –good practise• Two main "Schools"A. Distribute all EU payments as they arrive to

the CoordinatorB. Divide the EU payments into instalments for

distribution within the consortium– More frequent transfers– Smaller amounts with each payment

TN1302: BESTPRAC


Why not transfer all EU funding "immediately"?• Additional incentive for beneficiaries to perform their tasks, including

reporting obligations• Quick adaptation to changing circumstances

– If tasks are reallocated from beneficiary A to beneficiary B, the coordinator may transfer additional prefinance to beneficiary B without waiting for beneficiary A to return EU funding

• It is not uncommon for beneficiaries to spend less than their budget• EU funding stuck with non‐performing or defaulting beneficiaries• Waiting for beneficiaries to return excess funding often takes a long

time – sometimes years• The Guarantee Fund mechanism takes time to act• The Guarantee Fund only acts when the EU is owed funding• In cases of beneficiaries owing funding to other beneficiries, the

Guarantee Fund does not act

TN1302: BESTPRAC


Project follow‐up (monitoring)

• Why monitor the project?• What to look for• Monitoring from the financial perspective• Cost budget follow‐up• Progress report

TN1302: BESTPRAC


Why monitor the project?

• Identify needs for action as early as possible– The earlier it is discovered, the easier it is to fix– Also generally less costly to fix at an early stage

• Catch things before it is too late• Once the project is finished, it is too late to change anything

TN1302: BESTPRAC


What to look for• Ineligible costs• Incurred costs that should be, but have not been charged to the project accounts

• Significant deviations– From plan– From the budget

• "Threats" to the successful completion of the project

• Is there a need to adjust the plan or the budget?• Ideas on what adjustments to propose (if any)

TN1302: BESTPRAC


Monitoring from the financial perspective• Are there ineligible costs charged to the project?• Costs that are "missing" in the project accounts (charged somewhere else)

• Are the costs significantly higher or lower than expected?

• Are there costs that were not expected?– Not included in the budget or Grant Agreement?

TN1302: BESTPRAC


Internal financial monitoring –Levels of detail and complexityLevel

Simplified /complex?

Analytical focus Cost structure Project structure

1 Low Planned & remaining

Person months & Total costs(No split)

Project total(No split)

2 Medium Planned vs. ActualPerson months , Personnel costs, Subcontracting, Other costs

Split by WP (Work Package)

3 High Earned Value Management

Person months & Costs for each cost category in Form C

Split by WP and Task or Deliverable

TN1302: BESTPRAC


Monitoring at the beneficiary level

• Overall costs vs. budget• Is the remaining budget sufficient for completion of remaining tasks / deliverables?

• Actual vs. planned costs• Personnel

– Staff categories and costs according to plan?• Incurred cost categories that were not in the budget?– Ask the EU for approval before reporting?

TN1302: BESTPRAC


Monitoring at the consortium level

• Same questions as for the beneficiary levelPlus:

• Are there imbalances between beneficiaries?– Tight vs. generous budgets?– Budgets reflecting responsibilities (tasks / deliverables)?

• Any reasons to suggest budget reallocations?

TN1302: BESTPRAC


Financial monitoring example – FP7

WP1 WP2 WP3 … WPnTotal

incurred costs

Budget /Plan

Remaining budget

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 60,0% 60,0% 60,0% 60,0% 60,0% ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 100,0% 75,0% 75,0% 75,0% 50,0% ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

TotalReimbursement rate (%)Maximum EC contributionRequested EC contributio

EquipmentOther costs

Total other direct costsIndirect costs rate (%)Indirect costsLump sum/flat rate/scale

Work package

Person MonthsPersonnel costsSubcontracting

TravelConsumables

TN1302: BESTPRAC


Financial monitoring example – H2020

Person months

(A) Direct Personnel costs

(B) Direct costs of sub‐contracting

(D) Other direct costs

(E) Indirect costs Total Costs Receipts

Maximum EU Contribution

Total budget (Grant)

Remaining budget (Grant)

WP1 ‐ ‐ ‐ ‐ WP2 ‐ ‐ ‐ ‐ WP3 ‐ ‐ ‐ ‐ WP4 ‐ ‐ ‐ ‐ WP5 ‐ ‐ ‐ ‐ WP6 ‐ ‐ ‐ ‐ WP7 ‐ ‐ ‐ ‐ WP8 ‐ ‐ ‐ ‐ WP9 ‐ ‐ ‐ ‐ WP10 ‐ ‐ ‐ ‐ Total ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

TN1302: BESTPRAC


Financial monitoring example 2 – H2020

Person months



[C] Direct costs of financial support to third parties Travel Equipment

Consum‐ables

Costs of large

research infastructure


(E) Indirect costs

(F) Costs of.. Total Costs Receipts

Reimbursement rate


Requested EU Contribution



Partner1 ‐ ‐ ‐ 100 % ‐ ‐ ‐ Partner2 ‐ ‐ ‐ 100 % ‐ ‐ ‐ Partner3 ‐ ‐ ‐ 100 % ‐ ‐ ‐ Partner4 ‐ ‐ ‐ 100 % ‐ ‐ ‐ Partner5 ‐ ‐ ‐ 100 % ‐ ‐ ‐ Partner6 ‐ ‐ ‐ 100 % ‐ ‐ ‐ Partner7 ‐ ‐ ‐ 100 % ‐ ‐ ‐ Partner8 ‐ ‐ ‐ 100 % ‐ ‐ ‐ Partner9 ‐ ‐ ‐ 100 % ‐ ‐ ‐ Partner10 ‐ ‐ ‐ 100 % ‐ ‐ ‐ Total ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

TN1302: BESTPRAC


Progress report

• For deadlines that have passed:– Have tasks and deliverables been completed on schedule?

• For remaining tasks and deliverables:– Percent complete?– Expected delays?

• Time remaining vs. remaining tasks and deliverables

TN1302: BESTPRAC


Progress & Cost follow‐up

ResearchFinance

Resources

TN1302: BESTPRAC


Progress & Cost follow‐up

• Remaining budget vs. remaining time• Remaining budget vs. remaining tasks/deliverables

• Cost deviation vs progress deviation:– Planned vs. actual costs

– vs.

– Planned vs. actual progress/completion

TN1302: BESTPRAC


Progress – Planned vs. Actual effort

WP No. Task No. Task Name

Planned Actual Diff./ Remain

WP1 - - - Task 1.1 - Task 1.2 - Task 1.3 - Task 1.4 -

Partner 1

TN1302: BESTPRAC


Progress – Planned vs. Actual effortWP No. Task No. Task Name

Planned Actual Diff./ Remain Planned Actual Diff./

Remain Planned Actual Diff./ Remain Planned Actual Diff./

Remain Planned Actual Diff./ Remain Planned Actual Diff./

Remain WP1 - - - - - - - - - - - - - - - - - -

Task 1.1 - - - - - - - - Task 1.2 - - - - - - - - Task 1.3 - - - - - - - - Task 1.4 - - - - - - - -

WP2 - - - - - - - - - - - - - - - - - - Task 2.1 - - - - - - - - Task 2.2 - - - - - - - - Task 2.3 - - - - - - - - Task 2.4 - - - - - - - -




Totals - - - - - - - - - - - - - - - - - -

Consortium totalsPartner 1 Partner 2 Partner 3 Partner 4 Partner 5

TN1302: BESTPRAC


Finance & Progress: Remaining budget vs. remaining work – FP7

WP1 WP2 WP3 … WPnTotal incurred

costsBudget /Plan

Remaining budget

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 60,0% 60,0% 60,0% 60,0% 60,0% ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 100,0% 75,0% 75,0% 75,0% 50,0% ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

‐ ‐

‐ ‐ ‐ ‐ ‐ ‐ ‐

Total

Maximum EC contributionRequested EC contribution

ConsumablesEquipmentOther costs

Total other direct costs

Indirect costsLump sum/flat rate/scale of unit declared

Indirect costs rate (%)

Reimbursement rate (%)

Work package

Person MonthsPersonnel costsSubcontracting

Travel

BudgetRemaining budget (€)

% complete (tasks/deliverables)Remaining budget vs. remaining work

Remaining budget (%)

TN1302: BESTPRAC


Finance & Progress: Remaining budget vs. remaining work – H2020

Person months




(E) Indirect costs Total Costs Receipts





% complete (tasks/deliverables)

Remaining budget vs. remaining work

WP1 ‐ ‐ ‐ ‐ ‐ ‐ WP2 ‐ ‐ ‐ ‐ ‐ ‐ WP3 ‐ ‐ ‐ ‐ ‐ ‐ WP4 ‐ ‐ ‐ ‐ ‐ ‐ WP5 ‐ ‐ ‐ ‐ ‐ ‐ WP6 ‐ ‐ ‐ ‐ ‐ ‐ WP7 ‐ ‐ ‐ ‐ ‐ ‐ WP8 ‐ ‐ ‐ ‐ ‐ ‐ WP9 ‐ ‐ ‐ ‐ ‐ ‐ WP10 ‐ ‐ ‐ ‐ ‐ ‐ Total ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

TN1302: BESTPRAC


Finance & Progress: Remaining budget vs. remaining work – H2020

Person months



[C] Direct costs of financial support to third parties Travel Equipment

Consum‐ables

Costs of large

research infastructure


(E) Indirect costs

(F) Costs of.. Total Costs Receipts

Reimbursement rate


Requested EU Contribution




% complete (tasks/deliverables)

Remaining budget vs. remaining work

Partner1 ‐ ‐ ‐ 100 % ‐ ‐ ‐ ‐ ‐ Partner2 ‐ ‐ ‐ 100 % ‐ ‐ ‐ ‐ ‐ Partner3 ‐ ‐ ‐ 100 % ‐ ‐ ‐ ‐ ‐ Partner4 ‐ ‐ ‐ 100 % ‐ ‐ ‐ ‐ ‐ Partner5 ‐ ‐ ‐ 100 % ‐ ‐ ‐ ‐ ‐ Partner6 ‐ ‐ ‐ 100 % ‐ ‐ ‐ ‐ ‐ Partner7 ‐ ‐ ‐ 100 % ‐ ‐ ‐ ‐ ‐ Partner8 ‐ ‐ ‐ 100 % ‐ ‐ ‐ ‐ ‐ Partner9 ‐ ‐ ‐ 100 % ‐ ‐ ‐ ‐ ‐ Partner10 ‐ ‐ ‐ 100 % ‐ ‐ ‐ ‐ ‐ Total ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

TN1302: BESTPRAC


Beyond cost & progress: Earned Value Management

Source: NASA Earned Value Management, https://evm.nasa.gov/

TN1302: BESTPRAC


Budget reallocations

• Budget revisions/changes• Reallocations

– Individual beneficiary– Between beneficiaries

• Adding/replacing beneficiaries

TN1302: BESTPRAC


Reallocations by a beneficiary

• With or without prior EU approval?• Changes that require no prior approval• Changes were prior approval is recommended, but not required

• Changes were prior approval is required

TN1302: BESTPRAC


Reallocations between beneficiaries

• Basis: Same rules as for each beneficiaryPlus:

• Budgetary implications of reallocation of tasks• Rectifying any budget imbalances between

beneficiaries• Consortium procedures

– Check the Consortium Agreement– Negotiations between involved parties before formal decision

– Normally: General Assembly decision

TN1302: BESTPRAC


Adding/replacing beneficiaries

• Identify the tasks and deliverables that are going to be reallocated

• Determine what resources are required for these tasks• Verify cost rates for new beneficiaries• Recalculate budget based on cost rates for the

beneficiaries that take over tasks• Calculate budget amount that is "freed up" by leaving

beneficiaries – Establish what costs that have been accepted by the EU

• Determine whether revised budget is within max EU grant

TN1302: BESTPRAC


Project finish

• Budget reallocations in the closing stages of the project

• Scenario:– One or more beneficiaries have spent less than their budget

– One or more beneficiaries have spent more than their budget, and this appears to be justified

• Follow consortium procedures for reallocation before submission deadline for final report

TN1302: BESTPRAC


Any questions?

Thank you very much for your attention!

financial management of h2020 projects€¦ · economics and business administration social...

Documents