Financial management of H2020 projects

Transcription

1 Financial management of H2020 projects BESTPRAC Training School: "Finance for Beginners" Per Inge Andresen Senior adviser NTNU Norwegian University of Science and Technology

2 NTNU Norwegian University of Science and Technology

3 NTNU 3 cities TRONDHEIM GJØVIK ÅLESUND

4 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

5 NTNU Key figures 8 faculties, 55 departments and NTNU University Museum full time equivalent staff (2017) Over 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)

6 NTNU Students Over students: o Trondheim: 85 % o Gjøvik: 10 % o Ålesund: 5 % The seven largest education areas Technology Just over half are women 9 % international, from 121 countries Most first priority applicants in Norway, almost in 2017 The university that recruits most nationally Matematics and Natural Sciences Humanities Engineering Social Sciences Economics and Business Administration Nursing education

7 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 : ENERGY HEALTH OCEANS SUSTAINABILITY NTNU BIOTECHNOLOGY NTNU DIGITAL

8 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 ( MC member and member of WG Finance of the BESTPRAC COST Action

9 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?

10 Project implementation Where are we in the project's life? The linear project stage model The project life cycle model

11 The implementation stage in the linear project stage model Cost estimate Budget Cost Grant update prepar ation Budget update Proposal Project account setup Project Info on start procedures Prefinance Implementation Bookkeeping Time recording Cost vs budget follow up Periodic report Budget reallocations Interim payment Project end Final report Audit Closing of accounts Eva luation

12 Implementation in the project lifecycle model Proposal Cost estimate Budget Final report Audit Closing of accounts Eva luation Project end Grant preparation Cost update Budget update Book keeping Time recording Cost vs budget follow up Periodic report Budget reallocations Interim payment Implementation Project start Project account setup Info on procedures Pre finance

13 Grant preparation stage Consortium Agreement Financial provisions Also for MSCA's Financial validation MSCA Fellow recruitment

14 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

15 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

16 Implementation stage Key tasks Time recording (timesheeets) Bookkeeping Internal monitoring/follow up Reporting Payments of EU funding

17 Payments Transfers of EU funding Where does the EU funding flow? EU payment schedule Consortium payment schedule Simplified cash flow model

18 Where does the EU funding flow?

19 Categories of EU payments (H2020) Category Why? How much? When? Prefinancing Interim payments Payment of the balance (final payment) Provide a "float" (improved cash flow) Fund costs/activities for a reporting period Release funding that has been retained (withheld) Fund remaining costs/activities Usual practise (no fixed rule):. Exception: Projects with only 1 period * 5% of max Grant is deducted from pre financing for Guarantee Fund Reimbursement rate * (multiplied by) approved amounts for the reporting period Eligible costs Flat rates Lump sums Retained funding: Guarantee Fund allocation (5%) Final 10% of grant (90% limit) Any remaining funding beyond this (calculation as for interim payments) Latest of <30 days after: a) EU signature of GA b) 10 days before starting date of action 5 months (150 days) after end of period: 1. Reporting deadline: 60 days + 2. EU report approval deadline: 90 days 5 months (150 days) after end of action (project): 1. Reporting deadline: 60 days + 2. EU report approval deadline: 90 days

20 Costs and payments Example Maximum EU contribution ( ) Project duration (years) : 4 Number of reporting periods: 3 Guarantee Fund retention rate 5 % Funding retained until EU approval of final report 10 % Reporting periods: Start End month Approved month no. no. funding P P P P4 Month No M1 M6 M12 M18 M24 M30 M36 M42 M48 M54 M60 Total Prefinance Transfer to Guarantee Fund Funding equivalent of approved costs for the period Funding previously released by the EU Retained by the EU for the period Released from the Guarantee Fund Released after approval of final report Funding transferred by the EU for the

21 EU Payments vs. costs per period Cash flow costs vs. EU funding M1 M6 M12 M18 M24 M30 M36 M42 M48 M54 M60 Funding equivalent of approved costs for the period Funding transferred by the EU for the period

22 Cumulative, net "cash flow" Costs, EU funding and net EU transfer M1 M6 M12 M18 M24 M30 M36 M42 M48 M54 M Cumulative funding equivalent of approved costs Cumulative funding transferred by the EU Net funding balance

23 Consortium payment schedule EU rules: "The coordinator must distribute without unjustified delay" 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"

24 Consortium payment schedule good practise Two main "Schools" A. Distribute all EU payments as they arrive to the Coordinator B. Divide the EU payments into instalments for distribution within the consortium More frequent transfers Smaller amounts with each payment

25 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

26 Project follow up (monitoring) Why monitor the project? What to look for Monitoring from the financial perspective Cost budget follow up Progress report

27 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

28 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)

29 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?

30 Internal financial monitoring Levels of detail and complexity Lev el Simplified /complex? 1 Low Planned & remaining Analytical focus Cost structure Project structure 2 Medium Planned vs. Actual 3 High Earned Value Management Person months & Total costs (No split) Person months, Personnel costs, Subcontracting, Other costs Person months & Costs for each cost category in Form C Project total (No split) Split by WP (Work Package) Split by WP and Task or Deliverable

31 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?

32 Monitoring at the consortium level Same questions as for the beneficiary level Plus: Are there imbalances between beneficiaries? Tight vs. generous budgets? Budgets reflecting responsibilities (tasks / deliverables)? Any reasons to suggest budget reallocations?

33 Financial monitoring example FP7 Work package Person Months Personnel costs Subcontracting Travel Consumables Equipment Other costs Total other direct costs Indirect costs rate (%) Indirect costs Lump sum/flat rate/scale Total Reimbursement rate (%) Maximum EC contribution Requested EC contributio WP1 WP2 WP3 WPn Total 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%

34 Financial monitoring example H2020 Person months (A) Direct Personnel costs (B) Direct costs of subcontracting direct (D) Other costs (E) Indirect costs Total Costs Receipts Maximum EU Contributio n Total budget (Grant) Remaining budget (Grant) WP1 WP2 WP3 WP4 WP5 WP6 WP7 WP8 WP9 WP10 Total

35 Financial monitoring example 2 H2020 (A) Direct Person Personnel months costs [C] Direct costs of financial support to third parties Travel Equipment (B) Direct costs of subcontracting Consumables Costs of large (D) Other (E) research infastructure direct costs Indirect costs (F) Costs of.. Total Costs Receipts Reimburse ment rate Requested Maximum EU EU Total budget Contribution Contribution (Grant) Partner1 100 % Partner2 100 % Partner3 100 % Partner4 100 % Partner5 100 % Partner6 100 % Partner7 100 % Partner8 100 % Partner9 100 % Partner % Total Remaining budget (Grant)

36 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

37 Progress & Cost follow up Resources Finance Research

38 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

39 Progress Planned vs. Actual effort WP No. Task No. Task Name Partner 1 Planned Actual Diff./ Remain WP Task Task Task Task 1.4 -

40 Progress Planned vs. Actual effort WP No. Task No. Task Name Partner 1 Partner 2 Partner 3 Partner 4 Partner 5 Planned Actual Diff./ Remain Planned Actual Diff./ Remain Planned Actual Diff./ Remain Planned Actual Diff./ Remain Planned Actual Diff./ Remain Consortium totals Planned Actual WP Task Task Task Task WP Task Task Task Task WP Task Task Task Task WP Task Task Task Task WP Task Task Task Task Totals Diff./ Remain

41 Finance & Progress: Remaining budget vs. remaining work FP7 Work package Person Months Personnel costs Subcontracting Travel Consumables Equipment Other costs Total other direct costs Indirect costs rate (%) Indirect costs Lump sum/flat rate/scale of unit declared Total Reimbursement rate (%) Maximum EC contribution Requested EC contribution Budget Remaining budget ( ) Remaining budget (%) % complete (tasks/deliverables) Remaining budget vs. remaining work WP1 WP2 WP3 WPn Total incurred Budget Remaining costs /Plan budget 60,0% 60,0% 60,0% 60,0% 60,0% 100,0% 75,0% 75,0% 75,0% 50,0%

42 Finance & Progress: Remaining budget vs. remaining work H2020 Person months (A) Direct Personnel costs (B) Direct costs of subcontracting (D) Other direct costs (E) Indirect costs Total Costs Receipts Maximum EU Contribution Total budget (Grant) Remaining budget (Grant) Remaining budget (%) % complete (tasks/delive rables) Remaining budget vs. remaining work WP1 WP2 WP3 WP4 WP5 WP6 WP7 WP8 WP9 WP10 Total

43 Finance & Progress: Remaining budget vs. remaining work H2020 (A) Direct Person Personnel months costs [C] Direct costs of financial support to third parties Travel Equipment (B) Direct costs of subcontracting Consumables Costs of large (D) Other (E) research direct Indirect infastructure costs costs (F) Costs of.. Total Costs Receipts Reimburse ment rate Requested Total Maximum EU EU budget Contribution Contribution (Grant) Remaining budget (Grant) Remaining budget (%) % complete (tasks/delive rables) Partner1 100 % Partner2 100 % Partner3 100 % Partner4 100 % Partner5 100 % Partner6 100 % Partner7 100 % Partner8 100 % Partner9 100 % Partner % Total Remaining budget vs. remaining work

44 Beyond cost & progress: Earned Value Management Source: NASA Earned Value Management,

45 Budget reallocations Budget revisions/changes Reallocations Individual beneficiary Between beneficiaries Adding/replacing beneficiaries

46 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

47 Reallocations between beneficiaries Basis: Same rules as for each beneficiary Plus: 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

48 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

49 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

50 Any questions? Thank you very much for your attention!