Project Proposal and Concept Note

Project Proposal and Concept Note
Leonellha Dillon-Barreto, seecon gmbh

Copy it, adapt it, use it – but acknowledge the source!
Copyright & Disclaimer Copy it, adapt it, use it – but acknowledge the source! Copyright Included in the SSWM Toolbox are materials from various organisations and sources. Those materials are open source. Following the open-source concept for capacity building and non-profit use, copying and adapting is allowed provided proper acknowledgement of the source is made (see below). The publication of these materials in the SSWM Toolbox does not alter any existing copyrights. Material published in the SSWM Toolbox for the first time follows the same open-source concept, with all rights remaining with the original authors or producing organisations. To view an official copy of the the Creative Commons Attribution Works 3.0 Unported License we build upon, visit This agreement officially states that: You are free to: Share - to copy, distribute and transmit this document Remix - to adapt this document. We would appreciate receiving a copy of any changes that you have made to improve this document. Under the following conditions: Attribution: You must always give the original authors or publishing agencies credit for the document or picture you are using. Disclaimer The contents of the SSWM Toolbox reflect the opinions of the respective authors and not necessarily the official opinion of the funding or supporting partner organisations. Depending on the initial situations and respective local circumstances, there is no guarantee that single measures described in the toolbox will make the local water and sanitation system more sustainable. The main aim of the SSWM Toolbox is to be a reference tool to provide ideas for improving the local water and sanitation situation in a sustainable manner. Results depend largely on the respective situation and the implementation and combination of the measures described. An in-depth analysis of respective advantages and disadvantages and the suitability of the measure is necessary in every single case. We do not assume any responsibility for and make no warranty with respect to the results that may be obtained from the use of the information provided.

1. Introduction to Projects in the Water and Sanitation Sector
Contents 1. Introduction to Projects in the Water and Sanitation Sector 1.1 From Vision to Projects 1.2 Definition of Project and the Project Cycle 2. Developing a Project Proposal and Concept Note 2.1 Definition of Project Proposal and Concept Note 2.2 Getting Ready to Start a Project 2.3 Project Planning 2.4 Writing a Concept Note 2.5 Budget Allocation and Resources Planning References

1.1 From Vision to Projects
1. Introduction to Projects in the Water and Sanitation Sector 1.1 From Vision to Projects A vision is an agreed long term projection of what the local water resource and sanitation situation will be ideally in 20 to 30 year’s time. Once the vision of the community has been defined and a long-term strategy has been written, strategic objectives should be agreed, which will provide a framework for planning future actions. Strategic Objectives Objective 1 Objective 2 Objective 3 ... Objective N Future Planning Project 1 Project 2 Project 3 ... Project N Community’s Vision Long-term Strategy SOURCE: PHILIP, R., ANTON, B., BONJEAN, M., BROMLEY, J., COX, D., SMITS, S., SULLIVAN, C. A., VAN NIEKERK, K., CHONGUIÇA, E., MONGGAE, F., NYAGWAMBO, L., PULE, R., BERRAONDO LÓPEZ, M. (2008): Local Government and Integrated Water Resources Management (IWRM) Part III: Engaging in IWRM – Practical Steps and Tools for Local Governments. Freiburg: ICLEI European Secretariat GmbH.

So, the aim of the project should be:
1. Introduction to Projects in the Water and Sanitation Sector So, the aim of the project should be: achieving one or a defined number of strategic objectives and ultimately the overall water and sanitation vision. For instances: Strategic Objectives To eradicate open defecation in our town by 2015 To increase the access to improved sanitation facilities to 90% by 2020. To safely reuse 50% of treated wastewater in agricultural fields by 2020. Project 1 Project 2 Actions to be taken: Awareness raising campaign... Demand creation & information campaign Construction of new toilet facilities... Construction of a treatment plant... Projects may also be stand-alone initiatives, not necessarily integrated into a programme, with several projects contributing to one overall goal. ... But we also have to consider that:

A world of opportunities:
1. Introduction to Projects in the Water and Sanitation Sector A world of opportunities: Projects vary in scale, purpose and duration. Ideally in our SSWM approach, they are to be initiated with the participation of the community, but it also may be generated within an NGO or a municipality. Small projects require modest inputs and produce tangible outputs within a relatively short timeframe. At the other extreme, projects may require substantial financial resources and only generate benefits in the long term. Despite the difference in scale and nature of projects, there are aspects of sound project management that are universal. Source: L. Barreto Dillon

1.2 Definition of Project and Project Cycle
1. Introduction to Projects in the Water and Sanitation Sector 1.2 Definition of Project and Project Cycle A project is a unique venture to produce a set of outputs within clearly specified time, cost and quality constraints. Projects differ from standard business operational activities as they: • Are distinctive in nature, not involving a repetitive process. • Have a define time-plan, with a specified start and end dates to meet the beneficiaries or funding agency’s requirements. • Have an allocated budget, which should be spent to produce the deliverables. • Have limited resources, such as labour, material and equipment. • Involve a risk, as there is a level of uncertainty whether the objectives will be attained. SOURCE: METHOD123 (2003): Project Management Guidebook. URL: [Accessed: ]

1. Introduction to Projects in the Water and Sanitation Sector
The Project Cycle In SSWM Five stages are typically identified in the project cycle: Exploring Demand Creation Participatory Decision Making, Analysis and Planning Implementation Ensuring Sustainability I Identification: generation of the initial project idea II Definition and design: detailed design of the project addressing technical and operational aspects III Proposal preparation, approval and financing: writing the project proposal, securing approval for implementation and arranging sources of finance IV Implementation: implementation of project activities, with on-going checks on progress and feedback V Evaluation: periodic review of project with feedback for next project cycle. (After presenting the 5 stage in projects you say) It’s important to realize the similarities between any project cycle and our SSWM. Last week we did identify the project idea, the problems, the background information, and yesterday (Monday) we already decided with the stakeholders how the vision should be. Now we are going to the implementation phase, but we will concentrate today in proposal preparation, approval and financing.

2. Developing a Project Proposal and Concept Note
2.1 Definition of Project Proposal and Concept Note A project proposal is a detailed description of a series of activities aimed at solving a certain problem. The proposal should contain a detailed explanation of the: • justification of the project; • activities and implementation timeline; • methodology; and • human, material and financial resources required. The project proposal should be a detailed and directed manifestation of the project design. It is a means of presenting the project to the outside world in a format that is immediately recognised and accepted. SOURCE: NEBIU, B. (2002): Developing Skills of NGOs, Project Proposal Writing. Szentendre: The Regional Environmental Centre for Central and Eastern Europe.

2.1 Definition of Concept Note A concept note is a summary of a proposal containing a brief description of the idea of the project and the objectives to be pursued. Concept notes are prepare for: some financing programs, funding agencies require a concept note before the submission of a full proposal. donors without a formal call for proposals. A concept note is a summary of a proposal containing a brief description of the idea of the project and the objectives to be pursued. In some financing programs, funding agencies require a concept note before the submission of a full proposal, in order to decide whether the proposed project is in line with the priorities of the program and to eliminate proposals that are not likely to be funded. Concept notes are also submitted to donors without a formal call for proposals, who prefer to understand a project through a brief summary rather than a full-fledged proposal document.

2.2 Getting Ready to Start a Project Tips to start successfully your project writing: Identify potential funding options Build a team for proposal development: -Leader: coordinate all inputs and write core sections. -Technical experts: brainstorming, give input in technical issues. -Administrative staff: give accurate information related to budget. FUNDING OPTIONS: Funding for some actions listed in the local plan will have to come from the Local Government’s own resources. Depending on the institutional set-up of Local Government in a given country, these resources may to a certain extent also derive from revenues gained through the delivery of services included in the action plan itself. In collaborative activities, stakeholders might also be willing to invest some of their own resources if the activity promises to deliver a tangible benefit for them. Infrastructure projects in collaboration with the private sector might best be financed through models of public-private partnerships and financial mechanism such as leasing, BOT (Build – Operate – Transfer) or BOO (Build – Own – Operate). The need for external funding arises when none of the above approaches would be feasible. In case external funding is indeed the only feasible option, the rules and guidelines of each potential funder will have to be studied in detail. In most cases, forms are provided that need to be filled in following a number of detailed instructions. BUILD A TEAM: Any proposal needs the involvement of different team members, such as from the technical, financial and administrative side. LEADER: To manage the proposal development in an efficient way it is advisable to assign the lead role to one specific person. This person is then responsible for the coordination of the overall proposal development, for communication with potential funders and for making sure that all different pieces of input are brought together in a consistent and coherent text. It is also advisable to keep a person involved that represents the foreseen source of funding. If the proposal is to be submitted to the local council, one or two politicians could be informed about the overall idea to get some guidance from them that might enhance the likeliness of approval from the council. In the case of international organisations, for example, close coordination with a person in charge of grant funding can help match own interests with those of the funder. TECHNICAL EXPERTS: Experts with more detailed technical knowledge might be part of the team, or simply contribute to an initial brainstorming session. They can provide text contributions and later also comment on draft versions of the concept note or proposal. Experts might be available within the administration itself as well as among the group of stakeholders. ADMINISTRATIVE STAFF: The budget should be compiled in close cooperation with staff from the financial department. Input from stakeholders or other specialists with different backgrounds helps bring in the necessary expertise, but also a larger variety of ideas on how to solve a particular issue and achieve the previously agreed objectives. REVIEW THE COMMUNITY ACTION PLAN: Referring the proposal to the priorities identified in the local stakeholder process and to key policies at national or regional level will help justify it, find wider support and enhance the chances of receiving external funding if necessary. KICK-OFF MEETING: It is helpful to discuss and develop the proposal in a small team and share drafts with experts of all relevant disciplines not just from within the administration, but also from outside it. Input from stakeholders or other specialists with different backgrounds helps bring in the necessary expertise, but also a larger variety of ideas on how to solve a particular issue and achieve the previously agreed objectives. Review carefully the Community Action Plan or the Vision Statement of the Community. Hold a kick-off meeting and share your ideas

2.3 Project Planning: a part of the Project Design
2. Developing a Project Proposal and Concept Note 2.3 Project Planning: a part of the Project Design The project design is one phase of the project cycle. It consists of two elements: • project planning (formulation of project elements); and • project proposal writing (converting the plan into a project document). Project design is a result of both project planning and the project proposal. Both steps are essential to forming a solid project design.

2.3 Project Planning: Developing a Project Idea
2. Developing a Project Proposal and Concept Note 2.3 Project Planning: Developing a Project Idea In order to identify the project idea, different aspects have to be considered: Community vision of how the situation should be in a long term: Desired situation Current situation gap need Project Source: L. Barreto Dillon Community needs assessment is a key step to project design, as it helps addressing the problems of the targeted local community.

Setting priorities: out of all the goals to be achieved, priorities have to be set to decide which project to carry out first. Priority problems falling into the scope of the stakeholders, your organisation, the State policy and the donor shall be selected. Actor/Problem Problem 1 Problem 2 Problem 3 Stakeholders 3 1 2 State Donor Organisation

Thematic area of the potential donor: Each external funding agency, private donor and governmental office defines a set of thematic areas for the funding activities in a period of time. It is important to thoroughly read and understand the Guide for Applicants of the different sponsoring programs, before you embark in a proposal preparation. Your own capacity and experience: As the development of a project proposal takes a lot of efforts, it is better to concentrate in those areas in which your organisation has the most experience with.

2.3 Project Planning: Defining the Problem A problem is a negative undesired situation. It might create imbalance. It requires adaptation with the social, economic, educational, health or environmental conditions in the community. Example: 50% of the citizens of village (X) suffer from the garbage scattered everywhere in the streets. 100% of the citizens of village (z) drink contaminated water. When formulating the problem, you should clearly specify: 1- Reasons 2- Results 3- Magnitude (number or percentage of impacted persons) 4- Place of the problem 5- The impact of the problem on other problems especially poverty environment, women and unemployment. SOURCE: NEBIU, B. (2002): Developing Skills of NGOs, Project Proposal Writing. Szentendre: The Regional Environmental Centre for Central and Eastern Europe.

2.3 Project Planning: Analysing the Problem This means placing and organising the collected data and information in a logical sequential easily understandable manner that breaks down the problem into root and secondary causes; thus facilitates pinpointing the problem, the causes and implications. In order to do this, you should use the tool “Problem Tree Analysis” Main Problem Main and direct cause Results from the problem Indirect and secondary cause Source: L. Barreto Dillon

2.3 Project Planning: Defining Beneficiaries and Target Groups Beneficiaries: are those who benefit from the project. Target Group: the groups which would be positively affected by the project at the “goal level”. This might include the team from the partner organisation. Final Beneficiaries: are those who would benefit from the project at the long run at the group or community level, eg. Children, as a result of spending on health and education; or consumers due to improving agricultural production and marketing. Source: L. Barreto Dillon The project should provide a detailed description of the size and characteristics of the beneficiaries, target groups and final beneficiaries of the project. The criteria for target group analysis may be ethnic composition, gender, age, etc.

2.3 Project Planning: Defining the Goal of the Project It is a long term goal (mostly at the national level) this particular project together with other projects contribute to its achievement Tips for Setting a Project Goal 1. There should be only one goal per project. 2. The goal should be connected to the vision for development. 3. It is difficult or impossible to measure the accomplishment of the goal using measurable indicators, but it should be possible to prove its merit and contribution to the vision. Example: improving the quality of life in the community Z The goal is defined as “it contributes to …” SOURCE: NEBIU, B. (2002): Developing Skills of NGOs, Project Proposal Writing. Szentendre: The Regional Environmental Centre for Central and Eastern Europe.

2.3 Project Planning: Defining the Objectives of the Project The objectives should address the core problem in terms of the benefits to be received by the project beneficiaries or target group as a direct result of the project. Project objectives provide a more detailed breakdown of the project goal. A project will likely have multiple objectives. SOURCE: NEBIU, B. (2002): Developing Skills of NGOs, Project Proposal Writing. Szentendre: The Regional Environmental Centre for Central and Eastern Europe. Characteristics: Specific Measurable Applicable Realistic Timely Example: Increase the number of families from village Z in quantity X who live in a clean garbage-free environment within Y years. Improve the water supply in quantity X and quality Y for the population of village Z in the next N years. Requirements of drafting the project objective: percentages or figures place specified target group specified time-specific positive desired state

2.3 Project Planning: Defining the Results of the Project Results describe the services or products to be delivered to the intended beneficiaries. This is what the project management is promising to deliver. The results are more detailed than the objectives and the goal, and should be possible to measure through the use of objective indicators. SOURCE: NEBIU, B. (2002): Developing Skills of NGOs, Project Proposal Writing. Szentendre: The Regional Environmental Centre for Central and Eastern Europe. An indicator is the signal indicating the achievement of the set goal. An indicator is used to judge the level of success, it is mostly a figure, percentage or ration. An indicator is the unit measuring how far a certain result is achieved using a benchmark or a standard, yet it doesn’t demonstrate the trend or the change. Example: -Number of new water taps in the village Example of Results: Increase number of families living in a clean garbage-free environment. •Increased number of households connected to the water supply system; and •Increased number of water taps in the village.

2.3 Project Planning: Defining the Activities of the Project The tasks to be undertaken to achieve the aspired results. Selection criteria of the activities: 1- Proper (practical): the organisation and the community have the financial, administrative, and technical ability to carry out the planned project. 2- Acceptable: the activity should be acceptable to the community and official bodies. 3- Effectiveness: it leads to achieving the aspired results. 4- Efficiency: the less the cost of the activity and the more the number of people it serves, the better. 5- Sustainability: to continue throughout the period specified to reach the result and solve the problem. 6- Has no negative impact on the environment. “Activities are defined using an action verb in a present tense, eg. Design, draw up, search, construct…”

2.3 Project Planning: Project Tree Goal Problem Hierarchy of Goal, Objectives, Results and Activities Objective 1 Objective 2 Result 1 Result 2 Result 3 Activity 1 Activity 2 Activity 3 Activity 4 SOURCE: NEBIU, B. (2002): Developing Skills of NGOs, Project Proposal Writing. Szentendre: The Regional Environmental Centre for Central and Eastern Europe.

2.4 Writing a Concept Note: Purpose A concept note is a brief outline of your proposed project. The purpose of a concept paper: For the funding agency: is to help applicants develop more competitive proposals and to save time by eliminating proposals that are not likely to be funded. For the applicant: is to capture the interest of the funding agency and demonstrate that the idea they are proposing is worthy of further consideration. Therefore, the first sentences of a concept paper are very important. You want the funding agency representatives or board members to continue reading! Now that you have decided the goal, objectives, results, target audience and the activities to be carried out... It is time to write a concept note

2.4 Writing a Concept Note: Length and Format of the Document The length and the format for writing a concept note actually depend upon the donor agency. Usually donors do not have a format for a concept note as they have for a full proposal. Most donor agencies request a minimum of three pages to a maximum of five pages. In general, it is important to keep in mind that it should be the shortest possible text for the project idea. So, the shorter the better! Most donor agencies request a minimum of three pages to a maximum of five pages. So, the shorter the better!

2.4 Writing a Concept Note: Template 1. Title: it should be snappy, informative, and distinctive. It may be divided into two parts with the first one being short and catching the readers’ attention and the second one more ‘serious’ and informative. 2. Background: include your problem and its analysis, together with the following two guiding questions: Why it is crucial to address the problem identified? What has already been done to solve the problem? All these pieces of information are to be obtained from the previous step, the planning of the project. 3. Objectives: they should relate to the more general aim as previously agreed and entered into the local action plan. (Keep in mind the Project Tree!)

2.4 Writing a Concept Note: Template 4. Outputs: they should be directly related to the project objectives. Typically they are tangible items, such as a newly constructed technical facility, the publication of information materials, or events, such as workshops or stakeholder meetings. Depending on the project in question, intangible items might also be mentioned, such as a rise in awareness. 5. Activities and duration: a summary of the planned activities to achieve the project objectives should be included here.

2.4 Writing a Concept Note: Template 6. Beneficiaries and impacts: this section will be important for getting “buy-in” from the donor. It should contain: The expected benefits, both in quantitative and qualitative terms, and when and where they will occur. The underlying assumptions and the reasons why these benefits can be expected for a specific group of beneficiaries. Considerations concerning how and by whom the impacts will be assessed. 7. Project management (includes monitoring and evaluation): this section should explain how the objectives will be achieved and how the project will be managed and evaluated. It should become clear who will lead the project and what roles and responsibilities the various people in charge of tasks such as financial management, monitoring and evaluation will have. We will speak later how to develop a budget 8. Budget

2.4 Writing a Concept Note: More tips Don’t overwhelm the reader with details! Consider your audience. Consider your language. Only include budgetary information if it is specifically requested. Appearance is important. Identify a door opener if you are not writing your concept note for an announced call from the organisation. submission. Don’t overwhelm the reader with details, but avoid sounding vague or unsure about what you want to accomplish. Be positive and definite (AUB 2008): Consider your audience. In most cases, you will have to write different concept notes for different donors for the same issue. Only when your concept note fits into the framework of the donor, your request will have a chance. Get as much information as possible on objectives, “hot topics” and interests of the organisation you are sending the concept note to. Consider your language. If your concept paper is going to be reviewed by scientists in your field, scientific terms and technical jargon may be acceptable. However, if your proposal is being reviewed by generalists or lay persons, this type of language will not communicate your ideas effectively. Only include budgetary information if it is specifically requested. Appearance is important. This concept paper represents you! The type size should be large enough to read easily, and margins should be standard size. Check for spelling errors before submission. Attention to details is important. Number all pages. Place your name and date in the header. Include your contact information with the concept paper (AUB 2008). Identify a door opener if you are not writing your concept note for an announced call from the organisation. Sending random concept notes to the general address of an organisation are rarely successful. If you do not know anybody who could introduce you to somebody of the targeted organisation, try to establish personal contact by phone or with in a meeting. Only once you have convinced somebody who supports your concept idea within the donor organisation, you will have a realistic chance with a “wild” concept note submission.

2.5 Budget Allocation and Resource Planning: Definition A budget is defined as patterns of expenditure and revenue over the life of the project. Realistic planning of finances is key to the implementation of a project or program. Generally, the budget has mainly two functions. it estimates, as realistically as possible, the cost of completing the objectives identified in the project proposal. It provides a means to monitor the project's financial activities over the life of the project. A budget is defined as patterns of expenditure and revenue over the life of the project (SEAGA 2001). In general, it is a prediction of the possible costs that will be incurred by carrying out the activities planned in a project. Realistic planning of finances is key to the implementation of a project or program. A professional and transparent approach to budget planning will help convince investors, development banks and national or international donors to make financial resources available (PHILIP et al 2008). Generally, the budget has mainly two functions. First, it estimates, as realistically as possible, the cost of completing the objectives identified in the project proposal. The sponsoring agencies will use the budget details to determine whether the proposal is economically feasible and realistic. Secondly, the budget provides a means to monitor the project's financial activities over the life of the project. In this way, it's possible to determine how closely the actual progress toward achieving the objectives is being made relative to the proposed budget (UNIVERSITY OF VIRGINIA, 2010). Many sponsors, especially government agencies and international organisations, provide either a form or a format for the budget. It is therefore imperative to follow the donor’s instructions explicitly. In fact, the first thing you should do is read the application guidelines carefully so you are sure of what you need to include—or exclude—in your budget. In case there is not a specific guideline for the development of your budget, the following section will help you to prepare a realistic and well balanced budget.

2.5 Budget Allocation and Resource Planning: How to start? Typical categories may be, for example: ● people ● travel costs ● vehicles ● equipment ● consumables and supplies ● Sub-contracts Before drawing up the budget, it is necessary to get an overview of the type of inputs needed to achieve the objectives of the project. Typical categories may be, for example (taken from PHILIP 2008): ● people (such as researchers, consultants, other partners’ staff-time) ● travel costs (such as bus tickets, meal allowance) ● vehicles (such as rental, petrol, driver’s time) ● equipment (such as machinery, measuring instruments and other tools) ● consumables and supplies (such as material, pumps, bricks or containers) ● Subcontracts (services and construction work)

2.5 Budget Allocation and Resource Planning: Identifying the Resources needed Listing all the categories in columns in a spreadsheet application, such as excel, will help you to organise your costs. As the budget should be in line with the activities set in the work plan, you should work through the narrative of the proposal identifying all the costs that must be incurred in order to carry out each single activity planned. In order to indentify systematically the different expenditures, make sure you list all the activities in the rows of the same (excel) table, where you previously defined of the costs categories. Source: L. Barreto Dillon

2.5 Budget Allocation and Resource Planning: Direct costs “Direct costs are all those eligible costs which can be attributed directly to the project and are identified by the beneficiary as such, in accordance with its accounting principles and its usual internal rules”. Direct costs can be: ● Personnel costs: they should reflect the total remuneration, including salaries plus social security charges (holiday pay, pension contribution, health insurance, etc). ●Travel and subsistence allowances: first determine what travel expenses the granting agency will allow, and then itemize the cost of each trip, e.g., round-trip airfare, lodging and meals, taxis, visa, etc. ●Vehicles: usually this cost will be included in the travel and subsistence item. ●Durable equipment: any item which will retain its usefulness beyond the grant period is considered capital equipment. ●Consumables and supplies: stationery, duplicating supplies, typing/computing supplies, and software. Once you have identified the type of expenditures your project will have, the next step is to classify them according to standard budget categories. Budget’s items are generally divided into two classifications: direct costs and indirect costs. According to the European Commission (EC 2009) “direct costs are all those eligible costs which can be attributed directly to the project and are identified by the beneficiary as such, in accordance with its accounting principles and its usual internal rules”. Direct costs can be: ● Personnel costs: they should reflect the total remuneration, including salaries plus social security charges (holiday pay, pension contribution, health insurance, etc). Usually, the personnel costs are calculated in terms of ‘man days’ or “man months” of junior, medium and senior grade persons. You will have to identify the productive hours per employee per year to compute the hourly rate, and these should exclude annual leave, public holidays, weekends and sick leaves. ●Travel and subsistence allowances: first determine what travel expenses the granting agency will allow, and then itemize the cost of each trip, e.g., round-trip airfare, lodging and meals, taxis, visa, etc (UNIVERSITY OF IDAHO 2010). You can plan the reimbursement of the costs to your employees based on actual costs or a lump sum/or per diem payment. This last can be calculated through a simple addition of the possible costs that one employee might have spending one day (with and without night) outside his/her residential area. ●Vehicles: usually this cost will be included in the travel and subsistence item. You will need to consider the costs of renting or maintaining a car for the purposes of the project. If you plan to drive your own car, you may claim a certain amount per mile. ●Durable equipment: any item which will retain its usefulness beyond the grant period is considered capital equipment. Funding agencies have different views on the purchase and maintenance of equipment, so be sure you know the policy of the agency before including such costs in your budget (UNIVERSITY OF IDAHO 2010). ●Consumables and supplies: Include enough supply money for all activities in the project. Typical consumables are stationery, duplicating supplies, typing/computing supplies, and software. SOURCE: EUROPEAN COMMISSION (2009): Guide to Financial Issues relating to FP7 Indirect Actions. Seventh Framework Programme. URL: ftp://ftp.cordis.europa.eu/pub/fp7/docs/financialguide_en.pdf [Accessed: ]

2.5 Budget Allocation and Resource Planning: Indirect costs Indirect costs are all those eligible costs which cannot be identified by the beneficiary as being directly attributed to the project, but which can be identified and justified by its accounting system as being incurred in direct relationship with the eligible direct costs attributed to the project. Indirect costs, also called overheads, F&A and Facilities & Administrative Costs, typically are costs of: operating and maintaining buildings (electricity/gas/water bills), grounds and equipment, depreciation, general and departmental administrative salaries and expenses library costs. Indirect costs are all those eligible costs which cannot be identified by the beneficiary as being directly attributed to the project, but which can be identified and justified by its accounting system as being incurred in direct relationship with the eligible direct costs attributed to the project (EC 2009). Indirect costs, also called overheads, F&A and Facilities & Administrative Costs, typically are costs of operating and maintaining buildings (electricity/gas/water bills), grounds and equipment, depreciation, general and departmental administrative salaries and expenses and library costs. Rules for determining the overhead in a funding program is usually given by the donor, so be sure to find out what percentage, if any, the funding source will allow for indirect costs, and determine which portion of your budget the percentage applies to (EPA 2010). Sometimes indirect costs are a percentage of the total direct costs, or of the personnel costs, or of the salary and wages item alone. When you are determining the actual rate of the costs related to your action, be as close to reality as possible. It is important that the budget is compiled in close cooperation with staff from the financial department, so you would obtain realistic numbers. SOURCE: EUROPEAN COMMISSION (2009): Guide to Financial Issues relating to FP7 Indirect Actions. Seventh Framework Programme. URL: ftp://ftp.cordis.europa.eu/pub/fp7/docs/financialguide_en.pdf [Accessed: ]

2.5 Budget Allocation and Resource Planning: More tips! It is important that the budget is realistic. Before preparing a budget, determine what would be an appropriate amount to request. The numbers should be specific. Your planning should allow for contingencies. Some donors require that some part of the cost of a project be borne by the applicant institution. ● It is important that the budget is realistic, as otherwise a donor will not take it serious. On the other hand, an underestimated budget might lead to a standstill or even a complete termination of activities in the midst of implementation (PHILIP et al 2008). ●Before preparing a budget, determine what would be an appropriate amount to request. The guidelines usually tell you the maximum amount allowed. Request the maximum if you can justify it, but never request more money than the program allows (UNIVERSITY OF IDAHO 2010). ●The numbers should be specific. Rounding an item to the nearest thousand dollars does not inspire confidence. It also suggests you have not done much work preparing your budget (EPA 2010). ● Your planning should allow for contingencies. For example, a cost of living increase will happen before the grant begins. In this case, you should base salaries on the increased salaries (EPA 2010). ●Some donors require that some part of the cost of a project be borne by the applicant institution. When cost sharing is required and no rate is specified, about 5 to 10% is acceptable (EPA 2010). This is usually provided by pledging some portion of personnel salaries and in some cases, indirect costs. Therefore, don't forget to list in-kind support and matching revenue, where appropriate.

References EUROPEAN COMMISSION (2009): Guide to Financial Issues relating to FP7 Indirect Actions. Seventh Framework Programme. URL: ftp://ftp.cordis.europa.eu/pub/fp7/docs/financialguide_en.pdf [Accessed: ] METHOD123 (2003): Project Management Guidebook. URL: [Accessed: ] NEBIU, B. (2002): Developing Skills of NGOs, Project Proposal Writing. Szentendre: The Regional Environmental Centre for Central and Eastern Europe. URL: [Accessed: ] NETSSAF (2008): The NETSSAF Participatory Planning Approach. A Tutorial for Sustainable Sanitation. URL: [Accessed: ] PHILIP, R., ANTON, B., BONJEAN, M., BROMLEY, J., COX, D., SMITS, S., SULLIVAN, C. A., VAN NIEKERK, K., CHONGUIÇA, E., MONGGAE, F., NYAGWAMBO, L., PULE, R., BERRAONDO LÓPEZ, M. (2008): Local Government and Integrated Water Resources Management (IWRM) Part III: Engaging in IWRM – Practical Steps and Tools for Local Governments. Freiburg: ICLEI European Secretariat GmbH. PPIAF –PUBLIC-PRIVATE INFRASTRUCTURE ADVISORY FACILITY- (2010): What are Public-Private Partnerships. URL: [Accessed on ] SONI, P. (2005): Solution Exchange for WES-NET India. WES-NET India -Water & Environmental Sanitation Network-. URL: [Accessed on ] TRÈMOLET, S., PEREZ, E. and KOSLKY, P. (2007): WSP Sanitation Financing Study. Methodological Note. URL: 36

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