1. 1 An introduction to Project Cycle Management PCM DAY 3 Gori, 31/3 – 3/4/2015

2. BUDGET Budget translates plans into money - money that will need to be spent to get your planned activities done (expenditure) Budget translates plans into money - money that will need to be spent to get your planned activities done (expenditure) Most of EU funding is based on cost- sharing (50%, 75%, 90%) The EU contribution cannot give rise to any profit 2

3. Eligible costs MUST: relate to the purpose of the action; ƒ be included in the estimated budget annexed to the grant agreement; be necessary for the fulfilment of the action which is the subject of the grant; ƒ be generated during the duration of the action (eligible period) 3

4. principle of sound financial management, especially costeffectiveness and “value for money”; be identifiable, verifiable and determined in accordance with the relevant accounting principles (easily checked); be actually incurred by the participant and recorded in the accounts of the participant; ƒ be compliant with the applicable tax and social legislation; 4

5. Budgeted costs vs. actual costs "Budgeted" costs are used for establishing a budget estimate only actual costs must be used as a basis for completing the financial statements They must be supported by evidence that they are real (in the accounts, supported by invoices), paid (bank statements,...), and linked to the funded project. 5

6. Cost categories Direct Costs 1.Staff Costs 2.Travel costs and Subsistence 3.Purchase of Equipment 4.Subcontracting / Services (organising seminars, conferences, audit costs,...) 5.Other specific costs (organising seminars, conferences, audit costs,...) Indirect Costs Indirect eligible costs 6

7. those eligible costs are not directly linked to the implementation of the project administrative, technical and logistical nature A percentage of the total direct eligible costs administrative and financial management, legal advice, water, gas, electricity, insurance, office supplies, communications, accounting fees, telephone bills,... 7 Indirect costs

8. Indirect costs can be funded: on a flat rate basis on a real costs basis. The same indirect costs can never be covered by both real costs and a flat rate (double funding) Example: Total direct eligible costs: EUR 100,000 + 7% = EUR 7,000 indirect costs = EUR 107,000 total costs 8

9. Unit costs vs. Flat rate 9 ExpensesUnitNo. of unitsUnit cost (EUR) Total (EUR) Travel costsFlight ticket 3300900 Unit costs calculation Unit costs calculation ExpensesUnitNo. of unitsUnit cost (EUR) Total (EUR) Local travels Project1500

10. Unit costs vs. Flat rate Flat-rate – a fixed ammount e.g. ERASMUS+ travel costs, management costs 10

11. In-kind contributions Co-financing of the project budget – only EXCEPTIONAL, must be ALLOWED by the call for proposal non-financial resources provided to the beneficiary free of charge Examples: volunteering time (on the base of a minimum wage) free venues (equivalent market cost) 11