PROJECT PROJECT MANAGEMENT Financial aspects Speaker: Pierfranco Pizzala Centro Congressi Marengo – 26th November 2010

2 Reports: presentation methods Project duration Interim reportFinal report 24 monthsWithin the 14th month after project start (30/11/2011) Within two months after project end (30/11/2012)

3 Reports: evaluation phases Evaluation phases for INTERIM AND FINAL REPORTS are: Control of report formal requirements and documentation enclosed Report Evaluation in relation to activities/ results as well as costs borne in the period at issue, in terms of quantity and quality, including verification of correctness and eligibility of the action taken. For FINAL REPORT only, it is foreseen: Validation of financial statement and support material required, in order to verify if expenses are correct and eligible and management is lawful and regular.

4 Interim report: targets Main targets of the interim report can be summarized in two points: monitoring the project work progress controlling the community fund use

5 Interim and final report : evaluation times the Agency has 90 calendar days to approve or reject the report received, or to require further justifying documents or supplementary information. Such term is suspended if notes necessary for evaluation are requested, and is started again upon receipt of them. Beneficiary has 30 calendar days to forward information / supplementary documents or a new report

6 Final report: targets Main targets of final report can be summarized in three points: verifying transfer actions performed and results achieved controlling community fund use establishing the final amount of community grants with the purpose of relevant payment or recovery of funds.

7 Final report: scores and fallouts

8 Payment methods ( article IV Convention) Project duration I Pre- financing Further quotes of Pre-financing Final settlement 24 months 40% within 45 days after Convention implementation Up to 40% within 90 days from receipt of report about work progress of activities and expenses Within 90 days from receipt of final report N.B. The second pre-financing can be divided in a variable number of payments. Integral payment of the 2° quote will be made only if proved that at least 70% of the pre-financing obtained has been used. If less than 70% is used, pre-financing amount is reduced of the first payment quote not used ( art. IV 2 Convention). The 45 day term for pre-financing granting starts from the day of receipt of the last document duly prepared

9 Cost items of financial plan Direct costs: A. Staff costs B. Operating costs 1.travels and accommodation 2. Information technology equipment (10% of total direct costs) 3. Other C.Sub-contracts (30% of total direct costs) Indirect Costs (maximum 7% of total amount of eligible direct costs)

10 Cost types: direct costs These are costs that can be identified as specific costs directly related to the project realization. Direct costs: staff costs travel and accommodation costs I.T. equipment costs other sub-contract costs

11 Cost types: indirect costs These are costs that cannot be identified as specific costs directly related to the project realization. The amount established on approval cannot be modified. They have not to be justified by statements of account They are made up of a fixed lump sum not higher than 7% of the total amount of eligible direct costs. Examples of indirect costs: communication costs costs for infrastructures of the location where project takes place photocopies office supplies costs for equipment relative to the project administration

12 Cost types: eligible costs Costs considered eligible have to meet the following general criteria: directly related to the subject of the Convention and present in the estimated budget necessary for the project implementation reasonable, justified and coherent with the principle of sound financial management generated during the project life ( article II 2 Convention) actually borne by Beneficiary and/or partnership members identifiable and verifiable involving Countries taking part in the program pursuant to the tax legislation

13 Cost types: non eligible costs The following costs are always considered non eligible: costs inherent to the preparation of application costs for bank account opening and management costs borne by silent partners invested capital costs debts and borrowing rates provisions for eventual losses or future debts other interests payable uncollectable credits exchange losses costs declared and borne in relation to other projects or work programs already financed by other source, mainly by other community funds. Excessively high and not justified expenses redemption option costs at the end of rental or leasing VAT, if it does not stand for a final burden

14 Value Added Tax - VAT VAT is considered an eligible cost only if the organization can prove that he can not recover it N.B. Leonardo da Vinci contribution is not subject to the application of VAT system, and consequently it is not subject to any taxation.

15 Staff costs (1/2) Costs produced by partnership personnel assigned to the project: employees employed by partners on an open-ended or fixed-term contract temporary personnel employed through a specialized external agency CONTRACTS WITH VAT REGISTRATION NUMBER ONLY IF FOR THE WHOLE DURATION OF THE PROJECT They have to be based on the actual daily costs They include real wages, social security contributions, social contributions and other costs foreseen by the national regulation ( included in the ordinary retribution).

16 Staff costs (2/2) They are calculated multiplying the number of worked days by the actual daily cost. They cannot exceed the ceilings for each ISCO category (cfr. Supplement for the electronic Application Form 2010) Personnel of partner organizations cannot operate as project sub- contractor. Non contractual costs are not eligible: prices, expense accounts, economic incentives, programs for distribution of profits, car rental.

17 Travel costs Only costs borne by partnership personnel assigned to the project Only travels directly connected to specific activities relative to the project and clearly identifiable. They include all costs incurred in from the point of origin to the destination ( and vice versa). Application of the principle of cost saving in the choice of transport mean. Use of the own car – rented car - taxi N.B. Costs for visa, travel assurance and cancellation are eligible.

18 Costs for stay Only costs borne by the project partnership personnel for specific activities clearly identifiable. Stays in line with the daily ceilings of the destination Country (cfr. Supplement for the electronic Application Form 2010) They include food, accommodation and local transport. A whole day usually includes an overnight stay. Reimbursement system adopted by the organization expenses actually borne ( reimbursement on receipt) reimbursement on a lump sum base (as allowance) IN BOTH CASES A DOCUMENTATION PROVING THE PRESENCE AND OVERNIGHT STAY HAS TO BE DELIVERED

19 Costs for Information technology equipment Eligible costs are purchasing, rental and leasing of ( new and second hand) equipment including installation, maintenance and assurance costs. Equipment purchased before the project start is included in indirect costs. In case of equipment purchase: attribute to the project only the annual depreciation rate and the percentage of real use apply the community regulations concerning contracts (cfr. slide n.24) The cost of any redemption action at the end of rental / leasing is not eligible Total cost cannot exceed 10% of total direct costs of project.

20 Other They come from specific activities necessary for meeting the project targets. They are borne by project partners, are not attributable to the other cost categories and are always duly justified. Eligible costs are those directly coming from: requirements imposed by the convention, including costs of any financial service ( guarantee). Realization of specific actions or project products and results For eventual activities performed by subjects external to the project partnership, we recommend to comply with the community regulations concerning contracts (cfr. slide n.24)

21 Other: a few examples una tantum ( one-off) for press releases and advertising Purchasing of royalties and other rights of intellectual property Purchasing of information material as: books, studies, electronic data, etc. Participation quotes to conferences Financial guarantees Rental of exhibition areas Information spreading Specific action evaluation Audits translations Seminar organizations (if considered product / result) Drawing up of a seminar proceedings Video production Purchasing of consumer goods connected to a product / result (paper reams to print publications)

22 Sub-contract costs 1/2 We will consider costs coming from sub-contracts entered into to perform a project work specific and limited, granted by a partner to a board, an organization or an individual ( only if they are not employed by any organization partner of the consortium) (Guida al candidato 2010) Project management and general administration cannot be sub- contracted The contract must include all costs, including travel and accommodation costs

23 Sub-contract costs 2/2 It is possible to draw up a sub-contract only in the following cases: Just a limited part of actions can be sub-contracted Repeal to sub-contract must be justified Performances have to be declared in the annex I and costs have to be defined in the annex II If not foreseen in the original request for funding, it is necessary the previous AN written authorization Moreover, Beneficiary has to make any effort to avoid any conflict of interests Total cost cannot exceed 30% of total direct costs of the project

24 Community standards concerning contracts Contract valueProcedure to assign a sub-contract Lower than 12,500Direct contract (they can be paid upon invoice presentation ) from 12,500 to 25,000Require at least three bids from 25,000 to 60,000Require at least five bids over 60,000Apply national standards concerning public procurements

25 In itinere reformulation of budget Changes cannot: Modify the project total cost Alter the relation between equity and LDV contribution Involve the budget item Indirect Costs Infringe the principle of equal treatment among partners Compromise the project realization Modifications to the estimated budget create amendment if: Shifts among eligible cost items are higher than 10% of the destination cost item. If lower than 10% it is necessary to inform in writing the National Agency (article III. 4 Convention)

26 CONTACTS: For any question or communication of administrative or financial nature, please contact via e.mail: