2. Procedures for allocating budgets in EU projects at CERN
Gregory Cavallo
FAP-EF External Funding

3. External Grants (FAP-EF-EG)
18/05/2016
EU projects – Procedures for allocating budgets

4. How to build an EU project budget ?
In theory
Define the needs for the project
Personnel: Who? Number of PM
Material/Travel
Estimate the costs
Build the EC budget
In practice
Maximum budget decided by coordinator
How much can we fit in?
Number of PM? Who?
Material/Travel budget
PROPOSAL STAGE
Inconsistency between commitment and budget may result in additional costs for CERN.
External Grants will check this before submission (EDH)
18/05/2016
EU projects budgets

5. How to build an EU project budget ?
Project accepted for funding
Budget defined before project start in CHF
Including CERN’s share, if any
The amount will not change during the course of the project
Exchange rage guaranteed for the full duration
Exchange rate risk taken centrally
PROJECT START
18/05/2016
EU projects budgets

6. H Overheads
“Indirect costs (overhead) are costs that cannot be identified as specific costs directly linked to the work done in the project. In practice, they are costs whose attribution to the specific action cannot be or has not been measured directly, but only be distributed among the different activities by means of cost drivers or similar.”
2 types of projects:
«Standard» projects : overhead rate = 25% of direct costs
Marie Curie projects: overhead merged with management = 15-20% of direct costs
2 internal procedures on the website:
Building a H2020 project internal budget
Use of the Management budget on a H2020 “Marie Curie” project
18/05/2016
EU projects budgets

7. H2020 - Overheads Typical indirect costs are:
Telephone charges & office supplies
Heating, electricity, water, etc.
Administrative support:
Direct support: DG-LS, FAP-EF, HR-TA, IPT-EU, Secretariat
Indirect support: FAP, HR, IPT, SMB, etc.
Distribution of the overheads:
Coverage of (some) central costs 40% (i.e. 8% of EC contribution)
Coverage of (some) costs supported by departments 30% (i.e. 6% of EC contribution)
Coverage of financial loss for the Organization 30% (i.e. 6% of EC contribution)
18/05/2016
EU projects budgets

8. How to build an EU project budget ?
Distribution of the EC contribution (option 1)
EC's funding rate
100%
Project direct eligible costs
1000
Overheads (25%)
250
Project total costs
1250
Maximum EU contribution
Exchange rate / Financial loss coverage 75
Overheads for central costs
100
Overheads for department costs
Overheads for project costs
Total granted to the project
Project costs paid by deparment
100% funded
18/05/2016
EU projects budgets

9. How to build an EU project budget ?
Distribution of the EC contribution (option 2)
EC's funding rate
100%
Project direct eligible costs
1000
Overheads (25%)
250
Project total costs
1250
Maximum EU contribution
Exchange rate / Financial loss coverage 75
Overheads for central costs
100
Overheads for department costs
Overheads for project costs
Total granted to the project
1075
Project costs paid by deparment
107.5% funded
18/05/2016
EU projects budgets

10. How to build an EU project budget ?
Advantage of Option 1
The Department obtains a fair share of overheads
The Department can decide what to do with this money
The money is carried forward until the end of the project
Disadvantage of Option 1
Costs on the project must be 100% eligible
Amount shall be adjusted in case of underspending on the project
Advantage of Option 2
More flexibility on the project for ineligible costs
Amount included in the project budget (no additional follow-up needed)
Disadvantage of Option 2
Costs must be for the project only
18/05/2016
EU projects budgets

11. How to build an EU project budget ?
Distribution of the EC contribution
EC's funding rate
70%
Project direct eligible costs
1000
Overheads (25%)
250
Project total costs
1250
Maximum EU contribution
875
Exchange rate / Financial loss coverage 52
Overheads for central costs 70
Overheads for department costs
Overheads for project costs
Total granted to the project
752
Project costs paid by deparment
248
75.2% funded
18/05/2016
EU projects budgets

12. Exchange rate risk CERN’s costs in CHF EU projects budgets in EUR
CERN’s budgets/spending in CHF
Costs declared to EC in EUR
EC Contribution converted in CHF
Exchange rate 1
Exchange rate 2
3 to 7 years
Exchange rate 3
Exchange rate 4
18/05/2016
EU projects budgets

13. Exchange rate risk CERN’s costs in CHF EU projects budgets in EUR
CERN’s budgets/spending in CHF
Costs declared to EC in EUR
EC Contribution converted in CHF 1 Y
Risk partially covered
Exchange rate 1 6 M
Risk not covered
Project start
Exchange rate 2
3 to 6 Y
Risk covered
Exchange rate 3
Exchange rate 4
18/05/2016
EU projects budgets

14. Exchange rate risk FP7 statistics (2010-2014)
Average duration of a project: 3.2 years
Average variation of exchange rate over a project: 6.3%
H2020 statistics ( today)
Maximum variation of exchange rate: 8.1%
Average exchange rate variation: 4.2%
18/05/2016
EU projects budgets

15. Exchange rate risk
Why can CERN only lose money on exchange rate differences?
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EU projects budgets

16. Other financial risk/loss
Salary increase of the personnel working on EU projects
Budgets are build using the salary position/grid applicable when the person starts to work on the EU project;
The subsequent steps/promotions do not decrease the available budget
Impact: from 0 to 12.5% of the salary of the person
With H2020 rules, personnel costs are now declared using the hourly cost of the last closed year
Reimbursement rate is 100% of the declared costs;
The declared costs are lower than the real costs;
Impact: from 1.2% to 17% of the salary of the person
18/05/2016
EU projects budgets

17. Other financial risk/loss
Thank you
18/05/2016
EU projects budgets