Julia Harrow, Senior Faculty Accountant

Helen Jordan, Research Development Manager, European and

Overseas Programmes

Framework Programme Finance Training

October/November 2007

Main EU programme for funding research

Duration: 4 years (2002-2006)

Budget : €17.5 billion (£11 billion)

Framework Programme 6

• Policy driven: designed to achieve Lisbon and

Barcelona objectives and support European

Research Area (ERA)

• Majority of budget supports collaborative,

transnational research in prioritised research areas

• Partially funded

• Complex rules and criteria

FP6/FP7 features

Programmes & Activities

Project types / ‘Instruments’

Integrated Project (IP) Large multi partner project to support objective driven

research

Network of Excellence (NoE)Large multi partner network bringing together a critical

mass of resources and expertise

Co-ordination Actions (CA)

Co-ordination of research

Specific Targeted Research Project (STREP)Small multi partner research, demonstration or

innovation project

Specific Support Actions (SSA)Workshops, studies, training

European Collaborative Projects

Marie Curie Actions

Host Actions Research Training Networks (RTN)

Early Stage Training Networks (EST)

Transfer of Knowledge Fellowships

Conferences and Training Courses

Individual

Actions

Intra-European Fellowships

International Incoming Fellowships

International Outgoing Fellowships

Reintegration Grants

Excellence

Actions

Excellence Grants

Chairs

Excellence Awards

FP6 Finance - Key Data

• Core Contract – provides details of contract finances

• Annex II General Conditions – provides general

financial terms and conditions

• EU Financial Guidelines (250 pages)

• Website address to search for a key document:

http://www.cordis.lu/fp6/find-doc.htm

FP6 Funding Instruments

• Reimbursement of Costs – incl.– Specific Targeted Research Project (STREP)– Integrated Project– Network of Excellence– Coordination Action

• Lump Sum Payments– Human Resources & Mobility (Marie Curie

Actions) – Specific Support Action

FP6 Cost Models

• University of Bristol Model -

Additional Cost with flat indirect costs @ 20% (AC) -

100% reimbursement by EC. Adopted by UoB.

• Others

- Full Cost (FC) - 50% reimbursement by EC

- Full Cost with flat indirect costs @ 20% (FCF) - 50%

reimbursement by EC

Framework Programme 7

European Framework Programme 7(FP7)

• Main European programme for funding research

• 7 years in duration (2007-2013)

• Budget of €50.5 billion (£33.7 billion)

• Policy driven: designed to achieve Lisbon and

Barcelona objectives and support European

Research Area (ERA)

• Majority of budget supports collaborative,

transnational research in prioritised research areas

• Partially funded

• Complex rules and criteria

FP6/FP7 features

FP7 Structure

Four ‘Pillars’ of activity:

Co-operation – Collaborative Research

Ideas – Frontier Research

People – Human Potential

Capacities – Research Capacity

Plus JRC and EURATOM

FP7 Budget

FP7 Budget Distribution

Cooperation

Ideas

People

Capacities€32.4bn

€7.5bn

€4.7bn

€4.1bn

10. Space

Pillar 1: Co-operation

1. Health

2. Food, Agriculture and Biotechnology

3. ICT

4. Nano, Materials, Production

5. Energy

6. Environment

7. Transport

8. Socio-Economic Sciences and Humanities

9. Security

Project types / ‘Funding Schemes’

Large Collaborative Project Large multi partner project to support objective driven

research

Network of Excellence (NoE)Large multi partner network bringing together a critical

mass of resources and expertise

Co-ordination and Support Actions Co-ordination or support of research activities and policies

Small to Medium Sized Collaborative ProjectSmall multi partner research, demonstration or

innovation project

European Collaborative Projects

‘Co-operation’ themes budget split

Total: €32.365bn

Heath

Food

ICT

Nanosciences

Energy

Environment

Transport

SS&H

Security

Space

€9.11bn

€6.05bn

€4.18bn

€3.5bn

€2.3bn

€1.93bn

€1.35bn

€1.9bn

€1.43bn€0.61bn

• Concept: a ‘European Research Council’ (ERC)

• Highly prestigious – competition at a European level

• Supporting ‘frontier research’

• Investigator-driven (bottom-up)

2 central schemes:Starting Independent Researcher Grant– Between €100,000 and €400,000 per year for up to 5 years

for establish or consolidate a first research team

Advanced Investigator Grant– Between €100,000 and €500,000 per year for established

research leaders

Pillar 2: Ideas – NEW!

Developing Europe’s workforce: 2 main objectives

• Researcher mobility – Between Member States– From Member States to 3rd Countries and Vice

Versa

• Researcher training– Early stage & experienced researcher training– Wide range of skills training, including

transferable skills and working with the private sector

Pillar 3: People

Marie Curie Actions

Initial training of

researchers

Initial Training Networks (ITN)

Life-long training and

career development

Intra-European Fellowships

European Reintegration Grants

Co-funding of national programmes

Industry-academia

partnerships &

pathways

Industry-Academia partnerships &

Pathways

International

dimension

International Incoming Fellowships

International Outgoing Fellowships

International Reintegration Grants

• Research infrastructures

• Research for the benefit of SMEs

• Regions of knowledge

• Research potential of convergence regions

• Science in society

• Support to the coherent development of research

policies

• International co-operation

Pillar 4: Capacities

EU-27Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece,Hungary, Italy, Ireland, Latvia, Lithuania, Luxemburg,Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, UK

Associated Countries (FP6)Croatia, Iceland, Israel, Liechtenstein, Norway, Switzerland, Turkey, Serbia

EU Countries

International Cooperation in FP7

FP7 Finance - Key Data

• Core Contract – provides details of contract finances

• Annex II Grant Agreement (or GA) – provides general

financial terms and conditions

• EU Financial Guidelines (only 85 pages!)

• Website address to search for a key document:

http://cordis.europa.eu/fp7/find-doc_en.html

FP7 Funding Instruments - 1

• Reimbursement of Costs – ‘Co-operation’ Pillar– Collaborative Projects (cc STREPs - these

projects are small to medium sized)– Large Integrating Collaborative Projects (cc

Integrated Projects)– Networks of Excellence – Coordination and Support Actions (cc Specific

Support Actions and Coordination Actions)

FP7 Funding Instruments - 2

• Reimbursement of Costs – Other Pillars– ‘Ideas’ (ERC)– ‘Capacities’

• Lump Sum Payments– ‘People’ (Marie Curie Actions) – for

payments of individuals remuneration

FP7 Cost Model - 1

One cost model for all entities

• Additional cost model abolished

Direct Costs reimbursed as follows:

• Activities within ‘Co-operation’ and ‘Capacities’– Research Training Development (RTD) Activities: 75%– Demonstration Activities: 50%– Project Management, Training, Other Activities: 100%

• Except Coordination and Support Actions - all Activities:

100%

• ‘Ideas’/ERC: 100%

FP7 Cost Model - 2

Indirect Costs reimbursed as follows:

• For most activities (except below) calculate indirect costs

as either choice of either actual indirect costs or flat rate

of 60% of direct costs (latter is current UoB option)– reimburse as per rules for Direct e.g. 75% for RTD

• ERC projects: flat rate of 20% of direct costs

• Co-ordination and Support Actions: flat rate of 7% of

direct costs

• Marie Curie projects: flat rate of 10% of direct costs

Eligible Costs

• Actual and necessary

• Incurred during timescale of project

• Determined by accounting principles and management

practices e.g depreciation, travel standard class

• Recorded in accounts

• Used only to achieve project objectives

New for FP7!

• Time/cost of permanent researchers e.g. PIs

Management Activities

• EC fund 100% of management activities of

consortium

• FP6 ceiling of 7% of total EC contribution no longer

exists (but informal advice is not over 10%)

• Additional indirect costs of 60%

• Only available funding for Audit costs

• Coordination costs except those in RTD activities

• Most management activities

Ineligible Costs

The following will not be funded:

• Indirect taxes incl. VAT

• Excessive or reckless expenditure

• Indirect costs for subcontractors

• Exchange losses – may be managed within C.A.

• Student tuition fees

• Provisions for future losses

• Costs on other EC projects

FP7 and VAT

• VAT is an ineligible EC FP cost

• Unlike earlier Framework Programmes, HM

Revenue & Customs will not reimburse the VAT in

FP7. Thus the cost will fall to UoB

• UoB decision: irrecoverable VAT costs will be

accounted for as a reduction in the indirect income

rather than a direct cost to a department

Cost Category Exercise

Calculating Staff Time

• Need Number of Productive Hours per year

• Determined by deducting holidays, national

holidays, sick leave and other entitlements e.g.

training

• UK Productive Hours: 1650 hours per year

• Hourly Rate = Annual FTE salary / 1650 hours

• At UoB, this is done via fEC Research Costing tool

Time Recording

Q. Who needs to do this?

A. Any staff costed to a project, including PIs

Requirements as are follows:

• Record actual (not estimated) hours including time spent on all

projects, except PIs who only need to record time on project

• Record either start and end time, or number of hours each day

N.B. If total hours exceed annual amount, hourly rate will be reduced,

thus best to work standard hours

Web address:

http://www.bris.ac.uk/finance/systems/timesheets/safe/ec-timesheet.xls

Project Budget Virements

• Transfer of budget between activities and members

is allowed without need for EC approval

• Unless results from changes to workplan (as laid out

in Annex I of GA) e.g. new subcontractor

• Watch for transfer between activities with different

funding rates e.g. movements between RTD and

Management. N.B. maximum EC contribution

remains

• If in doubt, consult EC Project Officer

EC Financial Contribution

• Maximum contribution cannot be exceeded and

includes:– Single Pre-Financing (see slides below)– Interim payments following each Reporting Period– Final Payment plus any prior period adjustments

• Calculation of EC payments deducts any interest

earned by Coordinator from Pre-Financing (> €50k)

• EC withhold 10% retention until date of last payment

so pre-financing and interim payments shall not

exceed 90%

Pre-Financing 1 (Article 6 of Financial Guidelines + Article II.6 of GA)

• Only 1 pre-financing (or advance) payment

received at beginning of project

• Received from the EC no later than 45 days of

contract start date (unless special clause)

• Coordinator must distribute to members:-– Once minimum numbers of members have

signed and returned Form A (accession form)– Only to those members who have signed and

returned Form A

Pre-Financing 2

General Rule for projects with more than 2 reporting periods

(RPs) - 160% of average EU funding per RP less 5%

Guarantee Fund

For projects with 1 or 2 RPs – between 60%-80% of the total

EC contribution (specified in contract)

Reasons for variations to Pre-Financing:

1.Project with heavy initial investment – increased

2.Project with low expenditure in 1st period - decreased

Guarantee Fund(Article II.20 of GA)

• Aims to cover financial risks incurred by EC and participants

during project

• 5% of the total EC contribution retained by the EC and

transferred to separate EC fund at time of pre-financing payment

• Paid into EC bank account and interest earned should cover

risks of non reimbursement of amounts due by project members

• Returned to project members via Coordinator at point of final

payment

• Maximum deduction of 1% of EC contribution may be

permanently retained excluding public bodies (so UoB okay!)

Pre-Financing Example 1

Project running over 3 reporting periods (RPs) with

total budget €3,000,000

a) Average EC contribution = €1,000,000 (i. e.

3,000,000 / 3 years)

b) 160% of average contribution = €1,600,000

c) Contribution to Guarantee Fund @ 5% =

€150,000

d) Pre-financing to Coordinator = €1,450,000

Pre-Financing Example 2

Project running over 18 months with 1 RP with total

budget €900,000

a) Pre-financing 75% as stated in EC contract =

€675,000

b) Contribution to Guarantee Fund @ 5% = €45,000

c) Pre-financing to Coordinator = €630,000

N.B. RP may not equal number of years of project

Interim Payments

• EC pay all accepted costs of previous Reporting Period

as next interim payment (less pre-financing interest)

• Does not require Audit Certificate unless total accepted

costs have reached €375,000 or multiples thereof (see

Financial Audit below)

• Interim payments continue during life of project up to

threshold of 90% of total budget or final reporting period

• EC assumption that participants will get Guarantee

Fund so reality is receive up to threshold of 85% until

final payment

Project Reporting 1Article II.4 of GA

Periodic Report – due within 60 days after end of each

Reporting Period

Consortium Requirements:

• Overview of progress towards objectives

• Explanation of use of resources

• Financial statement – FORM C for each partner plus

consolidated report (Annex IV).

New for FP7!

• Form C requires separate reporting of Personnel costs

Project Reporting 2Article II.4 of GA

Final Reports – due within 60 days after end of project

Consortium Requirements:

• Final summary report of results, conclusions etc.

• Report covering wider societal implications,

dissemination plans etc.

Plus: Coordinator must submit report on distribution of EC

contribution to partners 30 days after receipt of final

payment

Financial Audit 1 Article II.4 of GA

‘Certificate on the Financial Statement (CFS)’

• Independent report of factual findings on costs

claimed in accordance with GA

• Mandatory (for interim and final claims) as soon as

EC contribution requested by reimbursement of costs

reaches threshold of €375,000 when cumulated with

all previous payments for which a CFS has not been

submitted. Once a CFS is submitted then threshold

applies again for subsequent EC contributions

Audit example – Project with duration of 5 years (€k)

Claim

no.

Eligible

Costs

50% EC

contr.

Cumulative

amount for

CFS

CFS

required

1 380 190 190 NO

2 410 205 395 YES

3 500 250 250 NO

4 350 175 425 YES

5 700 350 350 NO

Financial Audit 2Article II.4 of GA

Special Cases:

• Where project duration is 2 years or less, if

€375,000 threshold is met then only one CFS

submitted at time of final payment

• No CFS required if under threshold

• For all projects: no CFS required if costs are

approved via ‘Certificate on Methodology’

Financial Audit 3 Article II.4 of GA

‘Certificate on the Methodology’

• Certifies the calculation of personnel costs and

overhead rates e.g. Estates and Indirect

• No requirement for CFS on interim payments and

simplified final certificate

• Requires in-depth UoB independent audit of

figures/systems prior to EC acceptance

• Not likely to use until January 2010

EC Approval of Reports Article II.5 of GA

• EC evaluate Project Reports and ideally disburse payment within

105 days of RP

After receipt of reports, EC may:

• Approve in whole or part, or approve s.t. special conditions

• Reject with justification and terminate in whole or part

• Suspend time-limit if deliverable(s) are missing

• Suspend the payment in whole or part

EC shall inform Coordinator of amount of final payment; Coordinator has 2

months if disagree and EC has

2 months to reply thereafter

EC Financial Audit Article II.22 of GA

• May occur up to 5 years after end of project

• Financial and systemic audit including

management and accounting principles

• UoB keeps documents for 7 years

• Could have on-the-spot checks

• Institution has 30 days to respond to EC

provisional report, before final report is issued

EC Technical Audit Article II.23 of GA

• May occur up to 5 years after end of project

• Includes scientific and technological audit

• Evaluates progress, relevance, management,

resources and impact of the project

• Institution has 30 days to respond to EC

provisional report, before final report is issued

• May accept or reject deliverables/project

Collaboration Agreements

Mandatory for large scale integrated project, optional for

small and medium

Financial Review:

• Partner budgets and budget reviews

• Transfer of budgets

• Plan for defaulting partners

• May prioritise types of costs for reimbursement e.g.

RTD

EC Model Grant Agreement

• Web address:

http://cordis.europa.eu/fp7/calls-grant-agreement_en.html#standard_ga

• Core Text (main contract)

• Annex I – Description of Work (varies per project)

• Annex II – General Conditions

• Annex IV – Form A Accession to Agreement

• Annex VI – Form C (differs per Cooperation project)

• Annex VII – Certificate of Financial Statement and Certificate on the Methodology

(different forms)

• List of Special Clauses

FP7 Applications and Contracts

Applying to FP7

• Consult CORDIS calls page:

http://cordis.europa.eu/fp7/dc/index.cfm

• Consult relevant call fiche, Work Programme & Guide

for Applicants

• Ensure proposal idea is appropriate in terms of size

and scope of activities

• Speak to Helen and Tom! (helen.jordan@bristol.ac.uk

tom.bowker@bristol.ac.uk)

• ‘Part A’ is the administrative forms including

financial forms

• ‘Part B’ is the main proposal text

Part B

• Section 1: Scientific and/or technical quality

• Section 2: Implementation

• Section 3: Impact

Proposal preparation

• EPSS - the EC’s Electronic Proposal Submission System

• The proposal coordinator manages the EPSS account

• Each partner completes administrative ‘Part A’ forms, A1 and A2 (info on RED www for UoB)

• The coordinator uploads the proposal ‘Part B’ and submits proposal when all information is complete (well in advance of the deadline!)

Electronic submission - EPSS

• Successful applicants complete Grant Agreement Preparation forms (GPFs) (info on RED www for UoB)

• Grant Agreement is prepared by the Commission based on information provided in the GPFs

• Grant Agreement is ‘standard’ – no negotiation

Negotiation stage

• Consortium Agreement (CA) is negotiated and signed

prior to signature of grant agreement

• CA provides structure for decision making, conflict

avoidance, conflict resolution and exit and ‘fills in the

gaps’ left by the model grant agreement

• RED contracts team handles the negotiation of the CA

(contact Alan.Crowther@bristol.ac.uk)

Consortium Agreements

FP7 Intellectual Property Rights (IPR)

Access rights to

background

Access rights to

foreground

For carrying out the

project

Yes, if a participant needs them for carrying out its own

work under the project

Royalty-free unless otherwise

agreed before acceding to the

grant agreement

Royalty-free

For use (exploitation

+ further research)

Yes, if a participant needs them for using its own

foreground

Either fair and reasonable conditions or royalty-free to be

agreed

• Official FP7 website: http://cordis.europa.eu/fp7/home_en.html

• Marie Curie: http://cordis.europa.eu/mariecurie-actions/

• ERC: http://erc.europa.eu/

• European Commission FP7 Factsheet:

http://ec.europa.eu/research/fp7/pdf/fp7-factsheets_en.pdf

• RED FP7 pages:

http://www.bris.ac.uk/research/support/funding/european/fp7

• UKRO: http://www.ukro.ac.uk/subscriber_services/index.htm

• UoB EC Timesheet:

http://www.bris.ac.uk/finance/systems/timesheets/safe/ec-

timesheet.xls

Useful links

• FP7 Model Grant Agreements:

http://cordis.europa.eu/fp7/calls-grant-

agreement_en.html#standard_ga

• FP7 Financial Guidelines:

ftp://ftp.cordis.europa.eu/pub/fp7/docs/financialguide_en.pdf

• FP7 IPR Guidelines:

ftp://ftp.cordis.europa.eu/pub/fp7/docs/ipr_en.pdf

FP7 essential documents