D ETAILS ON BUDGET AND ELIGIBILITY AT THE APPLICATION STAGE

The following sections provide an overview of key points related to the project budget and eligibility to be borne in mind when preparing a project. Applicants should also study carefully section 5 of this programme manual.

4.5.1 Building a project budget

It is important that projects consider financial issues from the very beginning. This approach requires the involvement of all partners in the preparatory work and planning meetings during the development phase of the project application. Time invested prior to the submission of the application leads to stronger partnerships with clear responsibilities and well justified budget allocations. Good preparation is fundamental to ensuring a prompt start to the project’s activities after approval, as well as smooth project implementation thereafter.

It is certainly useful to estimate the funds potentially available and to take into account the recommendations for a reasonable project budget. The overall budget has to be in line with the activities planned, the project’s duration and the number of partners involved. This implies that the detailed budget is always prepared on the basis of the activities needed to meet the project’s objectives and the resources required to carry out these activities within the time allowed.

Cost budgeting

(Source: Interact Point Qualification and Transfer: “Financial Management Handbook”; 2006; p. 80)

1. The first step of project development should be dedicated to precisely defining the theme to be tackled, the objectives to be reached and the main activities required to achieve these objectives.

2. Once the partnership has a clear overview of the main activities and outputs by semester, it should decide which partner will be responsible for which activity / output.

3. When the allocation of activities / outputs per partner is clear, the budget design can start. It is advisable to:

 identify the resources needed by each partner to complete the activities,

 estimate the related cost and forecast the payment date,

 organise these figures by budget line.

This leads to the budget by partner, by budget line and for each six-monthly period.

4. By aggregating the partners’ budgets, the partnership obtains the total estimated amount per budget line and six-monthly period for the whole partnership for the application form.

Preparation costs are fixed as a lump sum of EUR 15,000. It is important to note that EUR 15,000 represents the total amount, meaning ERDF plus partner contribution. The lead partner reports this lump sum with the first progress report and will be reimbursed the corresponding ERDF and, if applicable, share it with the project partners (see section 7.3).

In the case of 4^th call projects, the activities related to phase 2 of the project will also be covered by a lump sum. The lead partner reports it with the last progress report and will be reimbursed the corresponding ERDF/Norwegian funding after report approval. The lead partner will then share it with the project partners (see section 7.4)

THE WRONG WAY

Activities to be carried out

Activities to be carried out Budget required

Two approaches to decide the project budget THE RIGHT WAY

Budget available

4.5.2 The budget lines

The budget table in the application form provides for a sub-division into the following budget lines:

Budget line Recommendations/ rules Applicable for Staff costs Usually largest share of the total

budget, approx. 50%

Flat rate of 15% of the staff costs (automatically calculated by the

Usually less than 50% of the total

budget external experts (including their

office and administrative expenditure + travel, equipment costs)

Equipment expenditure Aim for office equipment not exceeding EUR 5,000 – EUR 7,000 per project

the personnel/ staff employed by the partner institutions officially listed in the application form

For detailed information on the different budget lines, please study section 7.2 of this programme manual carefully.

4.5.3 The spending plan and decommitment

At the application stage, each project needs to plan a spending plan for each of the six-monthly reporting periods. Based on the budget planning as described above, the spending plan should take into consideration the following:

 The reporting periods cover periods of six months (for more information please see section 6.2.1).

 The spending plan should be an estimation of the actual payments to be made in each of the six-monthly periods. Therefore, it only partly reflects the activities taking place in a certain period.

Indeed, if an activity is carried out close to the end of a reporting period, the related payment may only be possible in the following period and the costs should therefore be budgeted in the following reporting period. It should be kept in mind that the time of an activity being carried out is not necessarily simultaneous with the payment related to the activity.

The project’s spending plan is important for the programme, because the programme must also comply with its own spending plan. The programme’s spending plan is based on ERDF allocations by the Commission. Thus, if the projects do not meet their spending plans, the programme may also not meet its own. In the event of the programme not meeting its spending plan, it will be subject to decommitment (for further information see below), this means that the programme budget would be reduced accordingly. This is why projects will be monitored on the basis of their spending plan. It is therefore important that projects:

 carefully prepare a realistic spending plan,

 are ready to start project implementation very quickly after project approval,

 monitor the financial spending continuously during implementation and

 ensure regular, timely and full reporting.

The decommitment rule (n+3)

At the beginning of every year, the Commission allocates a certain amount of ERDF to the Interreg Europe programme. The annual allocation must be spent within 3 years following the year of commitment. If, at the end of 3 years, the annual allocation is not spent, the corresponding ERDF budget will be lost (= decommitted). If this loss results from certain projects lagging behind their spending targets, the programme will be obliged to reduce the budget of these projects. Therefore, the spending plan is part of the subsidy contract, which also includes provision that any amounts which are not reported in time and in full may be lost.

The first year of potential decommitment for the Interreg Europe programme is 2018.

4.5.4 Time-frame for the eligibility of expenditure

Costs for project implementation are eligible from the date of approval by the programme’s monitoring committee to the end of the month referred to as the ‘finalisation month’ in the approval letter. The monitoring committee is expected to be held within six months after the end date of each call. Projects should be ready to start implementation within two months following the date of approval by the monitoring committee.

The ‘finalisation month’ marks the end date for all eligibility and determines the date by which the last progress report must arrive at the offices of the joint secretariat for the final monitoring. It is important to take this into consideration so that all activities are finalised and corresponding payments are made before this date in order to be eligible (incl. payment for the financial control of the last progress report).

For more information, please see section 6.4 of the programme manual.

It is important to note that the lump sums for preparation costs and pre-defined phase 2 activities (the latter for 4^th call projects only) are not concerned by the time-frame for the eligibility of expenditure.