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

PROJECT

PROJECT MANAGEMENT

Financial aspects

Speaker: Pierfranco PizzalaCentro Congressi Marengo – 26th November 2010

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Reports: presentation methods

Project duration

Interim report

Final report

24 months Within the 14th month after project start

(30/11/2011)

Within two months after project end

(30/11/2012)

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Reports: evaluation phasesEvaluation 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.

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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

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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

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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.

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Final report: scores and fallouts

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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

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Cost items of financial planDirect 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)

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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

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Cost types: indirect costsThese 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

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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

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Cost types: non eligible costsThe 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

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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.

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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).

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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.

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Travel costsOnly 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.

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Costs for stayOnly 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

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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.

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OtherThey 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)

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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)

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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

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Sub-contract costs 2/2It 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

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Community standards concerning contracts

Contract value Procedure to assign a sub-contract

Lower than 12,500 Direct contract (they can be paid upon invoice presentation )

from 12,500 to 25,000 Require at least three bids

from 25,000 to 60,000 Require at least five bids

over 60,000 Apply national standards concerning public procurements

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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)

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CONTACTS:

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

[email protected]

[email protected]

[email protected]