Financial management of projects Martin Plesch Content

Financial management of projects Martin Plesch

Content Preparation of budget n n Content side Formal side Using of budget n n n Project rules Institution rules Legal rules (public procurement etc. ) Intermediate financial reports Final financial reports

Preparation of budget Particularly high budget can be the reason for refusing the whole budget Particularly low budget will cause problems by implementation Do not forget about side expenses – bank fees, expenses for public procurement, phones, phone costs etc.

Justified expenses Specific for every project call – an exhaustive research of the call is needed Two basic types of projects n n Basic (hard) costs plus flat rate (overheads) Full costs overview Segmentations by purpose, task, period, year

Local budget models Institution dependent Governmental institutions 100% NGOs 95% - 100% Universities, villages, regions 95% SMEs 30% - 75% Partly funded by EU, partly by state budget

FP budget models FC (full cost) model – up to 50% of real costs of the institution connected with the project FCF (full cost flat rate) – up to 50% of real hard project costs of the institution plus overheads AC (additional costs) – up to 100% of the real additional project costs plus overheads

Most common limits Maximal and minimal volume, intensity of financing Maximal proportion of investments in soft projects Limit for costs of project management and administration Limits for operational costs (for full cast overview projects)

Value added tax For many projects not eligible n n n FP projects (Old) projects of APVV Phare projects Solutions n n n To buy from small companies Program refundations (MVRR, NADSME) Co-financing by other grants (VEGA)

Using of budget The contract is the rule Basic types n n Deposit paid projects (VEGA, APVV, MVTS) Pre-financed projects (ERDF) Refunded projects (ESF, ERDF) Combinations (PF, Phare)

Eligible costs As stated in the budget of the project Rules of budget changing are given in the contract n n Deposit – paid projects often have given a percentage, to what extent the budget may e changed without changing the contract Refunded projects only downwards Attention on strictly non-eligible costs

Public procurement Given “by law” or “by contract” The law is changing very dynamically Be aware of brute malfeasance – up to 5 or 8 years prison Basic limit for taking it seriously is 1 million SKK per year (in case of construction costs 4 millions SKK)

Intermediate reports Complex and thorough overview about used and unused funds In refunded projects it is a part of Request for payment It is a good time to preliminary evaluation of the project and preparation (if needed) requests for budget changes Normally the copies of documents are not needed

Final report Very detailed overview about funding of the project Sometimes the copies of documents are part of the report n n By flat rate project only covering the basic costs For other covering all the costs Report about small changes in the budget In most cases the Request for final payment is added

Most common problems Already used finances are declared as non -eligible Some invoices are dated after the end of the project (phones, internet) Complicated and long process of public procurement Funds for VAT Collision of project and fiscal years

Most common problems Breking of the contracts from the Contractual authorities Long times to get the payment Quickly changing conditions and rules for project preparations and running Changes of the law during the project runs