FP6 Audits, Average Personnel Costs, Invoiceable Days
November 26th, 2007 — fp7discussionI know this is about an FP6 subject, but it is also very relevant for FP7.
EARTO (www.earto.eu) has reported that several of its members have recently had FP6 projects audited and that many of them have been seriously criticised by the auditors.
There have been two main points of criticism.
One is that many of these research organisations have been using average personnel costs. Audit checks on individual projects have shown that the claimed costs were out of line with the real costs. The research organisations seem to have worked on the principle that over a number of FP6 projects the average and real costs would be more or less in line and therefore acceptable to the Commission. Clearly, the Commission expects costs to be accurate for each individual project. In other words: you can use average costs for interim reporting, but you need to correct for real costs at the latest when you make your final claim.
The other issue is more fundamental and potentially of very grave consequences. It has to do with the definition of “productive time” (”invoiceable days”). Many research organisations count as productive time only the hours that are available for invoicing to customers. So they deduct things like holidays, weekends, public holidays and sick leave, of course, but also internal management time, training and education time, equipment maintenance time, marketing time and so on. Some auditors, at least, have refused this, saying that things like general management time and marketing time have to be included. This can have big consequences: one research organisation calculated its number of productive hours per employee to be around 1,100 hours per year; the auditors said it should have included general management and marketing time, which gives a total nearer 1,600 hours per year. It makes a big difference to the reimbursed daily rate if you divide your total salary bill by 1,100 or 1,600.
EARTO is organising a workshop for its members on December 10th about these issues. Maybe there will be some more information after then.
In the meantime, has anybody else experienced FP6 audits recently? If so, what issues have been raised and with what consequences?
November 28th, 2007 at 3:55 pm
I have had FP6 audit lately. Generally it went well. The only remark from auditor’s side was about the number of man-months. The man-month rate had been specified at the proposal stage, however during execution of the project it turned out that it was too high. The coordinator said we should only be careful not to exceed the budget, no matter how many hours we devote to the cartain task. Consequently, we kept the planned budget but had a major over-spenditure of working hours. The auditor, of course, noticed that and advised us to make a kind of amendment to the contract stating that the number of man-months for our company is increased whereas the man-month rate is decreased. Otherwise, at the end of the project, the Commission may cut down its contribution. Right now we are in the middle of dealing with this situation with the coordinator and the project officer. Did anyone have similar problem?
November 29th, 2007 at 10:53 am
It’ll be interesting to see whether the Project Officer accepts and implements this kind of “solution”.
But it’s a cosmetic solution only. As you correctly state, it requires that the contractors accept to drop their man-day rate. Perhaps some people can afford to work at a loss. Most surely can’t!
November 30th, 2007 at 6:18 pm
On productive hours: the auditors who object to the exclusion of marketing time are consistent with the principle that the EC does not fund sales or marketing costs. If marketing time is deducted from productive hours, this has the effect of including marketing in overheads charged to the EC project.
On the other hand, auditors have long accepted time being trained as a legitimate deduction, usually at the level of 5 to 10 days per year.