Cost Reimbursement: actual cost and man months
July 18th, 2008 — vahIn order to be reimbursed at your budgeted allocation, must you meet both the actual incurred eligible cost and the man months budgeted?
For example – if the original budget was noted as 100,000 Euros and 50 man months, would a company be reimbursed at the full 100,000 Euro budget if they showed that they incurred 100,000 Euros of eligible cost with only 40 man months?
The concern is that the actual labor costs may be higher per man month than was originally budgeted and we want to ensure that we will not be required to spend 50 man months in order to receive the original budgeted allocation of 100,000 Euros.
This also assumes that the deliverables are met in a satisfactory manner within the 40 man month timeframe.
Thank you
July 26th, 2008 at 11:47 am
Reimbursement is based on eligible COSTS not person-months as such. As long as the promised deliverables are satisfactory it shdnt be a problem. In case of an audit you can always state that you put staff on the project with more qualifications (and thus were more expensive) to get the job done.
Putting CHEAPER staff may be more problematic as it may give the impression that trainees were put in with less care for quality of deliverables. But, again if (i) the quality of the deliverables is good and (ii) you stayed within budget you shdnt get much problems.
GL, Henk