ce projet est financé par lueet mis en œuvre par un consortium dirigé par mwh technical and...

Ce projet est financé par l’UE et mis en œuvre par un consortium dirigé par MWH

Technical and financial Technical and financial management of the management of the

projectproject

Technical and financial Technical and financial management of the management of the

projectprojectEstonia Latvia RussiaENPI CBC Programme

Project Management and Implementation training

20&21 February 2012


Sound project implementationSound project implementation

For a sound technical and financial management of your project you need:

1.a monitoring system

2.a financial plan

3.a project accounting system

4.a procurement plan


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1. Monitoring system 1. Monitoring system

Why a monitoring system?

•To keep track of how a project is progressing in terms of resource use, implementation, delivery of results and the management of risks

•To support effective decision making with systematic and continual collection, analysis and use of management information


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Monitoring system Monitoring system

Monitoring is:

•An information system

•Performed on a systematic, regular basis

•Based on indicators

•Concerned with the facts!

•Concerned with both financial and operational progress information

➪The information needed for monitoring should be identified when the project is first designed and/or when reviewed


Setting up the monitoring systemSetting up the monitoring system

Good monitoring depends on having reliable, relevant and timely information about the activities, outputs and outcomes of your project. This may be achieved by:

•Setting up a shared, internet-based (intranet), information tool including the control of deadlines, activities, deliverables and indicators using available project management software

•Requiring the project manager for each partner to submit a regular, short monitoring report to the Beneficiary providing information about the progress being made in implementing the project.


Sources of information for monitoringSources of information for monitoring

• The grant contract (your logframe, workplan…)

• Contracting information (sub-contracts)

• The record of project indicators at the levels of activities, outputs and results

• The financial records – bookkeeping system

• Special reports like quantitative surveys, questionnaires


Elements of Financial MonitoringElements of Financial Monitoring

• The value of the grant, the co-financing

• The expenditure and revenue budget and the actual financial position for the reporting period

– Expenditure & revenue

– Cash flows

– Cash flow forecast

– Bank balances

– Expected reimbursement claims for next period


Specific financial items to highlightSpecific financial items to highlight

• Actual expenditure significantly more than budget

• Actual expenditure significantly less than budget (eg savings on procurement)

• Delays in submitting payment requests

• Unexpected ineligible costs

• Significant change in exchange rates (effect on budget)

• Any other unexpected financial issues


Content of Operational MonitoringContent of Operational Monitoring

• Synopsis of the Grant contract

• Contracting (secondary procurement)

• Input / activity/ output monitoring (efficiency)

• Results monitoring (effectiveness) and impact

• Risk monitoring

• Sustainability

• Horizontal and cross-cutting issues

• Good practices

• Prognosis for future

➙ See annex on Operational Monitoring


Setting-up a monitoring systemSetting-up a monitoring system


The monitoring reportThe monitoring report

• Monitoring is based on a standard template adapted to the project

• Monitoring reports are usually collected on a regular basis (monthly, bi-monthly)

• Report is based on tables – very little narrative

• But with the possibility of highlighting unusual good or bad events

• A good monitoring report is easy and quick to read

• Monitoring will feed in project reporting


2. Financial planning (1)2. Financial planning (1)

Why should you revise project financial planning?

Is it not enough with the project budget approved?

Even though you prepared a budget including expenditure and sources of funding when preparing the application form, you have to take into consideration that:

•The budget doesn’t include an accurate monthly estimate for the whole project duration

•The approved budget does not have any forecast of the timetable for receipt of the sources of funding

•Not all expenditure imply an additional cash-flow, as they correspond, for example, to staff already working in your organisation


Why should you revise project Why should you revise project financial planning?financial planning?Why should you revise project Why should you revise project financial planning?financial planning?

Even though there is a 90% grant contribution, the balance will only be received after the project closure. The pre-financing may not avoid completely some cash deficits during project’s lifetime.

Therefore, it is important to make an accurate plan of receipts and payments in order to:

•Avoid any setbacks in project implementation due to cash shortage;

•Avoid misunderstandings among partners;

•Encourage partners to spend in time and contribute to a timely reporting and payment claim to JMA/JTS.


Steps for project financial planningSteps for project financial planningSteps for project financial planningSteps for project financial planning

1. Review your budget in detail to identify needs for minor adjustments in the initially estimated amounts;

2. Confirm your sources of funding and, in particular, the dates of expected receipt of contributions by external donors;

3. Prepare a monthly (or bi-monthly) forecast of all project expenditure;

4. Estimate when you will be able to submit and receive further pre-financing;

5. Prepare a project cash flow forecast.


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Let’s see a practical exampleLet’s see a practical exampleLet’s see a practical exampleLet’s see a practical example

Our simplified case study will be a project with:

• Beneficiary and one partner

• 24 months duration

• No additional donors, no direct revenue, no in-kind contribution

• A limited number of budget items

Let’s see the project budget

See tables annexed


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Planning and adjusting Planning and adjusting expenditure expenditure Planning and adjusting Planning and adjusting expenditure expenditure Staff costs

• Confirm which persons will be working for the project and see if they are already contracted or they have to be recruited

• Confirm the estimated monthly cost (as “month” is the unit of time in budget)

• Find out in which month the persons will start working and on what basis, if not full time

Costs Assumption Initial dateDetailed description End date# of units Unit rateUnit

1. Human Resources1.1 Salaries (gross salaries including social security charges and other related costs, local staff) 1.1.1 Technical Technician 1 Beneficiary Month 12,00 3.000,00 Already in institution. 50% dedication Month 1 Month 24

Technician 2 Beneficiary Month 20,00 2.850,00 Recruited for the project. 100% dedication Month 4 Month 23Technician 3 Beneficiary Month 2,00 2.600,00 Recruited for the project. Half dedication 4 months for final event Month 19 Month 22Technician 1 partner 1 Month 5,50 2.000,00 Already in institution. 25% dedication Month 2 Month 23Technician 2 partner 1 Month 20,00 1.900,00 Recruited for the project. 100% dedication Month 4 Month 23Total technical staff 59,50 2.473,95

1.1.2 Administrative/ support staff Assistant Beneficiary Month 12,00 2.000,00 Already in institution. 50% dedication Month 1 Month 24Assistant partner Month 5,50 1.600,00 Already in institution. 25% dedication Month 2 Month 23Total administrative/support staff 17,50 1.874,29


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Planning and adjusting Planning and adjusting expenditure expenditure Planning and adjusting Planning and adjusting expenditure expenditure Staff costs

• Calculate the monthly cost

1. Human Resources1.1 Salaries (gross salaries including social security charges and other related costs, local staff) 1.1.1 Technical Technician 1 Beneficiary

Technician 2 BeneficiaryTechnician 3 BeneficiaryTechnician 1 partner 1Technician 2 partner 1Total technical staff

1.1.2 Administrative/ support staff Assistant BeneficiaryAssistant partnerTotal administrative/support staff

Costs Detailed description

1.500,00 1.500,00

500,00

1.500,00 2.000,00

1.000,00 1.000,00400,00

1.000,00 1.400,00

Month 1 Month 2

1.500,00 1.500,00 1.500,00 36.000,002.850,00 2.850,00 57.000,001.300,00 5.200,00

500,00 500,00 11.000,001.900,00 1.900,00 38.000,008.050,00 6.750,00 1.500,00 147.200,00

1.000,00 1.000,00 1.000,00 24.000,00400,00 400,00 8.800,00

1.400,00 1.400,00 1.000,00 32.800,00

TOTALMonth 22 Month 23 Month 24


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Planning and adjusting Planning and adjusting expenditure expenditure Planning and adjusting Planning and adjusting expenditure expenditure Other categories

• Revise the estimated amounts and other necessary assumptions

• Identify when invoices for services and goods will be paid, according to the delivery dates and credit terms (usually X days after delivery)

• Make a monthly estimate of paid expenditure for each categories

• Exclude “contingency reserve” and “administrative costs” from these estimations

Let’s see a couple of examples

➙ See tables annexed


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Costs AssumptionDetailed description # of units Unit rateUnit

2. Travel2.1. International travel Kick-off meeting:

3 persons from partner 1 Per diem 6,00 250,00 Beneficiary's placeMeeting # 23 persons from Beneficiary Per diem 6,00 250,00 Partner 1 placeMeeting # 33 persons from partner 1 Per diem 6,00 250,00 Beneficiary's placeFinal conference5 persons from Beneficiary Per diem 10,00 400,00 Partner 1 placeTotal international travel 28,00 303,57

5. Other costs, services5.1 Publications Documents 1,00 300,00 Cost of printing the study5.2 Studies, research Studies 1,00 20.000,00 Paid 50% in 3 months; 50% 60 days after delivery5.3 Expenditure verification Reports 3,00 3.000,00 Paid 30 days after delivery5.4 Evaluation costs Reports 1,00 5.000,00 Paid 60 days after delivery

5.5 Translation, interpretersDocuments/

studies 2,00 2.000,00 Paid 60 days after delivery 5.7 Costs of conferences/seminars Conferences 1,00 5.000,00 Paid 30 days after delivery

5.8. Visibility actions Web site Web site 1,00 10.000,00Development (8.000 €) paid 60 days after delivery; maintenance paid 12 months later

Total other costs, services


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2. Travel2.1. International travel Kick-off meeting:

3 persons from partner 1Meeting # 23 persons from BeneficiaryMeeting # 33 persons from partner 1Final conference5 persons from BeneficiaryTotal international travel

5. Other costs, services5.1 Publications5.2 Studies, research5.3 Expenditure verification5.4 Evaluation costs

5.5 Translation, interpreters5.7 Costs of conferences/seminars

5.8. Visibility actions Web siteTotal other costs, services


Month 2 Month 3

1.500,00

0,00 1.500,00

TOTALMonth 23 Month 24

1.500,00

1.500,00

1.500,00

4.000,00 4.000,004.000,00 0,00 8.500,00

Month 9 Month 10

10.000,003.000,00

10.000,00 3.000,00

300,0020.000,00

3.000,00 9.000,005.000,00 5.000,00

4.000,005.000,00 5.000,00

10.000,0010.000,00 3.000,00 53.300,00

TOTALMonth 23 Month 24


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Planning payment claimsPlanning payment claimsPlanning payment claimsPlanning payment claims

• Take the amounts of the first pre-financing

• Calculate the thresholds of minimum expenditure in order to be allowed to submit payment claims for further pre-financing (see your contract)

• Estimate the date for submission of payment claims and the receipt of the grant after the approval of the financial report by JMA/JTS

Let’s see an example in two tables:

1st advance payment 40% grant 1st year; 45 days after contract signature 49.768,27Maximum additional advance payments

When grant corresponding to expenditure is at least 70% of previous advance payment 147.777,65

AmountClaim Comments


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Planning payment claimsPlanning payment claimsPlanning payment claimsPlanning payment claims

Do not forget to take into account the administrative costs to estimate when you will reach the threshold!

Monthly direct

expenditure

Cumulative direct

expenditure

Cumulative admin. Costs

(6,18%)

Cumulative total costs

Corresponding grant

Month 1 2.500,00 2.500,00 154,50 2.654,50 2.389,05Month 2 4.150,00 6.650,00 410,97 7.060,97 6.354,87Month 3 5.980,00 12.630,00 780,53 13.410,53 12.069,48Month 4 8.900,00 21.530,00 1.330,55 22.860,55 20.574,50Month 5 8.150,00 29.680,00 1.834,22 31.514,22 28.362,80

Threshold for 2nd advance payment Month 6 16.150,00 45.830,00 2.832,29 48.662,29 43.796,06Month 7 8.150,00 53.980,00 3.335,96 57.315,96 51.584,37Month 8 8.150,00 62.130,00 3.839,63 65.969,63 59.372,67Month 9 18150 80280 4961,304 85.241,30 76.717,17

Month 10 13.850,00 94.130,00 5.817,23 99.947,23 89.952,51Month 11 8.150,00 102.280,00 6.320,90 108.600,90 97.740,81Month 12 8.150,00 110.430,00 6.824,57 117.254,57 105.529,12

Threshold for 3rd advance payment Month 13 8.150,00 118.580,00 7.328,24 125.908,24 113.317,42Month 14 18.150,00 136.730,00 8.449,91 145.179,91 130.661,92Month 15 8.450,00 145.180,00 8.972,12 154.152,12 138.736,91Month 16 17.730,00 162.910,00 10.067,84 172.977,84 155.680,05Month 17 8.150,00 171.060,00 10.571,51 181.631,51 163.468,36Month 18 10.150,00 181.210,00 11.198,78 192.408,78 173.167,90Month 19 9.450,00 190.660,00 11.782,79 202.442,79 182.198,51Month 20 9.450,00 200.110,00 12.366,80 212.476,80 191.229,12Month 21 9.450,00 209.560,00 12.950,81 222.510,81 200.259,73Month 22 9.450,00 219.010,00 13.534,82 232.544,82 209.290,34Month 23 25.350,00 244.360,00 15.101,45 259.461,45 233.515,30Month 24 5.500,00 249.860,00 15.441,35 265.301,35 238.771,21

Total 249.860,00 272.801,35 245.521,21


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Planning of cash flowsPlanning of cash flowsPlanning of cash flowsPlanning of cash flows

Prepare a final table with:

• The revenues and their month of receipt;

• “Additional” foreseen expenditure paid for the project;

• Monthly and cumulative cash flow and surplus/deficit taking into account the “additional” expenditure;

• Other payments already budgeted in your organisation, such as permanent staff or administrative costs;

• Monthly and cumulative cash flow and surplus/deficit taking into account all expenditure


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Final remarks on financial planningFinal remarks on financial planningFinal remarks on financial planningFinal remarks on financial planning

• As with all estimates, the financial forecast is only useful if reviewed and updated on a regular basis

• Discuss the planning with your partners, get information from them and reach a consensus on commitment for expenditure and payments

• Cash forecasts tend to be optimistic; revenues arrive later and expenditure on time or earlier

• Be prudent and ensure that no partner is blocked in their contribution to project implementation for lack of liquidity of funds

The tables and assumptions shown in this presentation

are just an example


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3. Accounting system requirements3. Accounting system requirements3. Accounting system requirements3. Accounting system requirements

Art. 16.1 of General Conditions (annex II to the contract):

The Beneficiary and partners shall keep accurate and regular accounts of the implementation of the project, using an appropriate accounting and double-entry bookkeeping system. The system:

• May be either part of the beneficiary’s and partners’ regular system or an adjunct to that system

• Shall be run in accordance with the accounting and bookkeeping policies and rules that apply in the country concerned

• Accounts, expenditure and revenue relating to the project must be identifiable and verifiable

• Details on interest accruing on funds paid by EC have to be provided


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What is an accounting system?What is an accounting system?What is an accounting system?What is an accounting system?

Accounting IS NOT a list of expenditure and revenue. Accounting IS NOT a list of expenditure and revenue.

An excel file is not an accounting system.An excel file is not an accounting system.

General definition of accounting

The systematic recording, reporting and analysis of the financial transactions of an entity.

Common provisions on accounting by Financial Regulation (Article 132 of EC Regulation 1605/2002)

1. The institution’s accounting system is the system serving to organise the budgetary and financial information in such a way that figures can be input, filed and registered

2. The accounts shall consist of general accounts and budgetary accounts


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General requirements on General requirements on accountingaccountingGeneral requirements on General requirements on accountingaccounting

All partners need to have a general accounting in All partners need to have a general accounting in conformity with national rulesconformity with national rules

The project accounting has to be organised as a The project accounting has to be organised as a budgetary accounting in all partnersbudgetary accounting in all partners

The project accounting has to be kept in the national currency, as the translation to Euro will only be necessary for the financial report to JMA/JTS.


Use of exchange rates in the projectUse of exchange rates in the projectConversion:

Purpose Which exchange rate

Bank transfer Actual rate applied by bank

Reimbursement of subsistence costs to staff

National bank daily rate

Payment of invoices in foreign currency Actual rate applied by bank

Translation:

Purpose Which exchange rate

Reporting Average of monthly rates for the reporting period from Inforeuro

Decision on procurement procedure (verification of threshold)

Inforeuro rate of the month of launch of the procedure

http://ec.europa.eu/budget/contracts_grants/info_contracts/inforeuro/inforeuro_en.cfm


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What is double-entry bookkeeping?What is double-entry bookkeeping?What is double-entry bookkeeping?What is double-entry bookkeeping?

Definition of double-entry bookkeeping

An accounting technique which records each transaction in at least two different accounts, as a credit and as a debit. Credit entries represent the sources of financing, while debit entries represent the use of this financing.

Let’s see an example of expenditure in a project-dedicated accounting:

•The debit will indicate to which category of expenditure the invoice has to be imputed

•The credit will indicate if the invoice was paid by the beneficiary or a partner. In case of non-dedicated bank accounts, the entry should also indicate which one was used.


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Reconciliation with reportsReconciliation with reportsReconciliation with reportsReconciliation with reports

Article 16.1. of General Conditions also indicates that:

The financial report has to be properly and easily reconciled to the accounting and bookkeeping system and to the underlying accounting and other relevant records.

For this purpose, the beneficiary shall prepare and keep appropriate reconciliations, supporting schedules, analyses and breakdowns for inspection and verification.


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Setting up your accounting systemSetting up your accounting systemSetting up your accounting systemSetting up your accounting system

•Ensure that it is in conformity with the requirements of art. 16.1 of General Conditions

•Design it to provide the necessary information for the interim and final reports

•Use it periodically to allow a proper follow-up of the project budget and enable you to identify any major deviations beforehand

•Ensure that there is shared understanding by all partners. If it is a separate system, use the same for all the partnership; if it is included in the partners’ accounting, check its adequacy

•Ask support to the auditors on the conformity of the system by all partners several months before the first reporting


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Archiving of supporting documentsArchiving of supporting documentsArchiving of supporting documentsArchiving of supporting documents

Requirements of your archiving system

•All transactions in accounting are referred to the necessary supporting documents (see presentation on eligible expenditure)

•The originals of the supporting documents have to be kept by each partner institution, but copies (either scanned or physical) are easily available by the Beneficiary in order to facilitate the financial controls by authorized bodies. A web-based document repository shared by all partners may be very useful for this purpose.

•The documents have to be archived in a way that they are easily accessible after the project closure. (7 years after receiving the balance payment)


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4. Procurement plan4. Procurement plan4. Procurement plan4. Procurement plan

Delays in procurement procedures is one of the main risks for not keeping the working plan. Therefore:

•Identify which are the procurement procedures to be launched during the project implementation and who is the responsible partner

•Identify the applicable legislation and specific procedures and deadlines

•Insert the timing of the procedures in the working plan and ensure that no activity will be delayed for this reason

•Include the procurement plan in your monitoring system