The complete Horizon Europe budget preparation guide

Laying the foundations for budget construction

Before focusing on the content of the budget presentation, it is important to understand the correct timing to constructing it. From our experience, there is a recommended order to writing the entire Horizon Europe proposal. The first step is to present the project’s idea – its objectives, concept and methodology, and the expected impact. The next step is to form a detailed implementation & work plan. Finally, everything must be translated into a Horizon Europe project budget presentation and a requested grant amount in the online forms.

As you can see from the above order, the budget should only be attended to and constructed once there is a clear understanding of the project’s implementation plan, which fully respect and correspond to the project’s idea, goal, concept, objectives and methodology. This is because once there is a clear project concept and outline, structuring the budget becomes much easier. You will be able to more easily answer the question: “How are you going to achieve the objectives of the project?” – which is the starting point to understanding how much funding you will need.

To successfully answer this question, and then construct a strong a cohesive budget, consider our three suggested steps below.

Step 1: Follow one approach

There are two prevailing approaches for planning a budget in Horizon Europe grant applications. In this context, it is important to note that the approach will usually be chosen by the project’s coordinator.

The two approaches are:

• A top-down approach where the overall project budget is divided a priori (many times equally) between the partners. In this case, each partner is instructed to create and elaborate its own budget within the limits of the share that was allocated to it.
• A bottom-up approach where the partners are requested to indicate their detailed budgetary needs for executing their tasks in the project, without pre-determined limits. Once detailed, all budgets are consolidated to form the overall project’s budget.

The top-down approach has the advantage of being rather simple to many coordinators, as it puts most of the budget planning efforts on the partners. On the other hand, its main disadvantage is that it “forces” a budget structure that may not be as accurate and realistic as expected in these grants. As such, in many cases, it fails to reflect the expected efforts required from each partner in the project. In some cases, reviewers might perceive this budget presentation as too coarse or even artificial, which in turn may indicate a poor implementation plan. This is a conclusion we prefer to avoid entirely.

Different from the above is the bottom-up approach. This approach results in a more accurate and realistic Horizon Europe project budget description. While it may require more effort from all partners involved, this pays off during the project’s evaluation since it enables to spot the exact role of each partner and the overall division of work needed to implement the project’s work plan. It also conveys a strong message about the efforts invested in planning the implementation during the execution phase of the project. Therefore, while both approaches are entirely valid and legitimate, we recommend following the second approach over the first.

Step 2: Collect the required data

In this step, all partners must provide data according to their respective work packages. The type of data that should be collected includes:

• Personnel costs (being the main segment of most projects):
  • Calculation of personnel costs. When calculating the personnel costs for the project proposal the first element that we are interested in is the average monthly cost of employment of the personnel that is expected to participate in the project of each partner. The average monthly cost of employment should include the salaries alongside any additional employer’s payments (such as social benefits, pension, etc.). There is no need to get into the fine details of all salaries and additional payments. The main focus here is the average cost of employment of relevant personnel. Normally, it is up to the financial department of the partner’s institution to provide these required figures.
  • Allocation of person-months per work package. This next element that we are interested in will stem from the work assigned to each partner based on the discussions on the expected role and tasks in the process of developing the work plan. In this process, each partner should estimate how many person-months it should allocate per task in the work packages. These allocations are then added up to the total amount of person-months per partner.
  • The overall personnel charge per partner is essentially the average cost of employment (for the given partner) multiplied by the total of person-months allocation (for the said partner).
  • Important Note: the average cost of employment on one hand and the person-months allocation, on the other hand, are relevant mainly for the pre-award phase and the proposal evaluation process. Later on, in the post-award phase, during the project’s execution, the personnel calculation is done using a different scheme which is based on the daily rate, which should be monitored carefully during the project’s execution, and might be audited by the EC later on in potential financial audits. This may cause discrepancies between the early pre-award personnel charge calculations and the post-award personnel charge calculations. The complexity of these discrepancies is something to consult with the financial department in your institutions and get their support and approval for your personnel budget request, both for the pre-award and the post-award phases.
• Travel & subsistence costs:
  • Travel & subsistence costs can be associated with specific tasks or work packages, although it is not a must. It is perfectly fine to present a general travel budget (per partner) for the entire project.
  • That being said, we recommend having some kind of breakdown. Since it is hard to predict the exact costs of future travel expenses, we recommend using an average cost of travel & subsistence and multiply it with the expected number of trips planned during the project. The average travel cost should include transport, accommodation and subsistence per person, for a period of 2-3 days.
  • Travel is of course expected when implementing a Horizon Europe project. Still, we recommend not to overdo it. It is essential to keep the travel budget realistic and appropriate to the amount of involved personnel (per partner) and associated tasks.
• Equipment costs:
  • Any equipment required for the direct execution of the project is eligible for funding.
  • Horizon Europe equipment budget requests should typically be claimed based on their depreciation value according to the local tax regulations of each partner. The financial department in your institution should be able to assist in this regard.
• Sub-contracting and 3rd parties:
  • Any cost that might be directed towards sub-contractors should follow the guidelines of “best value for money” and be described and justified by the relevant partner. Make sure that the project’s core tasks cannot be subcontracted.
  • Keep in mind that subcontracting costs are not eligible for the 25% flat-rate addition of indirect costs.
• Other goods and services costs:
  • Any other goods and/or services required for the direct execution of the project can be added to the requested budget.
  • In case a partner’s total grant surpasses €430,000, a Certificate on Financial Statements (CFS) is required to be submitted once the project ends. A CFS is normally issued by an external auditor. The cost of producing the CFS is eligible and should be included in the partner’s budget estimation under this category.

After collecting all the necessary data, the next step is to organize it all in the most beneficial way. For this – continue to step 3.