The bottom line of any grant application is the foreseen budget and the requested grant amount for the project. In this regard, Horizon Europe is no exception. Grant application reviewers will typically refer to the budget to discern additional information about the overall quality of the proposal and to realize the work plan’s strength or, otherwise, discover potential flaws. Moreover, the reviewers will have to assess whether the project implementation structure and the allocated resources are appropriate and justified to achieve the project’s goals. Therefore, the presented budget must correlate with the expected efforts and tasks detailed in the work packages and reflect the quality of the overall work plan. For this exact reason, we have created this useful guide for preparing the Horizon Europe project budget. We will begin with a technical overview of the Horizon Europe proposal in terms of the budget sections and then continue with our recommendations for how to best construct the budget for your project.
A technical overview of the Horizon Europe budget sections
The budget of the Horizon Europe project is presented both in Part A and Part B of the Horizon Europe proposal. The budget table in Part A presents the ‘bottom lines’ for each partner, and the total for the entire project. It includes all the project’s direct costs and the additional 25% flat rate of indirect costs (only for the entitled direct costs). The expected grant for a specific project is indicated in the information provided in the topic description. The budget presentation in Part B is more elaborated. Let’s quickly review these below.
Budget presentation in Part A:
The budget table in Part A (in the electronic forms) presents only the budget’s “bottom line” figures for each partner for the entire project duration, using a breakdown of the defined cost categories, as reflected in the image below (click the image to enlarge).
Budget presentation in Part B:
The budget of the project is more elaborately presented in Part B section 3.1. It starts with the detailed information provided in the “Description of work” in each of the work packages (Table 3.1b). The information in these work packages serves as the main justification text for the budget request. Then this is complemented by the information provided in the following four different tables:
Table 3.1f – A Summary of staff effort – the information about person-month allocations per partner and per work package should be summarized under this table (should perfectly reflect and summarize the information provided in the various work packages).
Table 3.1g – A table showing a description and justification of subcontracting costs for each participant – Each partner should describe the tasks that it is going to subcontract (if any) and proper justification for that, alongside the associated costs.
Table 3.1h – A list of ‘Purchase costs’– Information and justification for purchase costs of the following cost categories (per partner): travel and subsistence, equipment and/or other goods, work and services. The rule here is that each partner should provide details for the purchase costs that sum up over 15% of the personnel costs allocated to the partner. The sum of the remaining purchase costs that are below the 15% mark (of personnel costs) can be presented here without additional justifications.
Table 3.1i – A list of ‘Other costs categories’ – There are several ‘other costs categories’, in addition to the ones mentioned above, that can be added to the Horizon Europe project’s budget. If one of these other cost categories is relevant to your project, a justification under table 3.1i should be provided. Keep in mind that most of these ‘other costs categories’ cannot benefit from the addition of the 25% flat rate of indirect costs.
Having understood the basic requirements for each budget table in both Part A and Part B of the Horizon Europe proposal, the next step is a more conceptual discussion regarding how to construct a strong budget that accurately reflects the project’s concept and objectives, and successfully “feeds the reviewers”. Continue reading below.
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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.
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Step 3: Make one big table, then split it into the requested sections
The fact that the budget appears in two different sections (Part A+B) of the proposal while using a set of various tables can create a loss of important information or inconsistency between the different parts. To best handle this issue, we recommend first create one consolidated table that collects and summarizes all the relevant data from all consortium partners. This table is external to the proposal (usually created by the coordinator), and will only be used internally to ensure the budget is consistent and exhaustive. Once this table is set, and all the information makes sense together, you can begin filling out the budget sections of the proposal by splitting up the information in the manner requested throughout the various sections.
Should your project be funded, this table can assist you during the project’s execution.
Step 4: Consolidating the Horizon budget
Once the data from all partners is in a table, the next step is to consolidate it into one unified project budge, most likely, the coordinator will be responsible for this task. First, it is necessary to add up all costs (per category) declared from all partners. This will reveal what the total project budget has amounted to.
If the total budget significantly exceeds the expected grant amount, it is necessary to revisit the input from the partners and consult with them regarding the reduction of the budget. The budget cut could be surgical (per partner) or horizontal (be that it is mutually agreed on).
Further notes about budget consolidation
When consolidating the Horizon Europe project budget, note the following additional tips we’ve gathered from our experience and feedback from reviewers (these are not a must):
- Avoid allocating more than 30% of the overall budget to a single partner (Coordinator included)
- Avoid allocating more than 40% of the overall budget to a single country (all partners from the same country put together)
- The budget allocated for coordination and project management activities (mostly by the coordinator) should range between 3% to 5.5% of the overall budget
Conclusion
Ensuring that the Horizon Europe proposal budget is accurately and efficiently prepared and presented could have a positive impact on the overall assessment of the proposal during the evaluation process, and later on, during the project execution. This guide can be used as a helpful tool during the entire process of budget planning. For additional information and guidance, do not hesitate to contact us.
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