Guidelines on Allowable Project Costs

Transcription

1 Guidelines on Allowable Project Costs 2013/2014

2 LIST OF CONTENTS 1. INTRODUCTION 3 2. BUDGET CATEGORIES HUMAN RESOURCES RUNNING COSTS (DIRECT COSTS) OVERHEADS (INDIRECT COSTS) CAPEX LEGAL & INTELLECTUAL PROPERTY (IP) COSTS COMMERCIALISATION COSTS 9 3. PILOT PLANTS 4. REGULATORY COSTS REFUNDS INFLATION ADJUSTMENTS 10

3 1. INTRODUCTION This document serves as a guideline for budgeting. Under no circumstance will the total costs of the project be increased during the course of the project. It should be noted that certain costs incurred by TIA investments are not classified as normal expenditure costs as associated with a going-concern company. These include costs for specialised equipment, scarce skills, regulatory approval, and technical consulting amongst others. The following are instances when a cost associated with a TIA investment is allowable and not-allowable: (a) A cost is allowable when: Incurred during the project investment s duration Incurred at/by the beneficiary Recorded in the accounts of the beneficiary Used for the sole purpose of achieving the objectives of the project investment Is in line with the approved budget as part of the funding agreement (2) A cost is not-allowable when it is not in adherence to PFMA provisions and includes: The opposite instances to the allowable costs listed above When a cost is incurred before TIA investment approval is sought, including costs incurred during the TIA funding application phase. A cost that is financed by another legal entity or person in the form of cash, debt or grant. Finance related costs such as interest owed, debt repayment and debt service charges. Fines and penalties associated with the investment and/or beneficiaries Any expenditure that is paid as a dividend, royalty or a transfer cost to an affiliated company or organisation as part of an agreement. Unnecessarily high, extravagant or wasteful expenditure as defined by the PFMA Currency exchange losses Charitable contribution Business class air travel Goods and services for personal use Lobbying costs Any costs related to other projects Motor vehicles/ bakkies

4 Allowable costs to the investment include: Categories Idea Dev Tech Dev Industry Matching Equity Fund Personnel Yes Yes Yes No Normal rate Personnel Full cost Yes No Yes Yes recovery Overheads Yes Yes Yes Yes Equipment or Facility No Yes Yes Yes Subcontracting Yes No Yes Yes Consumables Yes Yes Yes Yes Patent support Yes Yes Yes Yes Pilot Plants No No Yes Yes 2. BUDGET CATEGORIES Project budgets should be split according to the following broad categories: Human Resource Costs (project related HR costs) Running Costs ( direct costs) Capital Expenditure (CAPEX), (money to be spent on CAPEX related items worth in excess of R5000, and should be documented in an asset register. Intellectual Property (IP), its protection and exploitation thereof Commercialisation (as detailed further below) ALL ITEMS IN THE BUDGET MUST INCLUDE VAT 2.1 HUMAN RESOURCES (a) Normal personnel costs Normal personnel costs are defined as the total remuneration, in cash or in kind, payable by employer to an employee in return for work done by the latter during the reference period. Personnel costs can include high tech sector R&D personnel that are few well qualified, resulting in a higher pay scale than employees for conventional projects. (b) Full recovery costs There are instances where full cost recovery is necessary. The term full cost recovery means securing funding for or recovering all your organisation s costs, including the direct costs of your projects and all overheads. In full cost recovery your organisation s overheads are

5 shared among your organisation s different projects. The full costs of your project are all the costs directly relating to the project plus the project s share of the overheads. The following categories and maximum hourly charge out rates apply Category Maximum Hourly Charge Out Rate Description Project Manager R650 Person assigned to manage the programme or project. Senior Scientist R650 Person that has a PHD or equivalent with 5 years post doctorate experience. Scientist R500 Person that has a PHD or equivalent or M.Sc or equivalent with 4 years experience Junior Scientist R350 Person that has an M.Sc or equivalent, or Honours or equivalent with 5 years experience Laboratory Technician R350 Person that has a B tech or equivalent or Honours degree or equivalent PHD Student R200 Students (PHD level) Masters Student R150 Students (Masters level) Consultant R650 Person or company acting in an advisory role and contributing to intellectual Property (can consult on legal, technical, and business issues) Sub-contractor R450 Sub-contractors that provide help within the process of research and development (excludes consultants)

6 Administration R250 The staff that deal with administration and other such functions during project Finance R350 The support staff that deal with all of the financial aspects during the project, including the provision of support for TIA audits, should such audits occur. Commercialisation Manager R550 An individual with technical as well as commercial. Senior Engineer R650 Person who is a Pr. Engineer plus 5 years experience as an engineer. Engineer 500 Undergraduate plus 5 years experience Laboratory Assistant R100 General worker who normally assist in the laboratory Note that the maximum hourly charge out rate refers to the salary component only. Any additional overheads that normally contribute to a total HR cost must be included under indirect costs. The maximum hourly charge rate for PHD and Masters students should not exceed the applicable rate at the institution concerned. Students should on average not work for more than 12 hours per week. The above rates represent maximum and not standard rates, thus only actual costs will be reimbursed. Should actual costs actual costs exceed the above maximums, a motivation can be made for a specific exemption from the above. TIA will not accept costs that are the average of the institution involved, but require the actual salaries of persons proposed for the project. If your organisation uses different terminology for the various staff levels, please align them with the categories in this section and use TIA s descriptions to facilitate evaluation of the budget. 2.2 RUNNING COSTS (DIRECT COSTS) Direct costs will include the following: Salaries of persons directly engaged on the project and include statutory costs Bursaries (if applicable) Travel and subsistence(if exclusively incurred for the project) Training exclusively required for project success Conferences (if exclusively incurred for the project)

7 Materials and direct laboratory costs Direct subcontracting costs Equipment less than R5,000 Rental, if this can be traced exclusively to the project Insurance costs of fixed assets purchased for the project, if such costs can be traced exclusively to the project 2.3 OVERHEADS (INDIRECT COSTS) This expenditure category is only applicable to institutions that have a number of projects running simultaneously and where it is not practical to allocate costs directly to a project. The overheads or indirect cost line item is to be disclosed separately with a statement disclosing the basis of calculation for the state owned research institutes. A statement is also to be made that costs do not exceed the institution s policy on overhead recovery. In the case of state owned research institution which do not keep detailed and accurate records, the limit on IRC s (Indirect Research Costs) will be 33% of total budget (excluding capex, and subcontracting over R100, and Intellectual Property costs, and Commercialisation costs) or 50% of Direct costs. Indirect Research Costs in this context includes all non-direct costs including the following: Publications/ literature requirements Plant operations (for example, cleaning material and services, clinical fees, maintenance, testing, piloting, instruments) Water and electricity Logistics and distribution (e.g. courier, postage and fuel costs) Rental (which cannot be traced directly to the project) Information and telecommunications (e.g. phone, fax, internet) Training/ Human Resources Development (general training) Printing and stationery Depreciation Photocopying Security Refreshments Taxes Insurance

8 2.4 CAPEX This refers to costs related to all capital items worth over R which are documented in an asset register. The asset register should contain a description of the item, its cost and an indication of whether or not it is insured and who the underwriters are. During the course of the project responsibility of such assets are those of the project. The project team is responsible for the safe-keeping of the equipment and suitable insurance cover. The inclusion of equipment costs in project budgets will be determined on a case by case basis wherein the guiding principle will be that holistically the proposed equipment must be absolutely necessary and intrinsically tied to the success of the project. Budgeted equipment purchases are therefore expected to be accompanied by adequate motivation which would include an assessment of the costs and benefits of direct equipment purchases in relation to alternatives such as equipment leasing. 2.5 LEGAL & INTELLECTUAL PROPERTY COSTS These refer to costs associated with: - General legal fees - Patent searching, filing and registration - license fees - Drafting of contracts and agreements 2.6 COMMERCIALISATION COSTS These costs include: Market testing, market research, competitor analysis etc. Ensuring that adequate commercial business expertise is available to the consortium to develop value proposition and a full commercialisation business plan The maximum allowable cost for commercialisation activities is R500, per annum. 3 PILOT PLANTS In some instances it will be cost effective to develop a prototype or a pilot plant for a technology investment project. A cost estimate for a prototype or a pilot plant will have to account for the following: construction of the equipment or plant operation of the equipment development of test criteria for plant studies analysis of test results computer simulation of plant processes The estimate will also have to provide for project management and personnel during the pilot plant study or prototype testing.

9 4 REGULATORY COSTS There are certain regulatory costs, including certification, environmental, health and safety compliance costs associated with all facilities and projects. 5 REFUNDS Any funds, including interest earned that has not been spent at the end of the project are to be refunded within 30 days of the final site visit. 6 INFLATION ADJUSTMENTS All budgets are to include annual inflation adjustments.