• Using only completed financial years to calculate hourly rates for each person. Assuming salaries rise, this can reduce eligible costs by 0.5% or more.
• Luckily, those using average personnel costs are not directly affected by the “last completed financial year” rule, because they can add budgeted or estimated elements for salary increases. However, these elements must be based on objective data (such as CPI – the consumer price index), which is likely to reduce eligible costs compared with actual.
• Adopting the EC’s standard 1720 productive hours per year. For many organisations this is more than their actual productive hours. Those working a 7.5 hour day and so perhaps estimating 1650 productive hours per year can lose 4% of their personnel costs.
• Opting to use the organisation’s own standard for productive hours, which inevitably involves averaging. Because you can claim at most the standard productive hours for each person, hours worked above the average cannot be claimed. If half of those working on H2020 projects work two days more than average, the organisation can lose about 0.9% of its personnel costs.
One way round the last two problems is for people to work full time on a single project and not fill out time records. In this case they will be assumed to work precisely the productive hours used to calculate their hourly rate!
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