Last week, we discussed the novelties and clarifications – if any – included into the brand-new version of the Horizon Europe Annotated Grant Agreement (AGA), focusing on the personnel cost calculation methods. If you want to recall it, click here.
Now, I’d like to focus on the practical problems and complications this all-new daily-rate calculation method(s) causes to the time-recording protocols. Already at the beginning, when this daily-rate idea popped up, I had mixed feelings... what is this good for at all? A private entity like us would never measure days to track records, we rather do it by the minute. I think even for a university or any public body it is too lumpy. It is also not the daily-rate corporates used to use, since in Horizon Europe it is strictly based on and calculated from the eligible salary costs, excluding any other costs (i.e., mark-ups) – so it may trigger misinterpretation as well. Hence, it is simply just replacing the hourly-rate and the hour as a unit to daily-rates and day to the unit.
Now, one could easily say, what’s wrong with it? It is just a “bigger” unit, and we will have less administration, won’t we? Well, it’s not like that, and I believe it creates more problems than it solves.
1. Define: Day
Firstly, define day. Seriously, try to define a day. It is not the 24-hour day, that would be too simple. While the hour and the hourly-rate meant the same all over the world – 60 minutes – this day and daily-rate here refers to a working day. How long is a working day? What is a working day expressed in? Hours, you’re right. Back to square one.
One working day can literally mean any hour in between 7 to 9 hours – considering full time employment. In some countries you work 35 hours/week, in others 36, 37, 38 and 40 or more. And then we haven’t even talked about part-time employment, when a working day is a faction of those hours.
2. Recording days
One could say the above problem doesn’t exist when one records days and not hours. Could be true, indeed. Now, this new AGA even pushes Beneficiaries to use the sample template by saying:
“Best practice: It is recommended to explore the simplification potential of using monthly declarations on days spent for the action. This limits record-keeping burden and avoids the need for conversion of hours into day-equivalents.”
Sounds good, right? Well, let’s see the problems with recording days:
How would you compare one’s timesheets when one of them has time recorded in hours for an H2020 project, while the other one with days recorded for Horizon Europe? Can you add up 80 hours and 10 days?
How about working flexitime? For example, contract defines 40-hour-a-week, but one works 10 hour-a-day from Monday to Thursday? Should they put 1,25 days for each day? Or even round it up to 1,5? Or down to 1,0 as there are rounding rules?
How about a part-time employee? Let’s say they are employed for 20-hour per week, but works in as 10-hour each on Wednesday and Thursday? So they worked 2,5 days each day? Or just 1,25?
Also, if you were half-time employed and worked 4 hours on a Horizon Europe project on Monday – would you consider it as 1-day (as from your perspective it’s a full-day work….) or half-day (as you worked only 4 hours)?
Seriously, except for ERC projects and maybe some lower-level specialized employees, who can make an effort working on project(s) in full days? I’m involved in some activities for all 8 running Horizon Europe projects of ours, how on Earth would I record my time in days???
And we could make this list much longer.
That’s why we will keep recording hours, and we suggest the same for all participants on our training courses, all partners in our projects and to all our clients.
3. Converting hours to days
But then, if you accept our suggestions to keep your hourly based system, you will bump into the our last topic for today – converting hours into days. Actually, until the 1st April, that part was the only clear-and-precise part of the AGA – and now that is also gone… ?
There were/are 3 options specified here, as follows:
8 hours is one day, if you have absolutely no clue how many hours a full-time person has to work.
Calculated from the weekly hours set in most working contracts – for example, 38 hours a week would mean 7,6 hours is a day, or
It could have been calculated from the Beneficiaries yearly standard productive time (see H2020!!!) and divided by 215 – e.g. a beneficiary proved standard yearly hours as 1559, then 1559/215 = 7,25 hour is a day
It may sound complicated, but actually this part was clear enough for those of us still recording hours. However, now they made some changes which made it even more complicated. Hence now, during the daily-rate calculation one must take into account the FTE-level (i.e. not 215 days a year but only 107,5 for a half-time employee), you must do the same here. Therefore if one works half-time, for them in Option 1 above 8 hours is still only 1 day, not 2. How simpler it would have been if they say – what I say… - do not take into account the FTE level at the daily rate calculation, but here only. So for a half-time employee it is still 215 days a year, but for them 8-hour work on the project is 2 days.
And this could go on and on. Best part? In the Form C, you must still express the effort(s) spent on the project in Person-Months ?
Next week, in the last part, I’ll guide you through on one of my biggest disappointments - the changes made in reporting the internally invoiced goods and services. Stay tuned!
Don’t forget that we can meet in person for our exclusive Master of Finance and EC Audits in Brussels, on 15-17 May, where we deep dive into and practice what I just wrote about and more! Check it out here.
Continue reading the 3rd part of this series here: Lost in translation - the internally invoiced goods and services