Is budget deviation a problem in Horizon Europe?

Is budget deviation a problem in Horizon Europe?

Budget deviation is not necessarily a problem in Horizon Europe. It depends on the size of the deviation. This budget deviation will be visible when doing the financial (intermediary or final) reporting. To avoid unpleasant surprises, it is recommended to inform the coordinator and/or the project officer in advance of any deviation. Appropriate measures can be taken such as an amendment. This can include beneficiaries seeking to work on unforeseen tasks, unforeseen sub-contracting, and changes in the consortium composition.

Size of deviations:

  • Financial reports with a 0% deviation are suspicious. If you had exactly the same amount of costs as budgeted, auditors or the project officer might ask questions, as this is very unusual, especially with large amounts.
  • A deviation of 5% from the budget is considered completely normal and no particular explanation needs to be provided. In this case it means that you managed the project and your budget very well.
  • Up to 15% of deviation is still reasonable but a short explanation is requested.
  • Over 15% is considered as a major deviation and a strong explanation is requested.

Type of deviations:

  • Tasks: Explain any tasks not fully implemented, critical objectives not fully achieved and/or not on schedule. Explain also the impact of the available resources on other tasks and the timetable.
  • Resources: Explain any difference in the use of resources between actual and planned (Annex 1), especially related to person-months per work package.
    • Unforeseen subcontracting: Exceptionally, the Commission may approve costs related to subcontracts not included in Annex 1 and 2, without formally amending the GA (Article 13.1, GA) – if you explain and justify the circumstances: describe the tasks performed by the subcontractor, explain why you needed to use a subcontract, taking into account the specific characteristics of the project, confirm that the subcontractor was selected as offering the best value for money, if not the lowest price, and avoiding any conflict of interests.
    • Unforeseen use of in-kind contributions from a 3rd party against payment or free of charge: Exceptionally, the Commission may approve costs related to in-kind contributions not included in Annex 1 and 2, without formally amending the GA – if you explain and justify the circumstances: identify the third party, describe the resources made available by the third party, either for payment or for free, explain why you needed to use these resources to carry out the work.

Source: H2020 Online manual