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Scottish Executive Expertise, Knowledge & Innovation Transfer Programme (SEEKIT) Grant Application Guidance Notes

DescriptionSEEKIT GRANT APPLICATION GUIDANCE NOTES
ISBN
Official Print Publication Date
Website Publication DateJanuary 29, 2004

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    SCOTTISH EXECUTIVE EXPERTISE, KNOWLEDGE & INNOVATION TRANSFER PROGRAMME (SEEKIT)
    GRANT APPLICATION GUIDANCE NOTES

    This document is also available in pdf format (388k)

    (SEEKIT) General Information
    (SEEKIT) Grant Application Form (PDF file)
    (SEEKIT) Grant Application Form (word version)

    Set out below you will find guidance relating to identified sections of the application form with further information provided in the attached annexes.

    You may find it helpful to complete Sections 13 - 24 of the form (particularly sections 13, 17, 18 and 24) before completing the summary sections 1-12.

    SECTION 1: PROGRAMME

    This section is generated automatically.

    SECTION 2: PROJECT NUMBER

    This box should be left blank at the time of application. Each project will be assigned a reference number by the Programme Executive, which should then be quoted in all future correspondence.

    SECTION 3: PROJECT TITLE

    This should be the name by which the project is commonly known. Titles should be brief, precise, descriptive of the project, unique and suitable to be carried forward as the permanent project name.

    SECTION 4: APPLICANT ORGANISATION

    This section should detail the lead partner on the project. The lead partner will be responsible for all matters associated with the grant, including project application submission, project implementation, acceptance of grant, submission of claims, cash flow management, monitoring and verification visits and the retention of project documentation. The Offer of Grant will be made to the designated signatory of the lead partner.

    SECTION 5: CONTACT NAME & DESIGNATION

    This section should contain the name and designation of the individual who will deal with all project enquiries.

    SECTION 6: CONTACT ADDRESS

    Applicants should insert the full contact address of the individual identified in Section 5.

    SECTION 7: PROJECT LOCATION

    Applicants should insert the full address, including post code of the location from which the project will be managed.

    SECTIONS 8 AND 9: PROJECT START DATES AND END DATES

    Applicants should indicate in Sections 8 and 9 when the project is planned to start and end i.e. the first and last days on which expenditure will be incurred. Projects may not normally start before an offer of grant is made.

    SECTION 10: PROJECT EXPENDITURE PROFILE

    The financial information in this section is a summary of the more detailed information in Sections 17, 18 and 24.

    The Total Cost of the Project should include all proposed project expenditure regardless of the purpose of the expenditure i.e. it should include the total of all "eligible" and "ineligible" costs (see note on section 17 and 18). Please check that the combined annual costs at Sections 17 and 18 correspond with the figures entered at Section 10a.

    The Total Eligible Expenditure should include all project expenditure which is eligible for the calculation of Grant. Please check that the total eligible expenditure figures entered in this column match the figures given for the annual totals in Section 17 of the application form.

    The figures given in the Eligible Co-Finance columns must reflect the information given in Section 24 of the application form, in accordance with the project cash-flow projection.

    The Grant Requested is the balance of funding required to allow the project to proceed. This figure represents the Total Eligible Costs of the proposal less the eligible Co-Finance contribution to these costs. Please check that the Total Grant Requested equals the figure you have entered in the Grant Request column at Section 24 of the application form.

    The % Rate of Grant Requested will be the minimum intervention rate required to allow the project to proceed. It is a function of the Total Eligible Costs of the project and the Total Grant Requested { (Total Grant Requested ÷ Total Eligible Costs) x (100) }.

    Total Eligible Co-Finance + Grant Requested must equal Total Eligible Costs.

    SECTION 11: PROJECT SUMMARY

    This summary should read as a concise but meaningful stand-alone summary of the key aspects of the project. It should detail the actual project services and outcomes that the Grant will pay for.

    SECTION 12: PROJECT OUTPUTS, RESULTS AND IMPACTS

    This section should justify the project in terms of its positive Outputs and subsequent Results and Impacts. The key Indicators listed will provide much of the basis for project appraisal and monitoring and they should accurately reflect the outcomes expected of the project. Annex A provides definitions for the range of Activity Indicators shown. You should ensure you check this guidance before completing this part of the form.

    SECTION 13: PROJECT DESCRIPTION

    Section 13a should provide a concise description of all the key information contained elsewhere in the proposal. It should start with a comprehensive project summary defining the project; explaining how it meets the objectives of the Programme; what it seeks to achieve; how it will operate; how it will be delivered and to what timescale.

    It should then go on to explain the project rationale, provide justification for the level of funding support requested, evidence of market need/demand, details of linkages to other support programmes and the main benefits which will result from the project.

    Section 13b should be an expansion of the description provided in the summary section (Part 11) of the application form set to the wider operating environment for the project including directly related ineligible expenditure.

    Section 13c should describe in detail how the project will be implemented. It should also highlight the degree of partnership involved in developing and implementing the project including reference to any in-kind support that may be included as part of the funding package.

    Section 13d should describe how the project will help to meet the strategic objectives of the Programme. It should explain how effective knowledge transfer between industry and the science base will take place giving examples where possible. It is not sufficient just to say the project fits with the aims and objectives of the Programme.

    SECTION 14: PROGRAMME SELECTION CRITERIA

    Section 14 of the application form contains the core project selection criteria for the Programme. The key information contained here will be used to inform grant award decision making.

    Section 14a Gross Additional Jobs should describe the extent to which the project will create gross new jobs including net jobs safeguarded. All jobs created by the project should be expressed as full-time equivalents (FTEs).

    Project proposals will be expected to answer the following questions:

    • how many, and what types, of jobs will be directly created by the project?
    • how many, and what types, of jobs will be safeguarded by the project? What would happen to these jobs if the project does not take place?
    • is it expected that the project may create additional jobs as a multiplier effect? How many such jobs may be expected, and is there a reasoned and justified case for the multiplier used? Are some of the jobs temporary (e.g. in construction)?
    • what displacement of existing jobs may be caused by the project? Does this displacement include a similar multiplier to that used for the jobs to be created?

    Effective Knowledge Transfer and not job creation is the main focus of the SEEKIT programme. However, many SEEKIT projects will create jobs and those that do will score higher than those that do not.

    Section 14b Productive Knowledge Transfer this information will be used to determine how effective the project is in delivering competitive benefits to business.

    In this section, applicants should explain in detail how the project will deliver competitive benefits to business. You should describe the likely uptake of the knowledge and innovation services on offer and explain what improvement they can bring to the operating performance of the participating businesses. It would be helpful to explain the reasoning behind any assumptions made. Performance indicators could include the following as examples:

    • efficiency gains
    • profitability
    • growth rates
    • sales performance
    • investment in research or new product/ process development
    • visionary leadership
    • entrepreneurial culture
    • commitment to innovation
    • ability to adapt to change
    • environmental and social responsibility

    Some projects, in the first instance, may deliver only limited knowledge transfer results. However, some recognition will be given to such projects where they can show they will result in effective long term business and Science Base links.

    Section 14c Evidence of Demand the details provided here will be used to determine the quality, validity and robustness of market research and/or evidence of market failure provided as justification for intervention.

    In this section you should include specific evidence of demand for the project and explain the market failure which the project is designed to overcome. Indicators of demand may come from an existing track record of sales, throughput or successful delivery, whether in the same enterprise, or related activity elsewhere. Conventional market research may be supplemented by techniques such as scenario planning or other foresight methods. Support for the business case may be found in strategic or policy frameworks, including identified growth sectors or clusters, or more specific impact and feasibility studies. This can include government or independent research showing the need for service provision, partly to create the market demand.

    The justification for project support may include adjusting to market deficiencies such as supply chain pressures, information deficiencies, and regulatory changes, any of which may indicate demand, now or forthcoming.

    Project applications will be expected to show:

    • what is the evidence of demand for the project? Is there market research and/or other independent research to support this evidence?
    • if the project is for a new product or service, or extension of a product or service into new markets, what techniques have been used to justify that there will be a demand for it?
    • whether wider strategic plans for the area support the case for the projected demand?
    • what is the nature of the market failure which the project is designed to overcome and how will it be overcome?

    Section 14d Marketing details will be used to assess the extent to which the marketing and delivery of the project has been carefully thought through.

    Encouraging SMEs to take on knowledge transfer activity is often a time consuming and difficult task. It is therefore essential that the marketing approach and delivery of the service on offer is as good as it can be within the restriction of limited resources. Much care and thought needs to go into this aspect of project management. Applicants should explain in detail who their target market is and what steps will be taken to promote and sell the services on offer. They need to know what use can be made of the enterprise network and other agencies and whether or not their project can build upon this existing network activity.

    Project proposals need to assess as a minimum:

    • what the market requirements are?
    • who the target market is?
    • what is the quality of the product and service on offer?
    • what the pricing, revenue and route to market is?

    Section 14e Strategic Integration information will be used to assess the extent to which the project can demonstrate direct linkages and coherence with other related activities and strategies _ local, national and European _ including Development Plans.

    The contribution of individual projects can be greatly enhanced where they fit with other physically related or functionally complementary activities. This mutual enhancement can arise through comple-mentarity, bringing together economic, social and environmental objectives, to secure the efficient and effective use of public funds. This may be achieved by conformity with public policy strategies (through which, over time, other actions should reinforce the project; and in turn, the implementation of projects strengthens the strategy), or by direct relationships to other projects.

    Project proposals should explain:

    • in what ways do they conform to local, national and European strategies?
    • have the relevant partner bodies been consulted and what has been their response?
    • which other publicly assisted projects does the proposal relate to?
    • how does the proposed project integrate with, or complement, those other projects?
    • in what ways is the proposal additional to, and different from, existing provision or earlier phases?
    • overall, what added value is foreseen, arising from the relationship between the project and relevant strategies, both for the Programme and for the Partners' strategies?

    Section 14f Durability and Feasibility information will be used to assess the extent to which the project can demonstrate the ability to become self-sustaining over time. This is coupled with an assessment of the feasibility and risks of the project; its design and forecast targets and the capacity and track record of the delivery agent(s) to implement and sustain the project.

    The programme seeks to support projects which will happen, will last, will deliver the planned outcomes, and will do so in many cases with increasing self-sufficiency. These requirements need long term planning, realistic design and forecasting, and the capacity and commitment to deliver. The track record of the delivery agent(s) will be taken into account in this deliberation.

    Project proposals need to assess:

    • to what extent has project design and financing taken into consideration the need for longer term self-sufficiency?
    • is financial assistance pump-priming a new kind of activity, or does it contribute to enhancing or augmenting already established activity?
    • what financial control mechanisms and risk management or contingency planning will be in place?
    • what exit strategies have been identified?
    • in what ways will responsibility be taken on by others to maintain the project or consolidate its benefits; and how will expertise and understanding be transferred to project managers?
    • the delivery of outcomes:
    • what assessment has been made of how realistic and achievable are the forecast project outcomes?
    • what flexibility has been built in to adjust to changing market circumstances and technological developments?
    • at what stage is it likely that outcomes will be delivered (including whether jobs created are short or long term)?
    • what mechanisms will be in place to monitor the delivery of out-comes, including their quality and effectiveness?

    Section 14g Partnership and Leverage details will be used to assess the extent to which the project shows partnership between agencies reflected in their contributions of funds, expertise and other resources. Particular priority will be given to private sector contributions. Project applications must demonstrate that grant aid is essential for the implementation of the project.

    Projects are expected where possible to demonstrate a genuine partnership between agencies, with clear complementarity of roles and working arrangements in place to support all stages of the project. Some partners may have a particular role in initiating activity, or referring client businesses or entrepreneurs to the project; others may contribute more to exit strategies or aftercare. Applications should state:

    • what partners will be involved in the management of the project and what roles will they undertake?
    • who will be responsible for the continuation of this activity after the project comes to an end?
    • overall, to what extent does the project bring together partner agencies and other projects and activities in order to bring about significant change and move towards national/regional transformation?

    Proposals must demonstrate that grant aid is essential for project implementation and/or show what additional impact would be enabled by Grant assistance. Contributions in funding and in-kind from the project delivery agency may be taken into account, but care should be taken that these do not jeopardise cash flow or financial robustness.

    At the same time, projects should also show the extent of funding committed or levered from other sources. The sources and scale of funding can be informative: support from other economic development agencies may corroborate assessment of demand. Weight is attached to private sector contributions which may give an additional signal of market viability or potential.

    Section 14h Innovation information will be used to determine the extent of the project's focus on the development of innovation and management skills in SMEs, with clear linkage to company performance. Performance indicators could include the following as examples:

    • profitability
    • growth rates
    • sales performance
    • investment in research and/or new product development
    • visionary leadership
    • entrepreneurial culture
    • commitment to innovation
    • ability to adapt and change
    • environmental and social responsibility

    This section of the application should also be used to show how the application of "innovation" has been used to inform the design and delivery of the project.

    Project sponsors are also required to demonstrate how they have integrated creativity, learning, innovation and best practice into the design, planned implementation and outputs for their proposal. This should include a description of the tools, techniques and approaches you have used to generate new, creative and innovative ideas for the project and how these have been integrated into its design and planned delivery. It is also important that you describe how you have incorporated learning into the design and planned delivery of the project. This could include learning from project evaluation or survey work, incorporation of feedback and integrating best practice from other project support mechanisms.

    Project sponsors should also describe the process undertaken during project design and development to maximise input and ideas from relevant individuals from across the public and private sector. This could include consultation, workshops, survey and market research work, etc.

    Section 14i Value for Money (VFM) information will be used to assess the cost vs benefit mix of the proposal.

    Value for Money will be determined by comparing key quantified outputs and impacts against the overall project cost. This analysis will also take into account the non-quantifiable benefits of the project. This section gives applicants a chance to reinforce and build on the VFM information contained elsewhere in the application. Applicants should make use of this space to emphasise the economic/business benefits that will arise from the public sector intervention. They should comment clearly and precisely on this cost to benefit mix.

    Section 14j Science Base Knowledge Transfer Capacity Building will be used to assess what improvements the project will make to the knowledge transfer capacity of the applicant RTD performer and/or the Scottish Science Base.

    The SHEFC Knowledge Transfer Grant (KTG) has had a positive impact on the ability of HEIs to work with business. However, some institutions received less money than others did and may have more to do in terms of institutional capability building. In recognition of this, this criterion will be used to help assess this differential, in knowledge transfer capacity. The assessment will take into account the use made of KTG and other funding mechanisms, such as ERDF. Applicants are therefore asked to explain what use, if any, has been made of existing funding sources and say how this project will build upon this present activity. Applicants who have not had access to KTG funds, should say so in this part of the application form.

    Section 14k Rural SMEs the information in this section will be used to assess to what extent the project will help SMEs in remote locations access the Science Base.

    SMEs in remote locations face particular challenges in accessing the facilities, knowledge and skills contained in the Scottish Science Base. Projects that seek to combat this constraint by targeting "rural" SMEs, will receive recognition for their effort. Project applicants should therefore use this section where appropriate to describe any such action.

    SECTION 15: MONITORING AND EVALUATION

    This section of the application form should describe how the project will be monitored and evaluated to assess its performance against what is set out in the application form. This includes the procedures which will be in place to assess progress against the project's features, objectives and targets which form part of the application. If, for example, the application states intentions to achieve a specified number of additional jobs, new products and processes etc then this section should set out the process by which the achievement of these will be measured and monitored.

    Major projects in particular may involve specialist interim evaluations, including seeking information on outcomes from final recipients. Any such evaluations should contribute to the monitoring process. So too may published materials from projects, which not only give evidence of publicity, but also give supporting information about project activities planned or underway.

    It is also recognised that projects may, for a variety of reasons, evolve over time. Early objectives may prove inappropriate and be replaced or supplemented by other objectives. Monitoring and reporting arrangements should be designed so that any such changes are recorded, justified and agreed with the Scottish Executive through the monitoring process.

    SECTION 16: BANK DETAILS

    In this section, please insert details of the bank/building society account to which grant payments should be made.

    SECTION 17: BREAKDOWN OF ELIGIBLE PROJECT COSTS

    Grant can only be paid against expenditure which is incurred and defrayed on approved project costs. Only project costs incurred after the agreed start date and before the agreed project end date are eligible for support. Information on the type of project costs that can be supported is given at Annex B. Applicants should read Annex B before completing this section of the application form.

    SECTION 18: BREAKDOWN OF OTHER NON-ELIGIBLE PROJECT COSTS

    Applicants should provide a similar breakdown of all other expenditure on the project against which Grant funding is not being sought. The expenditure details provided in this Section allow for the calculation of Total Cost of Project (Section 10a) and also enable the Programme Executive to check that applicants have not unintentionally excluded any expenditure eligible for Grant.

    Some of the costs which are not eligible for support are listed at Annex C.

    SECTION 19: PUBLIC PROCUREMENT

    All projects must comply with the European Directives on Public Procurement, which covers works, supplies and/or services contracts.

    Copies of the Directives and associated UK implementing legislation can be obtained from The Stationery Office.

    Contracts with total costs in excess of the EC thresholds must be advertised in the EC's Official Journal. Thresholds vary according to the type of contract and are revised biennially. It is recommended that applicants advertise in the Official Journal where there is any possibility of the total final cost of the works, services and/or supplies involved in the project exceeding the threshold.

    Projects must not be artificially split into separate contracts such that the value of each contract is below the relevant threshold for advertising. For projects comprising several contracts, which when combined exceed the threshold, it is necessary to place an Advance Notice in the Official Journal.

    Applicants are required to certify that public procurement directives have been met and, if required, submit a completed Public Procurement Questionnaire as soon as practicable after accepting an offer of grant. Failure to provide satisfactory information may result in a demand for the repayment of all or part of the grant.

    Advice on EC procurement rules must, in the first instance, be sought from internal sources such as procurement specialists or legal advisers (either within the applicant's organisation or in associated or sponsoring bodies). If, in exceptional circumstances, an issue arises which cannot be resolved in house, the Procurement and Commercial Services Division of the Scottish Executive may be able to offer advice or interpretation of the rules.

    To obtain further advice, please refer to the Scottish Executive Public Procurement Website at www.scotland.gov.uk/procurement

    SECTION 20: COMPETITION POLICY/STATE AIDS

    Project applicants have a duty to ensure compliance with European State Aid rules. If the rules are breached, any grant already paid may have to be reclaimed. Unless assistance is being offered under the de minimis rule, project applicants should ensure that the State Aid approval is in place prior to making the SEEKIT grant application. It should be noted that projects will not receive formal approval until the State Aid position is considered and any necessary EC approval obtained.

    For advice and further detailed guidance visit the Scottish Executive State Aids Website at www.stateaidscotland.gov.uk

    SECTION 21: THE ENVIRONMENT

    As a legal minimum, applicants are required to check whether the project is subject to any particular European, UK or Scottish legislation on environmental protection, and illustrate how the requirements have been satisfied. Environmental legislation is wide ranging. In addition to setting the standards for quality of air and water and informing the Town and Country Planning framework, it covers among other aspects:

    • environmental assessment against a range of criteria for larger projects;
    • regulation of specific industrial processes;
    • targets for re-use and recycling of specific products; and
    • conservation of designated wildlife and cultural heritage sites and designated landscapes.

    Advice and further information can be obtained from your local authority (planning and environmental health departments) and from local offices of SEPA and SNH.

    SECTION 22: EQUAL OPPORTUNITIES

    The Scottish Executive has a clear commitment to equal opportunities. This factor will be taken into account in application appraisal.

    SECTION 23: ADDITIONALITY

    In section 23, project applicants must demonstrate clearly why the project cannot proceed without assistance from the SEEKIT programme. In determining the need for grant, the principle of "gap funding" should be applied in all cases, i.e. the minimum grant necessary to enable the project to proceed once all other sources of funding have been taken into account.

    The type of issues that should be taken into account include the following:

    • acceleration of project implementation;
    • enhancement of the scale and quality of the project; and
    • private sector leverage and/or direct contribution.
    SECTION 24: BREAKDOWN OF FINANCIAL CONTRIBUTIONS TO THE PROJECT

    The information in this section is needed to allow the Programme Executive to assess whether or not adequate project funding has been/or will be committed to meet the required project costs and therefore allow the project to proceed. Applicants should itemise all sources of financial support ensuring that their actual contributions to Total Project Costs and Eligible Project Costs (i.e. exclusive of SEEKIT grant) are entered in the correct columns. This should show that there are sufficient funds available to allow it to proceed should it be approved for SEEKIT assistance.

    Each column should be completed as follows:

    Source of Co-Finance _ Insert in this column the agency and/or source providing the co-finance e.g. ESEP-ERDF etc.

    Contribution to Total Project Costs _ This should show each funding source's total contribution to the project i.e. the total of the eligible and ineligible costs which that agency/source proposes to fund, net of the SEEKIT grant.

    Contribution to Eligible Project Costs _ Similar to above, this should show each funding agency's contribution to Eligible Project Costs net of the SEEKIT grant requested.

    Finance Confirmed and Date of Confirmation _ Where Co-Finance has been formally committed, the confirmation date should be entered into the appropriate column. A copy of the confirmation agreement, should accompany the application form. For sources of Co-Finance, which have not yet been confirmed, you should indicate the expected confirmation date.

    As a basic financial check, applicants should ensure that:

    Total Co-Finance + SEEKIT Grant Request = Total Cost of Project (10a).

    SECTION 25: APPLICANT DECLARATION

    This section should be signed by an authorised signatory of the organisation applying for grant.

    ANNEX A: DEFINITION OF ACTIVITY INDICATORS

    ACTIVITY INDICATOR

    DEFINITION

    OUTPUTS

    Knowledge Transfer Capacity building.

    Simple count of the number of science base institutions that the project will help. For most projects the figure to be entered is likely to be 1.

    No. of innovation/knowledge transfer networks supported.

    Defined as indicator.

    No. of events held.

    Defined as indicator.

    No. of SMEs attending events.

    Defined as indicator.

    No. of SMEs helped with advice/information.

    Defined as number of SMEs receiving less than 1 day of support or equivalent value.

    No. of new links between SMEs and Research Institutions.

    Defined as number of new links made between SMEs and Science Base, which resulted in at least two days of consultancy/innovation support to assisted business.

    No. of SMEs assisted.

    Defined as number of SMEs receiving between 1 and 5 days of consultancy/knowledge transfer support or equivalent value.

    No. of SMEs assisted with High Level support.

    Defined as number of SMEs receiving more than 5 days of consultancy/innovation support or equivalent value.

    No. of SMEs undertaking innovation/RTD projects.

    Defined as indicator.

    RESULTS

    Increased investment in innovation/RTD by SMEs.

    Defined as the increased level of private sector expenditure on innovation & RTD resulting from the project, but additional to any private sector contribution to eligible costs.

    No. of new patents issued/IPR Registrations made.

    Number of patents or intellectual property rights registrations achieved by assisted SMEs, as a result of the project.

    No. of new products introduced.

    Defined as the number of new products launched on the market by assisted SMEs as a result of the projects. This includes incremental improvements i.e material change to form or function of an existing product.

    No. of new processes introduced.

    Defined as the number of new processes implemented by SMEs as a result of the project. Process innovation is the adoption of new or improved production methods, including methods of product delivery. These methods may involve changes in equipment or production organisation or a combination of these and may be derived from the use of new knowledge. The methods applied should lead to improved production or delivery efficiency of existing products.

    No. of new licensing deals between SMEs and Science Base.

    Defined as indicator.

    No. of new spin-outs/SMEs formed.

    Defined as indicator.

    IMPACTS

    Increase in sales in assisted businesses.

    Additional sales generated by SMEs as a result of project assistance.

    Total number of gross new jobs.

    Defined as new jobs created by assisted project. This figure should be expressed as Full Time equivalents.

    Total number of gross jobs safeguarded.

    Defined as number of full time jobs safeguarded by the project.

    ANNEX B: ELIGIBLE COSTS

    1. The following list is indicative of the types of expenditure, which will be considered eligible for support and should not be viewed as exhaustive. Applicants do not have to use all of the headings, only those most appropriate to the individual project.

    Please use the expenditure headings as they appear in the list adopting the same order and wording.

    For the most part eligible costs will follow the eligibility criteria set by the Structural Funds. More information on eligible project costs can be had, if required, from the Programme Executive.

    2. STAFFING

    Staffing costs will normally be considered eligible where personnel are directly engaged on the project and where the applicant can clearly demonstrate that the personnel concerned are employed in additional posts.

    Note: Applicants should not list individual staff posts in the application form. A detailed breakdown of staffing should be included in an appendix to the application form.

    All staff costs included in the application should be in accordance with the following conditions:

    • staffing costs should include employer's National Insurance and Superannuation contributions (commissions and benefits in-kind e.g. bonuses are not eligible). There should be a clear audit trail for staff costs from payroll records and/or time sheets, via BACs to the bank statements.
    • where staff are also engaged in non-project related work, only the portion of staff costs directly attributable to the project should be shown.
    • the calculation used for apportionment must be detailed. Actual costs are required for claims and should be backed up by timesheets or other media where time spent on eligible activity can be clearly demonstrated.
    • where staff are costed at an hourly rate, the calculations must be acceptable, i.e. the total staff cost divided by the number of hours worked per year.
    • where staff are part-time or have joined/left the organisation during the year, a pro-rata rate should be calculated.
    • consultancy fees and sub-contractor fees should not be included in direct labour costs.

    Core funding of an organisation is not an eligible activity.

    3. CONSULTANCY FEES AND SUB-CONTRACT CHARGES

    Costs for work done by an independent consultant or sub-contractor will only be eligible if the work is essential to the project and the costs are reasonable.

    • A threshold of 500 per day for non-tendered consultancy fees has been set as the maximum eligible figure to receive support. Daily expenditure on consultancy above this threshold must be met in full by the project applicant and is not considered eligible for support.
    • For consultancy fees that have been subject to an approved tender process, the market rate resulting from that exercise may be included for support.
    • Costs associated with payment of consultants that provide support in completion of application/claim forms and with management fees are not eligible.

    4. PROJECT EVALUATION FEES

    Costs for independent evaluations will be eligible if the work is essential to the project and/or a condition of grant (see consultancy fees above).

    5. TRAVEL

    Travel costs must be directly related to and essential for the effective delivery of the project, and should be broken down into a rate per person per mile, and/or the expected cost of economy class travel on public transport for the forecast number of journeys. Certified travel claims must be retained.

    6. PREMISES AND OVERHEADS

    This should include rent, rates, heat, light and service charges associated with the premises where it can be clearly demonstrated that these are directly related to the delivery of the project.

    Charges relating to the statutory responsibilities of applicants or the applicant's day-to-day management, monitoring and control are not eligible.

    Rent and Rates:

    • Premises costs must be related solely to the project.
    • If only a part of the premises is used for the project then the amount charged should be apportioned accordingly. In this case calculations should show the actual annual rental cost to the applicant, the period of project usage, the proportion of the building used for the delivery of the project and the resultant eligible rental costs.
    • Notional rental charges where the applicant owns the premises, or occupy premises rent-free, are not eligible.

    Other charges, e.g. heating/lighting:

    • Amounts charged to the project should be apportioned as outlined above for rental and rates. Overheads should not include any staff costs.

    Note: Applicants should not list individual premises costs in the application form; a detailed breakdown of costs should be included in an appendix to the application form.

    7. MARKETING

    This heading may include costs related to all aspects of marketing specific to the project such as:

    • design and production of marketing materials;
    • facilitation of appropriate conferences and seminars; and
    • targeted advertised campaigns.

    8. LEASING RULE

    Leasing is eligible within certain qualifications.

    • Where premises, equipment, etc are not used solely for the project (e.g. equipment is only used 1 day per week), this should be indicated in an explanatory note added showing the apportionment of costs.
    • Operating leases are eligible provided the applicant can show that the costs of the lease are competitive and compatible with market rates.
    • A leasing charge for equipment (in any one year) which exceeded or closely matched the full cost of purchasing the item would not be eligible.

    Lessor

    • If the Lessor is receiving grant, the benefits must be passed onto the Lessee.

    Lessee

    * If the Lessee is in receipt of grant, the grant must be used towards leasing costs.

    Sale and Lease-Back

    • Rentals under sale and lease-back may be eligible but acquisition costs are not.

    9. ADMINISTRATION

    This should cover telephone, consumables and other reasonable costs associated with direct delivery of the project where it can be clearly demonstrated that these are additional costs being incurred by the organisation.

    Telephone costs must be directly related to and necessary for the effective delivery of the project. It must be possible to provide an itemised audit trail for the specific telephone.

    Consumables may include items such as postage, stationery, and other costs, which the applicant can demonstrate as essential to the effective delivery of the project.

    10. ASSETS

    Grant cannot be used to support the construction of assets.

    • Where the statutory or core activity of the applicant or training deliverer is consistent with the practical activity included in the project, the costs of any materials which are used to construct a permanent physical output are not eligible.
    • For all other projects (where the statutory or core activity of the applicant does not relate to the project), the cost of materials used in the project that contribute to the construction of a permanent physical output may be allowed as eligible expenditure, but such costs will not be allowed to exceed 20% of the total eligible project costs.

    11. NON-RECOVERABLE VAT

    It is recognised that some project applicants are unable to recover VAT. Non-recoverable VAT can be claimed as an eligible cost.

    • Project applicants claiming non-recoverable VAT will need to support their claim with appropriate evidence from HM Customs & Excise.
    • Organisations electing not to recover VAT that is recoverable cannot count the VAT as eligible.

    12. FINAL CLAIM AUDIT FEES

    Final claim audit fees may be incurred but cannot be defrayed in advance of the submission of a final claim.

    In order to claim these costs the applicant must:

    • Complete the final claim audit fees proforma.
    • Attach the invoice from the audit.

    13. PURCHASE OF EQUIPMENT

    Only one-off items of equipment which are essential for the delivery of the project; which will be used solely for that purpose and have been purchased from third parties on, or after, the commencement of the project will be considered eligible. Equipment purchased prior to the commencement of the project is not eligible.

    The figure for equipment must then be reduced by any estimated residual value of the equipment after the project period of support. If equipment is written off in less than a three-year period, evidence to justify this should accompany the project application.

    For second-hand equipment to be eligible:

    • the seller must provide a declaration stating its origin, and confirm that at no point during the previous seven years has it been purchased with the aid of national or EC grants;
    • the price must not exceed its market value and shall be less than the cost of similar new equipment; and
    • the equipment is necessary for the project and complies with applicable norms and standards.

    Note: This also represents acceptable capital expenditure within a revenue project.

    A detailed breakdown of all items included under this heading should be provided in an appendix.

    In cases where items of equipment have been purchased, an inventory must be retained for audit purposes.

    14. DEPRECIATION OF OWNED EQUIPMENT

    Depreciation, directly linked to the project, should be calculated in line with your organisation's accounting policy.

    • Claims should be based on the actual costs of the owned equipment.
    • Any grant used to purchase the asset should be taken off the cost before depreciation is calculated.
    • Depreciation may be claimed on second-hand equipment provided the equipment has not been purchased using a local, national or European grant.
    • Where deferred credits are used to offset depreciation costs, the amount of the deferred credit must be deducted from the depreciation costs for grant purposes.
    • Documentation showing how depreciation costs have been calculated must be kept for audit purposes. This will include invoices; payments records (including BACs lists and bank statements); descriptions and location of the items purchased; the method of depreciation; the time spent using the items (e.g. one day per week); and, where relevant, the estimated residual value.

    The following information is required:

    • the cost and description of the item purchased;
    • the purchase date;
    • the number of years over which the item is being depreciated (this must be a minimum of 3 years);
    • the % of the item's use devoted solely to the project, over the life of the item.
    ANNEX C: NON-ELIGIBLE PROJECT COSTS

    The purpose of this annex is to provide additional guidance in relation to individual project and non-eligible costs. This list is not exhaustive and merely indicates the broad types of expenditure normally considered ineligible. For further advice, please contact the Programme Executive (PE).

    1. FINANCIAL CHARGES

    • Loan Charges: the nature and amounts of any loan charges included in the overall project costs should be brought to the attention of the PE.
    • Service Charges _ arising on leases and hire purchase arrangements.
    • Costs resulting from the deferral of payments to creditors.
    • Costs involved in winding up a company.
    • Bad Debts.

    2. RECOVERABLE VAT

    Recoverable VAT is not eligible whether or not the applicant elects to recover.

    3. FINANCE LEASES

    Similar to hire purchase agreements _ at the end of the lease the equipment becomes the property of the Lessee.

    4. LEGAL COSTS

    This covers costs in respect of litigation.

    5. STAFF-RELATED COSTS

    • Staff costs that are not directly attributable to project delivery.
    • Staff training/training that is mandatory under statutory provision.
    • Redundancy payments.
    • Payments into private pension schemes.
    • Payments for unfunded pensions.

    6. OTHER COSTS

    • Expenditure defrayed outwith the eligible project period.
    • Related research or studies carried out in respect of the project prior to the official project start date.
    • Gifts.
    • Compensation for loss of office.
    • Costs of works being carried out as a statutory requirement.

    A detailed breakdown of any other costs should be provided as an appendix to the application form.

    ANNEX D: CONTACT ADDRESSES FOR STRUCTURAL FUNDS PROGRAMME AREAS

    Strathclyde European Partnership
    Strathclyde House
    94 Elmbank Street
    Glasgow
    G2 4DL
    Tel: 0141 572 4400
    Fax: 0141 572 4499
    Website: www.wsep.co.uk

    Eastern Scotland European Partnership
    Glenelvan House
    Enterprise Way
    Carnegie Campus South
    Dunfermline
    Fife
    KY11 8PY
    Tel: 01383 622537
    Fax: 01383 622624
    Website: www.esep.co.uk

    South of Scotland European Partnership
    Solway House
    Tinwald Downs Road
    Heathhall
    Dumfries
    DG1 3SJ
    Tel: 01387 251360
    Fax: 01387 252733
    Website: www.sosep.org

    Highlands & Islands Partnership Programme
    Castle Wynd
    Inverness
    IV2 3EB
    Tel: 01463 228900
    Fax: 01463 228989
    Website: www.hipp.org.uk

    © Crown copyright 2004
    This document is also available on the Scottish Executive website: www.scotland.gov.uk