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PPMI has successfully delivered another project in the area of simplified cost options

12 Oct 2023

PPMI has successfully delivered another project in the area of simplified cost options

The study was launched by the Directorate-General for Regional and Urban Policy (DG REGIO) of the European Commission to respond to a demand for further simplification of the European Regional Development Fund (ERDF) and Cohesion Fund (CF) in the period of 2021-2027. The study also aimed to respond to recent recommendations set out by the European Court of Auditors which urged the Commission to increase the usage of other result-based tools for financing under ERDF/CF, such as ‘Financing not linked to costs’ (FNLC). The study was led by PPMI together with partners t33 from Italy.

Previous studies on the use of simplified cost options (SCOs) under ERDF/CF shows that SCOs have been used under the large majority of ERDF/CF 2014-2020 programmes. Majority of ERDF/CF authorities have already used such simplified financing tools as flat rates covering part of the cost of the operations (particularly indirect costs). The use of SCOs, either Standard Scale of Unit Costs or Lump Sums, to cover all costs of the operation was reported only in a limited number of cases. Encouraging authorities to widen the scope of application of SCOs, introducing off-the-shelf options covering all or most costs of the operations, is essential to increase the share of ERDF/CF budget covered by SCOs and to fully enhance the advantages of the simplification measure. EU Level SCOs would also represent an important tool and a reference for ERDF/CF authorities for the transition from input-based to results-based approaches. To that end, the study team have undertaken the following key tasks under this study:

  • Development of EU level SCOs for each Member State in three policy areas, namely:
    • Energy efficiency & renewable energy;
    • Research & Innovation activities;
    • SME Growth & Competitiveness.
  • Assessment of feasibility of developing EU level result-based tools such as FNLC in three policy areas, namely:
    • Skills for smart specialisation and transition;
    • Climate change adaptation;
    • Sustainable urban mobility.

The work carried out under this contract is accordingly expected to support the adoption of EU-level SCOs (under art. 88(4) CPR) and the development of EU-level financing not linked to costs (art. 89 CPR) under the ERDF/CF during the programming period 2021-2027. In turn, this will allow to achieve the benefits of simplification while avoiding possible risks and encourage ERDF/CF authorities to make a wider use of those simplification measures. The study covered all 27 EU Member States.

As part of the first task, the recommended off-the-shelf solutions within the aforementioned areas consists of EU-level SCOs in the form of unit costs and lump sums. In the area of Energy efficiency & renewable energy, the study recommends:

    • a unit cost for one ton of decreased Carbon Dioxide (CO2) as part of annual Greenhouse Gas (GHG) emissions.

For the area of Research & Innovation activities, the suggested EU-level SCOs took the form of:

  • a unit cost to cover the cost of one researcher that directly performs research and development (R&D) activities in a small medium enterprise (SME) as part of intersectoral mobility activities;
  • a lump sum to cover the cost of one innovation voucher issued to an SME for completing innovation/digitisation activities within the SME.

In the last area, SME Growth & Competitiveness, the suggested solutions cover:

  • a lump sum to cover the cost of representatives from one SME attending a single international event (such as a trade fair, international conference, or partnership exchange);
  • a lump sum to cover the cost of an SME seeking consultancy or advisory services to develop an internationalisation strategy.

These combinations take into account, and are directly affected by, the heterogeneity observed between Member States with regard to intervention practices in the analysed areas.

Stay tuned for more news on EU-level SCO development under ERDF/CF in the near future!