Launched in 2018 and extended under Horizon 2020 as “pilots”, Lump Sum funding received an overall positive assessment in the survey carried out as part of the pilot evaluation. The new Horizon Europe Work Programmes therefore see an increase in lump sum projects (20 % of the total budget) and a target of up to 50 % of the budget in 2027.

Here is a brief overview of this new method of financing, with our latest advice for the grant application of lump sum projects.

A will to simplify the management of grants in Horizon Europe

For several years, the European Commission (EC) has wanted to facilitate the management of projects funded under the European Research and Innovation Programme, Horizon Europe. According to recent figures, more than 60 % of FP7 and Horizon 2020 beneficiaries received a single grant. Some potential candidates feel discouraged by the administrative task that this may represent, especially SMEs, and errors in cost reporting are often greater on the side of less experienced beneficiaries.

Despite this desire for simplification, some remain sceptical. Indeed, the burden of financial planning seems to weigh more on the grant application phase. And given the often low success rates, this additional upstream work could put smaller entities with less experience even more in a difficult position.

What are the differences from the actual cost model?

In practice, a Lump Sum project is simpler to manage than a project based on actual costs.

As with the real cost system, beneficiaries of a Lump Sum project will receive pre-financing at the start of the project. On the other hand, interim payments at the end of a reporting period will be approached differently. Payments will only be made when the Work Packages (WP) are completed. In other words, in order for project beneficiaries working on the same WP to be paid, it is now necessary that all partners involved in this WP have completed their tasks. The assessment of the completion of a WP will be carried out during the reporting periods through the validation of deliverables, milestones, and the technical report. Note that the finalisation of a WP is determined by carrying out the activities as described in the Grant Agreement, not by the success of these activities, and therefore by their outcome.

Nevertheless, a WP that is not fully finalised or rejected over a reporting period may be re-reported, validated, and paid in the context of a subsequent reporting. Only during the final reporting will it be possible to indicate that a WP has been partially completed: in this case the EC will finance this WP proportionally and according to a declared and validated rate of achievement.

What does a lump sum funding means for a Horizon Europe grant application ?

The grant application for project proposals in lump sum implies some changes:

• A more accurate estimate of costs. Applicants must provide a financial table detailing the costs for each partner and for each WP using a new budget file provided by the European Commission. This budget table will be assessed in the “Implementation” part of the proposal to ensure that costs are reasonable and not excessive. To estimate the costs, it is recommended to use the usual practices of the institution in line with the activities described. If the evaluators consider the costs to be poorly estimated, they will issue recommendations but there will be no impact on the score. Only a budget that is clearly under or overvalued will negatively impact the score.
• A different approach to project management. In response to a need for regular payments, assessments showed that more WPs were generally created for lump sum projects. However, the Commission was not very enthusiastic about increasing the number of WPs and some candidates were invited to reduce this number in their proposal. We therefore advise to avoid cutting the work plan of the project artificially according to the reporting periods: rather, it is necessary to ensure that the tasks are consistent and logically organised in relation to the objectives, and in line with the methodology described in the excellence section. However, this cutting is encouraged for long-term and transversal WPs such as WP management and communication/dissemination.
• An increased responsibility of the coordinator in building the work plan and the consortium. This implies attention on the definition of the output indicators of a WP, a joint responsibility that requires trust between the partners and the need to ensure the capacity of the partners to carry out the planned activities.

For more information, follow this link.

A new Consortium Agreement model

Two years after the publication of the DESCA consortium agreement model for Horizon Europe, an update was carried out with the publication in February 2024, of a new DESCA HE 2.0 model that incorporates provisions dedicated to projects financed by lump sums. This includes Section 4 – Responsibility, Section 6 – Governance, and Section 7 – Financial Provisions.

Financial reports, control and audit

Lump sums simplify the programme by removing the need to declare actual costs. The approach is the same as for grants in actual costs, except that the financial report is simplified and, to a large extent, automated:

1. At the end of each reporting period, each partner completes its contribution to the technical report on the portal: this report focuses on the completion of WPs, and therefore is necessary to prove that the activities were carried out and thus the WP completed. The coordinator then submits the technical report.
2. The coordinator indicates the status of each WP (completed or not completed). Only in the context of the final reporting can a WP be indicated as ‘partially completed’.
3. A single automated financial report resulting from the declaration of WP status is generated for all partners.
4. The FSIGN (Financial Signatories) sign to include the financial report in the coordinator’s periodic report.
5. The coordinator submits the periodic report containing the technical report, WP status, and financial report.

Note that the “Report on explanation on the use of resources” and the Certificate on the Financial Statement (CFS) do not apply for lump sum projects.

Do you want to submit a proposal for a lump sum project and you need support? Don’t hesitate to contact us!

To find out more, visit this page.