A well-known budget Item
Among the eligible cost categories defined in calls for proposals, material costs are perhaps one of the most straightforward: the term generally has the same meaning across different funding schemes, and it is also a cost category that applicants are familiar with.
During project preparation, namely when compiling the grant application, material costs generally do not need to be supported by quotations. In most cases, the total estimated material cost is entered as a single budget item in the application system.
Therefore, when submitting the application, it is sufficient to prepare a cost estimate for the expected material requirements. However, market research is still necessary in order to determine the prices. It is also advisable to retain links to websites and online offers used to substantiate the prices, as evaluators may request them for verification purposes to confirm that the material was genuinely available at the stated price when the budget was prepared. During project implementation, the documentation required for the settlement of costs must include the selected quotation supporting the purchase, the purchase order and its confirmation, the invoice, the delivery note, and the bank statement confirming payment.
Eligible material costs may include, among others:
- materials, auxiliary materials, and active substances required for preliminary examinations;
- materials incorporated into prototypes, such as metals, plastics, electronic components, or screws;
- materials used for testing, such as fuels, indicators, or chemicals;
- materials consumed or destroyed during examinations and tests.
However, particular care should be taken with certain purchases, as inadequately documented items may easily attract the attention of auditors. For higher-value material purchases, it is advisable to obtain several quotations and conduct market research. Although the meaning of “higher value” may vary from one company to another, particular caution is certainly justified for items worth several million forints.
Keep an Excel register
Preparing financial reports and conducting audits can be made considerably easier by maintaining an up-to-date Excel register of the materials purchased and used during the project. This not only facilitates the internal tracking of material movements and use, but may also serve as a clear and easy-to-understand document during an on-site inspection.
The register should include the full content of the relevant invoices, including the supplier’s name, the invoice number and dates, as well as the items listed on the invoice, together with their quantities and values. It should also clearly indicate which materials listed on each invoice were used within the project, in what quantities, and at what value.
Check the Procurement Policy
In addition to maintaining proper documentation, it is also advisable to review the company’s internal procurement policy. This can help avoid inconsistencies arising, for example, where the policy requires at least two quotations for the approval of a purchase, but no quotations were obtained for the relevant project budget item.
Where the company works exclusively with approved suppliers, the absence of quotations may be justified by presenting the list of approved suppliers and the official documents relating to the supplier qualification process.
By following the above principles—whether the project is a relatively simple development or a major research and development project—the settlement of material costs is unlikely to cause significant difficulties. Proper records and documentation may also simplify the overall administration of the project.
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