EU PROJECTS AND CONSORTIUM BUILDING AND MANAGEMENT

EU projects are usually structured as a collaboration between a group of partners who share tasks and responsibilities. This means that finding the right partners and setting up the collaboration or Consortium is a key preparatory task. Partners need to be complementary to each other, but they must share an interest in the common problem that they are going to tackle in the project . Moreover, the Consortium has to establish management structures and procedures adapted to the type and the complexity of the project. This will also be an important criterion in the evaluation of proposals.

It is best if the partners in a project are well known to each other and have worked together previously. However, this is not always possible, especially when seeking complementary skills and expertise.

Projects that bring together partners from very different parts of Europe can take advantage of the different perspectives and the range of skills that are potentially available. In addition, partners who are concerned with complementary aspects of the project will make a stronger Consortium than partners who are too similar and may even find themselves competing. Diversity up and down the supply chain will help to ensure that the necessary enabling technologies are available and that the results of the project are taken forward into application. Selecting partners from different industry sectors might further help to broaden the project and achieve critical mass.

At the same time, cultural differences can also be an obstacle if partners fail to understand them and allow for them. Good communication, clear agreement, and careful joint planning are essential if diverse partners are to work together in a coordinated way. No single culture is the right one and ways have to be found to accommodate diversity and to work with it to achieve the benefits.

There is no set prescription for what makes a good Consortium and no advantage to be gained by having a certain number of partners or types of partner. What matters is that the partnership is the right type and size to achieve the project objectives.

It is important to ensure that all the project partners have a clear understanding of the nature of the collaboration and are fully committed to it. For the project itself, this understanding will be covered by the Consortium Agreement which is a legally binding agreement that sits alongside the Consortium’s contract with the Commission.

In the early stages of formulating a collaborative consortium the Consortium Agreement has not yet been formed. However, it is often the case that teaming agreements are made. These cover aspects such as confidentiality, non-competition, background IPR etc. in order that the prospective partners have some basic rules for their early stage interactions. There are no EU rules for teaming agreements. Clearly they should not conflict with the eventual Consortium Agreement and Commission contract, but they can be made to cover any of the risks and fears of the partners in the early tentative stages of Consortium building.

To fix the conditions and modalities of co-operation between partners, the conclusion of a Consortium Agreement is obligatory for most of the actions . The European Commission will not be a party within this agreement and will not have to give its approval to it.

For proposals selected for funding, the European Commission will conclude a contract establishing rights and obligations of all participants. This concerns in particular provisions for the scientific, technological and financial monitoring, for the updating of objectives, changes in Consortium membership, payment of the Community financial contribution and rules for dissemination and use of knowledge. The contract will be concluded between the European Commission and all participants.

The partners in a Consortium are jointly and individually liable for the implementation of the contract. This means that if one contractor fails to perform their duties or to pay any financial reimbursement due to the Commission then the other partners are responsible for meeting those obligations.

Consortium Checklist

1. Technical provisions

• Technical contribution of each party;
• Technical resources made available;
• Production schedule for inter-related tasks and for planning purposes;
• Expected contribution, maximum effort expected;
• Modification procedure;
• Provisions for dealing with non-performing contractor(s).

 2. Commercial provisions

• Confidentiality;
• Ownership of results / joint ownership of results / difficult cases (i.e. pre-existing know-how that is very closely linked to the result, making it difficult to distinguish the pre-existing know-how from the result);
• Legal protection of results (intellectual property rights);
• Commercial exploitation of results and any necessary access rights;
• Commercial obligations;
• Relevant IPRs, know-how, and information;
• Sub-licensing;
• Pre-existing know-how excluded from use in the project.

 3. Organisational provisions

• Committees – establishment, composition, procedures, role and nature: Steering, management, technical, IPR, financial etc;
• Co-ordination of committees;
• Amendment / revision of the agreement.

 4. Financial provisions

• Financing plan;
• Modification procedure;
• Mutual payments, common costs;
• Distribution of management costs;
• Auditing of costs:
• Audit certificates;
• How to deal with financial collective responsibility;
• Provisions for dealing with non-performing contractor(s);
• Third party resources - identifying parties and resources.

 5. Legal provisions

• Legal form of the co-operation;
• Duration of the agreement versus duration of the EC contract (i.e. 6 months one year longer, etc)
• Penalties for non-compliance with obligations under the agreement;
• Applicable law and the settlement of disputes;
• Secondment of personnel;
• What to do if all the contractors do not sign the EC contract.

Recommendations

Risks related to cross-border cooperation in European projects

The initiation phase is composed of the partner search, project design and proposal writing. Mistakes arising in this phase can cost the whole consortium dearly and might even lead to an early project termination.

Mistakes to avoid when forming consortia

In several cases the consortium must be composed of at least three entities from three different Member States. While composing your consortium you should at least have one or two additional partners in order to avoid uncomfortable situations in case a partner has suddenly to drop out of the consortium. In this case you should also ensure to have partners from at least four different Member States. In order for the Consortium to cooperate successfully, you should be sure that every partner agrees to an exchange of information and solid non-disclosure agreements should be signed.

Furthermore for the application for a call for proposals Consortium partners will have to prove their financial viability. It is in your interest to increase your chances during the evaluation phase to actually run a check on each partner to examine if this partner has financial viability (financial capacity check). In special cases such as newly created entities there are a number of options for you to check (e.g. a letter of support from a supporting entity) but you need to carefully examine these cases in order to avoid losing crucial points in the evaluation.

A final point is the project management itself. During the whole application period roles should clearly be defined. Within a Consortium there is always a leading beneficiary (the “Coordinator”) – whose role is broad but whose prerogatives tend not to be, legally speaking. While building a Consortium, roles should be clearly defined and it should be verified that the Consortium leader has the resources and the capacities to carry out all tasks relative to its coordination role. The budget of the project should also include the costs related to project management and, if applicable, the costs of subcontractors. The budget should be as precise as possible in order to avoid uncomfortable situations during the whole duration of the potential project. Within the Consortium should also be defined for all beneficiaries and Consortium partners one contact person in order to avoid communication blunders. All those elements must be taken into account during the application period already.

The consequences stemming from voluntary vagueness, misunderstandings or simply bad project management during the initiation phase will prove to be dire. Frictions amongst Consortium partners will ensue and severe issues with the funding authority will almost be inevitable. A lack of clarity and structures almost always leads to personal frustrations and tensions.

The Coordinator usually faces most of the blame since he or she is the interface between the Consortium and the funding authority (such as the European Commission or an Agency). The Coordinator, usually a physical person working for an organisation with a management function but not a top-manager, might even run the risk of being held personally accountable if no proper Consortium Agreement has been put in place. The risk of partners leaving the project because they felt badly informed during the initiation phase, because they are financially not viable or because they dislike Consortium decisions, will ultimately weigh on the Coordinator, as the Consortium will turn to him or her to find replacements.

The other Consortium members will particularly be affected by a badly designed Consortium Agreement, which leaves the door open for tensions in terms of financial issues, the level of involvement and output validation. The smaller the individual partner’s contribution, the more important and adequate are the levels of legal and structural protection through a professional Consortium Agreement. The Consortium Agreement must foresee foreground and background protection, rules for the management and steering of the project, all responsibilities that are not stipulated in the contract with the Commission, and issues such as the voting rights in the steering group, partners leaving the project, and early warning systems in case of issues with financials and results.

The project budget is always a tricky subject. During the initiation phase, partners tend to be overly optimistic regarding their budget share and capacity of self-financing, often because the person writing the partner contribution is not the only one in charge in the respective association and does not sufficiently involve the top management and other departments. In other cases it happens that the Coordinator or another leading partner make promises that they cannot keep or do not wish to keep (“don’t worry, we will give you a part of our budget if you come on board” is a classic). During the project phase budgetary issues can paralyse a project or even lead to its complete failure and shut-down.

What matters most in an EU-funded project are the project results. The technical description which is subject to a through evaluation process having been approved by the Commission does not mean that each partner or smaller groups of partners should work on their own and then compile everything in a report at the end. The project officers within the Commission being overloaded with work, one should not wait for their assessment either. It is paramount that the project management is structured in such a way that all partners are always involved in the whole process and all project phases and regularly approve of all results, which also applies to smaller partners such as pilot users and the like. Otherwise the risk is that some partners object to some or all of the results at the end of the project (non-disclosure issues, diverging opinions on what the results should be, changes in opinion due to staff changes within the partner organisations…), which will be difficult to address.

Worst of all, however, a strained relationship to the funding authority will necessarily damage the effectiveness of the project management. The risk is that this relationship deteriorates due to the non-respect of communication channels, late notifications, delayed deliverables, and, ultimately a total lack of trust in the Coordinator’s ability to keep things smooth and under control.

Opportunities arising from a sound initiation phase

A simple advice: Think things through before initiating cooperation: Can we trust the other Consortium members, which are their interests in the project, do they have the adequate financial capacity and management capacity, do they have the human and technical resources, do they have project experience? The Coordinator is the party that needs to ask these questions but this does not exempt other Consortium members from the same kind of responsibility.

Added value of consortia in European projects

The added value and the reason why organisations of any kind should take part in European projects are evident: Such projects allow you to do things which you would like to do but which would have to wait – for financial and resource-related reasons – for some time if there was no EU co-funding.

The real added value however often lies with cooperation across sectors and borders. In European projects participants tend to get to know each other well – across sectors and borders – and engage in a long-lasting cooperation, whether unilateral or multilateral, which is being developed out of the project. Successful project management enables partners to find similarities, build trust and create value mutually, which is especially true for SMEs and midcaps.

SMEs tend to be cautious at the beginning of projects because they are afraid to “reveal their business secrets” or “have others benefit from their ideas”. There is plenty of evidence showing that this is usually not the case and that these fears have little or no foundation after all. First, to avoid this a well-designed Consortium Agreement should foresee corresponding clauses, including ways of legally enforcing ownership and patent rights. Usually, all participants tend to benefit from project implementation mechanisms and results – according to their level of involvement. Those who are truly afraid of “foreign influence” and “theft of ideas” should not get involved in European projects at all.

In many cases it is possible to combine EU and national/regional funding or different types of EU-funding for related activities, which encourages “project veterans” to develop a factual “addiction” to European projects. All these tangible and intangible values can nonetheless only be generated based on an effective and efficient project management.

Set-up of a coherent project management

Once a project has been approved and before kick-off, roles need to be clearly defined. Within its team the Coordinator should clearly define who is responsible for which tasks. The coordinating entity must therefore appoint a staff member as the “physical” Coordinator. It needs to be crystal-clear who is responsible for collecting administrative information and who is in charge of the content – there is no golden rule but there should ideally be one person overseeing all activities. Basically within each entity of the Consortium it ought to be defined who are the project managers. Not to forget the assignments of subcontractors and how they are related to the Consortium or specific partners. Parts of the project management can be delegated to an external subcontractor, provided that the Coordinator maintains a strict oversight.

How to do it right?

There is no miracle recipe to successfully manage a European project. However if the Consortium is balanced, financially viable, well-coordinated and if budgetary and legal issues are honestly and faithfully addressed from the beginning, there is a good chance that it will succeed if positively evaluated and awarded. Transparency and honesty being the cornerstones of such a success, it is paramount to write a technical project description with clearly measurable deliverables and results, implement a Consortium Agreement covering all multilateral details between the partners, and, setting up a viable and credible project management structure with clear responsibilities.

Creating a consortium is like any relationship: You need to ask yourself seriously: Is this the right relationship, is it viable, does my organisation reap the benefits as it should, is the EU-funding used reasonably? If these questions are answered positively, you are on the right track!