Understanding personnel cost budgeting in EU projects

Personnel costs are typically the largest budget category in EU-funded research projects, often accounting for 60–80 % of total project costs. Getting personnel cost budgeting right is critical — both at the proposal stage and during project implementation.

This article explains how personnel cost budgeting works in EMDESK in the context of EU-funded projects, how effort, rates, and costs relate to each other, and how the different parts of EMDESK work together to help you plan and monitor your personnel budget.

How personnel costs work in EU projects

In EU-funded programmes like Horizon Europe, personnel costs are calculated based on actual effort (time worked) and the cost rate of the person or staff category involved.

The core formula is:

Personnel costs = Daily rate × Number of days worked on the project

Where the daily rate is derived from the annual personnel costs for a person divided by 215 — the EU-standard number of productive working days per year.

From this standard, the common effort units are derived:

• 1 Person Month (PM) ≈ 17.92 working days (215 ÷ 12) ≈ 143.33 hours
• 1 Person Day (PD) = 8 working hours
• 1 Person Hour (PH) = 1 working hour

Person Months are the standard effort unit used in EU proposals and reports. They appear in the work package descriptions and effort tables (e.g. Tables 3.1a and 3.1f in Horizon Europe Part B).

Indirect costs (overhead)

In Horizon Europe, indirect costs are calculated as a flat rate of 25 % on top of eligible direct costs (excluding subcontracting and in-kind contributions not used on premises). EMDESK calculates indirect costs automatically based on the indirect cost rates you configure per participant and cost category.

What you need before you start

Before you can plan personnel budgets in EMDESK, a few building blocks must be in place:

1. Activities — Create your work packages and tasks in the Workplan section. Budget entries are always linked to an activity.

2. Participants — Set up the organisations (consortium partners) and, if applicable, individual persons in the Participants section.

3. Personnel cost rates — Define at least one personnel cost rate for each participant in their Financial Profile. A rate includes the monetary value, the time unit (PM, PD, or PH), and the working time configuration (hours/day, days/month). See "Create and edit personnel cost rates" for detailed instructions.

4. Cost categories — Ensure a personnel cost category of type "Rate" exists in your workspace. Cost categories are configured in Customization settings.

5. Indirect cost rates — Configure the overhead percentage per participant and cost category. For Horizon Europe, this is typically 25 %. Indirect cost rates are set in the participant's Financial Profile or workspace-wide in Customization.

How effort, rates, and costs relate to each other

The central calculation in EMDESK personnel budgeting is:

Direct personnel costs = Personnel cost rate × Effort

For example:

This calculation is bidirectional: you can either enter the planned effort and EMDESK calculates the cost, or you enter the cost and EMDESK calculates the corresponding effort based on the selected rate.

Indirect costs are then added on top:

Total costs = Direct costs + (Direct costs × Indirect cost rate %)

For example, with a 25 % indirect cost rate:

• Direct costs: €30,000
• Indirect costs: €30,000 × 25 % = €7,500
• Total costs: €37,500

Creating a personnel budget entry

For a detailed step-by-step walkthrough, see "Plan and create personnel budget". Here is a summary of the key steps:

1. Go to Budget in the main menu and click + Add Budget.
2. Select the activity (work package or task) and the participant (organisation).
3. Choose a Personnel cost category of type "Rate".
4. The indirect cost rate is automatically selected based on the participant and cost category.
5. Select the personnel cost rate from the dropdown. Only rates that are enabled for budgeting and within their validity date range appear. The default rate (if set) is pre-selected.
6. Enter the planned effort (PM, PD, or PH) — the cost is calculated automatically. Or enter the cost and the effort is calculated.
7. Optionally set a period, add a description, and add tags.
8. Click Save Budget.

Personnel cost rates and the financial profile

Personnel cost rates are configured per participant in their Financial Profile (Participants → click participant → Financial Profile tab). Each rate includes:

• A rate value (e.g. €5,000 per person month)
• A time unit: Person Month (PM), Person Day (PD), or Person Hour (PH)
• A working time configuration: hours per day (default: 8) and days per month (default: ~17.92, aligned with the EU 215-day standard)
• A name (e.g. "Senior Researcher", "Project Manager")
• Validity dates — optional date ranges controlling when the rate is available for budgeting and for expenses
• An Enable for Budgeting / Enable for Expenses toggle

You can create multiple rates per participant to represent different staff categories (e.g. researcher, technician, administrative staff) or to handle rate changes over time (e.g. annual salary increases). Use validity dates to control which rate applies for which period.

For full instructions, see "Create and edit personnel cost rates" and "Financial profile of a participant".

What happens when you change a rate

If you modify a personnel cost rate that is already used in budget entries, EMDESK asks how to handle the existing entries:

• Update costs — The effort stays the same, and costs are recalculated using the new rate.
• Update effort — The costs stay the same, and the effort is recalculated to match the new rate.

You can review the affected entries before confirming.

Period scheduling

Each budget entry can optionally have a period with a start and end month within the linked activity's duration:

• Without a period: The budget is assumed to be spent evenly over the entire activity duration. For example, if the activity runs from M1 to M36, a 12 PM entry is distributed as 0.33 PM per month.
• With a period: The budget is planned within a specific time range. For example, an entry scheduled from M6 to M12 concentrates all effort and cost in those 7 months.

Period scheduling is important for accurate time-based analytics and reporting, especially when comparing planned budget against actual expenses over specific quarters or years.

Cost categories: Fix vs. Rate

EMDESK distinguishes between two types of cost categories:

• Rate — For rate-based costs where cost = rate × effort. Use this for personnel budgets where you want to plan both effort and costs.
• Fix — For fixed-amount costs (e.g. travel, equipment, materials). If a personnel cost category is set to "Fix", you can only enter a lump-sum cost amount without effort tracking.

To plan personnel costs with effort and rate calculation, always select a personnel cost category of type "Rate". Cost categories are configured in Customization settings.

Importing personnel budget from Excel

If you have already developed your personnel budget outside EMDESK (for example in the proposal stage), you can import budget data from an Excel file (.xlsx). The import supports both cost amounts and effort values (PM, PD, PH) and maps them to existing activities, participants, cost categories, and personnel cost rates in your workspace.

For detailed import instructions, see "Importing budget".

Tracking actual personnel costs and effort

During project implementation, you report actual personnel costs and effort in the Expenses section. The same personnel cost rates from the Financial Profile are used for both budget planning and expense reporting, ensuring consistency between your plan and your actuals.

When reporting a personnel expense, you select the same combination of activity, participant, cost category, and cost rate. The cost is calculated from the reported effort using the same rate × effort formula.

For full instructions, see "Track personnel expenses and efforts". For other (non-personnel) expenses, see "Track and report expenses".

Comparing budget vs. actual expenses

The Analytics section in EMDESK lets you compare your planned personnel budget against actual reported expenses. This is particularly useful for EU projects where you need to monitor budget consumption during reporting periods.

The following analytics reports are relevant for personnel cost budgeting:

• Activities / Personnel Cost Rates — Compare budget vs. expenses for each activity and each personnel cost rate. This shows you, for example, how much of the planned senior researcher effort on WP2 has been consumed.
• Participants / Cost Categories — Compare budget vs. expenses per cost category per participant. This gives you an overview of each partner's personnel cost consumption.
• Activities / Time — Compare budget vs. expenses per activity over time (months, quarters, years). Useful for identifying activities that are over- or under-spending.
• Participants / Time — Compare budget vs. expenses per participant over time.

In the view settings, you can:

• Switch the resource unit between PM, PD, and PH to view effort in different units
• Include or exclude indirect costs from the comparison
• Show variance (absolute or relative) and percentage of plan consumed
• Adjust the time scale (year, half-year, quarter, month)

Protecting sensitive rate information

If personnel cost rates contain sensitive salary information, you can hide them from users who should not see the actual values. In the participant's Financial Profile, enable the "Hide personnel cost rate" toggle. Users with only Read access to that participant will then see blurred values in the Budget, Expenses, and Analytics views instead of the actual numbers.

Users with at least Edit access to the participant can still see the actual rates.

Tips for EU project personnel budgeting

Access rights

For details, see "Roles, access levels, and access rights".