Review of a proposal budget and budget monitoring of an ongoing grant

Errors: (1) line 1.4: 2,000 × 12 × 30% = 7,200, not 8,400; (2) the subtotal of the amounts entered is 259,900, not 257,900 (addition error of 2,000); (3) vehicle purchase not eligible; (4) indirect costs at 10% instead of the 7% maximum; (5) mandatory external audit missing; (6) total above the 250,000 ceiling.

Corrected budget: 38,400 + 42,000 + 14,400 + 7,200 + rental 12 × 1,800 = 21,600 + fuel 13,200 + 35,000 + 4,500 + 52,000 + audit 6,000 = 234,300 in direct costs; indirect costs 7% = 16,401; total 250,701, i.e. USD 701 above the ceiling.

Adjustment: direct costs cannot exceed 250,000 / 1.07 = 233,645. At least 655 must be removed from direct costs. Example: 2,450 kits instead of 2,500 (− 700): direct costs 233,600, indirect costs 16,352, total 249,952. Other adjustments are acceptable if justified (for example, fuel partly included in the rental, to be checked). Reducing indirect costs below 7% is possible but must be decided by senior management.

Burn rate at month 6 (50% of time elapsed): staff 66,000 / 120,000 = 55.0%; transfers 54,000 / 180,000 = 30.0%; logistics 31,000 / 40,000 = 77.5%; training 4,000 / 20,000 = 20.0%; direct costs 155,000 / 360,000 = 43.1%; total 165,850 / 385,200 = 43.1%.

Projections to M12 (taking the comments into account, not just linear): staff 66,000 / 6 × 12 = 132,000, overspend 12,000, i.e. 10.0%: at the limit of flexibility; logistics 31,000 × 2 = 62,000, overspend 22,000, i.e. 55%: well beyond the 10% (4,000), prior approval mandatory; transfers: 54,000 + 3 remaining cycles × 1,500 × 20 = 54,000 + 90,000 = 144,000, underspend of 36,000 (20%), which corresponds exactly to the 3 cycles not received by 600 households (600 × 20 × 3); training: 4,000 + 16,000 = 20,000, compliant.

Total projected direct costs: 132,000 + 144,000 + 62,000 + 20,000 = 358,000, i.e. 2,000 under budget. The problem is not the total but the distribution: a reallocation from transfers to logistics and staff must be requested, or the 600 households must receive their missed cycles. This is a programme decision, not just a financial one.

1.2 Community workers (USD 42,000): "Ten community workers, recruited from the targeted communities (at least 50% women), will raise awareness of school enrolment, monitor the attendance of the 2,450 pupils and refer children at risk. Each worker follows about 245 pupils in two schools. The monthly amount of USD 350 corresponds to the harmonised scale of partners in the area, full time over 12 months."

2.1 Vehicle rental (USD 21,600): "A 4×4 vehicle with driver and insurance is rented for 12 months at USD 1,800 per month, on the basis of three quotations, for supervision visits to the 8 schools, located 40 to 120 km from the base, on tracks that are impassable without a 4×4 in the rainy season. Rental, chosen instead of purchase in accordance with the donor rules, includes maintenance. Fuel is budgeted under line 2.2."

"Subject: Budget amendment request, project [reference]. Dear Sir or Madam, at month 6, our monitoring shows three variances. (1) Logistics: the 40% increase in fuel prices and the rental of a truck during the rainy season bring the projection to USD 62,000 against 40,000 planned (+ 22,000). (2) Staff: applying the new national salary scale gives a projection of USD 132,000 (+ 12,000, 10%). (3) Transfers: the registration delay deprived 600 households of cycles 1 to 3, resulting in a projected underspend of USD 36,000. We propose two options: A) pay these 600 households the missed cycles and reduce other costs by the same amount; B) reallocate USD 34,000 from transfers to logistics and staff, with the total unchanged. We recommend option A, which is more favourable to households, together with a logistics savings plan. The revised budget and supporting documents are attached. We remain available to discuss."

I refuse. Charging a donor for expenditure that does not belong to its project is misallocation, or even double funding if these costs already appear in the first donor's report: it is a management fault, non-compliance with both contracts and, depending on intent, fraud. Auditors reconcile supporting documents, vehicle logs and reports: the risk of disallowed costs and loss of trust is real. Only a documented allocation key, based on actual use (kilometres, logbooks), allows a cost to be shared between projects. I propose the amendment request, which is a normal step and generally well received if justified. I record the exchange and, if the instruction is maintained, I refer the matter to the country director or headquarters in line with internal policy.