Project Cycle Management Manual

4. Project Implementation

4. Project Implementation
4.1 Key Stakeholders in Project Implementation
4.1.1 The Project Holder
4.1.2 The Beneficiary
4.1.3 The Ministry of Environment
4.1.4 DANCEE
4.2 Management Forums
4.2.1 Project Management Group
4.2.2 Steering Committee
4.2.3 Advisory Committee
4.3 Project Monitoring and Reporting
4.3.1 Project Monitoring Systems
4.3.2 Reporting
4.3.3 Baseline Descriptions
4.3.4 Approval of Reports
4.3.5 Inception Report
4.3.6 Procedures Manual
4.3.7 Progress Reports
4.3.8 Technical Reports
4.3.9 Completion Report
4.4 Financial Management
4.4.1 Financial Management
4.4.2 Payment Schemes
4.4.3 Terms of Payment
4.4.4 Financial reporting

4. Project Implementation

4.1 Key Stakeholders in Project Implementation

4.1.1 The Project Holder

Responsibility of the project holder
Projects funded under the DANCEE cover a wide range of services, supplies and works, and the particular tasks and responsibilities of project holders vary correspondingly.

At one extreme, the implementation may rely almost entirely on the project holder; at another extreme, the beneficiary or other stakeholders may implement major parts of a project.

As a general rule, DEPA will hold a project holder responsible for the achievement of the immediate objectives of the project, but the particular capacity or role of the project holder as specified in the project document may modify this responsibility.

DANCEE's prior or subsequent approval of proposals, initiatives and approaches does not limit the professional responsibility of the project holder in terms of the appropriateness or feasibility thereof, unless the project holder in advance explicitly has alerted DANCEE to particular risks associated therewith. This also applies to any information on the progress or quality of the implementation provided by the project holder to DANCEE in reports, etc.

Figure 4.1: Key Stakeholders

The project holder will assign a team of international and national experts to implement the project. The project holder will appoint a team leader and a project director. The project director will be responsible for quality assurance of the project implementation and project outputs. The team leader has the overall daily responsibility for the timely and correct implementation of the project. In most projects the project holder will also assign a local assistant team leader.

Team leader
DANCEE's acceptance of the team leader - and of expatriate personnel in general - is part of the contract procedure and procedure for approval of applications. Technical, professional and personal qualifications and past experience and references of expatriate personnel will be evaluated by DANCEE.

The team leader is expected to establish a smooth working relationship with the local project manager, local consultants and other stakeholders. Further, the team leader will draft the specific work plans for all experts involved in the project and supervise the work performed.

The team leader will be responsible for organising a steering committee (SC) and - if agreed - also a advisory committee - please refer to Sections 4.2.2 and 4.2.3. The team leader will act as secretary to the steering committee and the possible advisory committee.

Responsibility
The beneficiary is the organisation in the partner country which benefits from the project and which receives the results of the project after completion. The beneficiary will normally implement local project components.

The beneficiary will have the overall responsibility for implementation of local project components. The responsibilities of the beneficiary will be clearly defined in the project document.

The beneficiary provides any local services agreed in the project document, and is responsible for the correct and timely service of all those local sub-contractors and local stakeholders which do not form a part of the project holder's team.

A representative appointed by the beneficiary serves as deputy chairman of the steering committee and chairs all meetings of the advisory committee - please refer to Sections 4.2.2 and 4.2.3.

Local project manager
The beneficiary will nominate a local project manager who will have the day-to-day responsibility for the implementation of the local project component working in an informal project management group with the team leader.

4.1.3 The Ministry of Environment

Responsibility of MoE
MoE has the overall local responsibility for the implementation of the country programme. In this capacity, MoE also has overall responsibility for monitoring the progress of project implementation and the project's contribution to the overall country programme.

Local project director
MoE will appoint a local project director who will chair all steering committee meetings.

MoE has the right to demand a halt of a project if MoE deems that it is not progressing according to the project document or if external matters indicate a need for a reformulation of the project. However, such a request must be directed to DANCEE, as only DANCEE has the authority to demand that the project holder halts the implementation of the project according to the provisions in the contract or the letter of grant between DANCEE and the project holder. Likewise, if MoE requires changes in the project, the matter shall be discussed in the steering committee and any decision shall be agreed with DANCEE.

4.1.4 DANCEE

Responsibility of the country coordinator
DANCEE has overall supervision responsibility for the projects. One country coordinator has been appointed to handle all relations with one specific partner country. This implies at least two annual meetings to negotiate and prioritise the project long-list into the project short-list and to assess ongoing and finalised projects. The overall responsibility for all projects in one individual partner country is undertaken by the relevant country coordinator. However, other DEPA specialists or specialists from other agencies within MoEE may be appointed to be responsible for a specific project.
The country coordinator will follow the progress of project implementation through the assessment of reports, accounting statements, reports from the LPC and by making site visits.

Local project coordinator
The LPC is a local native-speaking specialist employed by DANCEE and based in the partner country - most often in MoE. The main task is to assist the country coordinator in coordinating DANCEE activities in the partner country.

The LPC will monitor project implementation by visiting the project implementation sites regularly. Inadequate performance in relation to the project document will be reported to DANCEE. The project holder will then be contacted by DANCEE in order to find possible solutions to the problems incurred. The local project coordinator does not, however, have the authority to demand changes in project implementation.

DANCEE can stop project implementation
If a project is not progressing according to plans in the project document, DANCEE reserves the right and authority to halt its implementation or terminate the project.

4.2 Management Forums

To ensure the efficient implementation of projects, each DANCEE project will establish a management structure for project implementation. The type of management structure established will depend on the particular tasks of the project. The management structure will be described in the project document and will be elaborated in the procedures manual - please refer to Section 4.3.5.

4.2.1 Project Management Group

Responsibilities
The team leader and the local project manager constitute the project management group. The project management group is responsible for the day-to-day implementation of the project.

The team leader is responsible on behalf of the project holder and the local project manager is responsible for inputs from the beneficiary.

The tasks and responsibilities of the team leader and the local project manager are described in the project document and shall be elaborated in the procedures manual.

4.2.2 Steering Committee

For most projects, DANCEE recommends a steering committee. Some projects, e.g. projects which basically consist of equipment deliveries may not require a steering committee.

Established by Project Holder
It is the responsibility of the project holder to establish a steering committee in close collaboration with MoE and the beneficiary. No later than six weeks after the start of the project, the team leader shall submit a proposal to DANCEE on the proposed composition of the steering committee. DANCEE will approve or amend the proposal for composition of the steering committee within 10 working days of receipt of the proposal.

First steering committee meeting
The project holder will call the first meeting of the steering committee no later than three months after the start of the project. Generally, the first meeting of the steering committee shall be used for the formal introduction of project stakeholders. The team leader will present the first detailed plan for project implementation and introduce his team. At its first meeting the steering committee will approve or request revision of the inception report - please refer to Section 4.3.4. Recommended guidelines for steering committee meetings are shown in Enclosure E.

Final steering committee meeting
The focus of the final steering committee meeting will be an assessment of whether project objectives have been achieved. The committee will respond to a detailed reading of the completion report - please refer to Section 4.3.7. The conclusions of discussions will be summarised in the minutes of meetings. The minutes will be forwarded to DANCEE.

Project sustainability
Throughout the project period significant attention should be paid to the future. The team leader should monitor the end-of-project situation and the status of the sustainability of the project. This may also include a consideration of additional tasks deemed necessary to enhance the sustainability of the project's results which are beyond the scope of the project document. At the final steering committee meeting, the team leader should give a presentation on the end-of-project situation. Particular focus will be on the beneficiary's responsibility for developing the results achieved. Recommendations for locally initiated follow-up activities will be highlighted.

Costs of steering committee meetings
The project budget will have a provision to meet the costs of steering committee meetings.

4.2.3 Advisory Committee

The MoE and the beneficiary may decide to establish a project advisory committee to follow the development of the project implementation. Members of a project advisory committee will typically represent local and regional authorities, organisations, educational institutions, research institutes, NGOs, independent experts, citizen's groups and other stakeholders. A representative appointed by the beneficiary chairs all meetings of the advisory committee.

No formal responsibilities
This committee has no formal responsibility for project implementation. It decides its own order of business and frequency of meetings (twice a year may be regarded as a minimum). The committee can only give advice. This advice will be channelled to the steering committee by the chairman.

The project budget may have a small provision for to meet the costs of advisory meetings.

4.3 Project Monitoring and Reporting

4.3.1 Project Monitoring Systems

Monitoring system
Project monitoring systems are established to ensure that data are available for both the monitoring of the project implementation and the evaluation of the project's impact, sustainability and relevance.

Table 4.1: Issues to be monitored

Progress monitoring
Monitoring is the continuous and periodic assessment of the physical implementation of a project. Monitoring is carried out by the project management group. Project monitoring shall assess if inputs have been delivered and activities carried out according to plans, and if the project has achieved its outputs. Monitoring also involves an assessment of the likelihood of achieving the project objectives. No projects can be implemented in isolation from the surrounding environment and, therefore, changes in the project's social and economic environment shall also be assessed. The efficiency shall be monitored by assessing the "productivity" of the implementation process - how economically inputs are transformed into outputs.

Evaluation
Part of the project evaluation will be the responsibility of the project holder and should be reported to DANCEE in the completion report and the statistical summary. Additionally, DANCEE may decide to carry out an independant evaluation - please refer to Section 5.

The effectiveness of the project is judged by an assessment of the extent to which the project has achieved its immediate objectives. The foreseen and unforeseen consequences of a project, to the beneficiary in particular, and to society in general, shall be assessed.

The project's effectiveness and impacts shall be assessed by the project holder as part of the completion report. In addition, DANCEE can decide that the project should undergo an external evaluation according to the guidelines in Section 5.

The monitoring system should normally ensure that baseline data are available against which to assess the environmental impact of a project.

Baseline measurements or estimates should be made both before and after project implementation in order to measure the environmental impacts of the project - please refer to Section 4.3.3.

Indicators
Monitoring will normally be based on indicators. Indicators are established as success criteria at the output and objective level. Indicators are used as an economic and efficient way of making a partial test, on the premise that if the test conditions have been fulfilled, then the project's outputs and objectives have also been fulfilled.

Specifying indicators and milestones
Indicators and milestones are normally defined during the project's inception period, as the project document will often only describe indicators and milestones for project monitoring in general terms. Indicators and milestones should be established in collaboration with local partners and the beneficiary, to ensure that all parties to the project are committed to the achievement of the project's outputs and objectives from the beginning.

4.3.2 Reporting

During project implementation, the project holder is responsible for the production of the reports specified in the project document. Reports normally include monitoring reports, management reports and technical reports. The different reports to be presented by the project holder are outlined in Figure 4.2.

Figure 4.2: Reports produced during project implementation

The project reporting system is based on three types of monitoring reports:

1. an inception report describing how the project is to be implemented in relation to the project document,
2. progress reports which address project progress will normally be submitted quarterly. The progress reports should be brief, and focus on problems and deviations, not repeating issues previously reported. Approved progress reports are a precondition for the settlement of invoices,
3. a completion report summarising overall project achievements,
   

In addition to the above monitoring reports, a baseline study/description should be part of the project's monitoring and evaluation system.

Formats and requirements for the individual reports are outlined below.

4.3.3 Baseline Descriptions

A baseline description is established with the aim of describing the existing situation (the baseline) against which the impact of a project can be measured.

DANCEE requires baseline descriptions
All DANCEE supported projects shall establish baseline descriptions.
A baseline may refer to water quality parameters, biological diversity and species composition, the state of ecosystems, the physical background sustaining existing ecosystems or a specific species. Any impacts introduced as a change in the physical background shall be subsequently described and assessed in relation to a baseline description.

Two examples of baseline descriptions are given below.

Baseline for waste water treatment
For projects related to waste water treatment the baseline description will be used for the evaluation of the treatment facilities and the pollution of the receiving waters. The amount of waste water discharged will be assessed together with the content of the polluting substances (especially BOD, nitrogen, ammonia and phosphorous). If the catchment area includes large industries, the discharge of heavy metals, petro-chemical by-products etc. will be assessed.

Existing waste water treatment facilities will be evaluated and a baseline describing the present treatment facilities, their efficiency and the level of pollution from the discharge of waste water will be established.

Next, an assessment will be made of the improvements in the waste water treatment required to meet an outlet quality equal to e.g. EU standards and the expected consequent effect on the receiving waters.

In some projects, it is not possible to measure the direct impact of the project on the environment. In these situations, the baseline can be established by a comparison with the pre-existing processes. Two examples are given below of baseline studies for projects with no direct, measurable environmental impacts.

Baselines for legislative assistance
For assistance related to environmental legislation, baseline descriptions usually consist of a description of existing national legislation. In accession projects, legislative gap analysis is the usual methodology, i.e. a comparison of national legislation with the requirements found in EU Directives. The legislative baseline refers methodologically to provisions found in the national legislation. Required changes are defined by EU requirements.

Baselines for technical studies
For technical studies, baseline descriptions are used for an evaluation of the required enhancements in the technical production capabilities of enterprises, or of their capability to prevent pollution of the external environment.

An example of such evaluations is related to the Integrated Pollution Prevention Control (IPPC) Directive in European countries. From an evaluation of existing production facilities in industrial units, a baseline describing production facilities and levels of pollution control is established. Next, an assessment is made of modified production capability and pollution prevention measures based on the introduction of Best Available Technology (BAT), also in accordance with the IPPC Directive. All achievements are described in relation to the baseline situation.

4.3.4 Approval of Reports

Reports need to be approved first by the steering committee and subsequently by DANCEE. The general procedures for the approval of project reports are described below.

The steering committee
The steering committee may reject a report if it is of poor quality, i.e. if it does not comply with DANCEE's requirements or if it does not give a fair assessment of the project implementation. If a report indicates that project implementation is not meeting the expectations laid down in the project document and the proposed solutions seem inadequate, the report will normally be rejected.

Rejections of reports
If the steering committee rejects a report, the project holder will revise the report and re-submit it to the steering committee for their written approval. If members have not commented on the report within 10 working days, the report is deemed to be approved and can be forwarded to DANCEE by the team leader. If the steering committee again rejects the report, a further meeting will be called for approval of the report.

The project holder may request the chairman to ask the MoEE representative to participate in this further meeting, whether or not the MoEE representative took part in the meeting which rejected the original report. Once such a request has been submitted, the meeting cannot be held without the MoEE representative being present.

In those cases where the MoEE representative participates in the steering committee meetings, all reports are approved if the MoEE representative has no objections.

DANCEE's approval of reports
DANCEE will normally approve reports at the recommendation of the steering committee. However, DANCEE may reject reports approved by the steering committee. If this happens, a further steering committee meeting will be convened and the MoEE representative must participate and provide reasons for the rejection of the report.

DANCEE's approval of reports does not limit the professional responsibilities of the project holder - please refer to Section 4.1.1.

4.3.5 Inception Report

Typically all tendered projects have an inception phase and an inception report, whereas some projects by application, and most equipment supply projects do not have an inception phase. The project document will specify whether the project requires an inception phase. The usual length of the inception phase is three months.

Assessment of project document
During the inception phase, and at the team leader's initiative, the project management group will assess the project document, the budget and the plan of implementation. They will detail project activities and make required adjustments according to changes in the local environment. They will specify the project implementation plan. The project implementation plan will indicate when draft monitoring reports will be forwarded to the steering committee and to DANCEE. If any deficiencies or need for modifications are found, this must be clarified and agreed, and appropriate action taken.

The assessment of the project document is intended to verify that the description of the context, problems and assumptions for the project remain valid. In addition, the adequacy of inputs and support from the implementing organisation and other parties will be assessed, and clear roles and responsibilities will be defined. The assessment will also verify that the outputs can be produced with the planned activities and inputs specified in the project implementation plan. The indicators and means of verification will be detailed and refined, and the adequacy of baseline data will be checked.

Adjustments to project document
The results of this assessment will be documented in the inception report as shown in Table 4.2. If adjustments are required to the project document, the project holder must submit to DANCEE a revised project document or an addendum to the existing project document. DANCEE must approve the adjustments by co-signing with the project holder the revised project document or addendum to the existing project document.

Approval of inception report
Comments by the steering committee to the inception report shall be submitted to DANCEE by the project holder. DANCEE shall approve the report in writing within ten working days of receipt of the comments. If DANCEE cannot approve the report within ten working days of receipt of the comments from the steering committee, notice shall be given in writing to the project holder.

Table 4.2: Inception Report Format
Inception Report Format

4.3.6 Procedures Manual

The procedures manual serves as a guide for project staff, sub-consultants, steering committee members and other stakeholders. It contains information on project organisation and procedures and responsibilities for general management, financial management, project monitoring and reporting, and quality management.

Format of manual
Table 4.3 suggests contents and format for a procedures manual, but a manual will always be project-specific. Thus, it may contain additional information that project staff and steering committee may find appropriate. The physical format should be flexible (ring binder as well as electronic format) to allow continuous updating during the project's lifetime.

4.3.7 Progress Reports

Progress reports are prepared by the project management group at the initiative of the team leader. They are normally submitted to DANCEE and the steering committee every three months. The scheduling of progress reports is established in the inception report, and progress reports should to the extent possible correspond to the planned achievement of project outputs.

Means of communication
The progress reports (max. 10 pages plus annexes) are a means for the project management group to communicate information about the implementation of the project to the steering committee, MoE, DANCEE and other stakeholders.

Focus on problems
Progress reports should not repeat information contained in previously submitted reports. Their prime function is to point to unexpected problems which have occurred in the reporting period or which can be foreseen. Progress reports should propose solutions to identified problems for approval by the steering committee and DANCEE. These reports will also allow controlled adjustments, convey information to stakeholders, and serve as a project diary, showing agreed alterations to the project document.

DANCEE will primarily use the progress reports to monitor project implementation and will not normally initiate action unless specifically requested by the team leader or by MoE, or in cases where it is obvious that project implementation is not progressing satisfactory.

Approval of progress report
The draft progress report is normally submitted to the steering committee and DANCEE at least ten working days before the steering committee meeting. The steering committee comments on the draft progress report which is submitted to DANCEE after the meeting. DANCEE shall approve the report in writing within ten working days upon receipt of comments from the steering committee. If DANCEE cannot approve within ten working days, notice shall be given in writing to the project holder.

Approval of changes
If changes to the project outputs or objectives become necessary, these will be presented and documented in the progress reports. Proposed changes should be listed in the covering letter to the progress report for subsequent approval by DANCEE. Adjustments will be approved only when the covering letter is signed by DANCEE and the project holder - please refer to Enclosure F.

Adjustments of budget lines
Adjustments of budget lines are possible to a limited extent in tendered projects - please refer to Section 4.4. For projects by application, adjustment of budget lines is only possible to a limited extent and only after DANCEE's approval. Accounts for reimbursable expenses and accounts for fees should be submitted at the same time as progress reports. Payments cannot be made without approval of submitted progress reports.

A suggested format for progress reports is shown in Table 4.4. However, the reports may contain additional information found appropriate by the project management group.

Table 4.4: Progress Report Format

4.3.8 Technical Reports

Technical reports may include masterplans, feasibility studies, manuals, tender documents etc.

The technical reports can be used as milestones and it must be specified in the project document which technical reports are required.

The technical reports must be submitted to DANCEE in accordance with the time scedule in the project document. DANCEE shall approve the report within 20 working days upon reception. This approval must be in written form and addressed to the project holder.

4.3.9 Completion Report

Approval of completion report
The draft completion report is normally submitted to the steering committee and DANCEE at least one month before the steering committee meeting. After the steering committee, comments are submitted to DANCEE. DANCEE shall approve the report in writing within 20 working days upon receipt of the comments. If DANCEE cannot approve the report within 20 working days upon receipt of the comments from the SC, notice will be given in writing to the project holder.

Final completion report
If there is no request for changes, the draft completion report will become final by a replacement of the cover page. If the steering committee or DANCEE request changes, a revised draft completion report will be submitted by the team leader to the chairman of the steering committee and to DANCEE within 10 working days of receipt of the steering committee's or DANCEE's comments. If the project holder does not receive any comments from the steering committee or DANCEE within 20 working days, the revised draft completion report may be considered approved.

Statistical summary
DANCEE maintains a database of all projects carried out under the DANCEE programme. This database contains e.g. information on environmental impacts, ex-post summary, co-financing. All DANCEE projects must be included in this database. For this purpose, a statistical summary for each project must be filled in.

The project holder is responsible for filling in the data necessary in the statistal summary at the end of the project. The project holder shall submit the statistical summary (in MS Word format) together with the completion report. The summary must be filled in in accordance to specific instructions and submitted to DANCEE on diskette.

With the approval of the completion report and the statistical summary, the project holder may submit his final accounts and invoice.

The project holder will have completed his services once the completion report, the statistical summary and the final accounts have been accepted by DANCEE.

A format for the completion report is shown in Table 4.5.

Table 4.5:Completion Report Format

4.4 Financial Management

The purpose of this Section is to provide an overview of DANCEE's terms of payment and requirements for financial reporting. It is for information only, has no legal status, and can be deviated from by the DANCEE. The legal and detailed terms and requirements for a specific project are specified in the contracts and the letter of grant.

4.4.1 Financial Management

Project holder's responsibility
The general responsibility for the financial management of funds provided by DANCEE to projects rests with the project holder.

Financial management responsibilities entail inter alia that all fees and reimbursable expenses invoiced to DANCEE are against specific provisions in the budget and are adequately supported by evidence that procurement is based upon fair and open bargaining or tendering and on competitive terms and conditions, and that the use of the funds is appropriately accounted for. In general, financial management must be in accordance with common professional principles of sound commercial practice.

DANCEE cannot accept that any offer, payment, consideration, or benefit of any kind, which constitutes an illegal or corrupt practice, shall be made or accepted, directly or indirectly, as an inducement or reward in relation to the tendering, award, execution or performance of a contract or a grant. Any such practice will be grounds for the immediate termination of a project. The project holder will be permanently disqualified from DANCEE funded projects and activities. DANCEE may also pursue further civil and criminal actions against the project holder.

4.4.2 Payment Schemes

DANCEE will pay the project holder for fees and reimbursable expenses which are specified in the budget and incurred in the implementation of the project within the budgeted amounts.

Payments will be made on the basis of invoices submitted to DANCEE by the project holder.

Projects by Tender
Advance payment
In projects by tender, DANCEE may make advance payments to the project holder upon signing of the contract in an amount corresponding to a maximum of 30 % of the total estimated fees and to a maximum of 40 % of the total estimated reimbursable expenses. An advance payment must be repaid by means of pro rata deductions from the subsequent progress payments to the project holder.

Project holders other than NGOs must provide a security (bank guarantee) for an advance payment. For advance payments of less than DKK 400,000, DANCEE may waive this requirement.

DEPA may conduct an assessment of the institutional and financial standing of a NGO for purposes of determining the size of the advance payments.

Progress payments
Progress payments are made quarterly. DANCEE's approval of the most recent progress report is a precondition for the progress payment.

Progress payments are made on the basis of invoices submitted to DANCEE by the project holder for the services rendered and for the reimbursable expenses actually incurred in the preceding quarter.

Final payment
In a KR-contract, the advance and progress payment can as a maximum amount to 75% of the total estimated fees and reimbursable expenses. A final payment is made after DANCEE's approval of the final accounts.

For the procurement of supplies and works, DANCEE and the project holder may agree that DANCEE pays directly to the supplier or contractor on the basis of invoices endorsed for payment by the project holder.

Projects by Application
In projects by application, DANCEE will disburse the grant in two instalments.

First instalment
The first instalment corresponding to 90% of the grant will be paid at the time of submission of the completion report. If DANCEE at this point of time should have any substantial objections to making the payment, DANCEE may postpone it until DANCEE has approved the completion report and the audited final statement of accounts.

Second instalment
The second instalment (10% of the grant) will be paid when DANCEE has approved the completion report and the audited final statement of accounts.

The project holder shall submit invoices for the payment of the instalments.

Quarterly payments in projects longer than 6 months
In projects with a duration of more than 6 months, DANCEE may agree to make payments on account at quarterly intervals in amounts which correspond to fees and reimbursable expenses accrued in the preceding quarter. These payments cannot in total exceed 90% of the grant. Payments on account will not be finalised until DANCEE has approved the completion report and the audited final statement of accounts.

Advance payments to NGOs
Advance payments to NGOs are made in amounts which are suited to the accrual of fees and reimbursable expenses. Normally, DANCEE makes quarterly or biannual advance payments in amounts which correspond to the budgeted fees and reimbursable expenses in the following period.

DEPA may conduct an assessment of the institutional and financial standing of a NGO for purposes of determining the size of the advance payments.

Advance payment for supplies and works
Advance payments in connection with the procurement of supplies or works may correspond to maximum 75% of the costs. Such advance payments are subject to separate agreement between DANCEE and the project holder.

Project holders other than NGOs must provide a security (bank guarantee) for an advance payment. For advance payments of less than DKK 400,000 DEPA may waive this requirement.

Direct payment to supplier or contractor
For the procurement of supplies and works, DANCEE and the project holder may agree that DANCEE pays directly to the supplier or contractor on the basis of invoices endorsed for payment by the project holder.

4.4.3 Terms of Payment

DANCEE will pay the invoices within a period of 30 days from receipt provided that the invoices are complete and not disputed and that the project holder has submitted requisite reports.

Payment of the invoice as of 31 December and the final invoice further require the submission of the annual or final statement of accounts.

VAT and Taxation
In a project by application, the grant is not subject to Danish VAT, but the grant is taxable income for the project holder.

Services, supplies and works under a contract with a Danish project holder or subcontractor are not subject to Danish VAT, if the deliverables exclusively are used outside the EU.

All funds from the DANCEE shall be exempted from VAT, duties and taxation in the partner country.

4.4.4 Financial reporting

Statements of account
DANCEE may require that the project holder submits audited annual and final statements of accounts to DANCEE within a period of three months after December 31 or after completion.

In projects by application, the requirement for annual statements of accounts only applies if DANCEE has agreed to make payments on account.

For longer projects, the first annual statement of accounts and the final statement of accounts may cover a period of up to 14 months, and the consultant needs not submit annual statements of accounts within that period. The consultant shall in advance notify DANCEE of the omission of an annual statement of accounts.

The annual statement of accounts shall include a budget for the remaining project period.

The statements of accounts shall be in accordance with the specifications issued and be in the form which DANCEE may require at any time. Please refer to Table 4.6.

Audits
The annual and final statements of accounts shall be audited, and the auditor shall render his opinion and sign the statements.

The auditor shall be a state authorised or registered accountant.

The audit shall be conducted in accordance with standard auditing practice and any particular instructions issued by DANCEE.

The costs of the audits may be included in the budget as a reimbursable expense and invoiced to DANCEE.

Other donors
In case of projects which have been co-financed by funds from DANCEE and funds from other donors or financial institutions, DANCEE shall receive a copy of the auditing report from the entire project.

Inspection
DANCEE and its representatives shall be entitled to inspect and otherwise examine the project, including (but not limited to) all and any accounts, receipts, vouchers, contracts, and make site inspections, during and after the project. The project holder and the beneficiary are required to grant access for such inspection and examination. This also applies to investigations conducted by the office of the Auditor General of Denmark.

Table 4.6: Annual State of Accounts Format