The Lithuanian Business Support Agency (LBSA) organises training for potential applicants under the measure ‘SmartInvest LT’. It is very important for applicants preparing research and experimental development (R&D) projects to use both the Frascati and Oslo manuals. During the evaluation of applications, it has been observed that some studies are misinterpreted and misclassified as R&D activities, without fully assessing what the indicators aim to achieve. Therefore, for those carrying out R&D activities and seeking grants, the Agency reminds them what is important to know before submitting an application.
Why is the Oslo Manual used when the Frascati Manual defines R&D in detail?
The Frascati Manual is intended for the assessment, classification and data collection on R&D, while the Oslo Manual is intended for the classification and collection of data about innovation.

Innovation is understood as the practical implementation of ideas resulting in the introduction of new goods or services, or the improvement of the offer of goods or services. However, the development of innovation is not necessarily linked to R&D activities; for example, innovation can also be developed through the installation or purchase of new technological equipment and the training of employees to use it.
The latest version of the Oslo Manual states in point 2.64: ‘Chapter 4 sets out the innovation activities that enterprises carry out to develop innovations. These activities may be characterised by the knowledge on which they are based and which they generate, or by the stage in the innovation process at which they are carried out. They include R&D, engineering, design and other creative activities, marketing and brand value creation activities, IP-related activities, staff training activities, software development and database activities, as well as activities related to the acquisition or rental of tangible assets and innovation management activities.’
Further, point 2.65 emphasises ‘that [...] by official definition, R&D is neither a sufficient nor a necessary condition for innovative activity or innovation.’
In other words, innovation in itself does not determine the R&D character of a project.

Does the research carried out really constitute R&D?

Based on the experience of project evaluation, the LBSA notes that applicants often attribute the lack of knowledge to feasibility studies and attribute this lack to R&D.

‘However, it is important to check what is stated in the Frascati Manual, the guidelines for collecting and reporting on research and experimental development data. In this case, point 2.113 says: ‘Studies of proposed engineering projects, using existing methodologies to obtain additional information prior to the decision on its implementation, are not considered R&D,’ notes Rimantas Jančauskas of LBSA.

More examples of such feasibility studies are:
  • Activities to find out the technical parameters of equipment available on the market or its   applicability to the situation at hand, literature analysis to obtain technical information
  • Selection of a range of existing measuring equipment for the project
  • Studying the possibilities of inter-integration of various existing equipment, including software
  • Research and selection of existing data encryption models, and methods and protocols.
Applicants should also note that market studies carried out before deciding on the development of individual functionalities are also not classified as R&D.
Understanding the need for individual solutions and products, investigating the need for functional features of a product or solution under development, and linking these features to user satisfaction, is attributable to market research.

Five main Frascati criteria

The LBSA notes that applicants often use words such as unique, exceptional, global innovation and similar in their documents submitted. This in itself does not say anything about the compliance of the application with R&D.

The problem to be solved must be emphasised, as the prototype to be developed will not be a global innovation in the event of failure to identify the ‘global problem’ and envisage its solutions in the application. The applicant must first be interested in the formulation of the problem, the possible solutions to the problem and the compliance of the activities with R&D.
Experimental development (ED) is also generating new knowledge, not just applied research (AR).
So that to recognise an activity as an R&D activity, it must meet five main criteria.
Point 2.7 of the Frascati Manual states that the activity must be:
  • new (original)
  • creative
  • undefined
  • systematic
  • transferable and/or replicable.
These criteria apply to both research and experimental development.

How do you avoid budgeting errors?
Avoid assigning the same responsibilities to different positions when drawing up a project budget. Although there may be overlapping responsibilities, in principle different positions require different responsibilities. Overlapping responsibilities are usually indicative of insufficient preparation of the application.
‘When drawing up the project budget, applicants generally assign most of the activities to applied research. This is partly understandable, as R&D is more heavily funded than experimental development. However, the LBSA assesses the eligibility of a project for R&D not only in general, but also on the basis of the justification of the assignment of specific activities to AR or ED’, notes Inga Lukošiūnaitė, Head of Science and Innovation Projects Division.
Related to this is the separation and classification of the application’s AR and ED studies. Applicants often emphasise that there is no prototype/model yet in development and therefore AR is needed. Resolution No 650 of the Government of the Republic of Lithuania on the Approval of the Description of the Recommended Classification of Research and Experimental Development Stages dated 6 June 2012, defining the technological readiness levels (TRL), is cited as an argument. However, this TRL is only meaningful when the project is recognised as R&D. R&D itself is assessed on the basis of the Frascati Manual’s definitions and interpretations on the classification of activities such as R&D.
Thus, the concept of AR in the Frascati Manual cannot be distinguished from the Description of the Recommended Classification of Research and Experimental Development Stages. The fact that a prototype/model does not yet exist, does not in itself mean that AR is needed to create it.
Experimental development according to the Frascati Manual
When analysing what applicants still need to check in the Frascati Manual when applying for R&D; LBSA’s Rimantas Jančauskas points out that it is necessary to remember what it is provided in the manual about experimental development.
Point 2.34 states: ‘The concept of experimental development should not be confused with “product development”, which is the overall process – from the formulation of ideas and concepts to commercialisation – aimed at bringing a new product (good or service) to the market. Experimental development is just one possible stage in the product development process: that stage when generic knowledge is actually tested for the specific applications needed to bring such a process to a successful end. During the experimental development stage new knowledge is generated, and that stage comes to an end when the R&D criteria (novel, uncertain, creative, systematic, and transferable and/or reproducible) no longer apply ...’
For example, software development projects that apply individual known mathematical methods but do not lead to new knowledge or do not meet at least one of the criteria for identifying R&D, are not classified as experimental development. This also applies to applications of AI (artificial intelligence).
Often the boundary between conventional programming activities and R&D is not clearly defined, but it is important to remember that in the case of R&D, a certain ‘inventive step’ is required to take the quality of the project to a higher level compared to conventional programming activities, according to the specification provided.
It is important to note that the readiness of applications is crucial for a rapid peer review of applications. Failure to complete or properly complete all the required forms, such as a business plan, or to provide all the necessary documents, such as commercial proposals to justify the budget costs, prolongs the time limits for the evaluation of applications, as in such cases the LBSA has to contact the applicant and ask any questions that may arise.
The Lithuanian Business Support Agency (LBSA) has organised training for potential applicants under the ‘SmartInvest LT+’ measure on 7 October at 10 a.m.

The requirements of the call for the measure will be presented by Inga Lukošiūnaitė, Head of Science and Innovation Projects Division of the LBSA, and Gytis Petrukaitis, Adviser in the Project Development and Evaluation Division, who will introduce details of how to apply for this state aid.

We invite you to register.
Please note that applications for project funding will be accepted until 27 October.

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