How do you prove SR & ED? (2/2)

Contemporary documentation of SR & ED projects is the new credo of the RTAs. There must be documentary evidence that our research has taken place or there is no eligible SR & ED. Verbal testimonials are no longer enough. But how do we do that?

On the day your SR & ED is audited, you will be asked to answer each of the five questions defined in recent years by the CRA to determine eligibility for SR & ED. In a recent article we proposed to group your evidences according to these five questions.

Today, here are the evidence for the last three questions.

3- Evidence of a systematic investigation

A systematic investigation is a structured approach that involves moving from the identification of scientific or technological uncertainties to the issuance of hypotheses to resolve them, testing through experimentation or analysis, and the formulation of logical conclusions.

In a business context, this implies that:

• The SR & ED objectives are clearly established and written early in the project,
• The methods and experiments attempted to solve the uncertainties are specified,
• The work is supervised by personnel with appropriate technical competence.

Examples

To demonstrate a systematic process it is necessary to:

• Demonstrate systematic experimentation while supporting the costs:
• How many experiments and alternatives have been studied to try to solve each uncertainty,
• Demonstrate the working method:
• Analyzes (which, why, how many alternatives analyzed or simulated (theoretical), etc.)
• Testing process (what test environment, what changes from one test to another, how many process runs, conclusions, etc.),
• Keep evidence and inconclusive test results,
• Prototypes (how many prototypes (physical or simulated), why and what is the cause of their rejection),
• Take pictures of the physical prototypes before destroying them.
• Results of performance analyzes (over time and following the evolution of the process),
• Conclusions: compare results to expectations and explain variations,
• For which uncertainties do you think you can draw a conclusion (thus identifying a technological advance)?
• List in chronological order the key events, activities, tests and results relevant to the resolution of uncertainties,
• Keep copy of the results and the conclusions drawn at the time,
• Prepare and maintain minutes of your technical follow-up meetings including dates and participants,
• Document any new direction taken following the tests (iterations),
• Keep versions of project plans, budgets, resource utilization plans, test plans, and accompanying explanations,
• Note the support activities. The use of well-established technologies that are recognized as “routine” is not eligible unless the activity is carried out in support of an experimental development project. It can then become eligible. Do not neglect the tests which would seem to you ineligible at the outset,
• Keep all other relevant technical documents.

4- Proof of advancement

Advancement is defined by the CRA as the eligibility policy: “the generation of information or the discovery of knowledge that advances our understanding of scientific relations or technology. (…) Technological advancement shifts the scientific or technological knowledge base of a society to a higher level by increasing the understanding of technology. ”

http://www.cra-arc.gc.ca/txcrdt/sred-rsde/clmng/lgbltywrkfrsrdnvstmnttxcrdts-eng.html#s2_1_4

Examples

We have already illustrated the documentation of current practice and the technological gap. It is necessary to :

• Define the initial knowledge base,
• Specify the deviation sought in relation to the existing technology,
• Keep negative opinions on the feasibility of our technological approach by external experts or technology providers,
• Document the « rejection of a hypothesis, which is an advancement because it eliminates a possible solution»,
• Refer to a scientific or industry journal defining the state of technology capabilities at certain times,
• Record the results (even negative ones),
• Note the knowledge that we would be proud to show to our colleagues. What would be their opinion about the achieved/sought-after progress of knowledge?
• Periodically document your vision on topics such as:
• Is the new knowledge or technology generalizable? Where?
• Can this knowledge be applied elsewhere than in this specific situation?
• For what technological reason has advancement not been sought or obtained before?
• What would you do differently if the project started today?
• Compare your results/technologies to previous or competing products.

5- Register of assumptions and results

“A record of assumptions, tests and results should be kept in the course of the work. (…) the work must be documented so as to clearly state the rationale for their main elements and how they fit into the overall project. (…) A systematic investigation or search can generally not be conducted without recording work as it progresses. It is not intended to suggest a particular format of documentation to support SR & ED. ”

Appendix 2 of the T4088 – Guide for Form T661 contains some examples of evidence suggested by the CRA. But he does not give an example of a register of hypotheses. Here are a few practical suggestions:

Examples

For each SR & ED project, documentation must be produced while the activities are being carried out to ensure the consistency and integrity of the content. The following table should be revised and updated two to four times a year:

• Identify the project (name, numbers in management systems and timesheets, etc.),
• Identify the manager,
• Prepare a table of technological content specifying, for each uncertainty and for each hypothesis:
  • Start/end of activities,
  • Technological uncertainty and associated common practice,
  • Assumptions formulated to resolve uncertainties,
  • Results obtained for each hypothesis,
  • Technological advances targeted and obtained, knowledge generated by this work,
  • Resources and efforts (hours) used, including consultants.

Conclusion

This complements our documentation examples to support your SR & ED claims. The new RTAs now require such contemporary documentation of SR & ED projects. It has become a condition of acceptance. It is therefore necessary for you to organize to produce it, to enrich it and to preserve these traces of your projects during the year in order to reduce the risks of an unfortunate decision by these RTAs.

How do you document your SR & ED projects? Do you have any tricks or pitfalls to share? Which of your documentation practices have convinced the CRT?

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