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Implementation of Grants on a Full Economic Cost Basis

John Wand

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HEI Research Income

Insert the slide from the XCRand the IiI report

Expenditure by Funding Councils and other funders

0

500

1000

1500

2000

2500

1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00

HEFCs

Total project funders

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The Problem - trends

› Stagnating Funding Council support alongside increased project funding

› Increased pressure on staff to conduct and publish research

› Poor understanding of cost base

› Neglect of long run costs

› Low price culture

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Investing in Innovation/Science & Innovation Investment Framework

› Research in HEIs must be sustainable› HEIs must understand and recover FEC overall› Dual support system remains› Government is contributing very significant amounts

of money for sustainability: Science Research Investment Fund (SRIF)

increasing to a permanent stream of £500M per year

Extra quality related research funding (QR) (£244M + SR2004)

Extra money for Research Councils (£120M + £80M)

› Better cost recovery from others

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Implementation

› Calculating the full economic cost of individual projects

› Terms of trade between Research Councils (RCs) and Research Organisations

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Calculating Full Economic Costs - TRAC

› TRansparent Approach to Costing

› Activity based costing

› Owned by the sector

› Introduced at high level

› Cost not income

› Accepted by HM Treasury

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TRAC Methodology

› Extend to Project level› Robust, consistent› Balance accuracy and bureaucracy› Timesheets not required by RCs› Roll out by January 2005 (grant applications

to RCs from September 2005)› Produces a set of rates - indirect + estates› Quality Assurance process› Benchmarking exercise

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Project Costing

Current fEC

Dedicated staff X X

Academic staff - time X X

Academic staff - cost X

Equipment X X

Other costs, T&S X X

Indirect costs – 46% X

Space charge – per full time equivalent (FTE)

X

Indirect cost – per FTE X

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Terms of trade between HEIs and RCs

› Research Councils pay 80% of full economic cost

› Research Councils should meet close to 100% of fEC by 2010

› Includes Fellowships › Excludes Research Students (for the

present)› 100% of equipment over £50k› Cross Council project looking at

implementation

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Research Council funding – current position

Direct Costs Indirect Costs

eligible staff costs(e.g. Research Assistants,support staff)

Research council contribution to indirect costs = 46% of eligible direct staff costs

other eligible costs (e.g. equipment)

ineligible costs(e.g. salary of the Principal Investigator)

The institution must find the rest from other sources

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Research Council funding – future modelFull economic costs

Direct Costs Indirect Costs

Research Council pays 80% of full costs

The institution must find the rest from other sources

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Fund Headings for Research Grants

Directly Incurred

Staff Travel & subsistenceEquipmentOther costs

STAFF:Research, TechnicianFellows, Visiting Researchers, Other

Directly Allocated

InvestigatorsEstates CostsOther Directly Allocated costs

Investigators

Indirect Costs

Indirect costs

ExceptionsStaffEquipmentOther costs

Project Students

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Fund headings forResearch Grants

Directly Incurred

Staff Travel & SubsistenceOther CostsEquipment

STAFF:ResearchTechnicianOtherFellowsVisiting Researchers

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Classification of research costs within full economic costs methodologyDirectly Incurred (DI)

› Staff costs

› Travel & Subsistence

› Equipment

› Consumables

› Books

› Survey Fees

› Purchase / Hire of vehicles

› Publication costs

› Recruitment & Advertising costs

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Fund headings forResearch Grants

Directly Allocated

Investigators Estates CostsOther Directly Allocatedcosts

Investigators

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Classification of research costs within full economic costs methodologyDirectly Allocated (DA)

› Investigators costs

› Costs of pooled staff

› Estates costs

› Usage costs of research facilities

› Central & distributed computing

› Charge out rates for shared equipment

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Indirect Costs

Fund headings forResearch Grants

Indirect Costs

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Classification of research costs within full economic costs methodology

Indirect Costs

› General office & Laboratory consumables

› Library Services / Learning Resources

› Typing / Secretarial

› Departmental Services

› Central & Distributed Computing

› Cost of Capital Employed

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Fund headings forResearch Grants

Exceptions

Staff Other CostsEquipment

Project students

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Schemes

› Small Grants - £20k

› Overseas Travel Grants

› Visiting Fellowships

› Workshops/Symposia

› Fellowships

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Timetable

October 2004 Seminars for administrators

Autumn 2004 -Spring 2005

Business preparations by Councils

Spring 2005 Seminars for Academic / Peer review

June 2005 New application form available

31st July 2005 Last Date for submission of pre fEC applications

1st September 2005

First date for submission of fEC applications

31st March 2006 Last date for award of pre fEC grants