The Sustainability of Research: Lessons from the Full Economic Costing Programme in the UK

1. The Sustainability of Research: Lessons from the Full Economic Costing Programme in the UK John Newton Assistant Director (Costing, Pricing and Special Projects), Cardiff University

2. Background • Transparency Review • UK Government expectations/commitment - 2002 • JCPSG, TRAC and its strategy – methodology finally agreed June 2005 • Additional support for UK Research Councils • Implementation for Research Councils from September 2005 • Cost-based pricing based on TRAC/fEC • Market-based pricing • Sustainability – Reporting of data to UK government, Funders Forum, metrics

3. fEC • Definition of fEC • Full economic costs based on TRAC – definitions of activities, data, time allocation schedules, validation, testing, internal audit- refer to http://www.jcpsg.ac.uk/ • Cost models and rates vary between institutions • QA process – Dipstick testing • Rates calculated for Estates and Indirect costs – generic and lab-based departments • Breakdown of costs: • Directly Incurred (DI) • Directly Allocated (DA) • Indirect • Exceptional items

4. Directly Incurred (DI) costs DI costs are: • explicitly identifiable as arising from the conduct of the • research; • are charged on the basis of the cash spent; and • are verifiable and auditable from accounting records Types include: • Staff specific to a project (e.g. Technicians, RAs) – underpinned by an auditable record (i.e. timesheet) • consumables, travel, equipment) • Facility usage –if usage/project and auditable costs charged on the basis

5. Directly Incurred (DI) costs Issues • Names of staff • RAs and RFs wholly working on the project and all salary costs charged to the project treated differently to those working on a variety of projects • Hours in total over project • Cannot use pay bandings. Use actuals • Use of equipment funded by Research Councils/double counting • How are estimates derived? Note later justification for audit • Recording of costs as expenditure made • Indexation

6. Directly Allocated (DA) costs DA costs are: • shared costs based on estimates; and • do not represent actual costs on a project-by-project basis Types include: • Departmental technical and administrative service staff • Costs to projects, based on a charge-out rate related to estimated costs

7. Directly Allocated (DA) costs Issues • PIs/Co-investigators – change from current procedure • Costs of staff that work on several projects are generally directly allocated • Names • Hours (based on estimates – no timesheets) • Charged on the basis of standard charge-out rates and estimated time • Lab technicians to be directly allocated by 1 August 2007 • Research Councils will not fund PIs more than 1650 hours/year – 100% of salary • Costs of major research facilities to be directly allocated by 1 August 2007 • Reconciliation between actual and estimated hours • Agreed estimated costs paid – no more, no less • Pay bandings – TRAC • Estates – FTE based on research staff on project or sq m • Indexation

8. Estimating academic staff time/project (1) General • Pay bandings/actual salary costs • 1650 hours for fEC purposes – note standard and not contracted hours • Hours conversion to FTEs • Confirmation of time estimates annually or as required • Do not include time spent training or supervising project or tied studentships on project but record separately. • Determine total hours for project

9. Estimating academic staff time/project (2) Points to consider • Whether PI or Co-investigator • How many on project • Experience of RAs • General experience/aptitude • No. of partners • Type of equipment • No. of papers to be written • Sponsor requirements • Can include writing up time • Do not include dissemination

10. Estimating academic staff time/project (2) Methods • Zero-based • TRAC data • Time/RA – weighting as appropriate • Standards of department • Experience of older researchers • Peer discussion

11. Indirect costs • Cost driver model • Consists of: • the Support time of academics • clerical and administrative staff in • academic departments (exc. DI/DA costs) • non-staff costs in academic departments • central services (Finance, Research Admin., etc) • estates costs of central service departments • Cost of Capital Employed Adjustment (COCE) • FTE calculation – TRAC Time Allocation Schedules/PGR weightings • The total indirect costs for Research/total FTEs for Research provides the indirect cost rate/FTE for Research • Annual calculation, using historical data for the previous accounting year

12. Exceptions for Research Council purposes Include: • 100% fEC of equipment over K£50 threshold (total) • 100% of project studentship stipends and tuition fees (where applicable to project). Do not include as part of FTEs • Note indexation

13. General • Charge-out rates to be determined by central Finance division of university but in liaison with all other relevant staff • Costs used to establish the indirect cost, estates cost and all other charge-out rates are reconciled to the financial statements plus the two cost adjustments • Terms and conditions • Peer Review and fEC.

14. Conclusions • Do not underestimate work in implementing fEC systems • Involve all staff across university • Be aware of different funding regimes - Structural Funds, Charities, UK Research Councils, EU, etc • Some indirect costs may be ineligible – clarification required • Need to compare full economic costs with costs recovered in price for all projects • Activity needs to fit in with institutional/school strategic plans • What happens to shortfall between costs and price? Who meets shortfall? • Are European projects sustainable? - refer to: http://www.universitiesuk.ac.uk/research/downloads/EUFrameworkProgammes.pdf

15. Contact • John Newton • Assistant Director (Costing, Pricing and Special Projects) • Cardiff University • P O Box 497 • 30 -36 Newport Road • Cardiff CF10 3XR • UK • Email: newton@cardiff.ac.uk