1

2 Implementation of Grants on a Full Economic Cost Basis John Wand

3 HEI Research Income Insert the slide from the XCR and the IiI report Expenditure by Funding Councils and other funders HEFCs Total project funders

4 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

5 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

6 Implementation › Calculating the full economic cost of individual projects › Terms of trade between Research Councils (RCs) and Research Organisations

7 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

8 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

9 Project Costing CurrentfEC Dedicated staffXX Academic staff - timeXX Academic staff - costX EquipmentXX Other costs, T&SXX Indirect costs – 46%X Space charge – per full time equivalent (FTE) X Indirect cost – per FTEX

10 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

11 Research Council funding – current position Direct CostsIndirect 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

12 Research Council funding – future model Full economic costs Direct CostsIndirect Costs Research Councilpays 80% of full costs The institution mustfind the rest from other sources

13 Fund Headings for Research Grants Directly Incurred Staff Travel & subsistence Equipment Other costs STAFF: Research, Technician Fellows, Visiting Researchers, Other Directly Allocated Investigators Estates Costs Other Directly Allocated costs Investigators Indirect Costs Indirect costs Exceptions Staff Equipment Other costs Project Students

14 Staff Travel & Subsistence Other Costs Equipment STAFF: Research Technician Other Fellows Visiting Researchers

15 Classification of research costs within full economic costs methodology Directly Incurred (DI) › Staff costs › Travel & Subsistence › Equipment › Consumables › Books › Survey Fees › Purchase / Hire of vehicles › Publication costs › Recruitment & Advertising costs

16 Investigators Estates Costs Other Directly Allocated costs Investigators

17 Classification of research costs within full economic costs methodology Directly Allocated (DA) › Investigators costs › Costs of pooled staff › Estates costs › Usage costs of research facilities › Central & distributed computing › Charge out rates for shared equipment

18 Indirect Costs

19 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

20 Staff Other Costs Equipment Project students

21 Schemes › Small Grants - £20k › Overseas Travel Grants › Visiting Fellowships › Workshops/Symposia › Fellowships

22 Timetable October 2004 Seminars for administrators Autumn Spring 2005 Business preparations by Councils Spring 2005 Seminars for Academic / Peer review June 2005 New application form available 31 st July 2005 Last Date for submission of pre fEC applications 1 st September 2005 First date for submission of fEC applications 31 st March 2006 Last date for award of pre fEC grants