1. Preparing an IDC Projection Model
NACCA - Leading Excellence in Research Costing Practices
10/3/2017

2. Topics Projection Models Definition and Determination to Submit
Source Documentation and Gathering Data
Building, Interest, O&M, Equipment
Impact to Space Survey and Base
Submission Requirements
Summary

3. Projections- Defined
Provides an opportunity to recover costs that the university will incur during the Rate Agreement Period but were not reflected in the Base Year Period rate calculation
Government will not allow those increases during the rate negotiations if you don’t provide adequate documentation for the projection

4. Projections- Should I Submit?
If you answer “Yes” to all these questions:
Is the University building, purchasing, or significantly renovating facilities?
Will the costs be incurred (or capitalization completed) after the base year?
Will the new facilities be on-line for a substantial portion of the rate period?
Will inclusion of the projected new facilities costs have substantial impact on your F&A rate(s)?

5. Projections- Should I Submit?
If you can isolate specific projects to include:
New facilities
Massive renovations for existing facilities
Completion dates in early year/s of proposed rate period. Can you trust the expected completion timeline?
Facility projects where substantial research work will be conducted and will result in an increase to the research rate

6. Projections – Source Documentation
How do you find out about new buildings and renovations?
Monthly/Annual Capital reports
University’s Financing reports
Board of Regents reports
Facilities Administrators
Upper Administration of the University (i.e. University Planner or Architect)
Website, news sources, etc.

7. Projections – Source Documentation
Who should you contact for information?
Facilities upper management - Depreciation, Utilities, EH&S, Custodial
Financial Services - Interest
Data Warehouse, Annual Reports - Award and Base growth information
Department/College Contacts - Space data, award data, base growth, equipment purchases

8. Projections – Gathering Data
Get the information you need
Costs
Building cost/general depreciation schedule
Financing information (Interest) and rates
Operations and maintenance costs (Utilities, Custodial, EH&S)
Allocation data
Projected use of the facility
Occupant information
Awards/Proposals for the occupants to verify research activity
Other issues
Base growth
Decompression vs. New researchers

9. Projections – Gathering Data
Caution – Don’t project without solid data or for buildings that won’t be completed and occupied for a substantial portion of the rate period
Check all your information sources, if possible
A lot of the information you gather will be estimates, or even an educated guess
Start with the most reliable sources and go from there. Cost schedules, budgets and construction documents help limit the risk

10. Projections – Building Depreciation
Determine amount for each year of rate period
Make sure any costs included in base year are not double-counted
Get the most up-to-date information possible. Cost estimates change drastically from project approval to completion
Useful life
Componentized average or straight line (longest useful live)

11. Projections - Interest
Be sure you understand treatment at your institution regarding capitalized and non capitalized interest. Capitalized interest may be included in the total project cost and therefore as part of the building depreciation projection
Projected interest rates (contact your financial services office)
For public universities: Capital contributions from state may be bond financed and included via a Statewide Cost Allocation Plan

12. Projections –O&M O&M Comparable building
Average O&M costs per square foot from current proposal
Utilities
Cost estimates per month/year
New power plant or Chiller costs associated with new building
Custodial
Cost per month or year
Environmental Health and Safety
More staff needed to support new buildings?
CAS says it will not consider O&M in projections

13. Projections – Equipment
Usually not a substantial component because:
In new buildings, watch for fixed and other equipment that will be capitalized into the building costs
Be careful for existing equipment that is moved to the new building to avoid duplication with base year costs
Check with department or college to see if there are budgeted amounts for significant expansion of the equipment in the new building, e.g. expensive research equipment

14. Projections – Administrative Pools and Library
Difficult to identify the amount and justify in a projections model
CAS says it will not consider in projections
ONR would not expect to see in projections

15. Projections – Impact to Space Survey
Space Data – Mini Survey
Use construction document floor plans to work with projected departmental occupants to assign space usage by room if possible
WHO will be in the space - Assignable square footage per PI (or department)
WHEN they will occupy the space - may take years to fill a building to capacity
WHAT activity takes place - if research, are they already funded? Anticipating growth in research funds (i.e. Base growth)
HOW will the vacated space be used? Back filled with current researchers? Vacant? New researchers?

16. Projections – Impact to Space Survey
Space Data – Mini Survey
Use data from current space survey at most detailed level possible – by department or PI
Be wary of inflated projections of OR usage- try to validate with grants /projected awards
Mini survey needed for vacated space
For low facilities costs in vacated space, consider assigned to OIA- limit effect
If significant facilities costs, espec O&M, do a more detailed survey with more validation

17. Projections – Impact to Space Survey
First year on-line, research space may not be fully up-to-speed
New awards may not have come in yet
New PIs may not arrive until the following semester or summer
Construction may not be 100% complete - especially on specialized facilities - Animal Care, NMR room, BSL-3 labs
Be conservative with OR % in your space for the first and second years

18. Projections – Impact to Base
Base growth:
Historical trend may be the best indicator
CAS Best Practices Manual requires average MTDC base increase over past 5 years
OR reported on Financial Statements
NSF Survey data
Any deviation should be explained

19. Projections – Impact to Base
Base growth:
Additional growth
Check what the university’s goals are:
Focused on growing research? How much?
Any documentation of new PI positions being added?
Know the trends of your sponsors - are the sources drying up? Which sources are growing and how quickly?
Research growth due to new facilities

20. Projections – Factors to Consider
Government atmosphere
Are they being very critical in your region?
Does your institution have a good relationship with your cognizant agency?
Confidence in your proposal information
Your base year proposal rate – Do you really need to project or are you satisfied with base year rate calculated?
Your Administration’s expectations - how big an increase are they pushing for?
Your projections may create future issues if not sound. CAS has compared prior projections to current proposal

21. Projections – Submission
DHHS CAS (formerly DCA)
Facilities components only
“Simple” Projection
Concise analysis of the impact of a significant change new research space
New space must be significantly under construction or completed by negotiations
Submit as a separate enclosure with the base year proposal, or soon after
CAS Best Practices Manual (BPM) includes a sample facilities projection (Sec J- new BPM 2017)
Follow format required by your region
At a minimum, the format you use must provide the same information as shown in the CAS BPM example

22. Projections – Submission workpaper
CAS BPM Example

23. Summary of Allocation chgs

24. Projections – Submission
ONR
Early communication with Cognizant Officer that a projection will be submitted and a discussion of any submission expectations
Normally Facilities components only
Concise analysis of the impact of a significant change for new research space
New space must be significantly under construction or completed by negotiations
Submit as a separate enclosure with the base year proposal, or soon after
Format is not provided but should include sufficient detail of base, space and cost projections for DCAA/ONR cost impact determination
Summary schedule showing projected rates for all projection years and requested rates for rate period.
Will be reviewed as part of DCAA review

25. Projections – Submission Backup
Supporting documentation to have available upon CAS or DCAA request
Project documents submitted to regents or trustees (e.g., “Program Planning Guides”)
Floor plans, mini-space survey of new buildings
Information on occupancy and use of vacated space
Equipment lists, or documentation of budgets for new equipment
Justification for pool and base growth numbers
Cost schedules for construction of the buildings, Interest, and O&M

26. Projections – Summary
Do the best you can. Projections are based on solid evidence of your institution’s investment in research. Your job is to show the proof of cost and impact to the rate for the rate period.
Keep it simple, but projections must include sufficient detail and supporting documentation to allow the cognizant agency to determine:
Allowability of projected costs
Reasonableness of projected costs
Adequacy of the documentation

27. Projections – Summary (con’t)
Negotiation of projections are usually at a very high level for DHHS CAS. For ONR schools, the base rate costs will still be audited by DCAA as will the projection data so that ONR has the best information available for negotiation
It all comes down to your institution’s position for maximizing the F&A rate
What is realistic?
How aggressive do you want to be?
What number will you feel comfortable defending?
Do you want DHHS CAS to make a site visit?
Do you have strong support documentation for ONR/DCAA?

28. Projections – Survey Results
Seven questions sent to schools with prior projections to determine facilities and base information submitted, negotiation results and analysis of effect on rates.
Responses:
Average of two construction projects/school were included
Base changes were included in all cases
O&M was only included in 1/3 of the schools
Amount of additional points proposed for projections varied greatly
Points negotiated for projections not always easy to separate from CAS negotiated rates but CAS doesn’t always value
Overly optimistic projections don’t always come to fruition due to slow construction and unoccupied space

29. Questions and Comments
Caroline Beeman- Senior Manager
MAXIMUS Higher Education Practice
Mira L. Levine- Manager