1. Managing Research within FEC Dick Kitney (Dean of Engineering) & John Green (Chief Co-ordinating Officer) Spring 2006

2. Context Drop in volume and value of research council income Overspend on research contracts of £4.5m But also many accounts underspent at close From 1 August Research Services rolling out new systems to provide controls for financial management of contracts No increase in peer reviewed charity research in real terms over four years New HEFCE figures show Imperial to be losing out on research contracts to other universities Challenge for Imperial to price research bids competitively Imperial must develop a more commercially minded approach

3. Research Expenditure - Charities and Total by institution

4. Research Expenditure - Research Councils and Total by institution

5. What does this mean? On face of it, looks bad – shows a decreasing research expenditure Why is expenditure important? - that’s what counts as the volume for HEFCE grant - that’s what counts as the volume for RAE BUT … the amount of money unspent on grants is increasing – so we are getting the awards but not spending on the grant Rainy day strategy is counter-productive

6. Annual amount awarded by university by award or start date - All Research Councils

7. Key message Need to ensure spend on grants Therefore need to manage them more effectively Develop resource within departments to manage this process But must do it over next 12 months to count to RAE Order book from Research Councils improved Now need to SPEND!

8. What is a project’s full economic cost? Directly incurred costs –research staff, travel, consumables, dedicated technical (timesheets)/clerical staff costs, non-staff costs Directly allocated costs –PI & CoI time –“estates” costs [= no of FTEs x “estates rate”], out of which –~10 major facilities costs have been removed –charge-out rates for ~10 major facilities and later … charges for pooled/shared lab technicians Indirect costs –general office and basic lab consumables, central services, admin/ secretarial [= no of FTEs x “indirect cost rate”]

9. What is the “Estates Rate”? Term imposed by TRAC methodology – standard term used by HEFCE, Research Councils etc. Does not reflect what it includes nor fit with Imperial terminology The “Estates” rate includes: –Rents, rates, repairs, refurbishments, insurance –Infrastructure adjustment –Depreciation of our estate –Pooled technicians (until 2007) and equipment At Imperial, these costs borne by: –Departments –Faculties –College centre (Finance department) –Imperial’s Estates department

10. How is FEC calculated? (FEC methodology) The way overheads are recovered has changed: now based on FTEs x a rate per FTE for “estates” and “indirect” costs Our rates (“estates”, indirect, charge out) are derived from TRAC figures which we are obliged to adopt and are audited by HEFCE’s auditors Annually updated – so if can reduce our costs then can reduce our rates

11. FEC rates per FTE May not be comparing like for like (e.g. what equipment is in the Estates Rate?) Rates will change 2005/06 – Imperial taken out 10 pieces of equipment 2004/2005 (using 2003/2004 data) OxfordCambridgeUCLImperial HEFCE (Upper Quartile) High Cost Lab and Lab12,2239,3009,20010,07910,000 Non Lab5,5493,4002,3002,5976,000 INDIRECT RATE41,51537,10038,30042,20837,000 TOTAL59,28748,60049,80054,88453,000

12. Impact of FEC on Peer Review according to RCUK Peer Reviewers are asked to assess only the justification for requested resources (staff, equipment, travel, etc.), and “should not question estates and indirect costs” However, “the total cost of the grant should be taken into account when assessing the overall value for money of the proposal” This seems contradictory: the estates and indirect costs constitute an important part of the overall costs Panels not taking a consistent approach – value for money predominates

13. “Estates” Rate as bargaining tool – price A more commercial mindset is needed – negotiating tools should be used to price research competitively –e.g. If replacement of an item of equipment has already been funded, then depreciation and replacement costs will still need to be included when calculating the FEC, but can be cut from the price presented to potential funders Very large and potentially inter-faculty contracts may warrant allocating different “Estates” rates to specific activities in the contract

14. How much new money do we get under FEC? £8M from Research Councils in 2006-07 RC will increase year on year until steady state in ~ 3 years (providing research volume from RCs maintained) TRAC methodology predicts the following allocation of additional RC income (steady state of ~ £24M p.a.) : £16M will go to faculties and £8M to FEC Investment Fund (FIF) 1/3 of new money goes to FIF and 2/3 goes to Faculties The College must build FIF to meet the post SRIF, long-term FEC requirement of sustainability

15. How does this guide how we price to industry? To recover on base of £69M Price must be X% FEC Year on year % increase required on price Discount on FEC in InfoEd (currently 47%) Year 1£69.33M54%54/53 = 1%46% Year 2£71.67M57%57/54 = 5%43% Year 3£74.00M60%60/57 = 5%40% Industry portfolio is £69M. To become sustainable in 10 years, need to recover £0.33M, £2.67M, £5.00M year on year (rest from RC, OGD and charity income).

16. Structure of Research Office John Green Lynne Cox Director, Research Contracts David Langley Director of Research Services Karen Sergiou Head of Research Operations Cindy Lai Head of Research Support Research Services Managers Deslyn Brown Tania Palalic Mike Robinson Julie Williams Tushar Devani Shaun Power Brooke Alasya Faculty RS teams

17. Research Office responsibilities Guidance to faculties Communication improvements External relations (lobbying) Governance Strategy College consistency IP management and policy Professional policy Training and development PI support (strategic and complex bids) Management information

18. Research Office College Guardian of research management Develop external relations and lobbying Improvements of standards, service & professionalisation of RS across College Support to Faculties and their RS teams Hub of expertise in research management Internal dipstick to departments

19. Faculty responsibilities Faculties (FOOs) –RS teams (below RSM) are part of Faculty operational responsibility for RS teams and outputs, e.g. WIP, overheads, FEC –Quality of service to departments and PIs Role of departments/DAs –Support PIs in pre-contractual application process –Management of research accounts etc –Research account management

20. Function of Research Service teams in faculties Pre-award Assist with project proposals Advise cost Negotiate contracts and sub-contracts Arrange indemnity; sponsorship; NHS R&D; Ethics Office (Clinical Work); CRO Co-ordinate large bids Liaise with IC Innovations over lP, licensing and patent issues Liaise with ICON over consultancy issues Negotiate and accept terms and conditions of awards

21. Function of Research Service teams in faculties Post award Arrange credit checks on sponsors Set up research accounts on Oracle Grants and update InfoEd Cost and authorise staff appointments Claims and reconciliations Ensure compliance with contractual obligations Prepare and submit cost statements and invoices Submission of final cost statements and account closure Identify and resolve queries from Depts, PIs and funders Advise Credit Control and assist with resolution of payment queries Manage overhead recovery to divisions from research accounts Provision of measures on research activity

22. Key points All Faculties will receive additional benefit from FEC The College will be building up a reserve via the investment charge gradually Need 1%, 5% increase on industry price Departments and Divisions need to work with Faculties to establish an equitable distribution of the additional resource Additional money can be raised either by increasing price to other non-RC funders or from other sources (e.g. IP revenues)

23. Challenges ahead FEC must not drive changes in our funding portfolio We will engage with RC panellists to get feedback on RC behaviour and we will educate our peer reviewers to understand component parts of “estates” and indirect rates Partnership with industry and OGDs is critical in going forward

24. Challenges ahead Delay in delivery of InfoEd functionality for JeS means costing data cannot be checked for validity against business rules before uploading to JeS Imperial intended to have direct submission from InfoEd to Wellcome e-grants, but… new Wellcome e- Grants in 2007, whilst e-Grants mandatory by October 2006; thus Imperial has to register for e- Grants, use old system, and users need to register a ‘Personal Homepage’

25. Further questions This presentation and FAQs on: www.imperial.ac.uk/rs/changes Email questions to: fec@imperial.ac.uk Discussion?