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Transparency as a means to achieve institutional objectives Jim Port J M Consulting Ltd The big picture Transparency and public funding TRAC as an aid.

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Presentation on theme: "Transparency as a means to achieve institutional objectives Jim Port J M Consulting Ltd The big picture Transparency and public funding TRAC as an aid."— Presentation transcript:

1 Transparency as a means to achieve institutional objectives Jim Port J M Consulting Ltd The big picture Transparency and public funding TRAC as an aid to pricing contracts Internal uses of TRAC data What’s new for 2001/2

2 The big picture a. HE is a not-for-profit activity, but HEIs cannot survive if they do not invest. This implies managing costs, responding to markets, and generating surpluses b. Publicly funded T is just in balance and R in significant deficit c. There are back-logs of investment in infrastructure and staff d. Any increase in public funds will be conditional on institutions being more business-like in managing assets and activity e. Survival may well depend on being able to make hard decisions about priorities for resources Transparency is one of the sector’s most powerful tools to demonstrate funding needs, and to manage its resources

3 Areas where TRAC can help negotiations with funders n Institutional infrastructure for teaching and research n Funding of research grants and contracts n Charities funding of research n Indirect cost rates and pricing n NHS contracts

4 Institutional infrastructure n TRAC infrastructure adjustment n Study for OST/Treasury (science research) u What is backlog of investment? u How far have JIF and SRIF covered this? u How did it arise? u What should be done n Consultation paper with institutions n Likely conclusions: more funding needed but challenge to HEIs on research and asset management strategies n Parallel study of teaching, arts and humanities

5 Funding of research grants and contracts n All main sponsors pay less than FEC: u Research councils u Charities u UK government departments u EU n HEFCE QR funding supports infrastructure for research councils (dual support), but has grown much slower than volume of research n TR shows all PFR in deficit n Transparency Review recommendation that government sponsors should accept TRAC data as basis for negotiating prices

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7 Charity funding of research n Important source of funding in: Medicine/biosciences; Social science/policy; and arts and humanities n “charities do not pay overheads” n but they do fund infrastructure, and will sometimes pay for costs that research councils will not n With QR (in England), cost recovery depends on RAE grade and subject (and project), but can be similar to research councils n Institutions need to be aware of full costs and to seek at least all direct costs in a more transparent way. There is evidence of a game where: u Some HEI applications do not ask for all costs u Others try to include basic items like a PC u Charity panels often cut these back

8 Charity funding of research n “The medical research charities were not established to invest in bricks and mortar… Nor were we set up to pay for lighting;, heating, water, security, building maintenance or uniforms. Rather, our mission is to help the State find cures for disease and to increase knowledge for the health benefit of mankind” – Mike Dexter n Our report to HEFCE recommends additional QR to remove difference between charity and RC projects n But also need more professional management by HEIs – costing; pricing; transparency in negotiations; project management; management of contract staff; management of infrastructure

9 Indirect cost rates and pricing n Commercial pricing should be on market basis n But for HEIs many customers are public n These have not accepted HE claims for full costs in the past n TRAC rates are more robust, differentiated and larger than previous n Need to abate rates to avoid double counting for certain sponsors n Guidance shows how to calculate a Rate Card for the institution n Training workshops in November

10 NHS contracts n Over 70 HEIs involved, wide variation in pricing n NAO report on this n Variations can be legitimate (history, transfer, regional) n Or due to methods used to cost and what is accepted by consortia in the past n Guidance provides a check—list approach to ensure nothing is forgotten or undercosted n NHS-HE Benchmarking group looking at this n Similar approach could be applied to TTA

11 Internal uses of TRAC data n Financial strategy n Portfolio/contribution analysis n Business improvement n Resource allocation n Pricing – rate card n Costing – NHS contracts etc But probably not: n Course or project costing

12 Implementation work for n Indirect cost rates – workshops in November n JCPSG Pricing conference n Good practice guidance: u Time allocation u Non-staff costs n Review of cost adjustments n Benchmarking in January 2002


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