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Research Budgets – Everything you Wanted to Know But Were Afraid to Ask…! 15 March 2012, 10am-12pm Adrienne Scullion, Mark McLaughlin and Ashley Theunissen.

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Presentation on theme: "Research Budgets – Everything you Wanted to Know But Were Afraid to Ask…! 15 March 2012, 10am-12pm Adrienne Scullion, Mark McLaughlin and Ashley Theunissen."— Presentation transcript:

1 Research Budgets – Everything you Wanted to Know But Were Afraid to Ask…! 15 March 2012, 10am-12pm Adrienne Scullion, Mark McLaughlin and Ashley Theunissen 1

2 Grant Seminar Part 1: Generating Costings for Project Part 2: Costing Terms Explained Part 3: Post-Award Part 4:Monthly PI Report Part 5:Managing Spending Part 6: Overview of University/College/ and School Financial Reporting Tools Part 7:Closing the Grant Part 8: Questions Part 9: Head of School Administration, Research and Operations Administrator Information Session Part 10: Questions 2

3 Part 1 Generating Costings for Project 3

4 Whilst determining costs for your project, before going to R&E, ensure that you: - Read the funder/scheme rules carefully regarding eligible costs; -Discuss financial costings with School Research Administrator from your School who will advise on HR and financial issues and work with you on your draft costing sheet; -Be realistic about the resources that you will need in order to complete the proposed project. Put all eligible costs on your application; -Think ahead regarding technical assistance needed e.g. Websites, blogs, etc; and -Think about promotion and dissemination costs and factor them into your costings. 4

5 Understanding the PAF Know the difference between FEC and Price Applied For. The costs you populate on the PAF are very important as they form your future budget. If you don’t apply for consumables you won’t get a consumables budget. Links to a Sample PAF can be found here: 5

6 Process for Applications Information on School/College processes for applications to be made available on the Internal Staff section of the CoA website. All queries, in the first instance, including intent to submit an application, should be made to your School Research Office. For more information on Grants Application and Management Process see: ArtsLab Cradle to Grave presentation at: tions- CradleToGrave_29Feb12.pdf 6

7 Part 2 Costing Terms Explained 7

8 Costing Key Terms Full-Economic Costing (FEC) was introduced to the HE sector as part of the Government's 2003 White Paper 'The Future of Higher Education'. FEC aims to improve the sustainability of University finances and to ensure that research projects in particular are accurately costed and a suitable price charged. FEC was developed on the basis of Transparent Approach to Costing (TRAC). TRAC is the standard method now used for costing in higher education in the UK. FEC costs are calculated under 4 main headings: - Directly Incurred (DI); - Directly Allocated (DA); and - Estates and Indirect Costs. 8

9 Directly Incurred (DI) Costs Are specific to the project itself - they would not be incurred by anyone if the project was not happening – and cover a wide range of things including the salary costs of a fellowship, retired PI/CI, or Research Assistant (RA), travel and subsistence and consumables. Examples include (if eligible): - Staff Costs for new appointments; Studentships; Travel costs; Subsistence Costs; and Consumables. 9

10 Directly Allocated (DA) Costs Are costs that the University would be paying for irrespective of the research itself but that are now to be allocated to the activities associated with this research. Examples include: the time of the PI working on the project (unless retired) and other research and technical staff shared across multiple projects as well as the charge out costs for facilities and equipment. Please note, non-FEC grants may not cover these costs. The FEC model means that time is always costed irrespective of whether payment of DA costs are being sought from the funder or not. Also referred to as Salary Recoups in a budgetary context. 10

11 Estates and Indirects Indirect costs and Estates costs – are the costs of the support infrastructure and estate of the University and are calculated by percentage driver of the price of the research. These are fixed amounts set by the University. 11

12 Where do Estates/Indirects go? College 1 ARTS College 2 So Sci College 4 MVLS College 3 S&E I&E Research Contribution from Colleges is based on Income – DI – DA costs only. Any funding for indirect costs go to University Services to contribute towards the costs of the Estate (Only a contribution as the funding is not enough to fully cover these costs). This pushes the overall cost of the University Service down. This allows the University to benefit from economies of scale in relation to these costs. The alternative would be for Colleges to keep the indirect funding themselves, but to also manage the costs of running their Estates independantly. This has a three fold negative effect : 1. It reduces the margin / contribution on Research Grants at College Level. 2. It is not cost effective. 3. College resource (PI or Admin?) is diverted away from core activity towards managing the Estate costs. University Services Institute wide costs, such as (but not limited to) : Electricity / Energy Lighting Maintenance Janitorial Security Catering Not charged / recharged directly to Colleges University Surplus / Deficit Funding for Indirects from Grant awards

13 Research Contribution Not a value judgement on research being performed but a financial calculation. General Rule: RCUK funding should generate a positive research contribution as it covers a portion of Directly Allocated costs whilst charity and philanthropic funding will generate a negative research contribution as it will not cover Directly Allocated Costs, etc. 13

14 Negative Research Contribution Reasons for negative contribution: 1. Funding is at less than 80% of Full Economic Cost – i.e. There is no contribution to Indirects. 2. There is no funding of DA costs (Recoups). Outcomes 1. No impact to College. College contribution remains. (Per previous slide, however, no contribution towards central costs.) 2a. College / School underwrites a negative contribution from this project in its I&E and as part of it’s overall Research portfolio. 2b. If project is not providing a contribution to School / College, there will be no overhead / incentivisation payment for this project. 14

15 Positive Research Contribution Reasons for positive contribution: 1.Funding covers a higher percentage of FEC, and there’s contribution towards indirect costs. Outcomes 1. Project provides contribution in the I&E, driving up Subject, School & College contribution from Research. 1a. Contribution generating project drives overhead / research incentive allocation, based on percentage of recoup and contribution values. 15

16 Part 3 Post-Award 16

17 You’ve received your Award Letter, what next? The financial values applied for may have changed at the award stage due to funder restrictions, inflation, date changes, etc. Contact your School Research Office upon award and begin the Award PAF process. Once the Award PAF has been generated and sent to you for signature, ensure that the values awarded match the values on the Award letter. Please note that the budget centres may be different. Once signature stage is completed and the PAF is processed by R&E Grants Team (Awards Section), the Award PAF is passed to the Finance Office. The Finance Office then sets up a project on Finance System (Agresso). Automatic notification of Finance System Project number is sent to Principal Investigator (PI), enabling financial transactions to be processed (e.g. commitments, invoices, payroll). Please note, the Finance System Project Code is different than the R&E Project code on your PAFs. 17

18 Following notification of the creation of the Finance System Project number, ensure you tell your School Research Office to allow them to progress recruitment, process invoices, etc. Late notification of the creation of the Finance System Project Number to School Research Office may lead in delays in payments and recruitment so please tell them ASAP. Project budgets are loaded onto Finance System and relevant start up documentation is completed by Finance Office. Formal HR recruitment of new posts and job descriptions/contracts for named employees cannot begin until the project is opened and assigned a Finance System Project number. One month from the start of your project, you will receive your first monthly PI report and you will receive these monthly for the duration of the grant. Ensure you open and read these reports EVERY month. 18

19 Part 4 Monthly PI Report 19

20 20 Sample PI Monthly Report

21 Part 5 Managing Spending 21

22 Managing Spending “Don’t just look at the bottom line”: Each budget centre has a separate budget which must be adhered to e.g. Consumables, Salary, etc. You must spend against each line of your budget not look at the sum in its entirety. “Robbing Peter to pay Paul”: Long held belief that you can transfer money between budget centres on a project without permission. This is UNTRUE. You must seek permission from the Finance office to “vire” or transfer money between budget centres. Queries regarding virement can only be dealt with by Finance Office. Neither the School nor College can advise on this matter. These are subject to specific funder/scheme rules. “Spreading the wealth/deficit”: Transferring overspend/underspend across your portfolio of grants. You cannot transfer the surplus of one grant budget centre to another grant’s deficit budget centre. Each grant has specific funder rules which state what you can/cannot do. The majority of funders will deem the transfer of debt or infusion of capital into another grant IMPERMISSIBLE. If you have questions regarding your specific grant rules, please contact the Finance Office. 22

23 Financial queries from PI’s e.g. Understanding PI Monthly Reports, invoices, payments, etc. should be discussed with the School Research Office, in the first instance. The College Head of Research Administration and Head of Finance are also able to assist PIs and School Administrators on budget management matters. All other Finance queries e.g. Funder rules, virement questions, etc. should be sent to the Finance Office at: Please keep your School Research Office informed of all relevant communications with the Finance Office. 23

24 Part 6 Overview of University/College/ and School Financial Reporting Tools 24

25 Financial Reporting : Overview Head of Finance : College of ARTS Central Finance / Management Accounts Head of College Deans College Secretary Heads of School Heads of School Administration Head of Research Administration PI / Budget Holder Month End : Information Flow YTD Income & Expenditure accounts (I&Es) : College, School & Subject Level Management Packs : YTD performance (vs budget) by Project. (Management Pack includes detail on ALL live projects) Salary forecast files Research Margin Analysis / Traffic Light Report (Provides YTD & LTD analysis at Project level, and R.A.G status as to progress). Month End : Information Flow YTD Income & Expenditure accounts (I&Es) : College Level. Commentary on YTD variances, and reasons / drivers for the variances. Full year forecast. College Secretary receives specific month end pack for Admin. Monthly meeting with College Secretary & Head of College. Weekly feedback meetings with senior admin team Month End : Information Flow YTD performance (vs Budget) by School, Subject & Project – (School specific excerpts of the College Management Pack). Research Margin Analysis Month on Month Research expenditure review, by School / Project. Month End : Information Flow YTD School & Subject Level I&Es School Level Management Pack (School specific excerpts of the College Management Pack). Month on Month Research expenditure review (per project). Salary Analysis (per Subject) Monthly Finance Review Meetings Budget Holder Report Monthly Queries CMG College Council

26 Part 7 Closing the Project 26

27 Project Completion Projects with an overspend CANNOT be closed. All overspend will transferred by Finance Office into School General Funds. Finance Office issues Final Claim / Financial Statement to School / PI for checking. Final Report checks and returns Final Claim Report to Finance Office. (Important to keep deadlines!) Funder makes Final Payment (note that the Funder will not pay this until they have received the Final Report). Finance Office closes project in Finance System (Agresso). Keep to deadlines! The University can be fined if the Final Reports are not returned within a prescribed time period! 27

28 Part 8 Questions 28

29 Who/Where to go School Research Administrators: CCA Jeanette Berrie Critical StudiesMeg MacDonald Humanities Christelle Le Rigeur and Elaine Wilson SMLCCarolyn Donaldson CoA Head of Research Administration: CoA Head of Finance: Finance: 29

30 Part 9 Head of School Administration and Research and Operations Administrator Information Session 30

31 Income & Expenditure Reports Management Packs Research Margin Analysis (LTD & YTD Review) Agresso Query (Using Agresso Toolkit) Financial Reporting : Drilldown : Best Practice Income & Expenditure Reports are provided at Subject and School level only (For Schools). These are used to find high level variances vs budget on a School by School, or Subject by Subject basis. Management Packs provide a drill down on the I&E numbers, and help breakdown the high level variances to project level. From the Management Packs it should be clear which specific projects are having issues / driving any variances. The Management Packs allow the Schools to manage projects by exception. The Reseach Margin Analysis report is a report that reports progress on a research project vs the full Life To Date budget on the project. The Margin Report provides a traffic light early warning system that highlights when a project has / is spending ahead of budget, based on the time elapsed on that project. The Margin Analysis report also allows a School / PI to compare YTD variances with LTD variances in order to confirm if there is indeed an underlying budgetary issue, or if it’s simply a phasing matter. Cogniscence should always be taken of both the YTD progress on a project AND the LTD progress on a project when investigating / reporting on budgetary variances. Agresso / The Agresso Toolkit allows for detailed interrogation of specific projects at transaction level to identify the specific reasons as to why a project is over / underspent on a particular budgetary line, and the action required to bring said expenditure back In line with budget. Care should be taken when using Agresso to ensure that the parameters used are those that are wished. For example, care should be taken in running reports that exclude certain account codes etc.

32 Financial Reporting : Drilldown : Quick Example / Starter

33 Part 10 Questions 33

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