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

3. 3 HEI Research Income Insert the slide from the XCR and the IiI report Expenditure by Funding Councils and other funders 0 500 1000 1500 2000 2500 1988-891989-901990-911991-921992-931993-941994-951995-961996-971997-981998-991999-00 HEFCs Total project funders

4. 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. 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. 6 Implementation › Calculating the full economic cost of individual projects › Terms of trade between Research Councils (RCs) and Research Organisations

7. 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. 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. 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. 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. 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. 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. 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. 14 Staff Travel & Subsistence Other Costs Equipment STAFF: Research Technician Other Fellows Visiting Researchers

15. 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. 16 Investigators Estates Costs Other Directly Allocated costs Investigators

17. 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. 18 Indirect Costs

19. 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. 20 Staff Other Costs Equipment Project students

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

22. 22 Timetable October 2004 Seminars for administrators Autumn 2004 - 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