Full Economic Costing fEC P'I' Training

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Full Economic Costing ( fEC)P.I. Training

• Research Enterprise/Finance
• Version 6.2
• June 2006

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Course contents

• 1. Introduction
• 2. Key differences between fEC and the previous
  costing system
• 3. fEC cost types and definitions.
• 4. Project costing
• 5. Costing and approval
• 6. Prices
• 7. Single spine pay statement
• 8. Support to academics

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1. Introduction

• Lack of sustainability in HEI finances
• TRAC costing at institutional level
• Application of TRAC to projects ( fEC)
• fEC accepted as basis for RC and OGD pricing
• fEC is now our costing method for all activities

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2. fEC versus the old costing system

• 1. Cost does not price
• 2. Investigator hours are a chargeable cost
• 3. Facility (ie Estates) and college overhead (
  ie Indirect) costs are based on the academic
  hours spent on the project.
• 4. The cost will be higher than the old system.
• 5. fEC includes cost not in our Financial
  accounts.
• 6. All significant costs are indexed.

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3. fEC cost types definitions

• 1. Directly Incurred ( D.I)
• Expenditure that is incurred specifically for
  the project , an auditable cash cost.
• 2. Directly Allocated (D.A)
• Estimated costs of services ( such as staff and
  facilities) used by the project that are shared
  by other activities and projects
• 3. Indirect
• College overheads allocated to the project

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3.1 Directly incurred

• Research Assistants recruited
• Laboratory technicians recruited
• Admin staff recruited
• Contractors
• Travel
• Purchased materials and services
• Meetings and publication
• New equipment purchases maintenance
• Studentships
• Anything else you will have to pay for

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3.2 Directly Allocated

• P.I and co-investigators allocated time
• Estates charges
• operating, maintaining and replacing our
  physical facilities
• Facility usage charges
• Large free standing facilities, MRI EMU
• Other equipment usage costs not in Estates
• Pool technicians, admin staff, and other RHUL
  staff allocated to the project
• Stationery, postage ,phone. These costs are part
  of the Indirect rate. RC s will not pay, but
  other funders will.

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3.3 Indirect costs

• Central administrative and services costs
• Support activities, Admin, Central IT, Legal,
  Registry, Finance, Personnel, R E, Library

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3.4 Exceptional costs ( RC only)

• The RCs have chosen to fund certain D.I costs
  in full, ie at 100, and call them Exceptional.
  Other costs are currently funded at 80 by the
  RC.
• Equipment costs in excess of 50K
• Studentships
• They will not actually pay our incurred costs,
  they will pay the fees (income ), stipends and
  training.

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3.5.1 Cost type explanation

• Academic time
• P.I, RA and PGR time is academic time.
  Academic time attracts Estates Indirect costs
  at a precalculated rate.
• P.I time estimation
• 100 of a standard working year is 220 days of
  7.5 hours which is 1650 hours per annum.
• Estimate likely hours required, not a of
  working time.
• Include report writing time after the grant
  period .
• .
• Fte, Full time equivalent ( 1 person for 1 year
  at 100 )

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3.5.2 Cost type explanations

• Costing PI staff
• Actuals are not used for RC projects for
  professors.
• your salary
  charging rate
• band 1 up to58600
  66500
• band 2 58601 to 72700
  81700
• band 3 over 72700
  105000
• For non RC customers you can use actual or band
  rate
• For graded PI staff use year 1 grade rate
  plus increments. Use Sirius costs from research
  finance.

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3.5.3 TechniciansAdmin staff

• D. I. cost staff recruited for project
• D.A. cost time allocation of permanently
  employed staff.
• Je-S puts all techs into D.I. ,need to move
• fte rate for nonspecific staff cost allocation
• Admin support use spine pt 22
• Technician support use spine pt 31
• Use Sirius rates from Research finance for
  specific staff.

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3.5.4 Cost type explanations

• Estates Indirect costs
• What are the costs per academic fte per annum?
• Estates non lab department 3360
• Estates lab department 8620
• Indirect 39070
• Procedures to establish the rates are audited.
• RHUL rates are in line with the HEI sector.
• Lab departments are Bio Science, Physics,
  Computer Science, Geography, Geology, Media Arts,
  Drama, Music, and Psychology

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3.5.5 Cost type explanations

• Calculating costs for estates and indirect
• Eg 3 year project
• One PI for 3 years _at_ 165 hours is 0.1 fte per
  year
• 30.1 fte 0.3
• One RA for 3 years _at_ 100 is 1.0 fte per year
• 31.0 fte 3.0
• Total project fte 3.3
• Cash cost is
• Estates ( lab dept) 3.3 8620 28446
• Indirect 3.3 39070 128931

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4.1.1 Example Project costing

• Grant Details
• P.I 660 hours over 3 years gross cost 66500pa
• R.A 100 for 3 years gross cost 50000pa
• Travel 9k, consumables 30K, new equipment 6K
• Notes
• Lab dept Estates rates 8620 per fte per annum
• Indirect rate 39070 per fte per annum
• Fte calculation
• 660/1650 0.4 fte
• RA 3.0 fte
• _____
• Total Academic time 3.4 fte

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4.1.2 Example RC re-costing

• Old RC cost fEC cost
• R.A 150 R.A 150
• Travel, cons, equip 45 Travel, cons, equip
  45
• Direct costs 195 DI cost 195
• Overheads _at_46 of
• Staff costs 69 PI Cost 26
• Estates 3.4 8.6 29
• DA Cost 55
• Indirect
• ___ 3.4 39 133
• Cost 264 Cost 383
• RC price 264 80RC price 306

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4.2.1 PGR Costs RC prices

• PGRs are academics, so they attract Estates
  Indirect costs. They are deemed to attract lower
  Estates Indirect costs ( under review)
• Estates ( non lab) 0.5 of an fte, Estates ( lab)
  0.8 of an fte, Indirect 0.2 of an fte
• In costing a project there would be PI time
  supervising a PGR. This is charged at the PIs
  normal rate and Estates/Indirect costs are also
  charged
• RC pricing of PGR
• RC s are not paying PI Supervisor time and
  associated Estates/Indirect
• RC s are not paying PGR Estates/ Indirect
• RC s are paying fees/stipends/training
• (yes, fees are HEI income!)

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4.2.3 Equipment Facility usage

• If we can identify equipment that can be
  separately charged for it is usually to our
  benefit to do so.
• We need to establish operating cost, a charge out
  rate, document it, set up accounting.
• Finance do not have this information
• Finance need to ensure no double counting of
  costs, ie the cost is not in the overhead rates
  as well.

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5. Costing Approval

• The RE fec site includes a Research project
  Approval Form (RAF).
• The RAF form is attached to an excel costing
  spreadsheet that requires completion.
• Finance and R E will assist completion and
  provide Sirius staff pay cost rates

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6. Prices

• We have to cover our fEC costs in total over all
  our activities
• RC and some OGD work will result in higher prices
• Some OGD work will be competitive tender. OGDs
  should pay 100 of fEC, but may rely on tendering
  to avoid it
• Charities/EU
• Currently paying on the same basis as before
• Commercial customers
• There can be no subsidy of non public research
  activity from public funds. Price is what you can
  negotiate. Our current prices appear to be ( in
  total) low.
• Pricing (where not dictated by the funder ) is
  currently down to the PI with input from R E
• Reducing resources required in order to meet a
  price is not recommended
• Incentive details for Investigators announced
  December 2005

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7. Single pay spine

• It is suggested that in the case of RC grant
  applications the following statement is made in
  the section devoted to justification of
  resources.
• the salaries included in this proposal have been
  calculated using pay scales currently available
  to the institution. New pay structure will be
  introduced during the lifetime of this project
  and, as agreed with RCUK, reimbursement of any
  net cost increases will be expected at the
  reconciliation stage

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8.1 Support to academics

• Costing a project under fEC for non RC customers
  can be calculated using the costing tools on the
  RE fEC website. Most projects do not require
  spreadsheets to calculate the costs.
• There is a Je-S input help guide on the RE fEC
  website
• It covers Professorial costs and
  Estates/Indirect calculation
• Staff in Finance and RE who will help
• Lotte Boon RE. Je-S input approval. Costs.
• Sue Angulatta, Kate Corti Sirius staff costing
  and grant award Helen Swaine queries.
• Graham Clark, Hitesh Patel fEC principles and
  costs

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8.2 RHUL website

• http//www.rhul.ac.uk/Research-and-Enterprise/FE
  C.html
• Excel costing tools on the site can be used to
  arrive at project costs and produce an approval
  form.

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8.3 Academic Diary Exercise

• September 26 onwards
• Quantity and quality please
• Basis of TRAC/ Fec
• Website (instructions online return ) at
• www.rhul.ac.uk/finance.time-form.html