costing a research project - northumbria university · · 2010-03-24costing a research project...

Research Training Programme 2004-2005

Costing a Research Project

Professor Nicola PearsallNorthumbria Photovoltaics Applications Centre

School of Engineering and Technology


Introduction

• In order to have the resources for research activities, it is often necessary to apply for external funding

• This funding can support staff or research students, provide equipment and consumables, facilitate networking with other researchers and fund the dissemination of the results

• It can fund collaborative work with other universities or industry -this can be very stimulating and lead to more productive projects

• It is important to make sure that the funds requested are appropriate for the project - this workshop looks mainly at how projects costs are estimated


Training Workshop Format

• Presentation and discussion on the main issues• Sources of funding and project development• What costs can and should be included?• How can these be estimated?• University procedures for authorisation• Financial recording and claiming during the project• IPR and ownership of results


The Issues• From the researcher’s point of view, conducting research is a

stimulating activity and highly relevant to teaching activities

• From the University’s point of view, research brings external recognition but it needs to ensure that it does not impinge on budgets for other activities to an unacceptable level, otherwise it is not sustainable

• From the funder’s point of view, the costs must be justified by the content of the project – they will expect value for money

• How do we reconcile all three viewpoints?


A Partial Answer

• The projects must be carefully costed to ensure that – all the important costs are included so as to be able to conduct the

research to the highest quality– only acceptable costs have to be met by the University – varies with

project and School– the included costs are justified by the work content

• The advantages and disadvantages of doing the project must be considered and balanced– How it fits in with the research portfolio of the School/University– Opportunities for exploitation– Publicity, enhancement of reputation, strategic importance

• The time involved in preparing the bid and the likelihood of success should be considered


Full Economic Costing

• The object of FEC is to include all the costs attributable to a project and, where possible, recover these from the funder

• This workshop does not look at FEC but assumes that this will be applied when and where appropriate

• How FEC is applied will depend on the funder’s regulations and the University guidelines


Funding Sources

• Public funds– Research Councils– Government Departments & Organisations– European Commission

• Private funds– Industry– Charities / trusts

• Internal funds


Funding Sources – Public Funds

• Research Councils, Government Departments (national and regional), NHS, European Commission etc.

• Usually have well defined rules about proposal preparation and costing

• Always read the most up-to-date guidelines to find out what is eligible in terms of research content, partners and cost categories

• For collaboration with industry, there may be ownership issues for both equipment purchased and the eventual project results –this can affect the balance of funding between industry and academia

• State support rules might apply to the industrial partners


Funding Sources – Private Funds

• Industry, charities and trusts etc.

• Some have well defined rules, others provide little information

• Some will only fund certain cost categories (e.g. many do not support large equipment purchases) - some schemes are for travel or staff costs only


Proposal Development

• In all cases, you should choose the best funding source for the project content and funding required

• If they are available, look at previous successful projects to see the usual size of award and what is funded

• Almost all funders will have forms for you to provide the administrative details and the project costs – read these carefully! Make sure you present the costs in the format required and with the level of detail required.

• If in doubt, ask for advice from other colleagues with experience, Research Support or the REO, the funder themselves

• It is generally difficult to ask for more money – better to overestimate slightly than underestimate!


The Proposal Approval Procedure

• Advance authorisation– looks at brief outline of the project and approximate costs– also useful to make sure that duplicate or conflicting

proposals are not being developed

• Bid approval – provides a detailed breakdown of the costs being requested

which can be checked for accuracy by Finance

• Sign off of proposal– as required by funder (PVC Research or DVC, Dean of

School)


The Proposal Approval Procedure• Forms and information are available on web site under

Registrars Dept, Documents for: Research – Funding• The approval procedure applies to externally funded activities

over £20,000• Exceptions are for commercial activities fully routed through

NCE and single pot proposals routed through REO• The form is the same for both advance authorisation and bid

approval – differ in level of detail required (remember to tick the relevant box on the form)

• Input is required in the yellow boxes• Advice can be sought from Research Support or REO as

necessary• Workshops on advance authorisation are included in the training

programme


What funds can I ask for? - the usual cost categories

• Costs are usually split into direct and indirect• Staff – directly working on the project (over and above standard

allocations for permanent staff)• Equipment – usually over a defined cost limit, rules about

allocated cost may apply, may be upper cost limit• Consumables – materials directly used on the project• Travel and subsistence – meetings, conferences, visits directly

related to the project work or to disseminate the results• Other costs – insurance, auditing, student fees etc.• Overheads (be careful – varies considerably with funder)• Profit (be careful with this as well – not usually allowed!)


More on Staff Costs

• You should consider your time, other academics’ time, contract researchers, research students, technician time, administrative support

• Some funders do not allow for administrative support – in any case, it would usually have to be justified in terms of special requirements on the project (e.g. management of a partner network, conferenceorganisation)

• Some funders do not allow permanent staff time (i.e. academic time) to be charged – in this case you need to make sure that you are allowed to allocate sufficient time from your normal duties

• Inexperienced proposers often underestimate the amount of time required to carry out the proposed tasks

• You should decide whether you need a full time or part time researcher to undertake the work – depends on its nature, the project duration and the level and experience of the researcher.Remember that it may be more difficult to recruit a part time researcher.


More on Staff Costs (2)

• The salary scales for all types of personnel are available on the web site (http://online.northumbria.ac.uk/central_departments/humanresources/ic/ss/oc/index.htm)

• Always use the scale with on-costs (NI, superannuation) unless the funder specifically disallows this – failing to include this will mean that you are about 17% short in funding!

• Include annual increments and, if appropriate, an allowance for pay rises – the Research Councils usually account for the latter automatically but other funders do not

• You should decide if you want to use annual, daily or hourly rates• Do not use the hourly rates given by HR on the salary scales – these

are Personnel Hourly Rates and will give you too low a rate to cover your costs.

• Use Productive Hours. Sample calculation - take the annual salary and divide by 216 to get the daily rate and again by 7.4 to get the hourly rate.


Studentships• Studentships from Research Councils are funded by an

allowance for the student. This has recently been increased –Research Support can advise on the amounts to be included or see the proposal guidelines.

• You normally need a 3-year project to allow study for a PhD. If it is shorter, you will need to have additional funds from somewhere else to allow the studies to be completed.

• You need to also request the fees in the appropriate category (Exceptional Items or Other Costs, usually). It may be hard to obtain these from external sources other than the Research Councils


More on Equipment Costs

• You can ask for funds to purchase equipment that will be used directly on the project – you will need to justify this in your case for support

• You may need to provide copies of quotations from one or more suppliers – allow enough time to get these!

• You may only get part of the funds if the equipment is only used for a small part of the time on the project

• There may be rules regarding depreciation of the equipment and that can affect the funds you receive. For example, if the equipment must be depreciated over 5 years and you only have a 2 year project, you may only get 40% of the costs. The balance would need to be found from elsewhere.

• Some funders have special rules and/or categories for IT equipment• Make sure you know about the tendering and procurement rules of the

University. These can affect which supplier you can use and how long it takes to purchase the equipment. The rules depend on the value of the purchase.


More on Consumables• This category covers all the costs for materials used directly on

the project• You cannot usually charge for general consumables (e.g.

stationery, postage etc.) unless the project has a specific requirement for them (e.g. a postal survey, project brochure)

• You may want to include computer supplies if the project involves a lot of data storage, processing etc. and software if the project requires something specific (make sure this is allowableunder University IT policy)

• Recurrent charges such as service contracts on equipment, insurance etc. usually come under this category (but check the small print)

• Small equipment under a certain cost limit (typically £1000 but this can vary) may also come under this category


More on Travel & Subsistence

• Travel directly associated with the project work includes partner meetings, visits to related industries or research organisations, field work and attendance at seminars and conferences to gain specialist knowledge

• Be careful about training courses – not eligible if it would be expected to be part of the expertise you bring to the project or routine career development

• Some funders also fund dissemination activities –you should be able to ask for funds for conferences and seminars provided that (a) you or one of your team are presenting the results and (b) it falls within the project period.

• Remember to include fares, accommodation, subsistence and conference fees for as many participants as needed – this should be justified by the importance of the meeting/visit to the project.

• Some funders (e.g. EPSRC) need the main meetings to be specified in the proposal


More on T&S (continued)

• The European Commission requires you to ask permission in advance for travel outside the European Union

• Don’t just think of a number – add up your best estimate of the costs. It is easy to underestimate!

• The Travel Guidelines on the web can help with estimates for accommodation and subsistence. (http://online.northumbria.ac.uk/central_departments/finance/newtravel)

• Estimate fares by checking prices now and allowing 10-20% for variations. Don’t assume you can get budget fares – go for normal APEX returns on flights or Saver returns on rail

• Estimate conference fees by looking at what they have been in the past for that series or a similar series of conferences


More on Other Costs

• There is a wide variety of items which can appear in the Other Costs heading

• Some of the most common are: research student fees, leasing additional accommodation, sub-contracting, marketing and publicity (but only directly related to the project e.g. for seminars and dissemination activities), IPR and patents, computing services, audits, advertising for staff, insurance.

• The guidelines from the funder will define what type of costs are eligible. If in doubt, ask the funder before submitting the proposal.

• Costs which are usually ineligible include: interest and other financial charges, consultancy fees, bonus payments, purchase of buildings, staff time for preparation of the application


More on Overheads• Overheads essentially cover some or all of the indirect costs of doing

research associated with the employment of staff, accommodation,services etc.

• The overhead rate and the budget items on which they can be charged vary substantially between funders

• Research Councils currently use 46% of staff costs (note this does not include any research studentships where all administrative aspects should be covered by the fees)

• Current Government proposals for Full Economic Costing are expected to increase this overhead rate but the amount will varybetween Universities

• EC uses 20% of all direct costs (excluding subcontracts)• The University has a financial model which expects a certain level of

overheads to be returned from each School – allowable overheads on a portfolio of projects is decided at School level

• If the allowable overhead rate is not stated, ask for guidance from the School


More on Profit

• Many research funders will not allow profit to be included (e.g. European Commission, Research Councils, most Government Departments)

• You will probably be required by the funder to provide documentary proof of expenditure and the whole claim may be disallowed if you include something which is not eligible (either in direct costs or in overheads)

• You may be required to state explicitly that profit is not included or to define the percentage in the proposal


Other points of interest

• Remember to include VAT on equipment and consumables if it is allowable to do so

• The University cannot recover VAT so it has to be charged to somewhere! Finance will advise on specific cases

• If you are buying from overseas, do not forget the import tax• For Research Councils, you may be able to ask for access to facilities

separate from the main budget. Make sure you contact the facility far enough in advance to get all the paperwork you require.

• Service contracts are often useful for large equipment to ensure it runs throughout the project. You should be able to include this in either Consumables or Other Costs for the period of the project (subject to the equipment being essential for and mainly used on the project - otherwise it would be a contribution to the service contract).

• If the work involves site visits and interaction with the public, remember to consider insurance implications


Matched Funding• Some funding programmes require matched funding (i.e. the

proposer must input a proportion of the funds – often 50% - to carry out the project)

• This may be in the form of cash or in-kind services (e.g. staff time, access to facilities) from the project partners or an external contribution (e.g. from an interested company)

• Of whatever form, you must be able to prove the contribution has been made to the project (i.e. it must be auditable)

• Shortfalls in matched funding usually lead to an equivalent cut in the grant – awkward if you have already spent the money!

• Since these projects are demonstrably not fully funded, it is tobe expected that the University limits the number in which it gets involved


OK, I’ve got the grant – what now?

• Contract– Must be signed by the legal representative of the University– Wording may need to be checked by the legal advisor– You will need the approval form duly authorised

• Obtain an Expenditure Code (Internal Order Code)– Will be related to your School – Finance will require completed request form and a copy of

the contract and/or grant announcement to issue a code

• IPR – for collaborative projects, make sure there is an IPR agreement


Claiming / Invoicing

• It is worth checking on the payment and claiming details which will differ depending on the funder– Some pay at regular intervals (e.g. quarterly) in arrears on receipt of an

itemised claim– Some provide an advance and/or stage payments at agreed intervals– Some provide stage payments against specific milestones

• Most will retain part of the grant against submission of the final project report and there can be financial penalties if you do not submit within the required period

• Finance will submit the claims on your behalf BUT cannot keep track of your progress, so will usually need to be requested to do so

• Whilst they will have a record of direct expenditure, Finance cannot estimate the staff time allocated in the period – you will need to keep your own records and advise them of the time to be claimed

• Note that the payment details affect cash flow - the University may have difficulties with large payments which are not synchronised with income


Intellectual Property Rights

• Who will own the IPR from the project?• If it is collaborative, there needs to be an agreement between

the partners on background IPR and any resulting from the project

• The agreement should be approved by the University (Legal Advisor and/or NCE) before the contract is signed

• The University’s rights may vary depending on funding source, balance of effort and partner roles

• Be aware of what you can publish and what might affect later exploitation

• Be careful of other people’s IPR and they are more likely to be careful of yours!


Virement of Costs –underspends and overspends

• Virement refers to moving costs from one heading to another (e.g. an underspend on travel being transferred to the consumables category)

• The rules vary between funders – some disallow virement altogether, others allow it within certain rules

• Virement may only be allowed between certain categories of expenditure – be very careful about virement into or out of the staff budget

• There is likely to be a limit on the amount that can be vired, often based on a percentage of the smallest budget (e.g. EPSRC will allow 20% change in budget without requiring explanation but no transfer from large equipment or overheads categories)


Summary on Costs

• Always read the guidance from the funders to find out what is allowable – if you ask for something ineligible, the whole proposal may be disallowed

• Make an estimate of costs early in the proposal preparation and then refine along with the development of the proposal content

• Check the invoicing and payment procedures so you can keep appropriate records from the beginning of the project

• Most funders will not increase the grant after it is awarded so make sure the request covers what you need to do


Summary - continued

• The proposal needs to fit the funder in terms of work content, partners and budget items

• The budget requested needs to be justified by the work content• Don’t ruin your chances by not following the rules, filling in the

form incorrectly or missing the deadline!• Make sure you have added things up properly – ask someone

else to check the numbers if necessary!• Allow enough time for checking the forms and the case for

support for content and errors• Allow enough time for approval procedures• Don’t let all this put you off – it gets easier with practice and the

reward is getting to do more interesting research projects!