Part I - Overview

Section A: General Overview

Benefits and costs of TRAC

5. When introduced in 2000, TRAC was originally a regulatory requirement on the HE sector. Its primary purpose was about accountability for public funding of higher education, and about reassuring the Treasury that any additional funding provided for higher education could be used properly. However, TRAC was developed by a sector body (JCPSG) and in close consultation with institutions, with the specific intention of being useful to HEIs as well as meeting the accountability requirements.
6. The development of TRAC fEC also followed this principle. This provides robust data on project costs not only to sponsors, to inform their pricing, but also to institutions to allow them to make better informed decisions about what activities to do, at what prices. This improves institutions’ ability to manage themselves sustainably.
7. The benefits of TRAC are generally considered to greatly outweigh the costs. The benefits are of several kinds:
   1. Many institutions needed better cost information in 1999, and some had been involved in other costing initiatives before TRAC. It would have been wasteful for several different costing methods to be developed in the sector. HEIs that use cost information have all benefited from the advice, consultancy and support provided by the JCPSG, and also from having a common method available to them that is accepted by Government and other funders as a basis for research and other contracts.
   2. A number of institutions use TRAC data as a key part of their management processes and believe it helps them to manage their institutions more effectively.
   3. TRAC has been the accepted common method of costing used as the basis for a number of studies of the costs of teaching (e.g. of Initial Teacher Training, of National Health Service-funded health professions, of different modes of study and of widening participation) and all of these help to inform Government about the future resource needs of the sector. TRAC is being considered as a method of providing cost-based information to inform HEFCE’s Teaching Funding Method.
   4. The funding for research under the Dual Support System has increased substantially as a direct result of the evidence of deficits on research funding revealed by TRAC.
   5. TRAC also provided the clearest evidence of HEIs’ need for additional cash to invest in infrastructure. While the incidence of backlogs was well-known, TRAC has provided the first generally-accepted quantification of the additional levels of spend required, and some additional public funding for capital assets has been provided on the strength of this evidence.
   6. More generally, the fact that the sector has implemented TRAC has been important in building Government confidence that HEIs can manage additional funding if it is provided.

8. The total new money that has come into the sector on research, which would not have been provided without TRAC, will be well in excess of £1bn a year.ⁱⁱⁱ
9. Overall, TRAC has added to the regulatory burden on HEIs, but they would have to invest in better costing anyway. By implementing TRAC so successfully, the sector has gained a significant amount of additional funding, and (probably more important in the long run) has gained greater understanding of its costs and therefore greater control over the management of its business, and ultimately its ability to ensure the sustainability and autonomy of its institutions.
10. An overall cost and benefit analysis has been done by the JCPSG as part of their assessment of the regulatory burden of TRAC.^iv
11. The on-going annual costs for HEIs are typically of the order of £100k per annum for annual TRAC and, for HEIs carrying out significant volumes of Research, £300k per annum for TRAC fEC. This will vary, depending on the approach adopted by institutions, and on the state and flexibility of their existing systems and processes. Over time, these processes will become embedded into normal institutional management.
12. Most of this cost is accounted for by time of administration staff (usually in finance or research services). That from academic staff is also included in these estimates, but the burden on individual academics is very low. The main impact on academic staff is:
    1. all academics have to complete a time allocation schedule at least three times over a three year cycle (some institutions do this differently, by using one-week 24-hour diaries for a sample of academics selected on a statistical basis). This is a light-touch but robust method of collecting time at a high level on work done on the core activities of Teaching, Research and Other activities; and by research sponsor group.^v It also provides data on time spent in Support of Research or Teaching (for example, writing and reviewing research proposals). Support activities facilitate research activity, but are included as part of the indirect cost rate as they cannot be charged directly to a teaching programme or research project.
    2. all Principal Investigators have to plan and cost the resources needed for research projects. They have already done almost all of this, but they now need to forecast the academic time required robustly. The other new data required to build up the fEC of a project (academic staff salaries, estates and indirect cost charges, charges for research facilities and technicians, and inflation) can be provided and calculated automatically by research costing systems, once fully implemented. Methods of doing this vary by institution.

13. In practice: (a) should not take more than an hour a year; (b) was arguably always a requirement of Research Councils and some other funders, but is involving some additional time for many academics, until they become familiar with the more complete costing methods now used.
14. There were also one-off costs of implementing both annual TRAC and TRAC fEC for all institutions. These were harder to estimate as they were very variable depending on how far institutions were already interested in costing, and whether they chose to implement TRAC as a stand-alone requirement, or as a part of their management information strategy.