Part IV - Charge-out rates

Section D: Indirect cost rate

Chapter D.3 Applying the rate

1. The £/hour or £/FTE indirect cost rate should then be applied to the academic hours/FTEs and research staff FTEs which are estimated for a research project. It should also be applied to the FTE of PGR students, where they are formally recognised as part of the research team by the sponsor (the project studentships) and if the institution wishes to include their costs in the project cost totals. When applied to a PGR FTE the indirect cost rate should be weighted by 0.2.
2. Institutional rates would be applied as part of the project costing (estimating) process carried out pre-application. They should then be recorded against each project during its life. These costs would be charged to sponsors on cost-based price grants and contracts.
3. Under TRAC, no updating for actual indirect costs or rates need be recorded during the project life – this would not be recognised for cost-based pricing for PF sponsors. However, when cost-based pricing, indirect costs charged to a project should be reviewed and updated (for latest estimates) if there is a substantial change to the programme of work.
4. Initially based on a prior year’s cost totals, indirect cost rates should be indexed to current price levels.   Therefore rates based on historical costs should be indexed (by two years’ price levels) to provide a reasonable estimate of first year (‘base year’) costs for research projects. Further indexing of these base year costs should then be done throughout the life of the project.
5. There will be an over or under-recovery of indirect costs in any one year. This should not be taken into account in the calculation of the indirect cost rate based on that particular year’s figures.
6. When applying a rate to the time of an academic or member of research staff on a project:
   • if an academic has allocated time to a project, then the indirect cost rate should be applied to that time, irrespective of whether there is a salary also allocated to the project (e.g. visiting academic);
   • the rate calculated for the academic/research staff’s own discipline group/institution should be applied, irrespective of whether the project is being led by or taking place in another institution or off-campus. Where an academic is allocating time to a project but no salary is paid by the HEI (e.g. for some visiting professors), then an indirect cost should still be allocated;
   • Where there is a visiting academic on a project, indirect costs might be charged from the collaborator to the lead institution. This recharge can be based on either the collaborator's rate; or alternatively, the indirect cost rate for the employer of the majority of the staff could be used for all staff. Where costs are recharged:
     - the indirect cost rate applied to the collaborating institution's FTEs on the project should reflect the costs being recharged, and
     - the visiting staff FTEs should not be included in the denominator when calculating the lead institution's indirect cost rates.
     
     Where costs are not being recharged from the collaborator to the lead institution, the lead institution's own rates should be charged. In this case the FTEs would be included in the denominator when calculating the lead institution's indirect cost rates;
   • where a research fellow or RA is working on the project, but their time has already been wholly (100%) included in another single fellowship or research project (from the research councils, charities or OGDs), then no time will have been allocated to the new project. No indirect cost rate will then be applied in respect of that researcher (their ‘share of indirect costs’ would have been included on the initial fellowship or research project). This is irrespective of how the initial fellowship or research project was funded.