Part IV - Charge-out rates

Section D: Indirect cost rate

Chapter D.4 Alternative methods

1. Whilst only one generic institutional rate (£ per academic/research staff) need be calculated, different rates could be used for different types of staff, or for different departments. If so, institutions should ensure that:
2. the size of these differentials reflects appropriately the real drivers of the costs;
   • the FTE data, and the costs, should be robust at these lower levels (rather than for all academic staff working for each research sponsor type for each discipline group);
   • a single £/academic FTE indirect cost rate for Research is calculated for benchmarking (part of the external quality assurance process).
3. The two main options are:

   Grade of staff

   • The indirect costs on a project are unlikely to be affected materially by the grade of staff. (Even Support time, which does vary according to salary level, is mainly comprised of the costs of management and administration that should be spread across all projects, not just the one that the individual is working on).

     Institutions might therefore feel that it is not material to calculate and apply a different rate for each grade of staff. This would be more complex than a single grade rate, and require higher levels of robustness in the annual time allocation process.

   Clinical medicine and dentistry

   • However, staff in some departments may be more productive than others (their direct time is significantly higher, and their Support time is significantly lower). This may be the case particularly in clinical departments, reflecting the different working arrangements. It is good practice for institutions with clinical medical or dentistry departments to review this and, if appropriate, to calculate a separate indirect cost rate for those departments.
4. However, when doing so, it is good practice to ensure that the treatment of O(CS) will result in full recovery of indirect costs. Two types of recharges to Research can be made from: O(CS), reflecting Research services received from clinicians; or O(CS)(R) reflecting the Research work carried out by academic clinicians at the same time as clinical services. 
5. Institutions should only include any of this time as direct Research time (for the purposes of calculating the FTEs, and thus the indirect cost rate) if they are sure that this type of time is the same as might potentially be entered on project costing forms for Research projects – either by clinical academics or by clinicians (under knock-for-knock).