Part IV - Other charge-out rates

Section G: Other Charge-out rates

Chapter G.2 Major research facilities

1. The cost of equipment, including major research facilities, should be directly allocated to research projects. This means that it should not appear in the indirect cost rate. Equipment costs are to be included in the estates costs total, but no later than 1 August 2007 major research facilities should be directly allocated to research projects separately from the estates charge.
2. It is good practice for other equipment to be directly allocated separately from estates as well, but that is not a minimum requirement. Materiality is an important consideration.
3. All reference to a research facility in this chapter could also refer to equipment.   A research facility can be a single piece of equipment, or a group of equipment.
4. Major research facilities include specialist animal facilities, greenhouses, and specialist IT research facilities.
5. The charge-out rate for a research facility should be established by the following calculation:
   
   

   an annual fEC (a)

   total units of use for a year (b);

   a charge-out rate per unit of use: (a) divided by (b).

6. The charge-out rate should then be applied to projects based on an estimate of the units used by each of those projects.
7. The calculation of the rate, and the data collected for this purpose, should avoid undue complexity or spurious accuracy. It is not necessary to know either the historical cost or the sponsor of a piece of equipment when charging it directly onto projects. The avoidance of double-charging is covered further on in this chapter.

Annual fEC (a)

8. The annual fEC should include an estimate of the following costs, where applicable:
   • depreciation (based on an estimate of its replacement cost, written off over the likely useful life of the equipment). This would take into account exceptional procurement costs, installation costs, buildings modification, set-up and testing;
   • technicians;
   • consumables and spares;
   • additional insurance;
   • estates.
9. The operating costs (consumables, spares etc.) can be based on the actual costs of running that facility or a forecast level of costs.
10. The costs of technicians and consumables should only be included where they are not being included as a directly incurred cost on any other project, and are excluded from the laboratory technician charge-out rate.
11. Estates costs need not be included for all facilities – only where material.
12. Indirect costs should not be included.
13. The annual fEC (a) should include a depreciated replacement cost for the equipment (a broad estimate would suffice if detailed records are not available) written off over the likely useful life of the equipment. This replacement cost is unlikely to be the same as the historic cost.
14. This replacement cost should be included irrespective of who funded its original purchase, when, and at what price.

Likely use of the facility (b)

15. The likely use of the equipment (b) should be estimated. This should take into account its use for all activities (including Teaching) by all projects (including institution-/own-funded work and supervision of PGR students) and by all academics and all departments. This utilisation would commonly be expressed in terms of units of time (e.g. days or hours of use per year).
16. Utilisation should be calculated on the assumption of at least a ‘reasonably efficient’ basis (in the context of use in the HE sector). If institutions plan higher utilisation than this, then those higher estimates of time should be included. The calculation of utilisation should therefore take into account the likely use (days or hours) of each facility for Teaching, Research (including all of institution-/own-funded, PGR supervision, external projects), and Other activities; but should also include additional days or hours if this likely use is significantly less than a level normally experienced in the sector for this type of facility.
17. ‘Reasonably efficient utilisation’ which is normal for the sector could be established having considered:
    • utilisation that provides a market charge-out rate for this type of kit;
    • a concept of ‘well-managed equipment’; or
    • the target utilisation for the equipment (as long as it was not too light).

Calculation of the charge-out rate

18. The annual fEC (a) divided by the units of use (b) provides the charge-out rate for that item of equipment. If equipment has been grouped in this calculation, but each item of equipment can be used separately on projects, then the group charge out rate should be divided by the number of items of equipment to give a rate per item of equipment. (Weightings could be used in this but not if these make the calculation unduly complex.)
19. Each project’s use of each item of equipment should then be estimated, e.g. in terms of days or hours of use. Again, undue complexity should be avoided:  standards can be developed and applied. The relevant charge-out rate for the items of equipment used should then be applied to that time. This then provides a directly allocated cost for inclusion in the fEC of each project (and into the costs of Teaching, institution-/own-funded Research and PGR supervision when costed).
20. The charge-out rates should be indexed, along with all other costs, over the life of the project. Rates calculated on 1 February each year should be indexed for two years’ price rises, before they are applied to a research project application.

Animal houses

21. Animal houses should be considered a major facility:
    • the purchase of animals should be a DI cost (and if the number actually purchased is less than or more than originally estimated, the actual DI costs will change);
    • surgical procedures or other costs that are purchased from external sources specifically for a project should be charged as DI;
    • other costs, in particular housing, maintenance and operating costs, should be DA costs, charged to projects using charge-out rates.
22. The DA costs should include:
    • estates costs of the defined space housing the facility;
    • facility manager, laboratory technicians, other administrative staff, veterinary services including surgical procedures when not externally purchased;
    • bedding and feed;
    • other operating, maintenance and support costs.
    
    These costs should not be included in the estates or indirect cost rates, or charged as a DI cost.
23. A number of charge-out rates should be calculated and applied to projects – these would vary depending upon the type of:
    • animal;
    • condition;
    • care/maintenance provided.