Part V - TRAC fEC

Section B: Minimum requirements

1. The minimum requirements are:
   • all externally sponsored projects starting after 1 September 2005 are costed on a full economic cost basis (fEC);
     
     projects live prior to this need not be re-costed on the new fEC basis, except for long-term projects;
   • academics are provided with appropriate support;
   • researchers to be included, the estimates of their time, and their salary costs, are in accordance with TRAC requirements, e.g.:
     • all academic and research staff, however funded, who work on a project, are included in the cost. The costs of Fellows are included on a second project only when less than 100% of their time was included in the original fellowship project;
     • time is based on an estimate of the actual hours that will be worked on the project;
     • time is costed (using actual salaries or pay bandings) at a salary cost divided by a standard working year of 1650 hours;
     • the time of clinical academics on O(CS) and visiting staff not paid by the institution, is carefully treated;
   • institutions do not charge more than the salary costs that they incur to public bodies (research councils and OGDs). Institutions have in place various methods that prevent this, as specified in the Guidance;
   • laboratory technicians’ costs are directly allocated no later than 1 August 2007;
   • the costs of equipment purchased for an externally-funded project are written-off over the life of that equipment, and do not form part of the estates cost total;
   • interest, redundancy and severance payments are included in the fEC within the gross cost of capital employed, charged as part of the indirect cost total;
   • directly incurred costs are recorded against a project as the expenditure is made: PI costs, other directly allocated costs and indirect costs are recorded periodically against each project on estimate. There is no virement of the budgets of the last two categories;
   • any cost that is directly incurred can be verified by a record of its purchase (in the case of consumables or equipment purchase), or a timesheet (in the case of staff working on more than one project or activity);
   • estates costs are directly allocated to projects, on a £/FTE basis or method as robust as this;
   • the costs of major research facilities are directly allocated to projects no later than 1 August 2007;
   • there is no double-charging of technician or equipment costs. The costs recorded in the accounting records which relate to the directly allocated costs of technicians and equipment initially form part of the estates cost total. The estimated total of charges to be made against projects and other activities is then deducted from the estates cost total;
   • indirect costs are attributed to projects using a £/FTE rate;
   • default indirect cost rates and estates charges are applied, until full robustness is achieved;
   • the costs of supervising and training PGR students, even if they are an integral part of the research project, are kept separate from the costs of managing and carrying out the research on the project;
   • all project costs are indexed;
   • changes to cost estimates for PI salaries and time, estates costs and indirect costs during the life of the project are only made (for cost-based pricing purposes) where there is a substantial change to the programme of work;
   • each year, the PI is able to confirm that the time estimated on the project has been spent. Formal records are not required for this;
   • a reconciliation is made between academic salary costs recorded against Research Council projects, and academic salary costs allocated to Research Councils under the annual TRAC time allocation exercise, from December 2009;
   • research activity is carried out in the context of a balanced research portfolio, with infrastructure spend helping to facilitate its long-term sustainability;
   • cost-based prices to public good sponsors are not negotiated downwards in inappropriate areas.
2. Other minimum requirements that relate to TRAC fEC are given in:
   • Principles and conventions
   • Annual TRAC
   • Charge-out rates
3. A ‘project’ is an activity that is considered by a sponsor to be a separately fundable piece of research. It would include a research project, programme grant, centre grant, and fellowship. The costs of research studentships could also be calculated, but it is not a TRAC requirement to do so – see PGRs.
4. TRAC fEC is used to cost research projects for all sponsors – whether Research Councils, OGDs, charities, industry or EU. However, the prices that these sponsors will pay for their projects will differ, and will not always be fEC based.
5. It is good practice for institutions to use similar techniques on institution-/own-funded research. However, this would require such research to be defined in terms of discrete projects, which may not always be appropriate.
6. Academics should be provided with:
   • appropriate training in the new methods;
   • effective systems to support them in their costing, as required; and
   • financial and administrative support as required to produce quality cost estimates, particularly for complex projects and for academics new to costing applications.
7. When estimating the costs of a research project, PIs and/or other staff should have access to costing schedules, prepared by the institution, which set out:
   • the annual salary cost to be applied for each researcher or for each pay banding for academic and research staff;
   • this annual salary shown as a rate per day and hour;
   • estates charges (e.g. non-laboratory and laboratory, expressed in terms of £/hour, £/day, £/FTE);
   • an indirect cost rate (expressed in terms of £/hour, £/day, £/FTE);
   • institutional cost indices;
   • charge-out rates for each type of directly allocated cost (such as technicians and each major research facility) that will be charged to projects according to planned use.
8. Instructions should ensure that the costing schedules are supported with information which:
   • summarises the main points of this Guidance that relate to cost estimation
   • lists costs that should be charged directly
   • gives guidance on pricing, and
   • gives access to support and advice.

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