JCPSG | TRAC Guidance

Part I - Overview

Section C: Managing for Sustainability

  1. Institutions are required to take responsibility for their own financial sustainability, particularly in respect of research infrastructure.

Background

  1. The Government has accepted TRAC data which showed a significant under-funding on publicly-funded research. This evidence base was supported by national studies of infrastructure carried out in 2001.xi The 2002 and 2004 Spending Reviews awarded more money for research, both recurrent (QR and the Science Budget) and as capital through SRIF. Institutional responsibility for their sustainability was a condition for this, set out in several Government documents and embodied in the Financial Memorandum between an institution and its Funding Council.xii
  2. During 2003 and 2004, OST carried out a review and reform of the Dual Support System,xiii at the same time working with other major funders (OGDs, charity, industry) to improve the sustainability of the HE part of the UK research base.xiv As a result of this work, institutions will now prepare project applications to Research Councils and OGDs on a TRAC fEC basis, and those sponsors will pay a higher percentage of fEC.
  3. These are major changes but they are not a final and sufficient answer to research sustainability, and some issues will continue to be debated. However, they immediately improved the cost recovery for every research-active HEI. Equally significantly, they are changing the climate under which research has been subsidised by institutions to an unmanageable extent, while public funders had been experiencing little pressure to pay the real costs of the work they fund.
  4. There are wide implications and benefits for institutions. Research Council funding is not the only area where institutions need to improve their cost recovery. They also need to change the low price culture and make a convincing case to charities and other funders. The principles of using fEC to manage institutional sustainability apply to all activities. In England the HEFCE Financial Memorandum was amended to strengthen this requirement.
  5. Teaching equally demands a full cost approach in the context of setting fee levels (where these are not fixed by the Government). TRAC fEC guidance focuses on the costing of externally-funded research, but can as well be applied to institution-/own-funded projects and to Other projects (e.g. consultancy). The principles and approaches can also provide the fEC of Teaching courses or modules. HEFCE are using TRAC to inform their Teaching Funding Model. In time, Research Councils may use TRAC to inform the funding of PGR student activity.

What sustainability means

  1. Sustainability can be defined along the following lines:

An institution is being managed on a sustainable basis if, taking one year with another, it is recovering its full economic costs across its activities as a whole, and is investing in its infrastructure (physical, human and intellectual) at a rate adequate to maintain its future productive capacity appropriate to the needs of its strategic plan and students, sponsors and other customers’ requirements.

  1. Another way to express this is to say that the institution needs to do the activity today in a way which will not threaten its ability to do it in future.
  2. The reference to future needs suggests that what is needed is ‘adaptive’ capacity, i.e. sustainability is not about preserving current activities indefinitely but rather about preserving the right sort of capacity (changing over time) to carry out the activities that are necessary in the future.
  3. Institutions need to do five things to manage their research on a sustainable basis. These are:
    • establish and recognise the fEC of research;
    • manage the research activity strategically;
    • secure better prices for research;
    • improve project management and cost recovery;
    • invest in the research infrastructure.
  4. This must be done as part of a long-term strategy for the institution. As part of this institutions will need to realign their resource allocation models in order to ensure that these do not give perverse incentives, and that information from these and from TRAC costing systems do not conflict.
  5. Further information on managing for sustainability was given in a section in the original TRAC fEC Manual, now available as an extract.xv
  6. The Funding Councils will monitor institutions’ ability to manage themselves sustainably. The metrics used in this might include trends in the financial health of the institution, the productivity and quality of staff, the level of investment in equipment and buildings, and the reduction in the size of the backlog maintenance required.
  7. Implementing these processes is a significant challenge for many institutions. They need to introduce some relatively well understood business techniques, but to do it in a way which respects the nature of the academic process and does not threaten the conditions which make a research unit, academic department, university, college or other academic institution successful – and different from a commercial business.