JCPSG | TRAC Guidance

Part V - TRAC fEC

Costing schematic

data process product
costing schematic

Section A: Overview

The background to TRAC fEC is described in Part 1 Overview.

  1. The aims of the costing methods described in this part of the Guidance are:
    • pre-award, to produce a forecast (an estimate) of the cost of a research project by completing a project costing schedule; and
    • post-award, to charge to a project cost record the costs subsequently incurred on that project during its life.
  2. The costs should be calculated on a full economic cost basis (fEC), as described in this part of the TRAC Guidance.
  3. The fEC of a project consists of:
    • directly incurred costs
      • research staff
      • technical and clerical staff costs
      • non-staff costs (consumables, equipment purchase, etc.)
    • directly allocated costs
      • principal and co-investigators’ time and costs
      • estates costs (including the infrastructure adjustment)
      • charges for laboratory technicians and major research facilities
    • indirect costs (including the cost of capital employed).
  4. The fEC of a project is not dependent upon what the sponsor will pay, which is the price. The difference between the fEC and the price is the institutional contribution, or the institutional surplus available for re-investment.
  5. fEC is used to inform prices – either directly (fEC-based prices) or indirectly (market-based prices).

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:
  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.

Section C: Estimating researcher costs

  1. The time and costs of researchers should be included on all research project costing schedules.

Definition of researchers

  1. Researchers include both academic and research staff – see researchers.
  2. Academic staff include investigators (principal investigators and co-investigators); research staff include research assistants and research fellows.

DI or DA

  1. Researcher salary costs can be directly incurred, ordirectly allocated:
    • the costs of research staff dedicated to a project are directly incurred;
    • the costs of academics that work on several projects and activities are generally directly allocated.
  2. The key distinction between these is that:
    • directly incurred costs are charged on the basis of actual salaries and actual time   either the full cost of a salary is charged to a single project, or actual salaries are attributed to several projects on the basis of project-level timesheets; whilst
    • directly allocated costs are charged on the basis of standard charge-out rates and estimated time (no timesheets are required).
  3. Research Assistants and Research Fellows who can be classified as directly incurred and who do not have to complete project-level timesheets are those:
    1. who are considered by a funder of a research project to be wholly working on research. All of their time can be charged against that project (including any time spent, with the funder’s agreement, on Support or Teaching activities); and
    2. all of their actual salary costs, as incurred, are being charged against that project.

    (They may be working on more than one project, and in this case, all of their time would be defined as direct research effort, charged to those projects.)

  4. Other Research Assistants or Research Fellows may work on a number of projects, often alongside a Principal Investigator, and also carry out a range of other activities (Teaching and Support). Unless they meet the two criteria above, or complete project-level timesheets, below, then they would normally be classified as a directly allocated cost rather than a directly incurred cost.
  5. Academics in some departments do already complete project-level timesheets, because of EU or other requirements (not TRAC related). Timesheets are not a requirement of TRAC. However, if these staff wish their costs to be treated as directly incurred, then:
    1. the department should be a discrete management unit;
    2. all academic staff in that unit should complete monthly project-life timesheets over the whole life of the project; and
    3. the timesheets should comply with TRAC (they cover all activities, and all hours worked in a year; and use 1650 hours to calculate salary and indirect costs).
  6. Costs charged as directly incurred on a Research Council project can be vired between other directly incurred cost items on that project. However, preparing timesheets does involve a considerable amount of work and will not be acceptable to most academics. It is not required by TRAC.
  7. This chapter mainly focuses on the methods to be used for academic or research staff that work on several activities, not just on research. Their costs are normally classified as directly allocated.

Standard working hours

  1. During the allocation of staff time and salaries, hours may need to be converted to FTEs, or salary costs to a rate per hour. Institutions should use the following definition of a standard working year for this purpose:

    1650 hours a year.

  2. This can be calculated a number of ways – most commonly it is described as 220 days a year, 37.5 hours a week, 44 weeks a year. Alternatively it can be expressed as 44.5 hours a week, 37 weeks a year.
  3. 1650 hours should be used when calculating and applying salary costs, indirect cost rates and estates rates. This is a fair and reasonable figure. It has been defined as a calendar year excluding weekends, statutory/institutional holidays, and holiday entitlement for that post. (It is time available for Teaching, Research, Other and Support.)
  4. This will mean that institutions will be under-charging some 5 - 15% of their academic salary costs, indirect costs and estates costs. This is because the 1650 hours only takes into account time off on bank holidays and an annual holiday entitlement. It does not allow time on sickness, paternity/maternity, jury service or private consultancy to be charged to projects, either as a direct cost or as a Support or indirect cost.
  5. Against this under-charge is set a potential over-charge or over-recovery of salaries. This could otherwise have occurred as PIs apply salary and indirect cost rates calculated on the assumption of a 37.5 hour week, when staff may be working more than 37.5 hours a week.
  6. This standard working year of 1650 hours is to be used even when staff are formally contracted for different hours (e.g. 44 hours a week for clinical posts, or 35 hours a week for academics).
  7. TRAC includes other measures to avoid over-charging – see Chapter C.4.

Chapter C.5 Supervising PGRs

  1. The annual TRAC process recognises an activity called the supervision and training of PGRs. This is different from the work undertaken by an academic in a research project. A PGR student is not considered to be a member of academic staff.
  2. Where a PGR is on a project studentship linked to a project, they may be recognised on the project-costing schedule. All of the costs associated with their supervision and training should, however, be kept separate from all other costs of the research project itself.
  3. As funders (including the Research Councils) do not currently fund PGRs on an fEC-basis, and as establishing the fEC can be complex, it is good practice to estimate their costs on a research project, but it is not a minimum requirement under TRAC. (The Research Councils, for example, require appropriate project studentships to be recorded on their application form under ‘exceptions’ and these are funded on the basis of stipends plus fees – not on the basis of fEC.)
  4. Therefore the time the supervisor spends in PGR training and development (and this would include the time of internal and external examiners, co-supervisors, etc.) and stipends paid to students, should not be included as part of the research project fEC. (And, therefore, the indirect costs and estates costs associated with this time should not be included either.)
  5. Where the PGR is closely linked with one research project, it is good practice to show the fEC of this activity on the same research project costing schedule. However, this should be shown as a clearly separate category of expenditure from the costs of the research project.

Chapter C.1 Named researchers

  1. Academic and research staff on the project costing schedules should include all appropriate academic and research staff, i.e. Principal Investigators, co-investigators and Research Assistants. The staff should be named where possible, or a grade included with reference to the use of pool staff, or staff recruitment.
  2. The costing schedule should also include the names of Fellows, emeritus professors, visiting staff from industry, clinicians and clinical academics, as appropriate, irrespective of whether they are paid a salary through the HEI, and irrespective how much of this salary is sponsored/funded (or by whom). (It would be important to identify all relevant expertise being provided to a project so that sponsors or their representatives, e.g. Research Councils’ Peer Review Panels, can better understand the nature of the project. However, this process is unlikely to be given added value by inclusion of anyone with less than 0.05 FTE allocated to any one project.)
  3. PGR students are not members of the academic or research staff. However, if their studentship is based on their input to a particular project and this is recognised by the sponsor (e.g. some project studentships), then their names should also be included.

Chapter C.2 Their time

  1. The time for all of these academic and research staff should be estimated and entered on the project-costing schedule.
  2. An exception to this should be made for Fellows and Research Assistants whose time or salary has already been wholly (100%) included in a previous single separate fellowship or project grant provided by a Research Council, Other Government Department (OGD), or charity
    • the time or salaries of these Fellows or RAs should not then be included in the fEC of a subsequent research project. This is irrespective of the amount actually funded on that initial fellowship or project grant. They should, however, still be named on any research project on which they subsequently work;
    • however, if their original grant will have expired by the time the new project commences, then their time and salaries should be included in the new project costs;
    • all of the time of Fellows and Research Assistants whose time on Teaching and Support has been included on the fEC of a research project should be allocated to Research, and not to Teaching or Support:
      • as part of the annual TRAC time allocation process; and
      • when FTE numbers are being established for use as a cost driver or as a denominator in the indirect cost rates.
  3. However, the time that a Research Fellow or Research Assistant will be spending on a new project (and a proportionate part of their whole salary) should be included on that project where:
    • the first fellowship/project has expired; or
    • their initial fellowship grant, or other project grant, was charged with less than 100% of the Fellow or RA’s time, and the new project is outside the aim of the original fellowship.
  4. Where an institution has to make a contribution to salary costs to a researcher (a ‘top-up’ to a Research Fellow’s salary, for example) they should consider whether it is appropriate to charge all of the researcher’s salary and time to that original fellowship project. This may not be appropriate if it is expected that the researcher will work on other research projects that are out-with the scope of the original fellowship (a notional estimate of time could be linked to the value of the top-up and excluded from the charges made to the original fellowship project).
  5. The Teaching and Support duties of a Research Fellow and Research Assistant are usually within the scope of their research projects. The time that they expect to spend on these should remain part of the fEC for those research projects.
  6. Time for all other academic staff should be included, irrespective of how they are funded. This means, for example, that the time of staff funded through university trust funds, general endowments, etc., should be included on project applications. The time of individuals who are not paid through the institution (e.g. visiting professors from industry) should be included. All hours should be included, irrespective of when the work will be done (this would include any time formally or informally acknowledged in some way as overtime).
  7. Academics’ time should include all the direct time required to manage the project, undertake the work and supervise the project staff. It should not include any activity that is categorised by TRAC as Support.
  8. It should not include the time spent in training or supervising of research students – see supervising PGRs.
  9. The time should be that for the staff carrying out the work, and it should be costed as such, irrespective of any previous practice by sponsors to fund other costs (e.g. replacement teaching costs which are unlikely to be a reasonable proxy for the real costs).
  10. Investigators can estimate their time in a number of ways – three examples are (a) a month-by-month build up of time, or (b) estimating the number of hours on average across a year; or (c) using a proxy of hours per week per RA, plus time at the end for writing up. Guidance on this is given indocument link Annex 20.
  11. The techniques and estimates used in estimating time should be reviewed by the institution in year three of TRAC fEC implementation (2006/07) to ensure that the results are a fair and reasonable estimate of the actual time likely to be taken. By 2007 they need to improve the robustness of these estimates. The first (a) represents the most robust method.
  12. The time should be based on the actual hours required to work on the project, (irrespective of the total hours worked in a week). Over-charging of salary costs is avoided through a number of measures, covered in Chapter C.4 below.

Quoting time estimates

  1. It is good practice for estimates of academic time to focus on the hours required for the project as a whole. These are then converted to hours per year by dividing the project total by the number of funded years. Annual hours multiplied by an hourly rate provides the chargeable salary cost for that investigator for each year.
  2. An estimate of the time required on average across the whole project could be used to provide the estimate for each year, irrespective of annual fluctuations in workload. Investigators’ time does not have to be profiled across the life of the project (the actual life is often longer than the life assumed for funding purposes by the sponsor, e.g. work for a project funded by the Research Councils over three years might be carried out over six years). To ensure that project costing is not made too complex, time (and associated salary costs) can be spread evenly across the life assumed for funding purposes (e.g. three years) for costing purposes.
  3. Project sponsors may occasionally ask for an estimate of ‘hours per week’. These are useful to provide a comparison of resource inputs between projects. But they can be difficult to arrive at on a consistent basis. The use of ‘average hours a week’ does not encourage academics to think through the real time required (it encourages them to assume that they do the same amount of work in every week, which they do not). It is also difficult to cost as the basis on which this calculation would be made is not clear (e.g. should working weeks or calendar weeks be used; over how many years will the academic be working).
  4. Similarly, the use of ‘number of days in a year’ is difficult to cost (how many days does the academic work in a year – and how many hours a day?)
  5. Under either of these, it will be difficult for academics who are using robust methods as they estimate their time (e.g. building up their project estimates week by week) to convert these into figures that can be robustly costed.
  6. That is why it is good practice to estimate total hours on the project, not hours a week or days a year.
  7. To avoid these problems the Research Councils, for example, require an estimate of hours required for the whole project. They are still interested in average hours per week purely for comparative purposes, but are calculating a notional figure themselves (based on standard assumptions about the number of weeks in a year).
  8. It is strongly recommended that institutions do not use or refer to percentages of time in their time estimating procedures, or on their project costing schedules. This implies that there may not have been a particularly robust method of estimating time, as it is difficult to be certain that the costs that are then derived are correct.

Calculating FTEs

  1. The project hours of each investigator should be converted to a FTE figure so that it can be used as a basis for charging indirect cost rates and estates charges.
  2. The academics’ estimates of hours per project could be converted into hours per annum by dividing by the years of funded life of the project. These hours per annum should then be divided by the standard working year of 1650 hours – that will give a FTE for each investigator. These are then added together, along with the FTEs of Research Assistants and other research staff, to provide the total FTEs for each year of the project. Indirect cost rates and estates charges should be applied to that total FTE figure. Academic salary costs if quoted at a £/FTE basis, should be applied to each FTE figure.

Chapter C.3 Salary costs

  1. A salary cost should be applied to the time estimated against any one academic’s name, which reflects the salary costs of that academic to the institution. This can be based on appropriate pay bandings (individual salaries need not be disclosed on costing schedules to maintain confidentiality). Pay bandings can be used for all academic staff, or only some grades (e.g. professors) where confidentiality may be more of an issue. However, variation in honorariums and on-costs may mean that pay bandings are useful for all staff.
  2. The annual salary cost applied to a project for any one academic should be that which relates to the actual or likely salary or pay banding of that individual, whether they are in post or yet to be employed.
  3. The pay bandings should be set by each institution in a way that ensures that their application is fair and reasonable.
  4. The salary or pay bandings applied:

    should include:

    • on-costs;
    • allowances;
    • all honorariums (e.g. associated with the responsibilities of a dean or head of department);
    • fees or other similar payments made in lieu of salary (e.g. for visiting lecturers/professors, whose salary or pay banding may only consist of this cost element);

    should not include:

    • payments that purely relate to clinical work (often paid on an agency basis) e.g. NHS merit awards/clinical excellence awards, intensity payments, or Additional Doctors Hours (ADHs);
    • academic overtime. This generally should not be included as a direct cost on a project either by including it in the salary costs (in the £/FTE calculation) or by including it as a directly incurred cost.

      However, some sponsors may exceptionally agree to pay this as a specific part of their price. A sponsor may agree to pay a premium for a report to be produced quickly, which might require it to be done outside normal working hours (possibly leading to an overtime payment by the institution to the academic). This is not part of the salary cost (nor the pay banding) used in the fEC; it should not be included as a directly incurred cost. It is part of the price.

    • fees paid by a university to a UK academic who may be carrying out research work during their time spent on ‘private consultancy’. This is unlikely to be acceptable practice in most institutions. However, if it does occur, their time should be costed at the appropriate rate for that grade of staff, and any additional fees paid should not be included in any part of the fEC of a research project.
  5. Pay bandings should be based on an average of actual salaries (and all related costs, above) that are paid to the investigators within each band in a year, expressed in prices that will apply to year one of the project. This should be recalculated at least once every three years, with indexing applied in other years.
  6. Institutions can use actual salaries for some grades of staff and pay bandings for other staff (e.g. professors). However, where both methods are being used they should be applied consistently, i.e. if a pay band is being used for professorial staff, the average pay for that band should be applied to all professors’ time that is charged to projects.
  7. A daily or hourly salary cost should be calculated for each salary or pay banding by dividing the average salary for that band by the hours or days in a standard working year.
  8. A salary cost should then be applied to each academic’s time:
    • where academic staff are partly or wholly paid through the university then a salary cost should be applied;
    • a salary cost should be applied against the time of clinical academics whether or not their salaries are wholly or partly reimbursed (the reimbursement is part of the knock-for-knock arrangements. This means that Trusts receive clinical services (O(CS)) for reimbursed salary funding and this is deemed to balance at an institutional level. It does not affect time spent by any one clinical academic on a research grant.);
    • similarly, with Oxbridge academics where some or all of the salary might be paid by a college;
    • where staff costs are paid neither by the HEI nor by their collaborating partner (e.g. some visiting fellows, visiting professors from industry, or retired academics) then costs should not be applied to their time as there are no costs in the HEI’s accounting records;
    • the time of NHS researchers who work on a HEI research project, should be estimated and included. However, if their salary is not paid through the HEI, then a salary cost should only be attached to this time:
      • if it is deemed by the HEI to be part of the knock-for-knock arrangements (the HEI is incurring other costs in lieu, e.g. Other (Clinical Services) O(CS)); or
      • if the Trust specifically recharges an appropriate part of the salary costs;
    • where the project work (or fellowship) is specifically deemed to cover 100% of the time of a particular researcher – e.g. RA, or Fellow – then 100% of their salary cost should be included in the fEC. (In these cases the individual’s time cannot be included on another fellowship or research project. This would also mean that their time should be allocated 100% to Research, in the annual TRAC time allocation exercise, with no allocation to Teaching or Support.)
  9. Where an academic is to be involved in the project, but no time can be recorded, then a cost should not be included. An example of this is a Research Fellow all of whose time (100%) has been included on a single fellowship grant from a Research Council, OGD or charity.
  10. Where researchers from collaborating HEIs are to be included in the lead institution’s project costing then the time and relevant staff cost of all staff should be shown separately under the academic staff categories.
  11. Staff costs should be indexed (this is covered under indexing for future years).
  12. Care should be taken to quote year one prices at the price levels likely to be prevailing in year one. Some sponsors, e.g. the Research Councils, will index the prices themselves in future years (years two and three of a three-year project). When they do so, they will generally take into account pay increments and promotions on research staff, but not on academic staff (they are not told the grade and bands by applicants). Therefore, the year one salary costs for academic staff should include an element of average likely future years’ pay increments and promotions, unless the staff are already at top of scale.The year one salary costs should also include an uplift, as appropriate, to reflect an appropriate proportion of additional payments likely to be incurred from contribution-related pay (e.g. bonuses or increments when at top of scale), or from a change in the pay structure (e.g. the introduction of a single pay spine or other salary costs arising from the implementation of local pay arrangements).
  13. The impact on a single individual (or a particular pay banding) will not generally be known, so the uplift should be based on the estimated average uplift in academics' salaries across the institution. Uplifts in salaries across all years of the project should be considered and built into year one. To do this, the salary at the midpoint of the project life, assuming an annual pay increment and an average uplift in academics' salaries for contribution-related pay etc., expressed in year one prices, could be used as the year one salary.

Chapter C.4 Avoiding over-charging

  1. Institutions should not charge more than the salary costs they incur to research projects funded on a fEC basis by public bodies (i.e. Research Councils, and many OGD projects). A number of methods have been included in TRAC to prevent this:
    1. Each institution should have in place a process that confirms that it is likely that the staff whose names are included on the project costing form will have the time available to carry out the work, given current workloads, outstanding bids and likely success rates. This confirmation need not be in writing. The process could be based around negative confirmation only (i.e. the PI is alerted by the academic or other member of staff or management where it is considered that the academic will not be able to make the time available);
    2. The salary costs estimated and charged by a group of academics on Research Council and OGD-funded research projects(and including for this purpose an appropriate part of the time spent on Support) should not exceed the total salary cost that it is estimated that they will be paid, within the tolerances of the pay bandings used;
    3. The estimates of time made by a group of academics working on cost-based price research projects (i.e. for the Research Councils and many OGDs) should not exceed 100% of a standard working year (i.e. 220 days, or 1650 hours) in a year. (Direct project time and an appropriate part of Support time should both be considered in this.) It is not a requirement for the time for these academics to be added up for all projects being carried out and bid for, to check whether their total committed time on these activities exceeds the standard working year. However, it is good management practice to ensure that staff workloads are reasonable;
    4. (Research Councils are also likely to introduce (joint) systems that will allow them to identify any individuals who are working more than a standard working year on Research Councils’ projects. However, Research Councils also realise that, to some extent, institutions will need to over-commit academics at the proposal submission stage as success rates for proposals are not 100%.)
    5. Salary costs are to assume a standard working year of 1650 hours a year, whilst actual hours are to be charged to research projects. As actual working hours in a week are often more than a standard working week (37.5 hours) this might be seen as a potential area where over-charging might occur. But, as explained at the start of Section C, actual working days in a year are generally less than those in the standard working year (220 days). It is therefore likely that, overall, both actual and standard working hours in a year will total 1650. Cost rates based on 1650 hours, applied to actual hours worked, are therefore fair and reasonable, and double-charging is unlikely to occur;
    6. Academic overtime is excluded from the costs that are charged to research projects, unless the sponsor agrees to bear it in addition to normal salary costs;
    7. From December 2009 institutions will be able to, and should, compare:

      the total academic staff costs attributed to the Research Council sponsor type in the annual TRAC time allocation exercise

      with

      the total academic staff costs charged to Research Council projects in the accounting records under TRAC fEC.

      see reconciliation.

Chapter C.5 Supervising PGRs

  1. The annual TRAC process recognises an activity called the supervision and training of PGRs. This is different from the work undertaken by an academic in a research project. A PGR student is not considered to be a member of academic staff.
  2. Where a PGR is on a project studentship linked to a project, they may be recognised on the project-costing schedule. All of the costs associated with their supervision and training should, however, be kept separate from all other costs of the research project itself.
  3. As funders (including the Research Councils) do not currently fund PGRs on an fEC-basis, and as establishing the fEC can be complex, it is good practice to estimate their costs on a research project, but it is not a minimum requirement under TRAC. (The Research Councils, for example, require appropriate project studentships to be recorded on their application form under ‘exceptions’ and these are funded on the basis of stipends plus fees – not on the basis of fEC.)
  4. Therefore the time the supervisor spends in PGR training and development (and this would include the time of internal and external examiners, co-supervisors, etc.) and stipends paid to students, should not be included as part of the research project fEC. (And, therefore, the indirect costs and estates costs associated with this time should not be included either.)
  5. Where the PGR is closely linked with one research project, it is good practice to show the fEC of this activity on the same research project costing schedule. However, this should be shown as a clearly separate category of expenditure from the costs of the research project.

Section D: Estimating other costs

  1. Costs charged to a project can be categorised as directly incurred, directly allocated or indirect.
  2. It is good practice to charge costs as direct where possible. Costs should be identified and charged as direct costs in TRAC fEC where administrative systems will efficiently and robustly support this.

Directly incurred costs

  1. Directly incurred (DI) costs are items or services incurred or purchased specifically for a project. As well as Research Assistants they include consumables, travel and subsistence, equipment purchase and dedicated technicians or other support staff.
  2. Costs are charged to projects on actual. These costs can be vired (i.e. budgets can be transferred between DI fund headings when accounting for spend to sponsors).

Directly allocated costs

  1. Directly allocated (DA) costs are costs of services on a project, where the services are shared by other activities and projects. Investigators’ time, laboratory technicians, major research facilities, and estates should be directly allocated. Charge-out rates for each of these items are generally applied to researcher FTEs to derive an estimated cost for each project (other methods can be used).
  2. Costs are charged to projects on a standard charge-out rate, based on estimated usage, and do not change during the project life. No record of actual usage by a project is required. These costs cannot be vired (i.e. budgets cannot generally be transferred between fund headings when accounting for spend to sponsors).

Indirect costs

  1. Indirect costs are not directly related to any one project or activity, but are a necessary part of the costs of undertaking an activity. These costs are attributed to projects through a proxy – £/FTE.
  2. Costs are charged to projects on a standard estimate made pre-award, and do not change during the project life. No record of actual costs at a project level is required during the project life. These costs cannot be vired.

Choosing between categories

  1. By charging items as a direct cost, and not leaving them in indirect costs, institutions may:
    • be able to derive higher levels of recovery from sponsors of projects who do not fund on a fEC-basis, such as charities;
    • have more scope for virement of costs during the project life;
    • be viewed as lower cost than their peers during benchmarking of estates and indirect cost rates;
    • avoid being above the upper quartile of indirect cost sector rates that brings with it potential penalties – see external quality assurance process.
  2. Costs should appear on only one of the three categories (DI, DA or indirect) – there should not be any double counting.
  3. All three categories may include laboratory technicians and equipment costs, but they will each relate to a different type of these costs.

Laboratory technicians

  1. Laboratory technicians’ costs may be directly incurred or directly allocated. They can be charged as:
    • directly incurred (with timesheets supporting these charges)
    • directly allocated (a £/FTE basis might be a useful way of ensuring that costs are all charged to projects)
    • part of the laboratory estates cost (but not after 1 August 2007).
  2. Technicians and other non-academic staff who are dedicated to a project should be classified as directly incurred. They may be working in laboratory or non-laboratory departments. Their time should be charged against each project according to actual time worked on that project. If they are working on only one project, then this charge might be done in a way similar to RAs (i.e. through a direct posting from the payroll).
  3. If they are working on more than one project then the charges should be made from timesheets – records of time spent on each project. These should be at least quarterly and it is good practice for them to be counter-signed by their manager.
  4. The level of resource required on a project for directly incurred costs will need to be justified in the case for support in a Research Council grant application.
  5. All other laboratory technicians should be directly allocated, no later than 1 August 2007. Prior to that date their costs can be included as part of the estates charge, or directly allocated as a separate item. These are staff who provide services to more than one project, or provide an infrastructure service to the department as a whole. Charge-out rates are applied, for example on a £/FTE basis. See Part IV Laboratory technicians.
  6. Costs charged to projects on a standard percentage of salary basis should only be classified as DA cost, they should not be DI.
  7. Other support staff can be classified as directly incurred, directly allocated, or left in the indirect or estates rates. However, if they are DI or DA, then the above requirements apply.

Equipment

  1. The costs of equipment can be directly incurred or directly allocated:
    1. equipment purchased for a project is a directly incurred cost. All costs of the purchase should be included. (The charge to a project normally assumes a write-off of the costs over the life of the project. All costs are, therefore, directly incurred.)
    2. equipment already owned by the institution – and being directly allocated to the project on the basis of usage – is a directly allocated cost. (This is charged to projects using charge-out rates. This is covered in Part IV major research facilities.)
    3. equipment already owned by the institution – but not being directly allocated to projects on the basis of usage – is directly allocated but as part of the estates charge. (This is covered in Part IV estates costs.)
  2. The costs of equipment in academic departments should not be included in the indirect cost total.
  3. It is good practice to include all of the costs related to the purchase and maintenance of a piece of equipment that is being acquired specifically for a research project, irrespective of the policy of the project sponsor towards funding different elements. Equipment purchase costs may need to be split between projects if there are multiple sponsors, or conversely a project may receive funding from more than one external source.
  4. Equipment costs include purchase, installation, set-up, testing, maintenance, technicians, spares, additional insurance, exceptional procurement costs, and buildings modification. However, these costs should only be included as a DI cost where:
    1. the same costs are not included as a directly incurred cost on any other project; and
    2. the HEI has a robust system for ensuring that these costs are charged as a directly incurred cost on a research project or equipment grant, and are not then included in estates charges (or indirect cost rates).
  5. Where institutions build equipment rather than buy it, the materials used in the manufacture or assembly process can be included as a DI cost of equipment. The labour costs cannot - they are part of staff costs, charged as a DA or DI technician cost.
  6. When the fEC is to include the costs of equipment purchased for that project, these purchase costs should be written off against the project according to the likely useful life of the equipment (which is often the same as the life of the grant).

Default rates

  1. Some institutions may not have sufficiently robust processes for calculating the indirect cost rate, as determined by the external quality assurance process. In this case institutions should apply the appropriatedefault indirect cost rate.
  2. Some institutions may not have sufficiently robust processes for calculating the estates charges, as determined by the external quality assurance process. In this case institutions should apply the dispensation default estates rate/s (if they are eligible for dispensation) or should not apply an estates rate at all (if they are not eligible for dispensation), as the non-compliant default estates rate is zero.
  3. It is good practice for institutions applying default (or no) rates to cost projects using their own rates. However, this would be complex, as they would need to recalculate the project costs for funding purposes. It is, therefore, not a requirement under TRAC.

Other DI costs

  1. Directly incurred costs could include those from other institutions working collaboratively on the project. They could also include, for example, the costs of research nurses or ethics committees on clinical trials when these are recharged to the HEI by the Trust. (Or when they are calculated by the Trust but not charged to the HEI as the costs are already deemed to be covered through Other (Clinical Services) provided under knock-for-knock by HEI clinical academics.)
  2. Where a project is carried out in collaboration with industry, the total fEC should include the costs incurred by industry, which are recorded through the HEI’s books.
  3. As well as equipment purchase costs, directly incurred non-staff costs might include consumables, travel and subsistence, survey fees, equipment maintenance, purchase of animals.
  4. It would be unusual for maternity and paternity pay, or sick pay of Research Assistants to be identified and included in a project fEC pre-award. However, when incurred post-award, they would be included in the actual project costs. See Section F Post-award.
  5. Maternity and paternity and sick leave of academics should not be included as a separate directly incurred or allocated cost. They are considered to be covered in the standard assumption of 1650 hours per year, and in the indirect costs.
  6. Redundancy costs (actual or potential) should not be included as a separate direct cost, or as a specific additional element in the indirect cost. They are now considered to be covered by the gross cost of capital employed, which provides funds for development and restructuring and is part of the indirect cost total.
  7. (Some non-government sponsors will consider funding a specific redundancy cost for a particular researcher, rather than indirect costs. This does not mean that redundancy costs are to be included as direct costs in the calculation of the fEC but instead they are to be included in the calculation of the price.)
  8. Staff that are providing cover for an academic carrying out research should not be included in the fEC of that research project. It is the time of the investigator carrying out the work that should be included in the fEC. The replacement cost of teaching is not a research project cost.
  9. The costs of disseminating a project's findings are generally not to be included as a DI cost, as most dissemination of research will take place months or years after completion of the project. The costs of this dissemination would therefore be allocated to indirect costs and included in the indirect cost rate.
  10. But note that:
    • the time spent writing the final report for the sponsor should be included in the PI time estimates – even if it takes place after the research grant has been ‘completed’ (as defined by the sponsor);
    • in some cases there is some specific reporting activity within a project, and here the cost is likely to be a directly incurred project cost.
  11. A contingency cost should not be included in the fEC. It can, however, form part of the price, paid by some sponsors.

Supervising PGRs

  1. For project costing purposes, supervising and training a PGR student is a distinctly separate activity from that of managing and carrying out a research project – see PGRs.
  2. The costs of project studentships that are part of a research project are one of the cost elements of that project. It would be good practice for these costs to be included as part of the fEC of that project, but it is not a mandatory TRAC requirement to do so.
  3. Costing PGR activity and pricing PGR activity are two different things. For the time being, project studentships, and other PGR students funded by the Research Councils, will continue to be funded on tuition fees and stipends (or a doctoral training account and stipends). There is therefore no mandatory requirement to include their full costs on a project application (or on any application for a PGR student made to the Research Councils).
  4. But a full set of costs still exists for them. It is just that they are not being recognised as a basis for Research Council funding.
  5. If calculated, the costs should be shown separately. The costs should include:
    • the time of the supervisor in PGR training and development (and this would include the time of internal and external examiners, co-supervisors, etc.);
    • the indirect costs and estates costs associated with this supervisors’ time;
    • the indirect costs and estates costs associated with the PGRs themselves;
    • any direct costs incurred by the institution on behalf of PGR students (e.g. travel and subsistence, consumables, stipends).
  6. The sole exception to the requirement to cost PGR activity separately under TRAC fEC relates to some consumables. Where a sponsor will allow their travel and subsistence or consumables to be included under a research project budget heading, they need not be separately identified as a PGR cost.
  7. Fee remissions should not be included: they relate to source of funding, not real costs. The tuition fees themselves also should not be included: they are income, not a cost.
  8. The allocation of indirect costs and estates costs to PGR FTEs should use the weightings that were originally used (in the denominator) when the rates were calculated – see Part IV Charge-out rates.

Section E: The fEC total

  1. The full economic cost total for a project would have been built up using the methods described above. These costs should all be expressed in terms of the prices for each year that the work is being carried out.

Indexing to year one

  1. Investigators should make a realistic estimate of the start date. There is room for improvement in this area. This will affect the fEC, and the price, perhaps materially.
  2. Institutions should ensure that the year one costs (i.e. to be charged to the project in year one of its life) have themselves included appropriate indexation. Costs are often quoted to sponsors at year one price levels. However, indirect cost rates, estates charges and charges for other DA costs will initially have been calculated using historical data.
  3. A reasonable assumption is for two years’ indexation to be applied to these historical rates when bidding for a research project. This is an average figure, and there will be swings and roundabouts in how appropriate it is for any one research project, but it could provide a relatively simple method of indexing to arrive at the year one rates to be used on any project.
  4. (For example, projects bid for in 2005 will be based on 1 February 2005 rates that use 2003/04 data (i.e. 1 February 2004 price levels). These rates are to apply from 1 February 2005 to 31 January 2006. It could be assumed that projects bid for over this 12-month period actually start six months after application. That means that the average mid-point of year one for these projects could be 1 February 2006. This would imply that a two-year indexation of the 1 February 2005 rates is reasonable.)
  5. A more detailed calculation could be made, based on the specific (likely) start date of each project, coupled with information that will be available from the Research Councils about their indexation practices. However, this would be complicated and need not be done unless institutions wish to. The two-year indexing assumption for indirect cost rates and estates charges is an acceptable basis for TRAC.
  6. In order to arrive at year one rates, an institution should apply the indices that it is using in its planning processes – e.g. those used for their financial forecasts reported to their Funding Council.
  7. The salaries quoted at year one prices for investigators should include an element to recognise promotion/increment drift over the life of the project. This was covered above.

Indexing for future years

  1. A realistic profiling of costs should be made to ensure that indexing (whether done by the sponsor or by the institution) and therefore the fEC, are appropriate. This applies to all elements of cost in the fEC: DI, DA, and indirect costs.
  2. This will help to ensure that the fEC-based prices are appropriate and will give an institution valuable information about the level of the price and the fEC (and therefore their possible contribution). It will also allow standard journal entries to be set up on the accounting system so that future year’s postings of PI costs, estates, and other directly allocated costs such as equipment, can be made easily, at the right price levels.
  3. The profiling can, however, be made over the years that the sponsor will be funding the project. This may be a shorter time period than the elapsed period that that the project will actually be ‘live’. Profiling can be made on a linear basis, but it is good practice to profile costs (including PI costs) according to the year they are expected to be incurred. Indirect costs and estates costs could again be spread in a linear fashion, or across years according to FTEs in each year (the latter method is good practice).
  4. Pay increments for Research Assistants should be included. These could be based on one spinal point increase each year. Pay increments for Investigators are included when indexing to year one.
  5. Indices should then be applied both for pay and non-pay, in accordance with Funding Council planning guidelines, to allow the costs to be expressed in future year’s prices.
  6. Institutions can use their own assumptions on indexation rates and cost profiling of costs. Indexation dates could for example be a 12-month period calculated: from the expected start date of the project; or from 1 April each year; or from 1 August each year. There could be separate dates for pay awards. This is an institutional decision; but it is good practice (and less burdensome) to use one method for all projects.
  7. It is good practice for an institution to use the same price indices and pay awards as those used by the institution in its internal planning and forecasting.
  8. However, the Research Councils will be asking for costs based on year one price levels and will then be using their own indexing methods. Institutions may find it easier to replicate these, if published – see Research Council DSR website accessible at document link Annex 1.

Project cost form

  1. The fEC for each project should be summarised on a project costing form. These should show:
    • the fEC of the project;
    • the funding being proposed (calculated according to the pricing methods applied by each sponsor);
    • the difference between fEC and funding - this will show either a surplus, or a balance of costs to be covered by institutional funds from other sources.
  2. Two examples of project costing forms are given in document link Annex 19.

Use in pricing

  1. The fEC calculated under TRAC should be used as the basis for cost-based pricing for public sponsors such as the Research Councils and OGDs. Refer, for example, to the OST and Research Councils websites, and the H M Treasury letter accessible at document link Annex 1.
  2. The fEC as calculated under TRAC should not be either over costed or argued down. Institutions should not build discounts or subsidies into any of the costs shown on a project when calculating prices on a fEC-basis, with the sole exception of differences that might arise from different profiling and indexing assumptions (see indexing, above).
  3. Negotiations with funders who are funding on a fEC-basis should take place only on the:
    • time input of academic and research staff
    • grade of academic and research staff, and the named individuals
    • levels of technical and secretarial (and other non-academic) FTE input recorded as a DI cost
    • levels of directly incurred non-staff costs
    • use of major research facilities.
  4. For these items, negotiation would form part of the estimating process, with the relevant Research Council panel members considering what resource is, in the case of the Research Councils, needed to achieve the desired outcomes. They would refer to the case for support, justifying the costs, that was submitted along with the research costing form. The result of this negotiation would impact on the budget and the fEC for these items. It is good practice for all negotiations to involve representatives of their institutional finance department (or research services unit) and be signed off by an appropriate administrative authority.
  5. However, negotiations with funders who are funding on a fEC-basis should not take place on pay bandings, estates charges and costs, DA laboratory technicians’ costs, charge-out rates for major research facilities, and indirect cost rates and costs.
  6. Once agreed, amended levels of resource inputs should be used to recalculate the fEC.
  7. When estates charges are being applied to projects on a £/FTE basis, then this basis should be used consistently through any pre-award adjustments. If the estimates of RA or PI time on the bid change during pre-award discussions, then the estates costs charged to the project should reflect this. Indirect costs should also reflect this.
  8. If another charging basis is used for estates costs (e.g. square metres used by a project) then the level of these costs should be reviewed if the time estimates alter, pre-award. They may, or may not, then require adjustment, depending on the needs of the project.
  9. Some sponsors require different costing and verification methods on a project, for example the EU, ESF and the US Government. It is good practice for institutions to use common costing methods, in accordance with TRAC, on all projects irrespective of funder. However, instructions and calculations used to determine the price of a project will differ by sponsor.
  10. The breakdown of the fEC, by type of cost, will normally be required for funders paying on a fEC-based method. If other market-based pricing approaches are used, then it would generally be inappropriate for a full breakdown of the cost to be provided. The calculated costs will provide useful information about acceptable minimum pricing levels. Negotiations, however, should be in terms of inputs and outputs, and costs should not be disclosed.
  11. When negotiating, institutions should remember that the fEC is not (yet) a comprehensive economic cost:
    • buildings costs in the fEC may be understated (as the useful life assumed in the calculations, based on institutions’ accounting policies, may not fully take into account the major restructuring costs required during that life);
    • the full costs of equipment are not included (replacement costs are not currently being included in the fEC, neither are costs for equipment initially purchased through a research grant or otherwise fully written-off in the books);
    • the costs will not include time of staff provided to the institution at no–cost (visiting fellows, retired academics, equipment donated by industry, etc.).
  12. Prices that are not fEC-based should generally be based on the market value of the work. This will usually result in prices that are greater than the fEC, unless the institution makes a conscious decision to cross-subsidise such commercial projects. Guidance on pricing is available in two JCPSG publications – see document link Annex 1.

Section F: Post-award

Recording costs

  1. The costs incurred on each project should be recorded.
  2. DI costs should be recorded as the actual expenditure is incurred. This is the case even when the actual costs exceed the original DI level (and might therefore be ineligible for funding). However, costs recorded in the DI category should be DI costs. In particular, the recording of maternity, paternity and paid sick leave depends on their classification:
    • for RAs and staff in the directly incurred category of cost, they are DI costs. Sponsors generally allow virement within DI costs, and will often consider funding them even if it means that the original DI estimate is exceeded;
    • for academics, they are indirect costs. Investigators are classified as a DA cost, and charge-out rates are applied. These are based on the direct salaries (and on-costs) of staff, and incorporate assumptions about the working year and the time spent on direct Research activity. These do not include payments or time for any maternity, paternity or sick leave. The costs of these have been built into the indirect cost rates (part of the Support time and cost). Therefore, if incurred for a PI on a particular project, those costs should be allocated to Support in the annual TRAC process and should not be recorded as a direct project cost in TRAC fEC.
  3. DA and indirect costs can be recorded on original estimate. This provides a relatively simple method of recording the fEC of each project each year.
  4. Changes to indirect cost rates, or charge-out rates, or the level of resources being charged as DA costs, need not be recorded against the project cost record.
  5. If institutions wish, they can amend their DA and indirect cost charges to reflect more up-to-date rates, or indices, or perhaps actual estates utilisation, for example. However, any recorded increase in DA and indirect costs (from the original indexed estimates) will not lead to additional funding by most sponsors.
  6. For example, changes in the Research Assistant staffing could theoretically lead to different levels of PI, estates and indirect costs. If two RAs are budgeted (i.e. estimated in the bid), one leaves early, and then two new appointments are made, funders such as the Research Councils would not recognise any differences in the PI, estates or indirect cost totals charged to the project from those originally estimated.
  7. However, any decrease in DA and indirect costs recorded or reported against a project may lead to a lower funding, as public bodies have an obligation to ensure that their funds are being used for the purpose originally agreed.
  8. Most fEC-based funders will only change their price where there is a substantial change to the programme of work (e.g. departure of a key member of staff early in the project; serious curtailment of the work; or significant change to the type of work being undertaken). Except in these instances, there is no requirement under TRAC to change DA or indirect cost estimates during the project life.
  9. Where a project transfers to another institution, it is good practice for the recipient institution to recalculate the costs on the project. However, this would only be done if the difference is likely to be significant, and if the institution has systems that allow them to make this calculation efficiently. Changes to funding are not likely to follow – see for example Research Councils’ policies, given on their website, accessible from document link Annex 1.
  10. Rolling programmes more than three years in length are generally subject to a mid-term scientific review, at which time they may be extended. In these cases, the costs estimates (and prices) should be reviewed at this time.
  11. The estimates being recorded each year should be updated for the relevant price level. This can be based on the original phasing of estimates at project approval stage and the original indices.
  12. Entries should be made in project cost records once the work has started. For DI costs this will be when they start to be incurred. For DA and indirect costs this could be when the DI costs start to be incurred, when the investigator starts work, or when the sponsor recognises these costs for funding. It may be easier for institutions to use the latter, so that their costing and invoicing/income receivable systems are compatible.
  13. The Research Councils, for example, allow expenditure to be incurred prior to the start of the research, and subsequently charged to the grant, provided it does not precede the date of the award letter. Payments, however, take effect from the notified start date (shown on the starting certificate) or, if staff are being appointed, from the date when the first such staff start work.
  14. The recording fields, and periods, should be those that are most useful to the institution for managing the projects, charging sponsors, recording debtors, and making reconciliations at year-end and project-end. Quarterly or monthly records may be appropriate; but records should be made on a regular basis.

Reporting costs

  1. Project fEC-based costs will be reported:
    • to sponsors, in accordance with their requirements – the Research Councils, for example, require an Expenditure Statement at the end of a research grant;
    • as part of the external QA arrangements – the records required for this are described under verification, below;
    • possibly, at an aggregated level, to HESA FSR – see document link Annex 1.
  2. The categories of costs currently reported as the direct costs of research to the Higher Education Statistics Agency (HESA) in the Finance Statistics Return (FSR) are not being changed, for the time being. In this context note:
    • direct costs as currently defined would be reported (covering RAs, consumables, etc.), but neither estates charges nor PI salaries would be reported as direct costs of Research for the purposes of this return;
    • the FSR is based on the financial statements, which do not include the TRAC cost adjustments. Direct costs will, anyway, only be partially funded by the Research Councils. There may be issues of confidentiality. HESA definitions are likely to need reviewing as a result of TRAC;
    • research income on cost-based projects such as for the Research Councils may currently be defined for HESA with reference to costs. In this case a simple x% of recorded fEC could be used to establish Research Council income.
  3. Project cost records (maintained during the life of each project) might also be required to meet the needs arising from:
    • resource allocation (perhaps to identify the income from projects that academics are entitled to spend);
    • the identification of income receivable/income received in advance;
    • the requirement to compare charges made to Research Council projects in any one year for academics’ costs (through the standard charges recorded on project cost records), with the costs of the time they have actually spent (through the annual TRAC time allocation process);
    • other information (e.g. confirming whether the total level of directly allocated charges made during a year for an area of cost, such as a research facility, have been set at a level that appropriately ensures the recovery of those costs).
  4. However, project cost records are not required for the preparation of financial statements.

Verifying costs

  1. The costs estimated on projects should be verified, to ensure that they were actually incurred.
  2. Verification can be done by either:
    • recording actual costs as incurred; or
    • recording costs on estimate, and then matching these with the original rate calculations.
  3. Unless otherwise specified below, the required records should be kept at project level on systems that (a) provide an audit trail; and (b) allow aggregation of the entries in each field (time or cost category) each year. The total cost should be recorded in all cases (not any lesser total that forms the price for a particular sponsor).
  4. Directly incurred costs, such as RAs, dedicated technicians and other staff, consumables, travel and subsistence, and purchases of equipment for a project, should be recorded as expenditure is made, according to current practice.
  5. Directly allocated costs, such as pool/shared technicians, major research facilities, and estates, should be charged against the project, on a periodic basis (at least annually) according to estimated usage (by way of regular recharge journal or similar). The original records of estimated usage for Research, and calculation of the rates being applied, should be available for audit on an appropriate project file (but this could be paper- or electronic-based).
  6. The costs of PIs, fellows and co-investigators, as originally estimated and finalised during the project application process, should be recorded against the project periodically, not less than once a year. Again, appropriate records of the time originally estimated, and the pay bandings applied, should be available for audit on an appropriate project file (but the time estimated need not be in a form that could be aggregated for all projects, although this would be good practice).
  7. Indirect costs should be periodically recorded on initial estimate, not less than once a year. Appropriate records of the time and rates used to calculate the indirect cost totals should be kept for audit, but this could be a paper- or electronic-based file.
  8. Each year, or as required for project management purposes, the Principal Investigator should be able to confirm (or otherwise) that, broadly, the amount of time estimated at the start of the project is likely to have been spent, and will be spent, by the staff on the project. Broadly, in this context, means cumulative over the project so far, with reasonable assumptions as to future work on the project, and plus or minus 20%.
  9. The PI should be in a position to confirm this; the institution or head of department need not take responsibility, unless the institution so wishes. The PI need not keep formal records – but sponsors’ ‘dipstick’ style visits might need to see some evidence of time spent, e.g. paper-based diary entries, records of meetings, volume/quality of outputs, laboratory notes, conflicts of time flagged with head of department or supervisor, and so on. This does not imply the need for any timesheets, but it would be good practice in project management to keep a simple record (e.g. in a desk diary) of the significant inputs made to the project. The events, rather than time, are all that might be recorded in this. See document link Annex 1 – Research Council website – for more information on Research Council dipstick testing.
  10. The records therefore required under TRAC are no more than the desk diaries, laboratory notebooks and other mechanisms that staff already use to manage their time and their projects.
  11. Timesheets or other records of actual academic staff time by project should not be maintained to meet TRAC requirements. They are not required under TRAC. However, if a research unit does decide to complete partial or full timesheets (perhaps to satisfy EU or commercial requirements; or to overcome problems of robustness if there is little Research activity), then institutions should ensure that those processes, including the definitions of hours and costs/hour, are broadly compatible with the processes institutions are introducing more widely, both for project costing under TRAC and for the annual TRAC cost allocation exercise.
  12. Exceptionally, the Research Councils may require special project management procedures on very large projects, as currently (e.g. ESRC centres). This might continue to involve a particular type of time-recording (such as timesheets).
  13. Every year, from 2009, the institutions should compare the total academic costs attributed to the Research Council sponsor group in the annual TRAC time allocation exercise, with the total academic staff costs charged to Research Council projects in the accounting records - see reconciliation.