JCPSG | TRAC Guidance

Part V - TRAC fEC

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

3. 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.
4. 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

5. 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).
6. 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

7. 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.
8. 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

9. 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.
10. Costs should appear on only one of the three categories (DI, DA or indirect) – there should not be any double counting.
11. All three categories may include laboratory technicians and equipment costs, but they will each relate to a different type of these costs.

Laboratory technicians

12. 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).
13. 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).
14. 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.
15. 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.
16. 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.
17. Costs charged to projects on a standard percentage of salary basis should only be classified as DA cost, they should not be DI.
18. 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

19. 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.)
20. The costs of equipment in academic departments should not be included in the indirect cost total.
21. 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.
22. 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).
23. 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.
24. 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

25. 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.
26. 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.
27. 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

28. 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.)
29. 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.
30. As well as equipment purchase costs, directly incurred non-staff costs might include consumables, travel and subsistence, survey fees, equipment maintenance, purchase of animals.
31. 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.
32. 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.
33. 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.
34. (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.)
35. 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.
36. 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.
37. 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.
38. A contingency cost should not be included in the fEC. It can, however, form part of the price, paid by some sponsors.

Supervising PGRs

39. 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.
40. 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.
41. 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).
42. 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.
43. 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).
44. 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.
45. 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.
46. 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.