Presentations text content in Costing and Pricing workshop - SPRING 2011
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Costing and Pricing workshop - SPRING 2011
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Costing and Pricing Workshop
Organised by Finance and GRE for University of Greenwich staff
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Research Team, Greenwich Research & EnterpriseOur aim is to....‘assist with the delivery of an efficient, pro-active and customer-focused pre-award service’FinanceOur aim is to.... ‘assist with the delivery of an efficient, pro-active and customer-focused post-award service’
UoG Central Services
Slide3Contact Details
Research Support Team
Wendy CurranResearch Finance ManagerExtn: 8283 w.curran@gre.ac.ukCaroline EdneyResearch & Consultancy Administrator Extn: 7626 c.j.edney@gre.ac.ukJane AdamsonResearch & Consultancy Administrator Extn: 9858 j.adamson@gre.ac.uk
Finance, Research & Enterprise
Tracy Banton Research Support Manager Extn: 8406 T.Banton@gre.ac.uk Melanie HackettFunding Administrator & Adviser Extn: 7920m.hackett@gre.ac.uk
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Full Economic Cost
(FEC) :
Costing Bids Guidance
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Background
Transparent Approach to Costing (TRAC), which HEFCE created in 1999.
The process went further creating Full Economic Costing (FEC) for all UK universities in Sept 2005, with first Research Council FEC grants awarded April 2006.
Academic time allocation schedules are used for TRAC and also to calculate the amounts for Estates and Indirect Costs.
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All projects are to be costed at FEC
This enables Schools to make an informed decision.
Loss-making projects can be taken on: foot in the door, new markets, charities.
It is the portfolio of total institution projects that is important.
The HEFCE requirement is that HEIs are sustainable.
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FEC Template
Directly Incurred (DI):
Costs that are explicitly identifiable as arising from the conduct of a project
1 Person for a year
Piece of kit
Travel Exps
Directly Allocated (DA):
Costs of resources used by a project that are shared by other activities.
PI one day a week
Space used (Estates Rates)
Indirect Costs
Current FEC indirect cost rate
Overheads
Total
FEC
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Space & Overheads
Estates rates for space includes:
Space, utilities, maintenance, insurance, investment adjustment, depreciation.
Indirect rate includes:
Central costs like HR, Finance, Personnel & your department’s own administration
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Estates & Indirect Rates
1st February 2011 rates are:
Estates rates - Lab based projects - £10,908
fte
pa
- Office based - £7,755
fte
pa
Indirect rates - £33,143
fte
pa
These rates only apply to PIs, Co-Is, RAs when calculating a bid; does not apply to admin support or students.
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Calculating an FTE
4 Examples for a
3
year project:
50% of your time = 0.5fte
2) 1000 hrs during the whole project = 0.2fte
(1000hrs / (
1650
hrs x
3
years))
3) 264 days during the whole project = 0.4fte
(264 days / (
220
days x
3
years))
4) 66 weeks during the whole project = 0.5fte
(66 weeks / (
44
weeks x
3
years))
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Calculating your charge out rate
Find out your salary including on costs (NI, Pension).
You can get this from GRE or your Director of Resources.
Add current Indirect cost rate, and typical estates rate.
The total can be divided by
1650
to give your
hourly
rate.
The total can be divided by
220
to give your
daily
rate.
The total can be divided by
44
to give your
weekly
rate.
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Price is different to Cost
Once FEC is calculated a price can then be decided upon by the applicant in agreement with the School.
Some prices particularly in the public sector are restricted (e.g. 80% of FEC for RCs).
In the commercial sector the School can choose the price – can be above FEC: should price at a premium where we have a market advantage or where the market can stand it. e.g. For accounting, audit, tax & legal services: Senior £2,000 a day ,Specialist ££££££
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Commercial Consultancy Contract (Table 1)
DI: 2 part time people for 2 years(1.25ftes pa) 79,027
Kit 8,000
Travel 2,000
Other
25,000
114,027
DA: PI & Co-I half day a week for 21,240
2 years (0.2ftes pa)
Estates 1.45fte x
£7,755
x 2years
22,490
43,730
Indirect Costs 1.45 x
£33,143
x 2years
96,115
FEC = 253,872
PRICE = ??
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Research Council Contract (Table 2)
DI: 2 part time people for 2 year (1.25ftes pa) 79,027
Kit 8,000
Travel 2,000
Other
25,000
114,027
DA: PI & Co-I half day a week for 21,240
2 years (0.2ftes pa)
Estates 1.45fte x
£7,755
x 2years
22,490
43,730
Indirect Costs 1.45 x
£33,143
x 2years
96,115
FEC = 253,872
PRICE = 80% 203,098
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UoG R&E Portfolio 2010
£MPublic R 7.2Non Public R 4.0Consultancy 4.2 15.4
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Refreshment Break
After the break even sunnnier subjects: FP7VAT Internal Procedures Q&A
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Extra Information
Inflation is relevant for all staff costs and estates and indirect rates
If over a year include a 2% inflation year on year.
For RCs they calculate the inflation for you.
Remember to build in annual pay increments where applicable.
Admin and technical support staff are to be included in a project costing but their
fte
are not to be included in the estates and indirect cost calculations
Slide18Project Costing and Reimbursement Rates for FP7
Budgets should be costed using the same principles of full economic cost (fEC) EC/FP7 indirect cost rates applied accordingly.Claim value will be determined by the type of activity within each work package.Research and Technological DevelopmentTrainingManagementOther.
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REMEMBER
GRE ARE HERE TO HELP YOU WITH ALL THISYOU HAVE A SAFETY NET!
Slide20VAT
Universities are not exempt from being charged VAT. Exceptions are: - Advertising costs - Some medical research costs(Both have to have a signed certificate sent to the supplier).Thus VAT is a further cost to be included in your RESEARCH costs.
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VAT on Overseas Purchases
To ensure goods & services are not bought from abroad to escape paying vat on UK goods & services, Customs decree that we should self charge vat.
Thus the vat guidance applies to goods & services whether bought in UK or Overseas
.
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VAT Guidance
Consultancy
: All routed through GUE Ltd so fully vatable activity and any vat we are charged are recovered from Customs.
Research
: If Publicly funded, we cannot recover the vat from Customs so include any vat on goods/services bought in your costings.
Slide23VAT Examples
BBSRC research grant needs £100k of equipment + vat = £120,000 full cost.(This is publicly funded and so HMRC will not pay the vat element £20k, so will have to include in proposal as irrecoverable vat).Barclays PLC needs £100k of overseas market research + vat self charge = £120,000 cost.(Not publicly funded can reclaim vat so don’t need to include in proposal).
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Slide24VAT Pitfalls
Beware when subcontracting others!If another University does research for us, they will not charge vat and vice versa: it will be an exempt supply.BUT if a company works for us they WILL charge vat and if the original contract is publicly funded it CANNOT be claimed from HMRC. Agree a price inc vat.
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Slide25Who’s Public?
Publicly Funded Clients are:UK Research CouncilsUK Govt DepartmentsUK Govt AgenciesUK CharitiesOther UK UniversitiesEuropean Commission (Except FP6)Research services to these will be outside the scope of vat or exempt.
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UoG Internal Procedures
Forms 1 & 2: To be filled out so that the University knows what is happening.
Why? 1) Track success & opportunities
2) Ability to share research expertise
3) Minimising wasted time & resources on unrealistic expectations
4) Data for Government returns
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Q & A
Slide28Slide29Slide30Slide31
Costing and Pricing workshop - SPRING 2011
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