Costing and Pricing Workshop
Organised by Finance and GRE
for University of Greenwich staff
Costing and Pricing workshop - SPRING 2011
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UoG Central Services
Research Team, Greenwich Research &
Enterprise
Our aim is to....
‘assist with the delivery of an efficient, pro-active
and customer-focused pre-award service’
Finance
Our aim is to....
‘assist with the delivery of an efficient, proactive and customer-focused
post-award service’
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Contact Details
Research Support Team
Tracy Banton
Finance, Research &
Enterprise
Wendy Curran
Research Support Manager
Extn: 8406
[email protected]
Research Finance Manager
Extn: 8283 [email protected]
Melanie Hackett
Research & Consultancy
Administrator
Extn: 7626 [email protected]
Funding Administrator & Adviser
Extn: 7920
[email protected]
Caroline Edney
Jane Adamson
Research & Consultancy
Administrator
Extn: 9858 [email protected]
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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):
• PI one day a week
Costs of resources used by a project • Space used (Estates
Rates)
that are shared by other activities.
Indirect Costs
• Overheads
Current FEC indirect cost rate
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:
1) 50% of your time = 0.5fte
2) 1000 hrs during the whole project = 0.2fte
(1000hrs / (1650hrs 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)
Kit
Travel
Other
DA: PI & Co-I half day a week for
2 years (0.2ftes pa)
Estates 1.45fte x £7,755 x 2years
Indirect Costs 1.45 x £33,143 x 2years
21,240
22,490
FEC =
PRICE =
Costing and Pricing workshop - SPRING 2011
79,027
8,000
2,000
25,000
114,027
43,730
96,115
253,872
??
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Research Council Contract
(Table 2)
DI:
2 part time people for 2 year (1.25ftes pa)
Kit
Travel
Other
DA: PI & Co-I half day a week for
2 years (0.2ftes pa)
Estates 1.45fte x £7,755 x 2years
21,240
22,490
Indirect Costs 1.45 x £33,143 x 2years
FEC =
PRICE = 80%
Costing and Pricing workshop - SPRING 2011
79,027
8,000
2,000
25,000
114,027
43,730
96,115
253,872
203,098
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UoG R&E Portfolio 2010
£M
• Public R
7.2
• Non Public R 4.0
• Consultancy
4.2
15.4
Costing and Pricing workshop - SPRING 2011
PFR
NPFR
Consultancy
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Refreshment Break
After the break even
sunnnier subjects:
• FP7
• VAT
• 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
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Project 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 Development
– Training
– Management
– Other. Costing and Pricing workshop - SPRING 2011
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REMEMBER
GRE ARE HERE
TO HELP YOU
WITH ALL THIS
YOU HAVE A
SAFETY NET!
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VAT
• 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.
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VAT 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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VAT 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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Who’s Public?
Publicly Funded Clients are:
– UK Research Councils
– UK Govt Departments
– UK Govt Agencies
– UK Charities
– Other UK Universities
– European 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
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