All research projects are costed using Full Economic Costing (FEC) methodology. An understanding of the principles of FEC will facilitate the development of a research proposal and will inform decision making.
All proposals for external research funding are developed and internally approved on the InfoEd Proposal Development system. It is important to understand the principles of FEC before using InfoEd.
This section includes information on the following:
FEC and why it was introduced
In 1998 the UK government launched the Transparency Review to demonstrate the full costs of research and other publicly funded activities in higher education. This led to the creation of a costing methodology called Transparent Approach to Costing (TRAC), which is used by HE institutions to determine the costs of three main activities at an institutional level – teaching, research and other – using a range of appropriate drivers.
One of the main cost drivers is the time academics spend on the various activities. This time data is collected at Imperial through the TOAST survey (The Original Academic Staff Time)14-15 TOAST FAQs.
TRAC calculations are reviewed annually and the resulting TRAC rates become effective from 1 February each year. The process is managed by Central Finance, overseen by the College’s TRAC Committee and externally audited.
FEC is a development of TRAC methodology which allows the full economic costs of research activity to be calculated. The rates defined by TRAC are implemented at project level.
FEC principles (includes FEC guidance notes)
Full Economic Costing (FEC) is:
- A standardised costing methodology for research
- Applied at project level
- Used by all UK Higher Education Institutions
- Mandatory for external research funding
FEC represents the cost of all resources needed to undertake a research project: The FEC is not dependent upon what the funder will pay. The amount the funder is willing to pay (and what the institution is willing to accept) is the price of the research. Project costs must not be excluded from the FEC in order to anticipate a pricing decision.
FEC cost categories
Costs are defined in one of three ways:
- Directly Incurred Costs – costs which arise from the conduct of a project, are directly charged to a project as the cash value actually spent, and are supported by an audit record, e.g. staff costs, consumables, travel, equipment etc
- Directly Allocated Costs – costs of resources used by a project that are shared by other activities, and are charged to projects via journals on the basis of estimates rather than actual costs on a project-by-project basis
- Indirect Costs – non-specific costs charged across all projects based on estimates that are not otherwise included as Directly Allocated Costs
Project full time equivalent (FTE)
The full time equivalent (FTE) is the amount of time an employee works as a percentage of full time, e.g. an employee appointed for twelve months on a project for exactly half of their working time would equate to an FTE of 0.5 (50%) for that period. The project FTE is the sum of the researchers’ FTE (both academic and research staff) and project postgraduate students (weighted value).
The project FTE is the driver for the calculation of the estates, infrastructure technicians and indirect costs at project level.
- All research staff (either directly incurred or directly allocated) are counted within the project FTE
- Although a researcher may not attract a salary cost (e.g. visiting academics), their time will still count towards the project FTE – therefore they should be included in the costing
- The time of postgraduate research (PGR) students will count towards the project FTE, but its impact as a driver is weighted for different costs (indirect costs (0.2), laboratory estates charges (0.8) and generic (non-laboratory) estates charges (0.5))
- Support staff (technicians, administrative staff) are excluded – but see exceptions below
- Estates cost, infrastructure technicians, and indirect costs = relevant institutional rate x sum of project FTE
Staff groups that can count towards the project FTE:
- Principal Investigator and Co-Investigators
- Directly incurred research staff
- Researchers, research nurses, clinical research fellows etc.
- Postgraduate research (PGR) students
- If recognised as part of the research team by the funder, appropriate weighting will be applied
- Emerit us professors
- Visiting staff from industry
- Honorary staff
- Visiting academics
Staff groups that cannot count towards the project FTE:
- Technical staff undertaking support
- Administrative and clerical support staff
- Researchers named on the project, but with no associated time or cost
- e.g. a researcher whose time has been wholly (100%) included in another fellowship or research project
- Staff with a minimal project FTE (e.g. 2hrs/week) which is likely to be queried by a funder during peer review
Exceptions for support staff:
- Where staff are not assigned to academic or research grades the Principal Investigator should judge whether to include an individual as a researcher – provided it can be justified to the funder and/or peer review panel considering the application
- Support staff can be counted in the project FTE for a specific project only if they meet the TRAC definition of researcher. (See researcher definition in Directly Incurred staff costs section)
- Whilst ‘support staff’ undertaking research can be included in the project FTE with justification, care must be taken because there is a requirement for a FTE adjustment in the TRAC calculations which impacts the calculation of subsequent institutional rates
Directly incurred (DI) costs
Directly incurred staff costs
Directly incurred staff will work on a specific research project (in a full-time or part-time capacity) and their payroll costs are charged directly to the project via the College’s financial accounting system. All costs must be justified in the case for support when applying for external research funding. There are several types of directly incurred staff, research staff and non-research staff.
Research staff (researchers, clinical research fellows and research nurses)
- TRAC defines a researcher in a project as: “anyone who will make a significant intellectual contribution to a research project. Typically such a person would be qualified to carry out independent or supervised research, might provide an academic lead for research, or could provide expert advice to a research project. A researcher has a thorough understanding of what they are doing, can interpret results and devise appropriate ways forward (rather than, for example, carrying out a set of routine operations under carefully supervised conditions).”
- Research staff charged as directly incurred on more than one project will need to be supported by timesheets for some funders, e.g. Research Councils, European Commission.
Fellows and fellowships
- The time and salary of a fellow should not be included in the FEC of a new research project if all their time was included in the FEC of their original fellowship or project grant, and if it was funded by a Research Council, Other Government Department (OGD) or charity (irrespective of the amount actually funded). If no time can be attributed to the project, then no associated indirect costs or estates costs can be included.
- When costing a new fellowship, the time and salary cost of the fellow must be considered as directly incurred, not directly allocated, because the latter is an estimated cost.
- The time spent on the new project (and a proportion of the fellow’s salary cost) can be included if:
- The other project will have expired by the time the new project commences
- The other project was charged with less that 100% of the fellow’s time
- The new project is outside the scope of the original fellowship
- Directly incurred non-research staff include the following:
- Technicians (if dedicated)
- Will be required to complete timesheets for some funders e.g. Research Councils, European Commission
- Clerical staff (if dedicated)
- Will be required to complete timesheets for some funders e.g. Research Councils, European Commission
- Postgraduate research (PGR) students
- Must be eligible for inclusion on a project in accordance with the terms and conditions of the funder (e.g. project PGR studentships)
- Technicians (if dedicated)
Some types of staff cannot be categorised as directly incurred. These include:
- Research fellows
- researchers who are wholly funded from an alternative public source during the period of proposed project activity. Institutions cannot recover more than 100% of a salary from public bodies
- Directly allocated shared laboratory technicians (pool/infrastructure)
Directly incurred postgraduate research (PGR) students
The research work undertaken by postgraduate research (PGR) students is recognised as integral to research projects by many funders, including Research Councils.
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. In order to understand the true costs of a project, the costs of academic supervision and training should be estimated. However, many funders will not meet these costs, so they must be kept distinct from other costs associated with Principal Investigator and Co-Investigator time. Whether this is translated into the price is dependent on a funder’s terms and conditions.
Research Councils will meet the costs of tuition fees and stipends for PGR students as exceptions at 100%, but not the costs associated with academic supervision and training.
|Include in the FEC?||Funded by Research Councils?|
|PGR tuition fees||No||Yes|
The following elements should be considered when costing a PGR student:
- The stipend (bursary) payable to a student by their institution is part of the project studentship. It should be included in the FEC and met by the funder.
- The stipend rate applicable is dependent on the terms and conditions of the funder.
- The stipend (bursary) rate payable to a postgraduate research (PGR) student will vary depending on the funder. When costing a proposal, the stipend rate may be dictated by the funder (e.g. Research Councils) or subject to negotiation (e.g. industrial studentships). It is important to ensure that the stipend rate used is competitive and in line with the College’s main funders. As a general rule, the stipend rate should at least match the Research Councils stipend rate. Although there is no maximum financial limit for bursary payments, payment of a higher rate is likely to be closely scrutinised by HM Revenue and Customs to ensure it is a genuine studentship, not an employment contract.
PGR tuition fees
- Tuition fees payable by a student to their institution are part of the project studentship. Fees are not considered part of the FEC because they relate to the source of funding, not real costs; it is a non-cost item, but fees should be included in the price charged to the funder.
- Information on the bursary payment procedure and rules
- Information on fees for Home and EU postgraduates (full-time and part-time)
Academic supervision/training time
- Time spent on training and supervising PGR students on research projects is identified separately from other project management and research activity. It is included in the FEC, but will not be met by some funders, e.g. Research Councils.
- Consumables, travel etc should be included as directly incurred costs. External courses attended by a PGR student on a project studentship should be included as directly incurred costs.
- Indirect costs and estates costs associated with the PGR student and supervisor’s time are included in the FEC, but will not be met by some funders, e.g. Research Councils. Indirect costs and estates costs associated with the PGR student are weighted.
Student intellectual property policy
- Where students generate intellectual property (IP) in the course of their study or research, ownership of that IP will be governed by the College’s IP policy.
Research Councils – collaborative doctoral studentships
- Collaborative doctoral studentships are PhD studentship projects based in UK universities. Projects are often carried out in collaboration with non-academic organisations, such as industrial partners, whose level of involvement will depend on the funding scheme or Research Council. These studentships include doctoral training grants (DTG) and CASE Awards.
Doctoral training grants and accounts (DTGs/DTAs)
- The College's doctoral training grants and accounts are managed by the Finance Division in close liaison with departments and divisions. They are not administered in the same way as other externally funded research projects because they are not classified as research income. For more information, please contact your Faculty Finance Officer or Ewa Szynkowska.
CASE awards (collaborative awards in science and engineering)
- CASE awards are industrially focused studentships allocated by a Research Council to companies in collaboration with an academic partner. Time is spent by the student working in the company. The company provides a financial top-up to the core Research Council award.
- Funding from the industrial partner is usually governed by a legal agreement. It is the responsibility of Research Services to negotiate and finalise the terms of the agreement, but the department/division is responsible for managing the actual award. It is not administered in the same way as other externally funded research projects because CASE awards are not classified as research income. Faculty Research Services teams will advise the appropriate contact within Finance.
Directly incurred non-staff costs
Directly incurred non-staff costs are project specific running costs. They should be charged as actual expenditure incurred and must be auditable.
- Equipment purchases and associated costs
- Travel and subsistence
- Recruitment and advertising of staff
- Central Biomedical Services (CBS) purchases
- Professional fees
Directly incurred equipment costs
All new equipment required for a project should be included as directly incurred. Supplier quotations should state the price applicable at the proposed purchase date rather than the current price.
Costs to consider when costing new equipment include:
- Installation, set-up and testing
- Delivery and import duty
- Spare parts
- Maintenance/service contracts (for the project duration)
- Exceptional procurement costs
- Insurance costs
- Buildings modifications
All new equipment should be costed inclusive of VAT at the appropriate rate if chargeable. Contact the VAT department for further information and advice, e.g. VAT exemption for medical research.
The College’s procurement policy states that purchases over a specific limit are subject to competitive quotations to ensure value for money. Contact the Purchasing department for further info rmation and advice.
Costs relating to equipment already owned by an institution can only be charged in certain circumstances and should not be directly incurred. For further information about existing equipment and facilities see Directly allocated research facilities.
Directly allocated (DA) costs
Directly allocated academic staff time (PI/Co-I time)
The Principal Investigator and Co-Investigators are required to estimate the time they contribute to each project, irrespective of how they are funded. This is included in the calculation of the cost of a proposal. Academic time is included in the project FTE. All academic input must be considered whether a salary cost is incurred or not (e.g. visiting academics, emeritus professors, honorary staff).
NHS academic staff costs should be included if they are part of the reciprocal "knock for knock" arrangement, or if the Trust recharges an appropriate part of the salary costs. (“Knock for knock” is a term which reflects the College’s interdependent relationship with its associated NHS Trusts, e.g. the College’s clinical academics provide patient services to the NHS, and NHS clinicians provide teaching to the College. Neither party cross-charges for these arrangements - the burden of doing this would be too onerous - but absorbs the costs themselves. The assumption is that the net effect is neutral, i.e. both the College and NHS receive the same level of service.)
TRAC guidance states that directly allocated salaries can be estimated by using either pay banding or actual salaries, or a combination. At Imperial, directly allocated academic staff costs are calculated using pay bands.
To calculate the costs of academic staff (Principal and Co-Investigators) on research projects, all direct time required to manage the project, to undertake the work and to supervise the research must be estimated.
For calculation purposes only, time estimates must be based on the default TRAC standard working year of 1650 hours per year (or 220 days a year; 44 weeks a year; 37.5 hours per week; 7.5 hours/day). It is not indicative of the actual working year (contracted or otherwise), but is imposed so that we do not recover more than 100% of a salary from public bodies.
Time does not need to be estimated in certain circumstances:
- Applications for travel/conference or equipment only grants
- When a researcher is named on the project, but has no associated time or cost
e.g. a researcher may work on the project, but their time has been wholly (100%) included in another fellowship or research project (from the Research Councils or Other UK Government Departments)
Directly allocated estates costs
The estates rate is calculated to include premises-related research costs, including:
- Repairs and maintenance
- Basic services and utilities, rates, rents, insurance, gross buildings depreciation
- Estates staff, cleaning, porters, security
- Existing equipment and research facilities (with the exception of a limited number of charged out directly allocated research facilities)
The estates rate includes estates costs that are incurred by both academic departments and central Facilities Management, and the cost of all support staff related to these areas.
The estates charge for a project is calculated as the institutional rate x sum of project FTE. The project FTE is the driver for estates.
The estates rate is applied irrespective of whether or not a salary is to be incurred, and is dependent on the location of the research. Imperial currently has two estate rates: laboratory and non-laboratory. The laboratory rate applies to all departments except the Business School and Mathematics which are classified as non-laboratory.
The estates rate should be applied to the time of all researchers working in Imperial-owned laboratory facilities, irrespective of the funding of that facility.
Other factors affecting the estates charge:
- It is good practice for charges to reflect the location where each researcher is working but a single estates charge can be applied to represent where the majority of research will be undertaken.
- The estates rate applied to a researcher is determined by the rate assigned to their department/division and must not be changed.
Collaborative projects between institutions
- The estates rate should reflect the costs of the project (i.e. where the staff are working), therefore each institution should provide details of their own associated costs.
NHS Trust knock-for-knock
- If the facility is deemed part of the NHS Trust knock-for-knock arrangement, the appropriate Imperial estates rate can be applied.
- The estates rate applied to the time of visiting academics is the same as for Imperial staff working on the project, irrespective of whether a salary is incurred or not.
- If a researcher works off-site for six months or more in aggregate during a project, then no estates rate should be applied for that period of time. The off-site rate (zero) will apply with the following exceptions:
- If the facility is deemed part of the NHS Trust knock for knock arrangement, then apply the appropriate estates rate
- If the off-site provider intends to invoice Imperial, then costs should be included.
Directly allocated research facilities
Under FEC, the costs of most items of equipment and facilities already owned by the institution will have been automatically included in the calculation of the estates rate, and are therefore included in the FEC of a research project within the estates charge.
However, since 1 February 2006, Imperial has adopted usage based charge out rates for a limited number of facilities and equipment whose annual FEC cost is deducted from the College’s estates calculation. These facilities meet defined criteria for accessibility by users and recoverability.
There are three types of internal research facility:
FEC Charge-out equipment & facilities (extracted from estates costs)
- Charge-out research facilities are categorised as directly allocated and can comprise of:
- A single piece of major equipment
- A collective suite of equipment
- A research service, e.g. statistical advisory service
- A FEC compliant rate for each facility is calculated as an hourly running cost inclusive of facility staff costs, maintenance, consumables etc, but excluding a provision for replacement.
- The charge out rates of these facilities can be included on research proposals submitted to all funders, including Research Councils, because the costs have already been deducted from the Estates calculation.
- Directly allocated research facilities are selected and approved on an annual basis by the College’s TRAC Committee and detailed in a central facility Charge Outs List.
- TRAC guidance allows institutions to classify a facility as either a Major Research Facility (MRF) or a Small Research Facility (SRF). MRFs are significant in size and complexity and include the costs of depreciation and space charges. SRFs have lower operating costs and complexity, and include running costs and staff costs only. Charge out rates calculated for MRFs and SRFs are both referred to as FEC charge-out rates.
- Central Biomedical Services (CBS) is the College's only MRF. All CBS-related costs are calculated in consultation with the CBS unit at each campus. Costs are calculated using a CBS costing tool that provides a price in both FEC and non-FEC terms, dependent on the type of funder. Faculty Research Services teams can help to locate the relevant CBS Manager for each campus.
- Detailed information about managing College research facilities and the process for selecting future charge-out facilities can be found in the Framework for Managing Research Facilities Guidance.
Multi-user and PI-led equipment & facilities (included within estates costs)
- Multi-user and PI-led access charges cannot be included on research proposals submitted to funders who pay FEC (e.g. Research Councils, Other Government Departments). However, they may be included in proposals to other funders such as Charities and Industry. See guidance on Applying for Access Funding.
New and external equipment and facilities
- The following costs are not directly allocated – they should be classified as directly incurred:
- New equipment to be purchased for a specific project
- Access costs for external equipment and facilities (categorised as ‘professional fees’)
- See dedicated guidance for RCUK’s policy and requirements relating to the purchase of new equipment (including summaries of individual Research Council requirements and contributions and InfoEd costing).
Detailed information on technicians is available in the Technicians Guidance document.
There are three categories of technician:
- Directly incurred technician
- Dedicated to a specific research project(s) - whether in a full-time or part-time capacity
- Salary costs are directly charged to research projects based on actual costs
- Directly allocated pool technician
- Supports more than one research project (excluding support of infrastructure) – including externally funded research projects, institution/own funded research and support for postgraduates
- Salary costs are charged to research projects using an average rate per hour depending on the grade of the technician (£/hour)
- If technician time is required, the number of hours is estimated (excluding activity considered as Directly Incurred or Infrastructure)
- Directly allocated infrastructure technician
- Supports research infrastructure including health and safety, stores, workshops, laboratory equipment maintenance, laboratory management and administration
- Salary costs are charged to research projects based on an average rate per project FTE. The project FTE is the driver for infrastructure technicians, similar to the calculation of estates and indirect costs
- Inclusion of infrastructure technicians costs (£/FTE) in the FEC of a research project is mandatory for all departments assigned a laboratory estates rate (i.e. all departments except the Business School and Mathematics)
- Infrastructure technician rates are set as two institutional rates (clinical and non-clinical) which are attributed to departments and divisions to mirror the laboratory type. It must not be overridden unless the project is to be undertaken off-site
How to charge technicians to projects:
|Type||Directly incurred (DI)/directly allocated (DA)||Charging method||Justification required in application?|
Directly incurred technician (excluded from project FTE)
Dedicated project support in either full or part-time capacity
Follows standard procedures or techniques
Time for support staff is excluded from the project FTE
|DI||Included on proposals based on actual salary costs||Yes – subject to peer review|
| Directly incurred technician (included in project FTE)
Dedicated project support in either full or part-time capacity
In exceptional cases, technicians undertaking research can be categorised as a researcher.
Time for research technicians can be included in the project FTE
|DI||Included on proposals based on actual salary costs||Included on proposals based on actual salary costs|
Provides general support, e.g. health and safety, stores, laboratory equipment maintenance etc.
|DA||Included on proposals as a rate per project FTE (alongside the estates rate)||No – not subject to peer review|
Supports a number of research projects
|DA||Included on proposals as a rate per hour (if required)||Yes – subject to peer review|
These are non-specific costs charged across all projects, based on estimates, that are not otherwise included as directly allocated costs:
- General office and basic laboratory consumables
- Library services/learning resources
- Finance, personnel, public relations and departmental services
- Central and distributed computing (if not directly allocated)
Indirect costs are calculated as the (single) institutional rate x sum of project full time equivalent (FTE). The project FTE is the driver for indirect costs. The indirect cost rate is applied irrespective of whether a salary is to be incurred or not, and is independent of the location of the research.
TRAC (FEC) rates and indexation
The estates, infrastructure technician and indirect cost rates that are used to develop the Full Economic Costs (FEC) of research are calculated on an annual basis using TRAC methodology.
Costs are established at departmental level and amalgamated to provide institutional rates. Costs are apportioned to teaching, research and other using various cost drivers, e.g. the space survey drives the estates costs; staff numbers drive HR costs. Calculations are managed by the TRAC manager (Finance) and overseen by the TRAC Committee, and subject to external audit.
To calculate the FEC of a project, a provision for inflation will be automatically applied to all costs regardless of a funder’s policy towards indexation. Appropriate indices – approved by the College’s TRAC Committee – will be applied to each cost category.
Some funders will dictate the way that costs are presented on an application, and may even impose limits on the inflation rates which can be applied, e.g. Research Council applications must be submitted at 100% FEC excluding indexation, even though they will only pay 80% FEC (with exceptions).
TRAC rates are updated each year, effective from 1 February.