Equipment Costing Workshops
Costing and charging for equipment that can be shared with external
institutions (and implications of charging internally)
Jonathan Rose
fEC Accountant
Jonathan.Rose@admin.cam.ac.uk
Finance Division
Karl Wilson
Deputy Finance Manager
Karl.Wilson@admin.cam.ac.uk
Equipment sharing initiative – background
• Why are we here?
• RCUK revised guidance on equipment funding from May 2011
• Increase in threshold for minor items to £10k (inc. VAT)
• Justification of all items £10,000 > £135,668
• Evaluation of existing capital assets required
(both within the institution and at other accessible locations)
• If successful, RC’s contribution likely to be limited to 50% of cost.
• Full business case for all items of equipment > £135,668
• Equipment sharing Working Group formed by ROO
• Creation of equipment sharing database to facilitate asset evaluation
• Southern Regional Equipment Sharing Group
Format of the workshop
1. Presentation:
a) TRAC and the Full Economic Cost (fEC) rates for Research
b) Costing and accounting for Small Research Facilities (SRFs)
c) Costing equipment to be shared with external institutions
• (Deadline 1st June 2012)
2. The new equipment costing template – a detailed look
3. Break – biscuits!
4. Over to you – group discussion / questions and answers
5. Final thoughts and reminders
1 (a) TRAC and the fEC rates for Research
• TRAC (Transparent Approach to Costing) – activity based costing
method
• Formal return required by all HEIs to HEFCE/RCUK
• Attributes expenditure (per FS) to activity (also includes income)
• Identifies the direct costs of research and the indirect costs
• Indirect costs used to calculate our fEC rates:
• Indirect rate
• Estates rates (Lab and Non-lab)
• Infrastructure Technician rate
• Rates adjusted for costs recovered through MRF and SRF charges
1 (b) Costing and accounting for SRFs
• Requirements of MRFs/SRFs strictly defined in TRAC guidance
• Any charge made to a Research Grant which relates to more than just
consumables expenditure must = SRF!
• Annual process initiated by fEC Accountant:
• Costing template issued to capture data and meet TRAC requirement
• Annual “Full Economic Costs” to be identified
• Must be costs that are actually (or expected to be) incurred.
• No central or estates costs for SRFs
• Ensure costs can be accurately captured (i.e. through CUFS cost
centre)
1 (b) Costing and accounting for SRFs
1 (c) Costing of equipment shared with external institutions
Small Research Facility
Equipment shared externally
(no external sharing)
(no internal charging)
Include direct costs associated with
running equipment
Include direct costs associated with
running equipment
Optional to include replacement cost
Include replacement cost
Do not include estates costs
Include estates costs
Estimates of different types of usage
(Teaching, Research etc.) important!
Estimates of different types of usage
less important
Must have auditable records
(potential to be audited by RC’s)
Not likely to be subject to audit by
RC’s
Must account for costs re-charged to
Research Grants each year
No costs will have been recharged to
Research Grants
2. Costing template for externally shared equipment
Research Facility / Equipment costing tool
(for Research Facilities and equipment subject to potential sharing arrangements)
Please see accompanying instruction document for guidance on completing this template
General information about the facility
Name of facility/piece of equipment
Make and Model
Facility already/will be charged out as an SRF?
Form Completed By
Date when this form completed
Department name
Department CUFS code
CUFS Cost Centre for facility
Unit of production/output/measurement etc
2. Costing template for externally shared equipment
Usage of the facility/equipment
Type of usage
Research Grants/Contracts funded (research councils, charities, etc.)
Department own-funded (or unfunded) Research
Other external Institutions/Universities (under sharing arrangements)
Other externally funded activity (external trading)
Teaching
Under-utilisation / period inactive
Total
Estimated usage (/year)
Actual usage
-
2. Costing template for externally shared equipment
Direct running costs of the facility/equipment:
Staff
Name / Grade of Staff Member
Variable running costs of the facility
Description of Cost
% of time spent on facility
Variable cost (GBP/)
Annual cost (GBP/year)
2. Costing template for externally shared equipment
If including Fixed Direct costs (below), please state (for each item) if these will be recovered through the SRF charge?
Fixed direct costs of running facility
Description of Cost
Annual cost (GBP/year)
Recovered through SRF
Additional Direct Administration costs of running facility:
Description of Costs
Estimated Cost (GBP/year)
2. Costing template for externally shared equipment
Sustainability Calculation of Research Facility/equipment:
Will Sustainability/depreciation be recovered through the SRF charge?
Separately identifiable Capital
components of the facility
Fixed Asset
reference number
Replacement
Replacement cost (GBP) interval (years)
2. Costing template for externally shared equipment
Indirect Cost incurred by facility
Space occupied by the facility/equipment
Number
RAM (Indirect) charge added to cost of facility
Staff Expenditure Driven
Expenditure Driven
Room
Category of space
Area (m2)
Charge per £'000
141
39
Expenditure per Category
-
2. Costing template for externally shared equipment
Summary - SRF charging only
Total
Per Unit
Direct Cost Component
Staff
Other variable running costs
-
-
Other fixed direct costs
-
-
Sustainability Cost
-
-
Total
-
-
2. Costing template for externally shared equipment
Summary - MRF and external charging (under sharing arrangements)
Total
Per Unit
Direct Cost Component
Staff
Other variable running costs
-
-
Other fixed direct costs
-
-
Direct Administration Cost
-
-
Sustainability Cost
-
-
Indirect Cost
Space
Staff Expenditure Driven
Expenditure Driven
-
-
Total
-
-
Equipment costing workshops
BREAK TIME!
5. Final thoughts and reminders
Decision tree:
Internal
users
Charging for
shared
equipment
External
users
Internal users will
not be charged
No action
required
DI consumables
only?
Re-charge at
cost
(Not an SRF)
More than just
consumables?
Cost and charge
as SRF
Calculate full fEC
(using new
costing template)
Charge full fEC
price
5. Final thoughts and reminders
Factors to consider if already an SRF:
• Two charge out rates:
1) Normal SRF rate(s)
2) External sharers rate(s) (will be higher!)
• Grouped equipment:
1) Separately cost equipment with
different types of usage – rates will vary
depending on type of use
2) Group equipment together and cost as
one “facility” using assumptions about
usage of each item – then calculate an
overall rate per hour/day.
5. Final thoughts and reminders
General:
• Keep a usage record (see hand-out for an example)
• Particularly important with SRFs!
• Records for the whole year will help when setting the price
• Coding of income and costs:
• Set up a specific cost centre in CUFS – especially SRFs
• Journal costs across (monthly) / or directly code invoices on AP.
• Making re-charges:
• External to the University = external invoice
• Internal = internal trading invoice
• SRF internal to department = transfer of expenditure (not income see hand-out)
5. Final thoughts and reminders
• Timetable:
Newly identified
sharable
equipment
SRFs
Initial costing completed
1 June 2012
N/A
Next review of costing
October 2013
October 2012
Annually thereafter
Annually thereafter
Action
Subsequent costing reviews
5. Final thoughts and reminders
• Help, advice and support:
Department / School
Fin Div. support
Contact details
Physics
Jonathan Rose
(7)66946
Chemistry
Steve Wilson
(7)60770
All other Physical Sciences depts.
Annie Baxter
(3)30582
Technology depts.
Daniel Greenfield
(3)30700
Biological Sciences depts.
Karl Wilson
(7)66904
Clinical School depts.
Dean Harper
(3)36705
5. Final thoughts and reminders
Any questions?