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Appendix 1
TRAC Guidance
Update (3)
August 2007
Research facilities
As part of implementation of the Guidance on MRFs, various changes and clarifications
have been made. The worked example (Annex 17) will be extended to due course to
illustrate these.
In taking forward Guidance on this area institutions should note that:

The changes have mainly meant more flexibility and choice (the introduction of a
small research facility definition, the ability to charge costs as DI or DA, the
recognition of hybrid facilities, etc – see (4) and (5) below). These have been
introduced at the request of institutions. Most of these developments (and
complexities) are not mandatory;

This whole area can be very complex, and the accounting entries burdensome. The
minimum requirements do not require this, and therefore institutions need to consider
carefully how they wish to cost their facilities to avoid burden, but to improve their
management of their equipment within their own institution;

A relatively non-complex approach is to:
o
o
o
o
o
o
define the animal house as MRF;
select and define a number of other facilities as MRF if they are large
(replacement value or annual costs of £300k – see (4) below);
define a number of facilities as SRF where academics currently charge
running costs to projects – see (5) below;
depending on current internal charging methods, decide whether to charge
each facility as DA or DI;
follow
the
worked
example
on
MRFs,
available
on
http://www.jcpsg.ac.uk/guidance/revisions/annex17_sup.xls, as a guide to
calculating the charge-out rates;
finally, review the costing and accounting treatment to ensure that auditors
would be satisfied that no part of the costs included in the MRF or SRF
charge-out rates for Research are included in the estates or indirect cost
rates for Research; and that the costs of the use of these facilities for
Teaching or Other activities are also not included in any of the Research
rates.
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4. Major research facilities (MRF)
Facilities to be charged as MRFs
It is a minimum requirement for an animal house for which a Home Office licence is
held to be defined as a MRF, irrespective of size.
It is not a minimum requirement for any other particular type of facility to be defined as a
MRF. However, it is expected a research-intensive institution would have at least half a
dozen of these; and that any facility with a replacement cost or annual costs (including
depreciation) of £300k or more has been considered for inclusion in this definition. It is
good practice to define facilities as MRFs, and institutions with a resource allocation
model that incorporates internal charging of facility use are likely to wish to treat a
number of facilities this way. However, the number of MRFs, and the definition of those,
remains for each institution to decide.
MRFS should be identified centrally, and the charge-out rates authorised centrally.
Hybrid MRFs
An institution may choose to make a whole facility a MRF, or only part of it (a ‘hybrid’
MRF). However, the costing treatment of the latter can be very complex, particularly
with the need to ensure that RC projects are costed fairly. In a hybrid MRF, the part
that is charged as a MRF may be defined functionally (only some services offered by the
facility) or in terms of volume (only charging high volume users). In the latter case the
charge-out rate calculation would reflect only the costs of the high volume use. The
remaining costs, e.g. incurred for the low volume Research users, can then be included
in the estates rates for Research.
However, a hybrid MRF should not be defined by way of sponsor (i.e. only charging
paying users such as the RCs, and not other users e.g. PGRs or for institution/ownfunded Research). This would have meant that the estates rates (into which all of the
costs of facility use by PGRs and on institution/own-funded Research would have been
allocated) would include costs that are not relevant to RC projects, which is not
acceptable under TRAC.
The costs to be included
Estates and technician costs should form part of the MRF costs used to calculate the
charge-out rates if they are material.
Depreciation of the equipment should form part of the MRF costs used to calculate the
charge-out rates, irrespective of how the original purchase, or subsequent updates, were
funded. (Research Council Guidance which contradicted this has now been changed.)
The MRF costs should include all other costs required to run the facility.
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Methods of charging
The annual costs of running the facility, including depreciation, will generally form part of
the costs charged for a facility. These costs can be estimated costs (not based on
historic actuals) – e.g. an estimate of technicians time and future maintenance contracts.
These will be aggregated, divided by estimated (or efficient) utilisation, and used to
calculate a charge-out rate, which is charged to each project based on their use of the
facility. However, some annual costs can be kept separately from the charge-out rates
and can be charged as the costs are incurred (e.g. consumables consumed for each
run).
Charging facility costs as DI or DA
The minimum requirement for MRFs to be treated only as DA has been removed.
MRF charges can now be treated as DI, if charges are made on actual use, and full audit
records are kept. As a minimum a quarterly record of use, and quarterly charging,
authorised by appropriate managers of the facility, should be made for facilities charged
as DI.
The treatment of any one facility (including the animal house) as DI or DA is a choice for
each institution. An institution can choose to charge some facilities as DI and some as
DA.
Minimum requirements
Any charge for use of a piece of equipment or facility that is made to a research project
should meet the minimum requirements:

each element of its costs should be consistently defined and charged either
through application of a standard charge-out rate or on actual costs.

MRF costs should include depreciation.

the costs for each facility should be consistently charged as either DI (with full
audit records showing charges made on actual usage) or as DA (charges made
on estimate at the beginning of each project). Any change in the categorisation
of a facility should be made very carefully to ensure that there is no chance of
double-charging, or indeed of under-charging (this might occur should a DI
facility revert back and become included in the estates charge once more).

where the cost of a facility for a year is being included in a facility rate calculation
or is being charged on actuals to a project, then no part of that cost should be
included in the estates or indirect cost rates for that same year.
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Exclusion of costs from charge-out rates
The last requirement means that all the costs of any facility that is being charged out
as a DI or DA cost, both the estimated costs included in the facility charge-out rate or
which are to be charged out as actuals, should be excluded from the estates or
indirect costs:

the costs that reflect use on Teaching or Other activities should not be included
in the estates or indirect cost rates for Research;

the costs included in the charge-out rate calculation that reflect use on Research
projects or activities that are either not being charged (e.g. for institution/ownfunded Research, PGRs) or are being charged but cannot be recovered (e.g.
some charitable projects) should not be included in the estates or indirect cost
rates for Research;
(If they are, then the RCs are effectively being charged for the use of this
equipment on activities that is not relevant to them, which would be contrary to
TRAC Guidance)

The only exceptions to this are:
a) where the calculation of the standard charge-out rates for a facility
has been based on an estimated use that reflects a reasonably
efficient utilisation, which is in excess of what is likely to be
experienced (see Part IV, G.2, para 16-17 of the TRAC Guidance). In
this case, the research element of the unrecoverable costs can be
included in the estates cost rate for Research.
b) where the facility is only being charged out to high-volume users (a
hybrid facility, as described above). In this case the costs of the lowvolume use on Research can be included in the estates cost rate for
Research.

if the estates costs have already been reduced to reflect a recharge or recovery
of some of the facility costs (i.e. the estate costs are net of some income or
recharge), then those costs need not be deducted twice. When the facility costs
are deducted from estates costs, they would take into account the fact that some
have already been removed in-year.
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5. Small research facilities (SRFs)
It is good practice for facilities to be charged to users, however the accounting treatment
for this can be burdensome. Some academics are accustomed to charging out to users
some of the running expenses that are borne on their departmental budgets. This
encourages collaboration and sharing of equipment. In order to support this good
practice and minimise burden on institutions small research facilities (SRFs) can now be
charged onto research projects as a DI or DA cost.
The minimum requirements for SRFs are the same as for MRFs except that
depreciation, estates and technician costs need not be calculated and included in the
charge-out rate: although this would be good practice.
It is up to each institution whether they wish to define a piece of equipment as a SRF or
not (and therefore to leave its costs in the estates rate). Some institutions will have
many more SRFs than MRFs. The decision is likely to be driven by the particular
resource allocation model in each institution.
Generally a facility defined as a SRF would be offered to users outside the department
that runs it, and would be smaller in size than a MRF.