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University of Oxford
From FP6 to FP7Additional Cost to Full Cost
Pierre EspinasseDeputy Director, Research Services
University of Oxford
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University of Oxford
Take a pill, undergo an operation, have a baby, go to school, receive a benefit, surf the internet, take a journey by plane, train or automobile, play a cd, ‘phone overseas, hear a weather forecast, follow a road sign, give up smoking, study the stars, switch on a lightbulb, …
and you will have benefited from the work of UK universities
UniversitiesUK 2006
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University of Oxford
Overview
1. Why move to Full Economic Cost (FEC)
2. What is FEC
3. Additional Cost to Full Cost: how achieve transition
4. Concluding remarks
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University of Oxford
From ‘vicious’ circle …
How to achieve and maintain excellence:
• Raise profile/awareness– publications/citations
• Recruit & retain key academic staff– pay and resources
• Develop and maintain facilities & infrastructure– remain competitive
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University of Oxford
…to ‘virtuous’ circle
Through proper funding and investment in physical and human infrastructure
But
To do so you need know and recover your full economic costs
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University of Oxford
What is fEC?
A price which, if recovered across an institution’s full programme, would recover the total cost (direct and indirect) of the institution, including an adequate recurring investment in the institution’s infrastructure.
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University of Oxford
However
•Historically universities have had little or no understanding :– of the cost of different activities,
– of the difference between cost and price,
– that on virtually every research grant awarded the institution would lose money
• Academic staff are motivated to win grants not to worry about financial consequences
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University of Oxford
and
• Universities operate in an environment where long term strategic financial planning is challenged by short term ‘easy win’ objectives
• The diverse research funding base and sponsors’ aims are not easily compatible with long term financial planning
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University of Oxford
How does this relate to FP7?
FP6 Additional Cost model:
marginal direct costs only• employment costs of temporary staff
• employment costs of non-centrally funded staff
• consumables, equipment, travel
» Directly incurred costs
Easy to identify
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University of Oxford
FP7 All Direct Costs:
marginal costs plus• appropriate proportion of permanent/core staff costs
• access charges for main facilities
• use of space
» Directly Incurred plus Directly Allocated
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University of Oxford
Key Issue for Universities How to identify costs at Project level
– Academic/research staff time estimation– Know staff costs– Cost of major research facilities/services– Applying estates costs at local level– Costing/Pricing tools
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University of Oxford
Cost ModelsAdditional Cost (FP6):
100% of Marginal Costs plus 20% Indirect
eg 100€ plus 20€ = 120€
Flat Rate (FP7)
75% of all Direct costs plus 20% Indirect
eg 75% of (110€ plus 22€) = 99€
75% of all Direct costs plus 60% Indirect
eg 75% of (110€ plus 66€) = 132€
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University of Oxford
Concluding Remarks (1)
Key issue under FP7 will therefore be the ability to identify all Direct Costs
This may be a challenge for many universities but the benefits of doing so will be significant
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University of Oxford
Concluding Remarks (2)
The funding and long term sustainability of research in universities is crucial to all sponsors of research
This is a partnership between universities and sponsors, both public and private