What Are TRAC and FEC All About?


TRAC is the acronym used for the Transparent Approach to Costing. This is an initiative implemented by the government to enable Universities to manage on a more financially sustainable basis. TRAC is an activity based costing system that allocates the income and expenditure of a university between teaching, research and other activities. In doing so the expenditure reported in the University’s accounts is adjusted to take account of the full economic cost.

A significant amount of income and expenditure can be identified directly against one of the activities referred to above. However there is also a significant amount of expenditure that cannot easily be attributed to one activity or another (eg academic salary costs, cost of running buildings etc.). In order to do this analysis a number of multipliers (known as drivers) are used that are derived from data collected within the University. The most significant of these drivers is time spent on different activities by University staff, but drivers related to student numbers, space and other factors are also used. In this way the TRAC process allocates all the costs of the University, including those incurred within central service departments, between the activities referred to.

Information about time spent on different activities is collected by means of a Time Allocation Survey (TAS). This survey collects data from all staff (except ancillary staff) based on three sample weeks in a 12 month period.

TRAC information is reported to The Higher Education Funding Council for England (HEFCE) annually. This includes data on income and expenditure in relation to:

  • publicly funded teaching
  • non-publicly funded teaching
  • publicly funded research
  • non-publicly funded research
  • other activities

In addition, the average cost of teaching a HEFCE fundable student in each academic cost centre (as defined by Higher Education Statistics Agency (HESA)) has to be returned to HEFCE annually.

Further information on the role of TRAC in the financial management information needs of Higher Education can be found in the policy overview report produced by the TRAC Development Group.

FEC for Research

FEC is the acronym used for Full Economic Cost which is a means of estimating the cost that the University would incur if it were investing in its resources and infrastructure at a level appropriate to ensure that it could continue to survive and maintain its capacity in the long term. FEC is usually higher than the cost reported in the University’s published accounts. The University uses FEC to calculate the cost of research projects.

Data derived from TRAC about research costs are further analysed to derive rates for allocating indirect costs and estates costs to externally funded research projects. These rates are used when working out what a proposed project is going to cost the University.

The principle investigator of the project uses the University’s Research Management System (URMS) to input details of the resources that will be required to undertake the project. URMS then applies the indirect cost and estates rates to the costing so that the full economic cost of the project can be determined. The rates are expressed as £x per academic member of staff (full time equivalent) working on the project.

This way of calculating the costs of research projects is now standard across the higher education sector.

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