Costing research applications - FEC

All research projects are costed using Full Economic Costing (FEC) methodology. An understanding of the principles of FEC will help you to calculate the true cost of a research project, ensuring that you have the necessary financial resources required. All grant applications are developed and internally approved using the Costing & Awards Tool. Note that FEC provides the cost of undertaking the research, with the price charged to the funder is determined later.

Access the Costing & Awards Tool

This page offers general guidance on calculating the FEC of a research project. Please ensure that you also refer to the detailed guidance provided by funders on their own specific rules and requirements.

Background to FEC

Following the government's Transparency Review in the late 1990s, which examined the funding of Higher Education, the Transparent Approach to Costing (TRAC) methodology was developed for use by all UK Higher Education Institutions (HEIs). This was in recognition of the fact that activities in HEIs were not being funded on a basis that would lead to long-term sustainability.

The TRAC methodology is designed to enable HEIs to calculate their costs robustly and attribute those costs to the areas of Teaching (split into publicly funded and non-publicly funded), Research (similarly split) and Other. The principle behind this is simple: by understanding what our costs are, we can make better informed decisions about charging for our activities with a view to recovering our costs, not on a project by project basis, but rather 'taking one year with another'. The FEC methodology we now use for research proposals is a direct result of the TRAC process.

useful briefing was produced by the consultants who developed the TRAC methodology for the government in 2005 provides a non-technical introduction to the TRAC process. Prior to the introduction of FEC in 2005, research was costed on the basis of direct costs + 46% of staff costs as a notional overhead charge. The aim of FEC (in the larger context of the TRAC methodology) is that universities cost their research robustly, recognising both the marginal costs of a project (that is the resources required to deliver the research, funded directly by the grant or contract) as well as the standing costs of a project (costs which exist even if the project is not funded such as academic time, the costs of running research labs, the library etc).


FEC divides costs into three main areas:

  • Directly Incurred (DI): new costs specifically for the research project (and so will not be incurred if the proposal is not funded), including staff time, travel, and consumables. The costs charged will be the cash values actually spent and will be supported by an audit record, such as a timesheet for staff part funded by the grant or an invoice for non-staff items.
  • Directly Allocated (DA): costs of resources that are funded by the University regardless of whether the research project goes ahead, such as investigator time, pool technicians, and research facility charges.
  • Indirect: costs incurred by the University in support of research but not directly attributed to an individual project. They include the University’s infrastructure costs that enable research to occur, including computing services, library, research support staff in departments, professional services (HR, Finance etc); and estates costs (heating, lighting, security etc.). Indirect costs are automatically calculated by the Costing & Awards Tool, using the FTE of investigator and researcher time attributed to the project and the departments of the staff involved.
Staff costs
  • Use the Cost Estimator to quickly generate staff costs for a project.
  • The Costing & Awards Tool calculates staff costs and includes scheduled increases such as annual increments and inflation.

Directly Incurred Staff

DI staff are paid directly from a grant or contract. They can be existing ("named") staff or new staff that will be recruited, and may include postgraduate researchers, research assistants, research nurses, technicians dedicated to the project, administrators and clerical staff.

  • The Costing & Awards Tool calculates the costs for new posts based on a given grade and point, including scheduled increases such as annual increments and inflation increases.
  • Be sure to consider prevailing market conditions, previous experience and required qualifications when costing a new post.
  • All new posts will be job matched before advertisement, and advice may be sought from HR regarding appropriate salaries.
  • DI technicians are normally named individuals and must be fully dedicated to a project.

Directly Allocated Staff

The time of the Principal Investigator (PI) and Co-Investigators (CI) are usually DA costs.

  • Carefully consider how much staff time will be spent on the project. The funder's peer review process will compare the time requested to the project scope. It is useful to consider the experience of the investigators; the number of staff and collaborators involved; time required to supervise others; and the time required to attend meetings and conferences, undertake fieldwork, and write project reports. Do not include time spent preparing the proposal, supervising PGR students or any administration not related to the project.
  • Consider the amount of time the PI and/or CI are already committed to existing research projects.
  • If the project will mainly be conducted by one or more Research Associate (RA) then it is appropriate to include their posts at 100% and sufficient PI time to cover the general supervision of the project (e.g. two hours per week - 5%).
  • A fellowship application may require the PI to be 100% dedicated to the project, in which case the PI time should be added as a DI cost.
  • Staff costs may need to be listed on a costing but the costs excluded, for example where a staff member is fully funded from a fellowship award but will be contributing to other projects.
  • The Costing & Awards Tool uses payroll data to calculate costs for DA staff, including pay increments, superannuation and National Insurance. Grades 1-9 are costed on their actual salary, whereas professorial staff are costed in bands of £10,000, using the average salary for professors in that band.
  • Pool technicians are core funded by a department and are called on to support specific research projects. A pool technician can be added on the Costing Awards Tool in the 'Pool technician' section. Their cost is calculated on the basis of the average salary for a pool technician.
  • Infrastructure technicians are involved in the general running of a laboratory, e.g. on health and safety, risk assessments, waste disposal. The Costing & Awards Tool calculates their cost based on the academic and research staff FTE for a project.

Working overseas

If staff will be working overseas for any part of the project, there may be implications from an employment perspective, such as the payment of salary, expenses, tax, social security and pensions. If any researchers will be working abroad (for longer than a month), please contact your faculty HR team to discuss the arrangements and establish what, if any, additional costs will need to be included.

More information on working overseas (HR)

Apprenticeship Levy

The Apprenticeship Levy is a tax on employers, applied as a percentage of the University's salary costs.
Costings with a start date on or after 6 April 2017 (except for Cancer Research UK (CRUK) and Leverhulme Trust) incorporate the Levy in additional staff costs, to allow the University to claim this back from funders.
Projects starting before 6 April 2017 do not include the Levy as an additional cost, even if they run beyond the Levy's implementation date.

Recruitment costs

Many funders allow costs to recruit researchers or project managers.

  • Consider where the best place to advertise may be, for example, a subject specific journal.
  • The University has an institutional subscription to Jobs.ac.uk for standard adverts but you may wish to purchase a spotlight advert at an additional cost. Information on recruitment adverts is available on the HR webpages.

More information on recruitment (HR)

Travel and subsistence costs

Travel and subsistence costs are often underestimated:

  • Indicative costs for train journeys can gained from train travel websites such as East Midlands Trains, Trainline and National Rail.
  • Remember that prices can increase considerably closer to the travel date, and include some provision for inflation in later years (1-3%).
  • You should cost standard fares. Generally funders will pay travel on the same basis as University expenses.
  • Although some sponsors include standard rates for hotel costs, most recognise that costs vary from place to place. You do not usually need to go into too much detail at application stage but do consider the general area that you will be staying in, for example a Premier Inn in London will be around £180 p/n compared to £60 in Sheffield.
Consumables
  • Normal usage of consumables (e.g. routine orders for paper, test tubes etc) are included in the Indirect costs.
  • Abnormal usage (e.g. using a large quantity of fuel to run a machine) are usually eligible as a separate DA cost. Since consumable costs are often specific to a department, we recommend asking your departmental finance contact to provide an estimate of costs.
  • Different funders have very varied policies on what consumables they will pay for and you should check their guidelines carefully.
Equipment

Equipment is funded differently by each sponsor, so please check their specific rules. Below are the standard rules for Resarch Council and Horizon 2020 projects.

UK Research Councils Equipment

  • Research Councils expect equipment/facilities to be shared where possible. You should therefore check whether the University already has a piece of equipment or facility available via the Shared Equipment Database.
  • Items under £10,000 (inc. VAT) are not classified as equipment and should be included as Other Directly Incurred costs and are funded at the standard 80% rate.
  • Items between £10,000 and £135,668 (inc. VAT) are funded by the Research Council at 50%, with the remainder funded from the research net contribution (RNC) generated by the award. Any requests for equipment in this category should be discussed with your department and must follow procurement procedures.
  • Items over £135,668 inc. VAT (the OJEU threshold) are funded up to 100% of the cost, but the Research Councils expect the University to make a contribution. This contribution can either be in-kind or cash and should be discussed with your department and faculty.

European Commission - Horizon 2020

  • Equipment can be requested on most Horizon 2020 schemes.
  • Items less than £20,000 (inc. VAT) will be funded in full.
  • For items over £20,000 (inc. VAT) only the depreciation costs are funded. Items are depreciated over 36 months, from the date the item is delivered and installed. On projects that have a duration of 36 months or less, some of the equipment costs may not be funded. For example:
    • Item Cost: £35,000
    • Project duration: 36 months
    • Item delivered month: 3
    • Months between delivery and end date: 33
    • Depreciation costs per month: £972.22 (£35,000 / 36)
    • Costs to be funded: £32,083.26 (£972.22 x 33)

Items over £25,000 (from any funder)

  • Requests for single items of equipment with a value of £25,000 or more need additional approval from the Procurement Office.
  • Complete a procurement form and email it to procurement@sheffield.ac.uk.
  • To minimise delays in submitting applications, complete the costing assuming that the values for equipment are acceptable and Research Services will validate the initial budget on that basis.
  • Final applications will not be authorised until Procurement Office approval has been received.
Facilities
  • Consider whether there are any University facilities that you may need to access during the project. The Costing & Awards Tool includes a list of Major Facilities from across the University that can be included as DA costs by selecting the facility and specifying the number of units required.
  • Some departments and faculties have charge rates which need to be included on applications.
  • Some departments have minor facilities that do not appear in the Costing & Awards Tool. These can be included, but be aware that some funders may request further evidence on how the costs have been calculated. If no evidence is available, then they may reject the costs.
Impact and public engagement
  • Research Councils are keen to fund reasonable, relevant and appropriate impact activities (including public engagement), and you should make sure you ask for additional funding for the activities you outline in your Pathways to Impact.
  • There is no official upper limit (either as a flat figure or as a percentage of the total) to how much you can request for impact activities, provided the costs are appropriate are likely to generate impact and will be conducted during the life of the grant. However, bear in mind that calls may have an upper funding limit and you will need to balance impact activities against other project costs. We advise you to cost your Pathways to Impact as accurately as possible. Indicative impact related costs are available on the Pathways to Impact website.

More information on Pathways to Impact

Open access and research data management
  • You must determine the most appropriate open access publication route. Associated costs (Article Processing Charges) may be eligible as a DI cost. UK Research Councils and Wellcome Trust provide block grants to the University to cover open access and further costs may not be costed into grant applications.

More information on Open Access (Library)

  • Costs associated with research data management, such as additional storage, may be eligible as a DI cost. Further information can be found on the Library website.

More information on Research Data Management (Library)

Conferences
    • Some funders will cover fees to attend or present at relevant conferences.
    • Some of these activities may require additional staff time: administrative, research and PI staff time should be included as a staff cost.
    • Some sponsors will fund computing equipment, particularly if it is required to provide something specialist not provided by standard University machines.
Animal costs

Animal work should be costed through the University's Biological Services department. Email bioservices@sheffield.ac.uk with your requirements. Once a costing has been completed it can be transferred to the Costing & Awards Tool.

Project studentships
  • Project studentships are DI costs funded from the grant or contract.
  • They are sometimes referred to as "Exceptions", since under Research Council rules they are funded at 100% of cost, rather than the usual 80%.
  • Student stipends should be included in the Costing & Awards Tool as Exception Staff, and fees as Exception Non-Staff.
Collaborator costs and subcontractor costs
  • The University classifies organisations working with us on a project as either Collaborators or Subcontractors (this includes consultants). Making this distinction is vital as, in the majority of cases, VAT will be payable by the University to any Subcontractor. We need to ensure that provision is made for this potential cost as early as possible.
  • Subcontract services to be charged to a project, but undertaken wholly by an external provider, are usually DI costs. For example, a telephone survey undertaken by a private company for a set fee. Procurement guidelines must be followed for services over £10,000 (excl VAT).
  • Joint applications with other universities or NHS Trusts are becoming increasingly common. If we are the lead institution, and there will be one set of costs for the whole project, then the PI needs to obtain costs from the collaborators. They should provide a breakdown of their costs under the FEC headings. As estates and indirect costs differ between HEIs, it is important that the figures you use are those provided by the relevant research office, otherwise the final budget may be inadequate.
  • Collaborator costs must not be entered into the Costing & Awards Tool as a lump sum in non-staff costs, but entered as "Collaborator Costs" on the relevant collaborator page. Please contact the Pricing Team for assistance.

Guidance on collaborators and sub-contractors

Additional costs to consider

Each sponsor and scheme has different allowable costs, read through the specific guidance for the programme you are applying to.

Who to contact

For advice, guidance and support with any aspect of costing a grant application, please contact the Pricing Team in Research Services.

Contact the Pricing Team