Equipment Costing Workshops

Equipment Costing Workshops Costing and charging for equipment that can be shared with external institutions (and implications of charging internally) Jonathan Rose Karl Wilson fEC Accountant Deputy Finance Manager Jonathan.Rose@admin.cam.ac.uk Karl.Wilson@admin.cam.ac.uk Finance Division

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 • Presentation: • TRAC and the Full Economic Cost (fEC) rates for Research • Costing and accounting for Small Research Facilities (SRFs) • Costing equipment to be shared with external institutions • (Deadline 1st June 2012) • The new equipment costing template – a detailed look • Break – biscuits! • Over to you – group discussion / questions and answers • 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

2. Costing template for externally shared equipment

Equipment costing workshops BREAK TIME!

5. Final thoughts and reminders Decision tree:

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:

5. Final thoughts and reminders • Help, advice and support:

5. Final thoughts and reminders Any questions?

Equipment Costing Workshops