Costing and pricing

Principal Investigators work with their Department to cost and price a research project. You should start your costing as early as possible.
 

What the Principal Investigator does

The Principal Investigator lets the Department know the resources needed to deliver the project. This will include staff, equipment, travel, and anything else they need.

Read more about costing and pricing a project as a Principal Investigator. 
 

What the Department does

The Department makes sure that:

  • the PI's costs are accurate
  • the funder will pay for what the PI is asking for. They'll need to check the funder's terms and conditions to make sure that all the costs are eligible
  • the PI has asked for all the resources that they need to complete their research project
  • the VAT is correct
  • the application and costing complies with Department, School and University policies
  • the costing and application is approved via Worktribe, ready for final checks by the Research Office prior to submission

Read more about costing and pricing a project as a Department.

 

Costing and pricing explained

When you request money from a funder you need to understand the difference between the cost and price of your project.

Research grant applications are costed on the basis of full economic costs (fEC). The amount funders will pay is known as the price

Some funders pay less than the fEC for example Research Councils pay 80% of the fEC

You need to make sure the money you request from the funder will cover all the project costs.

You must provide accurate costings in your grant application so that:

  • the funder can decide what level of funding to provide
  • your department and the University can decide whether to accept the costs they need to cover
  • any auditing and financial reporting can be carried out effectively

The fEC is how much it costs the University of Cambridge for you to undertake your research. fEC has been developed from the Transparent Approach to Costing (TRAC), a government initiative to help institutions manage their financial sustainability.

Example of full economic costing

Directly incurred costs:

  • Researcher: £156,150
  • Equipment: £27,500
  • Travel: £43,000
  • Consumables: £32,500
    Total DI costs= £259,150

Directly allocated costs:

  • Pooled labour: £34,982
  • Research facilities: £2,500
  • Estate costs: £54,900
    Total DA costs = £92,382

Indirect costs: 

  • Indirect costs: £176,500
    Total indirect costs = £176,500

Full economic cost (fEC) (Total DI, DA and Indirect costs) = £528,302

Directly incurred costs

DI costs are the most obvious items that you will charge directly to the project. These have are verifiable and auditable (for example a supplier invoice).

Examples include:

  • Research associate salaries
  • Salaries for anyone charged to the project
  • Contractors
  • Travel
  • Materials, consumables and new equipment

Directly allocated costs

DA costs are the estimated costs of shared services or facilities used by your project.

Examples include:

  • The proportion of time the principal investigator and any co-investigators spend on the project
  • Estates charges including facilities management
  • Existing equipment and research facilities

Indirect costs (overheads)

These are your costs which are not directly charged to any one project or activity (i.e. there is no invoice) but are a necessary part of the costs of undertaking your project.

They are:

  • Attributed to projects through a cost rate – based on £ per FTE (Full Time Equivalent) on those performing the research.
  • Charged to projects on a standard estimate made pre-award, and do not change during the project life.

Examples include:

  • Library services
  • HR services
  • IT services
  • Departmental support staff​

The costs funders will pay for

Research councils

  • 80% fEC but there are exceptions

Charities

  • 100% direct costs plus maximum overhead allowed within funder terms

UK government departments

  • Up to 100% fEC, but all direct research expenses must be recovered in full

EU commission

  • 25% direct costs as overhead

Overseas government or education

  • In line with their standard terms, but must meet 100% of direct costs

Industry IP

  • Negotiated subject to IP position (100% minimum)