Overview

1.1 In December 2002, the University of Queensland adopted a revised policy for recovering from clients the direct and indirect costs associated with undertaking externally commissioned research and consultancy projects. These costs include salaries, salary on-costs, consumables, travel and maintenance together with costs which are incurred by the individual Schools and Centres, the Faculties and the central University in providing support services and infrastructure.

1.2 Services and infrastructure costs, commonly referred to as overheads or indirect costs, are real costs incurred by the University. If those costs are not recovered through the funding provided by the client, then the project is being subsidised from elsewhere within the University.

1.4 The primary objective of this policy is to move UQ to a position where all research contracts (i.e. for both competitive grants and contract research) include a provision for indirect cost recovery, granting agency conditions permitting.

1.5 A second objective is to ensure that there is full accountability for decisions taken on pricing of research projects.

1.6 A third objective is to encourage researchers to adopt a more commercial approach to negotiating agreements with outside parties. While recognising the competitive and funding pressures facing researchers, the University is a provider of high quality and high value services and prices should reflect this position. Prices that are at or below cost only serve to devalue these services.

1.7 In these ways it is intended that the University will satisfy its National Competition Policy obligations, will adopt a more transparent methodology for costing, and will obtain the necessary funding to cover the full cost of research activities.

Description

2.1 Definitions

For the purpose of the indirect cost formula, the following definitions apply:

Total Employment Costs include:

• direct salary costs of staff employed on the project;
• imputed costs of salaried academic staff for the time they work on the project;
• salary on-costs, normally levied at 27.2% to recover costs of Superannuation, Payroll Tax, Workers' Compensation premiums, Annual Leave Loading and provisions for Long Service Leave and Parental Leave;

All Other Costs include but are not limited to:

• cost of consumable items;
• bona fide contracts with unrelated external suppliers of specialist services (Note: Contracts which are simply labour supply contracts must be included under Total Employment Costs);
• laboratory and facility rental or usage charges;
• travel costs;
• other maintenance costs; and
• items of equipment purchased;

but do NOT include items which, while being part of the research budget, are not subject to a loading for indirect recovery:

• costs of using facilities neither owned nor financially supported by the University; and
• costs of providing support for postgraduate and research higher degree student thesis projects, including scholarships, stipends, the imputed costs of salaried academic staff for student supervision, and costs directly related to the thesis project and provided that there are no obligations on the student or the University other than to provide progress reports and a copy of the thesis should the student complete the project.

2.2 Project Pricing

The University will seek to price research projects so as to recover, as a minimum, all direct costs and indirect costs from project funds.

The indirect cost recovery component on all research projects will be calculated as:

• 60% of total employment costs (equivalent to using a multiplier of 1.6 x total employment costs)

PLUS

• 10% of all other costs.

2.3 Prices in Excess of the Minimum

Where Schools, Centres or controlled entities already specify higher minimum rates of indirect cost recovery than proposed here, the higher rates will remain in force.

Where a researcher or research group negotiates a price for a project in excess of the minimum, the additional funds will be allocated to the research project account.

2.4 Variations To Project Pricing

• the project provides for provision of large-scale, specialised equipment that would remain in the possession of the University at the end of the project and would be fully available to support further research by the University; or
• The work will be undertaken in research facilities not wholly owned or provided by the University or by staff not solely employed by the University.

All such variations will need to be applied for in writing to the Deputy Vice-Chancellor (Research). In general, this list rules out any reduction in the indirect cost recovery rate for work undertaken on behalf of commercial clients.

3. Distribution of Services and Infrastructure Costs Recovered

Funds recovered for indirect costs will be allocated as follows:

4. Operational Procedures

All researchers are encouraged to discuss research budgets with their Manager, Innovation and Commercial Development where relevant before committing to a price with a client or sponsor.

A printed copy of the pro forma budget must be attached to the research agreement or contract when submitted to Research and Research Training Division for negotiation or signature.

Where the client or granting body requires a budget to be presented in a different format this should be prepared in addition to the pro forma budget.

When the rules of the granting body do not allow for full cost recovery, the full amount of the indirect cost component must be shown as a note in the budget.

Controlled Entities

Annex

Proforma Overheads (Infrastructure) Budget