Please help me understand Full Economic Costing

[Catabogus]

At my institution we have just been told that, owing to straitened circumstances, we must prioritise grants with FEC. Grants which don’t have FEC are “low value” and should be avoided (and don’t even get me started on research which doesn’t need a grant at all - this is now somehow seen as completely worthless even though we’re all technically supposed to spend 40% of our time doing research [??]).

In practice, this FEC rule seems to mean having to use internal funds to cover small research expenses rather than applying for external funds like ISRF - because ISRF won’t cover FEC. So here I am having to get my institution to pay for a short research trip rather than applying to an external funder…. How does this help us save money? What am I missing?

Full economic cost, is (in theory) the amount of money it takes to deliver the research. Because universities get QR funding from Research England and the equivalents, a lot of research funders do not pay FEC as it is viewed that the universities can “top up” the rest with QR funding or their own other streams of income. If you bid for a load of below FEC grants, then your research delivery quota is full but the costs of you delivering it are not covered, so they have to find that money elsewhere to pay your salary, cover overheads etc etc

Re the funding for a one-off research trip - grants for that would be few and far between I imagine, and they’d probably prefer you to be doing a more significant project with your time, with full funding. If be surprised if your institution paid for that

Institutions don't just look at research income, they look at recovery costs, i.e. what % of your research delivery costs (including time but also expenses, overheads, etc.) is recovered through funding (whether grants, contracts, QR funding, etc.). So increasingly, we're being discouraged (and in some cases prevented) from applying to funders who don't provide FEC. Though, in reality, no funder offers FEC - the most is around 80%, I think - but because we have to cover some of the overheads anyway, that is regarded as "good" funding.

If you just want expenses, but not covering or buying out your salary, then non FEC is OK - it pays travel, etc.

But universities subsidise loss-leading undergrad teaching by having some staff earning a percentage of their salaries back. I currently have a grant which pays around a third to a half of my salary, so the university is saving that money, and I have a reduced teaching load (arts & hums).

In my area, it is mostly RCUK schemes (some of them) which do FEC whereas others such as Leverhulme Research Fellowships don't.
Imagine you are a senior lecturer on £60k and you apply for a fellowship to cover one year of your time. Imagine you have overheads that are calculated at £30k.
Leverhulme provides the money to hire a temporary lecturer to cover your classes, let's say £35k. This doesn't cost your university any money but the university still needs to pay your salary and your overheads. There is little if any wiggle room as typically you need to write into your application which courses and admin duties the lecturer will cover, etc. so the money does need to be employed for that.
RCUK gives your university £90k. Typically there is no obligation that this money will be used to hire a replacement. At my place, they will at most hire a few extra teaching assistants to do hourly paid teaching and then distribute the admin duties between existing colleagues. So imagine the teaching assistants cost £3k - the university effectively keeps £87k.
Then there's the "small grants" which do not offer FEC or teaching replacement, they just cover expenses. I always regarded them as not affecting my teaching or admin duties at all - I would just use them to do research in the time I had allocated to do research. Being HoD, I discovered that not everyone sees them like that and some (especially men) will absolutely insist that they need to be released from teaching/admin duties to be able to deliver what they promised and more often than not they are accommodated, as for the grant not to be delivered would not be a good look.

ukri typically pays 80% of FEC
so if you have a project costed "all in" at £100k, with your time and coI costed at £10k, research staff £50k, consumables £10k and overheads £30k (estates, techs, etc), then UKRI will pay £80k and your uni will need to find the remaining £20k

now if you apply to a charity instead and maybe use the same amount of time and energy, the charity often won t pay for your time, or the overheads, and maybe will only pay 80% or less of FEC on the rest. So maybe only £50k, leaving your uni to find the other £50k.

low cost recovery hurts because it makes unis pay for a larger chunk of the research.

Thanks for all the explanations. Why I don’t understand though is - surely the university is paying overheads on my research costs anyway? So my getting a grant that pays something towards my expenses but not much towards our overheads isn’t actually costing the university any extra money? mean, I’m employed on a teaching and research contract with the expectation I spend nearly half my time doing research. So the lights, heating, security, maintenance staff etc all still need to be kept on!

Big grants are actually pretty rare in my field - there are a lot of projects done on small grants that just cover expenses etc, and a lot of research that is very low cost and doesn't need to be externally funded. Obviously that all still counts towards REF! So why has it suddenly become a problem?

I work at a university and if you have research buyout that’s time you don’t have available for teaching or other responsibilities. It doesn’t come from your research time. So the time you spend on research that isn’t paying for your time is paid by the University - and the people doing the teaching you aren’t doing as you’re busy with your research grant are being paid too. Plus of course all research grants require some level of administrative support in post award teams or HR or finance or however it works for you. And that’s all paid for by the university too.

lots of things weren’t problems 10 years ago that are massive issues today. The Uk universities are crumbling - Brexit was a hit, cost of living crisis, the Uk student funding model. It’s all a huge mess and everything needs to be rethought or more universities will need to close.

for tiny grants (5K and under) then your argument that they have to keep the lights on anyway is correct. And so rules about FEC for such small sums shouldn’t be used. But even a tiny grant needs an admin person to move the money into the right bit of the university account and check it is spend appropriately etc. so there is a cost.

for larger grants, there will be more costs in hiring staff and maintaining labs etc and the university can make a loss on a project that doesn’t have any overhead.

there is QR funding which is meant to cover the overhead on charity grants but it is never clear to me how that works.

I imagine it might come down to a question of "bang for their buck". The University will need to maintain a Grants Office that supports staff with grant applications. In a scenario where everyone applies to non-FCE funding only, then the Grants Office is an extra cost to the university, because no overheads are recouped. Whereas with a higher percentage of FCE funding they will recoup some of the expenses of the RO.
This is something I did struggle a bit as an ECR OP - strictly speaking, I don't need a lot of money to do research, most of my expense is archival trips so normally it would be a few thousand pounds, and with digitization these days there are whole books I could write without leaving my office and perhaps spending a few hundred pounds to get scans and photocopies that are not available online. My first grant applications were, consequently, for small grants, and I found it weird and mildly disturbing that I was being constantly pushed to apply for bigger pots of money that I didn't feel I need - if applying for a small grant, the implication was often that this would be a pilot study that would lead to a larger grant application. I have since applied to larger pots of money (and obtained a few) - but it took a while to develop an ability to develop and contextualize projects that a) do genuinely need more than a few thousand; b) are projects that I actually want to do. Most of the times for me it's been about hiring research associates or organizing large-scale networking events which couldn't happen without big funding.

There are overheads in administering small grants - legal, finance, reporting - that all have to be paid for. Across the total portfolio of teaching, research and other activities, something has got to pay for the electricity, the gardening, the roof repairs etc. If small grants don't contribute anything to that, then it means larger grants have to bear a greater proportion of these overheads.

Electricity bills, employer NI contributions for gardeners and building materials to keep the roof watertight have all gone up, and student fees have not kept pace with these increased costs. Hence the change and the relentless focus on margin.

Universities could simply cease research activity in areas where they cannot generate sufficient margin, or close down whole departments, or refocus them onto teaching only.

Thanks for all the explanations. Why I don’t understand though is - surely the university is paying overheads on my research costs anyway? So my getting a grant that pays something towards my expenses but not much towards our overheads isn’t actually costing the university any extra money? mean, I’m employed on a teaching and research contract with the expectation I spend nearly half my time doing research. So the lights, heating, security, maintenance staff etc all still need to be kept on!

Have you not been listening to professional conversations over the last decade? If I were your HoD or DoR, I'd find this quite professionally irresponsible, frankly.

Teaching income from fees no longer covers the costs of universities' delivery of undergrad teaching, including funding academics on teaching & research contracts. So no, your overheads are not covered.

QR money drawn from a university's performance in REF covers some of the costs of staff doing research. But increasingly, universities are looking at "unfunded" research with narrowed eyes. Even though QR funding is supposed to cover our research time.

I don't like this, but it's the reality, and in my opinion, it is collegial & professional to understand this, and try to do something about it.

In the sciences, most academics have to get external funding to run their labs & do their research. In the humanities (where I am) those of us who get big grants also do the same things as our colleagues, and basically subsidise those who don't get grants.

If I were your HoD or DoR, I'd find this quite professionally irresponsible, frankly. Personally (as a Director of Research), I think this is a bit harsh. The OP is asking questions and trying to understand something which is complex, unlike the many academics who just rant and rage against the system...

I'd also note that many scientists don't run labs; theoretical and computational science are 'a thing' and some experimentalists mainly use national and international facilities.

Agree @xxuserxx . There are a lot of very experienced academics who are still struggling to get their heads around this, OP is doing the right thing by asking the questions.

QR funding has been mentioned above. That has shrunk considerably in the last decade or so. It does not cover the 40% of staff time spent on research, or anything close to that. We would need our QR funding to be four times higher than what it currently is in my humanities department for that to be the case, once you factor in overheads.

Yes fair enough maybe overly harsh, but it's the frustration of a person in those roles, with colleagues who seem to think they're above these realities ...

I’m also doing humanities research, and really I don’t need a grant except to cover my trips to archives etc. I also don't really need teaching buyout as I can mostly balance research and teaching plus admin roles. I was employed on a contract which says I will spend 40% of my time doing research. So yes, I do find it a bit baffling to hear now that actually what I do isn’t “valued” research and that I need to be contributing to university overheads!

of course you need to contribute to the university s overheads - as an employee of the university, you contribute to securing income via teaching as well as research. The 40% spent on research should be time funded via grant captures.

here at my uni, the motto is you eat what you kill - no fec grants mean smaller research allocation on the workload model, and more teaching / committees etc.

We are usually not allowed to apply for low cost recovery grants, unless they are prestigious enough, like wellcome.

@Catabogusdo you have any PhD students or postdocs? If you get a decent sized grant and hire someone to do a piece of work, then there are costs to the university (hr, desk space, mat leave, etc) but also potential for a decent overhead.

your 40% research time isn’t all time doing research yourself. It is often training and organising others to do research.

Yes, I have plenty of PhDs and postdocs too. All externally funded through RCUK, Leverhulme and other-country governments to do their own projects, supervised or mentored by me, but none are funded through large grants I’ve applied for.

I guess the norms are really changing. I didn’t enter academia to supervise large teams of researchers on big projects. When I joined my institution, I knew very few researchers in my field with any experience of doing that. I was perfectly happy writing books and papers, teaching and supervising. My publications were all in highly regarded outlets and well-placed for REF. If I needed some extra funds to travel for a piece of fieldwork or to visit an archive, I’d apply for a small grant of a few thousand (no FEC!). Now we’ve been told we shouldn’t be applying for this kind of grant as it loses the university money.

Yes, the whole economic landscape has changed. REF doesn't bring in much money. Nor do home students. Your 40% research time isn't free and it's not bringing in money to pay your salary.

I get the point of FEC but when I see the % overheads I’m incredulous. I’ve recently been costed £500k for a 4 year postdoc. No one actually explains the rate of overhead, we’re all just supposed to jump to it.

my last postdoc had neurodivergence that required mediation to get them to accept that the accomodations we put in place were as much as we could do without endangering others; most of my phd students are regular user of the mental health support services. The support and training for all ECR are amazing compared to what existed years ago. Anything we break in the lab, or which needs replaced out of "old age" costs £0000 - and for the library, i dread to thing how much they pay for subs.

even for applications, i spend hours and hours debating indeminities and costing with colleagues in admin, finance and contracts. If a grant gets granted, this multiplies.

We got cyberhacked last year... i guess that costed quite a bit and will feature somewhere in calculations too, and we need to change most of our PC for win11 upgrade...

all this adds up, so i m not super shocked by overheads.Although i m sure there could be a leaner model, but unis are super bloated chaotic nightmares to manage and reshaping the model would probably carve out its spirit at the same time.