refer to expense items that are specifically associated with a research project.
These costs include:
• salaries and benefits
• materials and supplies
• participant reimbursement costs
• animal care
• subcontracting or consulting fees
are those underlying or hidden costs that sustain the research activity before, during and after research outputs have been delivered. These costs that are incurred for common or joint objectives and may not be readily associated with a research project.
Typically these costs include:
• building/ infrastructure utilities
• insurance costs
• office supplies
• library access
of research is an accounting methodology or model that takes full account of both all (reasonable and necessary) direct and indirect costs associated with research
is a detailed breakdown of all anticipated costs which should mirror the activities and timelines of the research
partners to develop and maintain their research environments, sustain high-quality research and access adequate funding. This goes a long way toward promoting good research costing practices where all foreseeable and underlying costs of research are included. For example, current indirect costs do not sufficiently build capacity. Funders could periodically review the indirect cost rates to ensure research partners are able to accurately cost research in a sustainable manner. The inadequacy of accurate costing around the full extent of indirect costs in research budgets has a direct impact on the sustainability of the research activity and of the research environment. It is thus critical for institutions to build capacity to accurately determine and negotiate for indirect costs in the research contract.
is important, thus all partners should work toward transparency and accountability in budget planning. In determining accurate costing of research, the following aspects should be factored to create an enabling environment:
• Develop good financial mechanisms to strengthen finance and administrative procedures is important
• Establish whether partner institutions are flexible on indirect costs and if there is room to negotiate
• Establish whether there is a pre-determined method or rate for calculating indirect costs
• Separate the direct running expenses of a particular project as different from those operational expenses that enable your institution to house and run such projects
• Research partners should also take into account the range of expenses that could fall under indirect costs such as human resources and finance services, office rental, facilities, maintenance, telephone and internet and so on
• Cost your research activities at a reasonable and current market value as it is most important not to under or overestimate how much it costs to run a research project
Researchers should be able to accurately identify and allocate such expenses to a research costing (budget) – i.e. the real costs to their institution of carrying out the research project.
Ultimately, a costing culture needs to be fostered whereby full costs (the real cost of carrying out research activity) are recognized and accounted for when budgeting.
For further ideas on methods for calculating indirect costs -
See ESSENCE: Five keys to improving research costing in low- and middle-income countries. Available at http://www.who.int/tdr/publications/TDR_ESSENCE_1.12_eng.pdf
partners should each determine their own full economic costs of their research contribution. This requires transparency and accountability to ensure sustainability of the entire research undertaking. It is good practice for each partner to have a clear policy around research costs so that there is consistency across research collaborations.
In addition, the different partnership requirements may mean that there be flexibility to negotiate around the budget and finance arrangements.
South Africa is, so far, the only country in Africa that has used legislation to encourage research institutions to move towards full-costing.
The Intellectual Property Rights from Publicly Financed Research and Development Act (No. 51 of 2008) came into effect in August 2010. Its primary goal is to ensure that intellectual property generated through the use of public funds is used to benefit the people of South Africa. The Act applies only to projects and research contracts that are fully or partially state funded (in other words, the Act does not apply when funders cover the full cost of the research).
In terms of the Act, the National Intellectual Property Management Office (NIPMO) was established, and has called on all publicly funded higher education institutions to develop their own full-costing policies as a step towards developing a nationally accepted full-costing model.
(From ESSENCE (2012a): Five keys to improving research costing in low and middle-income countries).
Humentum:Full Cost Recovery: The Strategy And Mechanics
The Grantsmanship Centre
NIH:Grants and Funding
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Good Financial Grants Practice