On 1 August a new University policy covering Costing & Pricing of work with commercial and other external parties was introduced, primarily related to research, knowledge exchange, consultancy and continuing professional development services (CPD).
This new policy forms part of a package of measures to grow income from academic commercialisation activities and also ensures that the University complies with the principles of charity law - which require that the University should not use its funds or resources to subsidise activity or make up a funding shortfall unless satisfied it would be within its charitable purposes and in the interests of the University and its beneficiaries to do so.
The new policy makes a clear distinction between the cost to the University to complete the activity (calculated using Full Economic Cost principles) and price - how much the University of Aberdeen requests from the external funder for that activity.
Why is this policy being introduced?
A benchmarking exercise conducted last year indicated that the University was underperforming with respect to recovery of costs from industry-funded research. Based on Transparent Approach to Costing (TRAC) data, our recovery rates were up to 10% lower than the UK sector average.
The new policy provides a framework for the costing and pricing of all work done with commercial and other external partners that is not covered by peer-reviewed competitively won research awards (e.g. Research Councils, EU Commission, Innovate UK) or major charity funding.
The policy:
- provides an overview of the different types of externally funded activity and provides general guidance on categorisation
- addresses specific concerns relating to low levels of cost recovery from commercially-funded research
- provides recognition that, for some specific consultancy contracts – for example those with policy-makers and third sector organisations – pricing of individual contracts may need to reflect the ability of customers to pay and the wider demonstrable non-financial benefits to the University of such activities
- provides guidance on sharing of cost and pricing information with external parties, and roles and responsibilities relating to price negotiation
- provides guidance on the contractual terms and conditions in conjunction with costing and pricing
- provides a mechanism for approvals required in presenting quotes to industry and external parties
A full description of the policy, including the recovery levels expected for different categories of activity, can be found here.
What are the important changes from the current position?
The new policy sets out clear prices for various types of work and an enhanced approvals process to ensure that the University can enter into funding agreements where the negotiated price allows appropriate recovery of costs.
It applies to all University staff, including those with Emeritus and Honorary status, who are involved in externally funded research, consultancy and CPD activities.
All work falling within the scope of the policy must be discussed with Research and Innovation; a nominated Business Development Executive or Technology Transfer Executive will liaise with the applicant to negotiate a price with the external organisation.
No discussion of price should take place with any external body for the delivery of an activity prior to the establishment of the costs involved. Any such discussions can severely undermine the negotiating position of the University and impede its ability to fully recover its costs.
In addition, sharing of cost information (once determined) with an external entity (in any form) is expressly forbidden, as this also undermines the University’s position. No staff member (including those in management positions) should share sensitive cost information with external parties.
Heads of School have discretion to relax minimum pricing requirements for commercially-funded research to as low as 75% fEC (recognising in the process the effective loss to the School); any project requesting a price that represented a recovery rate of less than 75% fEC will require approval by the Vice-Principal Regional Engagement or a nominated deputy acting with the explicit authority of the VP.
Where can I get more information?
A full description of the policy can be found in the Policy Zone section of the University web site.
A supporting FAQs page has been created here.
The following contacts in Research & Innovation are also able to answer queries:
- Research Finance Manager Donna Walker - d.walker@abdn.ac.uk
- Commercialisation Manager Ann Lewendon - a.lewendon@abdn.ac.uk
- Research Development Manager Juliette Snow - j.e.snow@abdn.ac.uk
- Consultancy - consultancy@abdn.ac.uk
- CPD - cpdservices@abdn.ac.uk
Pete Edwards, Vice-Principal Regional Engagement
Liz Rattray, Director of Research & Innovation