Transparency as a means to achieve institutional objectives

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Transparency as a means to achieve institutional
objectives

• Jim Port
• J M Consulting Ltd
• The big picture
• Transparency and public funding
• TRAC as an aid to pricing contracts
• Internal uses of TRAC data
• Whats new for 2001/2

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The big picture

• HE is a not-for-profit activity, but HEIs cannot
  survive if they do not invest. This implies
  managing costs, responding to markets, and
  generating surpluses
• Publicly funded T is just in balance and R in
  significant deficit
• There are back-logs of investment in
  infrastructure and staff
• Any increase in public funds will be conditional
  on institutions being more business-like in
  managing assets and activity
• Survival may well depend on being able to make
  hard decisions about priorities for resources
• Transparency is one of the sectors most powerful
  tools to demonstrate funding needs, and to manage
  its resources

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Areas where TRAC can help negotiations with
funders

• Institutional infrastructure for teaching and
  research
• Funding of research grants and contracts
• Charities funding of research
• Indirect cost rates and pricing
• NHS contracts

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Institutional infrastructure

• TRAC infrastructure adjustment
• Study for OST/Treasury (science research)
• What is backlog of investment?
• How far have JIF and SRIF covered this?
• How did it arise?
• What should be done
• Consultation paper with institutions
• Likely conclusions more funding needed but
  challenge to HEIs on research and asset
  management strategies
• Parallel study of teaching, arts and humanities

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Funding of research grants and contracts

• All main sponsors pay less than FEC
• Research councils
• Charities
• UK government departments
• EU
• HEFCE QR funding supports infrastructure for
  research councils (dual support), but has grown
  much slower than volume of research
• TR shows all PFR in deficit
• Transparency Review recommendation that
  government sponsors should accept TRAC data as
  basis for negotiating prices

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Charity funding of research

• Important source of funding in
  Medicine/biosciences Social science/policy and
  arts and humanities
• charities do not pay overheads
• but they do fund infrastructure, and will
  sometimes pay for costs that research councils
  will not
• With QR (in England), cost recovery depends on
  RAE grade and subject (and project), but can be
  similar to research councils
• Institutions need to be aware of full costs and
  to seek at least all direct costs in a more
  transparent way. There is evidence of a game
  where
• Some HEI applications do not ask for all costs
• Others try to include basic items like a PC
• Charity panels often cut these back

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Charity funding of research

• The medical research charities were not
  established to invest in bricks and mortar Nor
  were we set up to pay for lighting, heating,
  water, security, building maintenance or
  uniforms. Rather, our mission is to help the
  State find cures for disease and to increase
  knowledge for the health benefit of mankind
  Mike Dexter
• Our report to HEFCE recommends additional QR to
  remove difference between charity and RC projects
• But also need more professional management by
  HEIs costing pricing transparency in
  negotiations project management management of
  contract staff management of infrastructure

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Indirect cost rates and pricing

• Commercial pricing should be on market basis
• But for HEIs many customers are public
• These have not accepted HE claims for full costs
  in the past
• TRAC rates are more robust, differentiated and
  larger than previous
• Need to abate rates to avoid double counting for
  certain sponsors
• Guidance shows how to calculate a Rate Card for
  the institution
• Training workshops in November

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NHS contracts

• Over 70 HEIs involved, wide variation in pricing
• NAO report on this
• Variations can be legitimate (history, transfer,
  regional)
• Or due to methods used to cost and what is
  accepted by consortia in the past
• Guidance provides a checklist approach to ensure
  nothing is forgotten or undercosted
• NHS-HE Benchmarking group looking at this
• Similar approach could be applied to TTA

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Internal uses of TRAC data

• Financial strategy
• Portfolio/contribution analysis
• Business improvement
• Resource allocation
• Pricing rate card
• Costing NHS contracts etc
• But probably not
• Course or project costing

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Implementation work for 2001-02

• Indirect cost rates workshops in November
• JCPSG Pricing conference
• Good practice guidance
• Time allocation
• Non-staff costs
• Review of cost adjustments
• Benchmarking in January 2002