Category: Research Funding

  • What’s driving low levels of full economic cost recovery in research?

    What’s driving low levels of full economic cost recovery in research?

    Media attention has emphasised that the financial issues facing universities continue to worsen. While research is a cornerstone and strength of the sector, it is often regarded as a cost, which leads to scrutiny as part of institutional savings targets. Despite calls to acknowledge the value of research, the focus understandably remains on research costs.

    The focus of universities on the volume and cost of unfunded research, or more accurately, internally funded research, is a question that must be addressed. Institutions are reflecting on and revising internal research allowances as part of their efforts to achieve a more sustainable financial position, as the cross-subsidy from international student fees is no longer as viable as it once was.

    The question of funded research, however, is a different matter. For quite some time, there have been questions about what constitutes the full economic cost (FEC) and how these costs are recovered when projects are funded. Both issues have once again come to the forefront in the current climate, especially as institutions are failing to recover the eligible costs of funded projects.

    As part of the Innovation & Research Caucus, an investment funded by UKRI, we have been investigating why the recovery of UKRI-funded research is often below the stated rates. To put it simply, if the official recovery rate is 80 per cent FEC, why is 80 per cent not being recovered on UKRI-funded projects?

    Understanding under-recovery

    We conducted a series of interviews with chief financial officers, pro vice chancellors for research, and directors of research services across mission groups, the Transparent Approach to Costing (TRAC) group, and various geographic regions. They identified several key reasons why universities are not recovering the funding to which they are entitled.

    Before exploring the causes of under-recovery on UKRI-funded projects, the project aimed to establish the extent to which TRAC data was curated and utilised. Notably, the study found that the data collected for TRAC does not exist within research organisations and would not otherwise be collected in this form if it were not for the TRAC reporting requirement.

    While scrutinising TRAC data was less of a priority when the financial situation was more stable, in many institutions, it is now of interest to the top table and serves as the basis for modelling, projections, and scenario planning. That said, such analysis did not always recognise TRAC’s limitations in terms of how it was compiled and, therefore, its comparability.

    In many of the research organisations consulted, the responsibilities for TRAC, project costing, and project delivery are distinct. Given the growing significance of TRAC data in influencing resource allocation and strategic decision-making, it is essential for research organisations to adopt a more integrated approach to compiling and utilising TRAC data to achieve improved outcomes.

    Drivers of under-recovery

    A wide range of factors explains why the cost recovered at the end of a funding grant is less than anticipated at the point of submission and award. Almost all respondents highlighted three factors as significant in low cost recovery:

    1. Equipment and facilities costs were consistently cited as a factor, including issues associated with allocating and costing overheads and estates. Several institutions highlighted the difficulty in realistically costing equipment and facilities shared between research projects or between research projects and teaching.
    1. Staff under-costing was frequently mentioned, as principal investigators (PIs) underestimated their own and their colleagues’ time commitment to projects. This ineffective practice was driven by a (mis)perception that lower costs will likely improve success rates – despite the emphasis being on value rather than cost within a specific funding envelope.
    2. Inflation has been identified as a factor affecting all cost elements – from staff costs related to pay settlements and promotions to the rising expenses associated with consumables, equipment, and energy. This reveals a growing gap in applications, delivery, and reporting.

    Beyond these top three, the report highlights the implications of the often “hidden” costs associated with supporting and administering UKRI grants, the perennial issues of match funding, and the often inevitable delays in starting and delivering projects – all of which add to the cost and increase the prospect of under-recovery.

    In addition, an array of other contributing factors were also raised. These included the impact of exchange rates, eligibility criteria, the capital intensity of projects, cost recovery for partners, recruitment challenges, lack of contingency, and no cost extensions. While not pinpointing the importance of a single factor, the interplay and cumulative effect were considered to result in under-recovery.

    Addressing under-recovery

    Universities bear the cost of under-recovery, but funders and universities can take several actions to improve under-recovery – some of which are low- or no-cost, could be implemented in the short term, and would make a real difference.

    Funders, such as UKRI, should provide clearer guidance for research organisations on how to cost facilities and equipment, as well as how to include these costs in research bids. Similarly, applicants and reviewers should receive clearer guidance regarding realistic expectations from PIs in leading projects, emphasising that value should be prioritised over cost. Another area that warrants clearer guidance is match funding, specifically for institutions regarding expectations and for reviewers on how match funding should be assessed. We are pleased to see that UKRI is already taking steps to address these points in its funding policies [editor’s note: this link will be live around 9am on Friday morning].

    In the medium term, research funders could also review their approaches to indexation, which could help mitigate the impact of inflation in driving under-recovery, although this is, of course, not without cost. Another area worth exploring by both research organisations and funders is the provision of shared infrastructures and assets, both within and across institutions – again, a longer-term project.

    We are already seeing institutions taking steps to manage and mitigate under-recovery, and there is scope to extend good practice. Perhaps the main challenge to improving cost recovery is better managing the link between project budgets – based on proposal costs – and project delivery costs. Ensuring a joined-up approach from project costing to reporting is important, but more important is developing a deeper understanding across these areas.

    A final point is the need to ensure that academics vying for funding really understand the new realities of cost and recovery. This has not always been the case, and arguably still is not the case. These skills – from clarifying the importance of realistic staff costs to accurately costing the use of facilities to effectively managing project budgets – will help close the cost recovery gap.

    The real FEC of research funding

    The current project has focused on under-recovery in project delivery. The next step is to understand the real cost to research organisations of UKRI grant funding.

    This means understanding the cost of developing, preparing and submitting a UKRI grant application – whether successful or not. It means understanding the costs associated with administering and reporting on a UKRI grant during and beyond the life of a project (think ResearchFish!).

    For more information, please get in touch – or watch this space for further findings.

    The Innovation & Research Caucus report, Understanding low levels of FEC cost recovery on UKRI grants, will be published on the UKRI site later today.

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  • Trump: Aus research must disclose vaccine, transgender, DEI or China ties

    Trump: Aus research must disclose vaccine, transgender, DEI or China ties

    US President Donald Trump in the Oval Office of the White House. Picture: Mandel Ngan

    Australian researchers who receive United States funding have been asked to disclose links to China and whether they agree with US President Donald Trump’s “two sexes” executive order.

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  • The research system won’t become more agile without a deeper conversation on funding

    The research system won’t become more agile without a deeper conversation on funding

    There is a feeling among some policymakers that the UK research system lacks agility. But the key question is agility for who: for researchers, for research institutions, or for the government which funds the research?

    By definition, research explores the unknown. These unknowns range from the unknown solutions to today’s challenges such as affordable healthcare and reversing climate change, to initiating the yet unknown technologies of tomorrow that will feed future economic growth.

    Whose agility?

    The UK government’s Plan for change: milestones for mission-led government repeatedly mentions the UK’s outstanding research base. It is also clear that government has high expectations of how our research system can demonstrate agility to pivot towards addressing major societal needs. But addressing any of these missions requires time, and hence a disciplined balance of agility and commitment to a long-term research agenda.

    At a more operational level, for our national funders such as UKRI, legitimate concerns over the precarity of research careers, and the recognition that hard problems take time to solve, means that a large fraction of their annual budget is committed for three or more years into the future.

    The extent of these multi-year commitments seemingly restricts the agility of the research system. However, looking more closely, embedded within these commitments are the commitments made to individual researchers to support them and their teams to pursue thematic programmes while empowering their own agility to rapidly pivot their research in response to new ideas of their own or the discoveries of others. It is precisely these longer-term funding commitments typified by support for research fellowships or the quality-related funding driven by REF that allows the UK’s researchers themselves to be agile.

    It is widely accepted the UK’s research system is highly productive in basic curiosity-driven research. This productivity, we would argue, is a direct result of the researcher-led agility that our current funding system allows. However, we also recognise that government can and should identify areas of research in support of our industrial or other national needs – some on shorter time horizons.

    The key is the balance between this academically-led and government directed agility – we can and do need to do both. Reaching this balance requires greater transparency from the funding agencies and an intellectually safe discussion between government and the research sector. We urge UKRI and DSIT to articulate this balance, around which we can all then work.

    Speed and success

    Related to these questions of agility are current problems in the funding system which if left unchecked will undermine our research productivity. The costs of research have far outstripped inflation and available research funding has not kept pace – for example, the fall in the number of doctoral training centres funded by EPSRC from 2014 to 2019 and to 2024.

    These financial pressures have driven hyper competition in the sector. Success rates have plummeted, with many researchers’ experience being of ten per cent success rates or less – particularly in the schemes supporting academically-led, curiosity-driven research.

    Perhaps even worse are the lengthening times taken to receive a funding decision; a decision on a three-year long application often takes more than one year to receive – hardly a route to agility of any kind.

    Irrespective of these budget-constrained success rates, we urge our national funders to reduce significantly the time it takes to reach their decisions on whether to fund or not. Suggestions have been made to move to lottery funding, thereby reducing decision times and eliminating potential biases within an ultra-low success rate environment. But a lottery would not solve the issue of low success rates, and hence fails to provide the continuity of funding for people and the security of careers upon which their agility depends.

    Beyond long decision times, low success rates drive many other unwanted behaviours: for example, conservatism in selection, or a tendency for the applicant to oversell.

    The danger of system failure

    The reality is that the public purse alone is insufficient to fund the research volume the UK requires. Hence a question for the research sector, funders and government alike is how we can maximise the gearing of taxpayers’ investments by securing industrial and philanthropic co-investment to drive economic growth and public benefit.

    It should also be recognised that universities in the UK increasingly cross-subsidise the whole research system via non-publicly funded teaching, and that this aspect of the system is already highly geared. Leaving aside several successful schemes which already do this, such as EPSRC prosperity partnerships, we believe that a co-investment culture would also require system agility and prompt decisions.

    We all feel that the research system lacks agility, but we each see this problem from our own perspectives. The government bemoans the forward commitment of our funders – but also needs to restrict the number of new initiatives to those that it has the resources to fund, perhaps refocussing an agreed fraction of the challenges each year. Funders think that they are empowering the agility of their researchers – but also need to realise that their lengthy decision times are harming productivity. Individual researchers should welcome the agility with which they are empowered – but must accept also the responsibility to never stop thinking as to how their expertise can be applied to benefit the economy and society.

    These are the interconnected problems of agility, of balance between government priorities and curiosity-driven research, of success rates, of decision times. The system we have is in danger of failing us all – we need to talk.

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  • Tesla chair to lead research and development review

    Tesla chair to lead research and development review

    Robyn Denholm has been chair of Tesla since 2018. Picture: Lyndon Mechielsen/Courier Mail

    A Strategic Examination of Research and Development review is to evaluate how to maximise Australia’s existing research and development (R&D) spend, and convince industry to adopt innovation.

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