Background to fEC
fEC is a development of TRAC, a costing methodology used by the Higher Education Sector that calculates the total costs to an institution of undertaking a project or activity in a sustainable manner.
Before the introduction of fEC, the absence of robust data on the full costs of research had led to institutions underestimating the costs of research. Research grant applications were made mainly on the basis of directly incurred costs together with a fixed allowance for overhead costs where this was recoverable from sponsors. This approach had led to research activity being subsidised to an unmanageable extent across the Sector. In addition, funders were experiencing little pressure to pay the real costs of the work undertaken on their behalf.
fEC, based on TRAC methodology, was introduced in 3 phases
- TRAC Return
This was introduced in 1999 across the Sector as a method of identifying the costs of Teaching (public and non-publicly funded), Research (public and non-publicly funded) and Other activities at institutional level. The TRAC Return now includes income against each of the five headings, and continues to be submitted to HEFCE each year. This costing methodology is used as the basis of the production of the University's fEC rates, and data for TRAC Teaching.
A pre-requisite of this first stage of the TRAC process was to quantify general levels of Research under-funding. It also highlighted significant problems of investment in the HE infrastructure across the sector.
- TRAC and Full Economic Costing (fEC) Research
This second stage was introduced across the Sector in September 2005. This in effect applied the TRAC methodology at an individual research application level. fEC provides a method to calculate the full costs of research projects leading to improved cost recovery in order to improve the sustainability of research. This was acknowledged as a major culture change which would take time to be fully embedded across the sector.
- TRAC Teaching
This third stage was introduced in 2007 to develop and implement a national framework for the costing of teaching based on the principles of the TRAC methodology. The purpose is to identify Teaching costs by subject for HEFCE fundable students. It produces data at Subject Level (HESA cost centre level) to inform the review of public funding teaching methodology by HEFCE in 2010-11.
With effect from February 2008 an annual TRAC Teaching Return has to be submitted to HEFCE.
The introduction of fEC has been consistent with the requirements and guidance of the Joint Costing and Pricing Steering Group (JCPSG) through the methodology set out in TRAC Volumes I, II, IIa & Volume III: 'Full Economic Costs of Projects', and the Office of Science and Technology (OST) and Research Councils.
JM Consultants Ltd, a group of consultants supporting the development of TRAC and fEC at a national level, have produced a useful briefing note which provides further level of background information without the need to refer to the full guidance manuals.