Budget case studies
| Client sets maximum price |
Competing with private sector |
RHD Student Stipend |
Cash and in-kind needed |
| No indirect costs funded |
Tender to government department |
Applying to ARC/NHMRC |
The following case studies describe situations that are typically faced by researchers and administrative staff when preparing budgets for research grants or contracts. The solutions offered are not necessarily the sole solutions, but they represent optimal outcomes that are compliant with University policy.
Client sets maximum price
During discussions with a potential research client, it has become clear that the budget for the research project cannot exceed $135,000. The client recognises that the University must recover some of its indirect costs and has been advised of the University policy on this matter. My faculty has mandated a minimum 35% cost recovery factor for all research contracts.
Given that the research sponsor has placed a ‘ceiling’ on the project budget, only Section A of the UoM Budget Form needs to be completed for the University to be compliant with the National Competition Policy. The faculty’s policy of a 35% cost recovery, consistent with the University’s recommended minimum, implies that there will only be $100,000 available to fund direct costs associated with the project. Your budget will need to be formulated on this basis, and include the additional $35,000 as an overhead charge to the sponsor, so that the total price quoted is $135,000.
Competing with the private sector
I am submitting a tender for provision of research services to a company. It seems likely that other universities and public research agencies may be competing for this project. There are also some specialist companies (ie. private sector businesses) that may be interested. The tender call makes no reference to any restrictions on the types of budget items supported.
In this situation both Section A and B of the UoM Budget Form must be completed and the budget in your tender document should reflect the full cost rather than direct costs plus an overhead component. This will ensure that the University remains compliant with the National Competition Policy. Even if the tender is awarded, there may be subsequent negotiations regarding the scope of services to be provided, and the final price.
RHD Student Stipend
I have managed to secure funding for a PhD student to undertake a project. The sponsor has agreed to fund both the stipend and some support costs.
Only Section A of the UoM Budget Form needs to be completed. As student stipends are exempt from overheads, no cost recovery factor needs to be included in Part B of the form.
Cash and in-kind needed
I have the opportunity to become involved in some collaborative research with a large, multi-national corporation. This organisation is providing both cash and in-kind contributions to the project. Although the University is providing no direct cash contribution, it is providing significant in-kind support through provision of staff time and laboratory facilities. We have agreed to split IP rights on the basis of cash and in-kind contributions. The cash support proposed by the sponsor is $675,000.
It is essential that the both Section A and B of the UoM Budget Form are completed, in particular so that the value of the University’s in-kind contribution can be determined. In accordance with the University’s Policy only $500,000 of the $675,000 can be used to directly fund the project as the remaining $175,000 (35%) must be charged as an overhead.
No indirect costs funded
I am undertaking research for an organisation or granting body that will not fund indirect costs.
Only Section A of the UoM Budget Form needs to be completed. The Dean’s approval of the budget will be required.
Tender to government department
I am submitting a tender for provision of research services to a Commonwealth Government department. My sources in the department tell me that only tenders below $150,000 will be seriously considered. The tender conditions state that overheads will be funded at a level of 10% of direct costs. I expect that tenders will be submitted by the private sector.
Even though you might be competing with the private sector for this tender, the fact that an upper limit has been placed on the tender price, and a limit of 10% has been placed on indirect costs means that only Section A of the UoM Budget Form needs to be completed. The Dean will need to approve the budget. Given the low level of overhead cost recovery it is unlikely that any private sector organisation would even submit a tender.
Applying for an ARC or NHMRC grant
I am applying for a grant to the ARC Discovery Project scheme. The grant requests funding for a postdoctoral fellowship and project costs over a three year period.
ARC schemes are Australian Competitive Grants and as a result the ARC does not provide funding to cover overheads. You do not complete the UoM Budget Form at all. The format for the grant budget is specified in the ARC Instructions for Applicants and the indirect costs in the budget are estimated using Australian Vice-Chancellor’s Committee multiplier for laboratory or non-laboratory research. The Melbourne Research Office provides specific advice on salary scales and also an example budget for Discovery Project and Linkage Project schemes. The University will eventually get funding from the Research Infrastructure Black Grant (RIBG) after it reports its Australian Competitive Grant income to the Department of Education, Employment and Workplace Relations.
- See ARC budgets page
- See NHMRC budgets page