Cost Recovery and Pricing Policy
||9 March 2006
|Date Last Amendment:
|Nature of Amendment:
Consequential amendments arising from a restructure
of Central Administration/VC's office and the creation of
new senior executive positions replacing the EDA and Registrar.
|Date Last Reviewed:
||21 October 2010 - minor amendments
||Director, Financial Services
In general, the University expects that all costs incurred
in the conduct of professional activities that attract a payment
to the University or to a staff member will be recovered.
Wherever possible, the University also expects to receive
an additional margin or reasonable compensation for access
to the expertise of its employees, for reinvestment in the
1.1 Where the University is a party to an
agreement for provision of an activity or service:
• Staff capacity, availability of resources and cost
considerations will be adequately addressed prior to any commitment
being made to a client or funding agency;
• The full cost of an activity will be recovered in
the price charged to the client or funding agency, wherever
• The price charged will include a margin for reinvestment
in the University, where appropriate;
• Any unrecovered costs will be properly recognised
as a University in-kind contribution to the activity, where
applicable e.g. in collaborative research; and
• The University will adopt practices that provide reasonable
assurance that public funding received by the University is
not used to cross-subsidise its activities to gain a competitive
advantage over the private sector.
1.2 In the case of approved professional
activities, which attract income to a staff member from another
organisation or employer, the University expects:
• reimbursement for all costs borne by the University
in the conduct of the work; and
• reasonable compensation for access to the expertise
of its employees and for providing an environment that is
conducive to the performance of such work.
This Policy does not apply to funding received from donations
For the purposes of this policy,
Agreement can mean either a formal written
contract executed by all parties, an exchange of letters committing
the parties to certain things or a verbal arrangement between
the parties to do certain things for an agreed fee. Further
information on contract management is available at
Capital and special costs means the sum of
the cost of special space requirements, charged at suitable
commercial rates, as advised by Buildings and Property Division
from time to time, building works costs and depreciation costs
for major equipment items.
Cost Centre Head means the Vice-Chancellor
and Executive Deans and the manager of any other major cost
centre that Council may approve from time to time.
Costing/Full Costing means identification
of all relevant costs associated with the activity, including
capital and special costs, direct costs, infrastructure costs
Direct costs are the total of all those costs
that are easily identified with the project, including professional
fees and/or payroll costs, specific service costs, consumables,
equipment purchases, travel and per diems etc.
GST stands for Goods and Services Tax, a
10% tax on sales and services rendered.
Infrastructure costs (sometimes also referred
to as indirect costs or overheads) are those costs that relate
to the general infrastructure associated with the functioning
of the University and are not easily calculated and assigned
to the specific project or activity. They include but are
not necessarily limited to financial, personnel and payroll
services, legal, contractual and administrative services,
buildings and grounds maintenance, utility costs, library,
computing and telecommunications, laboratories, workshops,
insurance and indemnity cover.
Margin for reinvestment means a component
of the professional fee or price charged to a client or funding
agency that is over and above recovery of the full costs of
the activity or service. It is a charge that is applied in
pricing activities when a commercial return or a margin to
compensate for risk is considered to be warranted.
Pricing means the determination of the amount
the client is charged, whether it be less or greater than
the full cost of the activity, plus GST. Where the GST exclusive
price exceeds full costs, the difference is margin or profit.
Where the price charged is less than the full cost, the difference
constitutes an in-kind contribution by the University.
3.1 Wherever possible, the full cost of
an activity, comprising all relevant direct, capital and infrastructure
costs in accordance with the guidelines to this Policy will
be recovered in the price charged to the client or funding
agency. Any unrecovered costs will be recognized as a University
3.2 Subject to exemptions for specific categories
of research funding outlined in the guidelines, the standard minimum
charge to a client or funding agency to compensate the University
for infrastructure costs will be 25% unless an exemption applies to the funding source or relevant Cost Centre Head authorises a lower rate. Where commercially appropriate, a higher rate should be applied commensurate with market conditions
||3.3 The price charged for an activity will include a margin for reinvestment in the University, where appropriate. The margin for reinvestment will normally be guided by what the market for the activity will bear. Discretion to determine the margin for reinvestment vests in the relevant Cost Centre Head.
3.4 The price charged for activities where the University competes with the private sector for provision of the service, e.g., consulting or fee for service, will normally include:
(i) Generally accepted professional fees for the staff member’s time to provide reasonable assurance of no unfair advantage over the private sector from undercharging for professional staff time and use of University infrastructure; plus
(ii) All other direct and capital or special costs borne by the University in the conduct of the work; plus
(iii) An additional margin, where the market will bear it.
3.5 Except with the approval of the Cost Centre Head, the budget or price charged for an activity will be in accordance with the above pricing clauses and the guidelines.
For all activities that will attract a payment to a
staff member or to the University
4.1 The staff
(i) consult their supervisor at the earliest possible time the
activity is being considered, and before any commitment is made
to the client or funding agency;
(ii) consult Faculty Resources Officers, or staff in the Research Services Office or Financial Services Division for advice on the
budget or price to be charged for activities as per clause 1.1;
(iii) in the case of income received from activities as per
clause 1.2, make arrangements with their Cost Centre Head for:
• identification and reimbursement of all University
• payment to the University of a share
of the revenue equivalent to infrastructure levy as per clause
4.2 The staff member’s
(i) be satisfied the staff member has the capacity, relative
to other priorities and commitments, to undertake the activity;
(ii) be satisfied that the staff member has consulted on the
budget or price to be charged, as per 4.1(ii);
(iii) be satisfied that any University resources that need to
be accessed are available;
(iv) ensure that the Cost Centre Head is consulted, as appropriate;
(v) ensure that the activity is approved and undertaken in accordance
with this and any other relevant University policies and guidelines,
e.g. offshore teaching, delegations of authority to enter into
contracts, intellectual property, risk management.
4.3 Faculty Resources Officers or staff in
the Research Services Office or Financial Services Division will provide
costing and pricing advice consistent with this Policy and with
reference to the associated guidelines and financial tools developed
by the Financial Services Division from time to time.
4.4 The Cost Centre Head will ensure that other
senior staff of the University are consulted about the activity,
Distribution of Revenue
5.1 Direct costs will be reimbursed to the
relevant cost centre where the expenditure is incurred.
5.2 The Infrastructure levy at the specified rate will apply
(i) research and non-research revenue, subject to certain
exemptions outlined in the guidelines and in the absence of
alternative arrangements as per clause 5.3, below; and
(ii) revenue credited to consulting accounts.
5.3 Different levies may operate in accordance
with University policies and procedures for specific activities
that are approved from time to time.
5.4 Infrastructure levy as per clause 5.2
will be distributed to the Major Cost Centre that generated the revenue.
Major Cost Centres will be charged overheads based on their proportion of eligible research and consulting revenue, independent of their levy earnings.
5.5 Subject to any over-riding contractual
requirement, the margin for reinvestment or any surplus revenue
remaining after recovery of all costs and distribution of
infrastructure levy will be available to the relevant Cost
Centre for expenditure for University purposes.
5.6 A Cost Centre Head may approve payment
as salary of such amount of a consulting fee after deduction
of infrastructure levy and all relevant costs borne by the
University as is mutually agreed with the staff member. The
University will deduct the applicable taxes and superannuation
guarantee contribution from the staff member payment.
5.7 Cost Centre Heads will determine the
distribution of their share of revenue in accordance with
this clause 5 by agreement with relevant parties, which may
include other Cost Centres.