Research and Consulting Incentives Policy


Application


This policy applies to all University academic staff members who are involved in research and consulting activities.

Purpose


To provide direction and guidance for the distribution of resources arising from research and consulting.

Background


This policy has been developed and released in conjunction with ‘go-live’ of the IRiS project and is effective from 4 April 2018.

While a comprehensive review of incentives has been undertaken in respect of ‘research’ and ‘consulting’ projects this work has not been completed with respect to all other related revenue streams (e.g. product or materials testing). It is envisaged that the review of these revenue streams and the determination of appropriate policies and distributions will be completed by 31 October 2018.

Introduction


The University requires a policy framework to incentivise Principal Investigators (PI’s) to win grants/contracts and deliver research outcomes which support the University’s research strategy, and to incentivise other parts of the University/UniServices to support that process.

The incentives are intended to:

  • recognise that resources need to be shared fairly to incentivise the various parties involved

  • generate the resources required to provide continuation for, or investment in, larger research groups and ongoing research activities

  • recognise that research should not be an excessive drain (through cross-subsidy) on teaching

Outside work activities undertaken by academic staff


Note - This policy should be read in conjunction with the policy on “
Outside Activities Undertaken by Academic Staff”.  In particular, academic staff should note the requirement to obtain prior written approval of the academic head for all professional or academic activities undertaken within the scope of that policy

POLICY


  1. This policy is to be effective with respect to contracts signed on or after 4 April 2018

  2. Contracts signed prior to that date are to be accounted for in accordance with the prior policies and practices

  3. With respect to arrangements in any HoD agreements signed prior to go-live where the contract is not entered into until after 4 April 2018 the distribution is to comply with the terms of the HoD agreement

  4. Research and consulting project resource distributions are to be made consistently across all faculties/Large Scale Research Institutes in accordance with the 6 scenarios outlined below:

Project funding scenarios

Note – please see Research and Consulting Incentives Decision Tree for assistance in determining which project funding scenario to apply

 

Research projects

      5.  In terms of this policy two possible research project funding scenarios may apply:

Scenario R1:

The first scenario to be considered is that in which the PI does not already have his/her salary fully funded (e.g. they are funded through grants and contracts but those grants and contracts do not cover their full salary). In that case, the distribution of resources is to be:

  Overheads Allocation of PI time charged Equipment and technical time Consumables and direct people costs Profit * and Under-spend
University - - - - 20%
Faculty (Contribution + Local Research Support) 100% - - - -
Department/School - 100% - - -
PI - - - - 80%
Relevant research contract (s) - - 100% 100% -
How allocated Charged (and for multi-year projects; scheduled) at time of project set-up Spend as you go (direct) costs Project wash-up at end

    *applicable typically to commercial projects only 

Note - in tables 1-4, overheads are calculated as 115% of academic time included in the budget for the grant or contract

The rationale for this resource distribution is that:  

  • Overhead Recoveries contribute to the costs of local support in faculties and to the faculty contribution to University central costs (e.g. Library, research policy/ethics, IT, HR, scholarships)  consistent with the University Overhead Rate Charging Policy

  • The PI time charge (actual cost) is distributed 100% to the department/school to support the salary of the PI

  • Equipment and technical time, and consumables and direct people costs, are expended by the PI to support the direct costs of undertaking the research

  • Profit (applicable typically to commercial projects only) and underspend is distributed: 20% to the University to recognise that the University has to meet a 3 to 4% profit expectation on total revenue and currently has to take resources from teaching to compensate for the fact that research does not generate this level of profit; and 80% to the PI (via the Research Development Account) for investment in enhancing research capability 

Scenario R2:

In the second research scenario, the salary of the PI is already being met from other sources (e.g. the Teaching and Research budget of their academic unit or fully from other research grants and contracts).

With the prior agreement of their academic head, the PI has included in the budget funding for their time that will allow them to be bought out of some of their duties. Here the distribution of resources is to be as per Table 2

Table 2: Research - PI salary fully funded, bought out of some duties

  Overheads Allocation of PI time charged Equipment and technical time Consumables and direct people costs Profit * and Under-spend
University - - - - 20%
Faculty (Contribution + Local Research Support) 100% 10% - - -
Department/School - 60% - - -
PI - 30% - - 80%
Relevant research contract (s) - - 100% 100% -
How allocated Charged (and for multi-year projects; scheduled) at time of project set-up Spend as you go (direct) costs Project wash-up at end

    * applicable typically to commercial projects only 

This is the same as in Table 1 except that the PI time charge is distributed: 60% to the department/school to support buyout of the academic from some existing duties; and 10% and 30% to the faculty and PI (via the Research Development Account) respectively for investment in enhancing research capability. 
 

Consulting Projects

Note – Resource distribution for Consulting projects differs from research projects in those instances where the consultancy is undertaken under the Outside Activities Undertaken by Academic Staff Policy and Procedures 

6.   In terms of this policy one of four possible consulting project funding scenarios may apply each of which result in particular distribution of resources: 

Scenario C1:

As in scenario R1, the PI does not already have his/her salary fully funded. In that case, the distribution of resources is to be as per Table 3 (which is similar to Table 1):

Table 3: Consulting - PI salary not already fully funded, no buyout

  Overheads Allocation of PI time charged Equipment and technical time Consumables and direct people costs Profit and Under-spend
University - - - - 20%
Faculty (Contribution + Local Research Support) 100% - - - -
Department/School - 100% - - -
PI - - - - 80%
Relevant research contract (s) - - 100% 100% -
How allocated Charged (and for multi-year projects; scheduled) at time of project set-up Not generally relevant in consulting, but spend as you go where it does occur Spend as you go (direct) costs Project wash-up at end

Scenario C2:

The PI and academic head agree that the PI will be bought out of some activities in order to take on the new consulting activity. This allocation is to be as shown in Table 4, which is similar to Table 2.

Table 4: Consulting – PI salary fully funded, bought out of some duties

  Overheads  Allocation of PI time charged Equipment and technical time Consumables and direct people costs Profit and Under-spend
University - - - - -
Faculty (Contribution + Local Research Support) 100% 10% - - -
Department/School - 60% - - -
PI - 30% - - 100%
Relevant research contract (s) - - 100% 100% -
How allocated Charged (and for multi-year projects; scheduled) at time of project set-up Not generally relevant in consulting, but spend as you go where it does occur Spend as you go (direct) costs Project wash-up at end

In the final two scenarios, the PI takes on the extra consulting activity under the Outside Activities Undertaken by Academic Staff Policy and Procedures

Because the extra consulting activity is agreed by the academic head to be additional to normal duties, there is no substitution of duties (i.e. buyout). Here a more simple approach to overheads and profit-sharing will be applied with an overhead/profit share charge levied on the total contract price.

Scenario C3:

The PI takes on the extra consulting activity under the Outside Activities Undertaken by Academic Staff Policy and Procedures and elects to have a share of the revenues paid into their Research Development Account.

Because there is no substitution of duties, the PI time funding goes 100% to the Research Development Account of the PI. A charge of 30% of the total contract price will be levied to meet University requirements to meet overhead costs and generate an operating surplus. The allocation is set out in Table 5.

Table 5: Consulting - PI takes on extra consulting activity under Outside Activities Undertaken by Academic Staff Policy and Procedures no substitution of duties and elects to have a share of the revenues paid into their Research Development Account

  Overheads and profit share (30% of the total contract price) Allocation of PI  charge out rate Equipment and technical time Consumables and direct people costs Profit and Under-spend
University - - - - -
Faculty (Contribution + Local Research Support) 100% - - - -
Department/School - - - - -
PI - 100% - - 100%
Relevant research contract (s) - - 100% 100% -
How allocated

Charged (and for multi-year projects; scheduled) at time of project set-up

Not generally relevant in consulting, but spend as you go where it does occur Spend as you go (direct) costs Project wash-up at end

Scenario C4:

The PI takes on the extra consulting activity under the Outside Activities Undertaken by Academic Staff Policy and Procedures with no substitution of duties and elects to have a share of the revenues paid personally (after normal deduction of tax). Such revenues would typically not be counted as University performance for purposes such as promotion.  

Because there is minimal benefit to the University, the share of profit to PI (personal payment) is reduced in favour of the share to the faculty through a 40% rather than 30% overhead/profit share levy. This allocation is set out in Table 6:

Table 6: Consulting – PI takes on the extra consulting activity under the Outside Activities Undertaken by Academic Staff Policy and Procedures with no substitution of duties and elects to have a share of the revenues paid personally.

  Overheads and profit share (40% of the total contract price) Allocation of PI charge out rate Equipment and technical time Consumables and direct people costs Profit and Under-spend
University - - - - -
Faculty (Contribution + Local Research Support) 100% - - - -
Department/School - - - - -
PI - 100% - - 100%
Relevant research contract (s) - - 100% 100% -
How allocated Charged at time of billing Not generally relevant in consulting, but spend as you go where it does occur Spend as you go (direct) costs Project wash-up at end

 Staff funded directly from grants    

   7.    Where PIs and/or other staff members have their salaries funded directly from grants, buyout (and the associated distribution of funds) will typically not apply

Note - For example, a staff member might be partly funded from a research grant and the PI would then have them take on another research or consulting grant to cover the rest of their salary. In that situation, their time will come under the “Consumables and direct people costs” column and the revenue so generated will flow directly to the project. Where such staff generate research and consultancy income that covers more than 100% of their salary then distributions can occur as per Table 2 above subject to academic head approval and suitable substitution accommodations being agreed with relevant funders

Classification of research projects

Note - The revised budget templates will include a categorisation of each project as to whether it is research (Scenarios R1, R2) or consulting (Scenarios C1, C2, C3 or C4) as per the definitions above. 

    8.   This categorisation must be specifically agreed by the academic head as part of the budget approval process 

Aggregation of resources

    9.   The distribution of resources provided for under this policy is to be applied consistently across the University. Local variations  will not be permitted 

    10.  However, academic units may choose to pool resources 

Note - For example, the PI’s in a department, school, centre, LSRI or faculty could choose to pool resources from their research development accounts in order to acquire a shared resource (e.g. to make a staffing appointment bringing expertise to be shared across that academic unit)

Definitions


The following definitions apply to this document:

Academic time / PI time refers to the actual cost before any overheads or multipliers are applied.

Note - For Research projects this will typically be an FTE calculation (e.g. a staff member paid $150,000 p.a. and costed into a project at 0.2 FTE would be a cost of $30,000). For Consulting under the Outside Work policy this will typically be the actual hourly rate paid (e.g. $150,000 per annum divided by a nominal 1,850 hours worked per annum = $81 per hour).

Consulting is the utilisation or manipulation of existing knowledge to provide expert advice. The answer to the question may be known or able to be deduced, calculated or otherwise determined from the current state of knowledge.

Research is original, independent investigation undertaken to contribute to knowledge and understanding and, in the case of some disciplines, cultural innovation or aesthetic refinement. Research typically involves inquiry of an experimental or critical nature driven by hypotheses or intellectual positions capable of rigorous assessment by experts in a given discipline.

Staff member refers to an individual employed by the University on a full or part time basis

University means the University of Auckland and includes all subsidiaries

Document management and control


Owner:                 Chief Financial Officer

Content manager:  Chief Financial Officer

Approved by:         Vice-Chancellor

Date approved:      5 April 2018

Review date:         5 April 2019