Distribution of income from university consultancy

The amount received relating to the contract (ie consultancy income) will be as per the price agreed.

Against this income the following costs are expected to be covered:

However, there may be cases where estate and indirect costs are prohibitively high. Consultancy with high staff time on would be an example. In consideration of this, an approach could be:

During the pricing process, the decision around estate and indirect recovery would be made by the HoS in collaboration with Finance, considering the activity and profile of the School, including financial targets.

The following two flowcharts show examples of income distribution for consultancy:

1. Standard one-day consultancy carried out by one academic

The fEC cost for a piece of off-site consultancy is £500. This consists of £250 direct travel costs and £250 day rate for the PI (day rate includes estate and indirect costs). The consultancy is for a single day.

The price offered to the customer is £1,000 (100% mark-up). At the approval stage it was agreed the PI day rate would be allocated 100% to School indirect income and that the ‘surplus’ would be shared 50/50 between the School and Academic using the discretionary policy. When this amount is received by the University, it is distributed as follows:

Example 1 of distribution of income from university consultancy

2. Less common consultancy carried out over a number of days by several people

The fEC cost for the consultancy is £14,000. This consists of £4,500 for direct costs, broken down as £4,000 for staff time and £500 for consumables. PI day rate is £250 (includes estate and indirect) and they are doing 10 days at a total of £2,500. The additional estate and indirect cost related to the direct staff time at cost is £6,250.

However, the maximum amount that the client will pay for the work is £10,000.

The work is being carried out on-site in an office environment.

The HoS, PI and finance have considered the benefits and agreed to set the estate and indirect contribution related to the direct staff time at 40%. This reduces the estate and indirect amount to £2,500.

The final costs to be included for the consultancy are:

Staff time £4,000

Consumables £500

PI time £2,500

Estate and Indirect £2,500

Total cost = £9,500

A mark up of £500 is applied, bringing the price offered to the customer to £10,000.

At the approval stage it was agreed that the PI day rate would be split 50/50 with the School and academic and the mark up would be split 20/80 with the School and academic respectively, using the discretionary account policy.

When the £10,000 is received by the University, it is distributed as follows:

 Example 2 of distribution of income from university consultancy