How Space Utilization Relates to Efficient Use of Research Dollars
Efficient and optimized use of research space results in less costs for overhead in support of research.
Indirect costs (a.k.a. facilities and administrative (F&A) costs) are overhead expenses associated with the use of university facilities and administrative support in connection with sponsor funded research. Every three or four years, universities or institutions submit a report and negotiate with the federal government to determine their rate of reimbursement for overhead costs in support of sponsor funded research. For universities or institutions receiving significant funding from sponsors (over $10 million in direct costs; Section D of Appendix III of Part 200 of Title 2), space assigned to sponsor funded research is an important factor in determining the facilities portion of the Indirect Cost Recovery (ICR or F&A) rate for that university. Typically, a percentage of a building's space used for sponsor funded research is assigned to each campus building where sponsor funded research is taking place. The assigned percentages are then applied to the various qualifying facility overhead costs for the corresponding building to determine the values that can be included in the calculation of the facilities portion of the F&A rate (a.k.a ICR rate). Information on this calculation is found in the Code of Federal Regulations in Appendix III of 2 CFR 200.
In 1991, the Federal Government capped the administrative portion of the ICR (F&A) rate at 26% (Section C8 of Appendix III of Part 200 of Title 2); however, the facilities portion of the ICR rate remains uncapped Allowed facility overhead costs in the rate calculation include the building depreciation, capital improvements, interest on building debt, operation and maintenance expenses, hazardous waste disposal, safety, facility management and planning, and central receiving, and other related expenses. Universities with over $10 million in direct costs report space connected with sponsor funded research as part of their ICR rate application but the federal process does not require or encourage space efficiency considerations. Universities simply report the space used without justification or discussion of their efforts to optimize research space utilization. As a result, inefficient use of space at institutions can result in higher ICR (F&A) rates, which in turn means the need to allocate more of sponsor research funding budgets towards overhead costs, lessening the funding available to support additional grants.
It should be noted that universities contribute to overhead research costs as well. Universities commonly report that they do not receive sufficient overhead funding from sponsors to cover all the indirect costs of sponsor funded research on their campuses; therefore inefficient use of space is also costly to universities who end up also sharing the costs of overhead in support of sponsor funded research.
By viewing research space as a community asset where possible rather than an individualized asset, universities could allocate space based on current researcher needs (rather than historical needs), avoid redundancy, and eliminate the “need” to build additional research spaces, thus saving funding. Inefficient use of research space leads to the construction of additional costly research buildings, which further perpetuates the current funding crisis of limited funds for research. Maintaining an efficient footprint (both in terms of space utilization and environmental impact) and reducing the indirect costs of research could save university funding and lead to more of the sponsor research budgets going towards the direct costs of research to ultimately fund more principal investigators.
Indirect costs (a.k.a. facilities and administrative (F&A) costs) are overhead expenses associated with the use of university facilities and administrative support in connection with sponsor funded research. Every three or four years, universities or institutions submit a report and negotiate with the federal government to determine their rate of reimbursement for overhead costs in support of sponsor funded research. For universities or institutions receiving significant funding from sponsors (over $10 million in direct costs; Section D of Appendix III of Part 200 of Title 2), space assigned to sponsor funded research is an important factor in determining the facilities portion of the Indirect Cost Recovery (ICR or F&A) rate for that university. Typically, a percentage of a building's space used for sponsor funded research is assigned to each campus building where sponsor funded research is taking place. The assigned percentages are then applied to the various qualifying facility overhead costs for the corresponding building to determine the values that can be included in the calculation of the facilities portion of the F&A rate (a.k.a ICR rate). Information on this calculation is found in the Code of Federal Regulations in Appendix III of 2 CFR 200.
In 1991, the Federal Government capped the administrative portion of the ICR (F&A) rate at 26% (Section C8 of Appendix III of Part 200 of Title 2); however, the facilities portion of the ICR rate remains uncapped Allowed facility overhead costs in the rate calculation include the building depreciation, capital improvements, interest on building debt, operation and maintenance expenses, hazardous waste disposal, safety, facility management and planning, and central receiving, and other related expenses. Universities with over $10 million in direct costs report space connected with sponsor funded research as part of their ICR rate application but the federal process does not require or encourage space efficiency considerations. Universities simply report the space used without justification or discussion of their efforts to optimize research space utilization. As a result, inefficient use of space at institutions can result in higher ICR (F&A) rates, which in turn means the need to allocate more of sponsor research funding budgets towards overhead costs, lessening the funding available to support additional grants.
It should be noted that universities contribute to overhead research costs as well. Universities commonly report that they do not receive sufficient overhead funding from sponsors to cover all the indirect costs of sponsor funded research on their campuses; therefore inefficient use of space is also costly to universities who end up also sharing the costs of overhead in support of sponsor funded research.
By viewing research space as a community asset where possible rather than an individualized asset, universities could allocate space based on current researcher needs (rather than historical needs), avoid redundancy, and eliminate the “need” to build additional research spaces, thus saving funding. Inefficient use of research space leads to the construction of additional costly research buildings, which further perpetuates the current funding crisis of limited funds for research. Maintaining an efficient footprint (both in terms of space utilization and environmental impact) and reducing the indirect costs of research could save university funding and lead to more of the sponsor research budgets going towards the direct costs of research to ultimately fund more principal investigators.