GLASGOW CALEDONIAN UNIVERSITY
UNIVERSITY REQUIREMENTS FOR THE CONDUCT OF COMMERCIAL ACTIVITIES
September2013
CONTENTS
Page
1. Introduction 3
2. Definitions 3
3. Responsibilities 5
4. Commercial Proposal Development and Assessment (pre-award) 6
5. Proposal Approval (pre-award) 7
6. Commercial Project Acceptance (pre-award) 12
7. Project Delivery and Monitoring (post-award) 15
8. Project Completion and Review (post-award) 16
GLASGOW CALEDONIAN UNIVERSITY
UNIVERSITY REQUIREMENTS FOR THE CONDUCT OF COMMERCIAL ACTIVITIES
1.INTRODUCTION
This document is intended to provide all staffwith mandatory instructions about University requirements in preparing, assessing, approvingand undertaking commercial activities only, i.e. those activities classified as consultancy, contract research and CPD/Other. A separate document providing mandatory instructions concerning University requirements in preparing, assessing, approving and undertaking research activities can be obtained from Research, Innovation & Enterprise Department (“RIE”).
The purpose of this document is to help ensure that the University and its staff conduct business activity in a professional manner and deliver an added value service to the client, thereby benefitting the University’s external reputation. In addition to ensuring a consistent approach to commercial activity appraisal, the adoption of this mandatory practice will minimise risk to both the University and individuals undertaking such activities.
Many of the documents and processes referred to in this document have been in use for some time in the University and are administrated primarily by RIE. However, this document places these processes in the wider context of the conduct of the lifecycle of a commercial activity, and includes in particular the need to reflect on the purpose of carrying out such work on behalf of the University, and in understanding and capturing the reputational benefits of its impact for the institution in the external sphere.
2.DEFINITIONS
2.1 COST
The total cost of any commercial work undertaken by the University is made up of the direct costs of carrying out the work (pro-rata salary costs and salary related costs such as national insurance and superannuation), additional direct costs such as travel and consumables, and indirect costs such as University overheads applied pro-rata to the staff cost. The staff costs and overhead rates applicable are updated annually by the Finance Office.
2.2 PRICE
The price of any commercial work undertaken by the University is the amount of money paid by the client for the services to be provided.
It should always be made clear to the client whether or not the price quoted is inclusive or exclusive of VAT. This should be reflected in the contract agreed.
2.3 SURPLUS
The surplus generated by the University from commercial activities is the difference between the calculated cost of doing the work, included overheads (section 2.1) and the price charged (section 2.2).
2.4 CONTRACT
A contract is a legally binding document negotiated between the University and the client that specifies the agreed programme of work to be carried out, the price and assigns the formal responsibilities and liabilities associated both parties in respect of the activity to be undertaken. UNDER NO CIRCUMSTANCES SHOULD ANY WORK BE CARRIED OUT BY THE UNIVERSITY UNTIL THE HARDCOPY OF THE CONTRACT, SIGNED BY BOTH PARTIES, IS IN THE POSSESSION OF RIE.
2.5CONTRACT RESEARCH
The University uses the Frascati definition of research as used by the Scottish Funding council to classify this type of activity.
The Frascati definition of research is as follows:
“Research and experimental development (R&D) comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications.”
“R&D is a term covering three activities: basic research, applied research, and experimental development. Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundation of phenomena and observable facts, without any particular application or use in view. Applied research is also original investigation undertaken to acquire new knowledge. It is, however, directed primarily towards a specific practical aim or objective. Experimental development is systematic work, drawing on existing knowledge gained from research and/or practical experience that is directed to producing new materials, products or devices, to installing new processes, systems and services, or to improving substantially those already produced or installed.”
Contract researchmust meet with the definition for research provided above, which differentiates it from consultancy. Contract research would be carried out under a legally binding contract (see section 2.4) between the University and an external collaborator, where there are deliverables and expectations of the work defined by the client. Such work is classified as a commercial service, carried out for a price (as opposed to the refund of eligible costs as in an educational research grant).
2.6 CONSULTANCY AND OTHER SERVICES
Consultancy
Consultancy is defined as an activity that a member of staff carries out within or related to their professional field through which their expertise is exchanged with an external organisation but which does not involve original research work (as defined in the Frascati manual) or form part of an accredited programme of learning and teaching (eg. CPD).
The Consultancy definition also includes the provision of expert advice and work which, while it may involve a degree of analysis, measurement or testing, is crucially dependant on a high degree of intellectual input (such as interpretation) from the University to business.
Continuing Professional Development (CPD)
ContinuingProfessional Development is defined by the Scottish Funding Council as:
“A course or other educational provision that is self financing, is developmental, and aims either to meet the needs of employers and their workforces or improve the employment related skills of the students/delegates.”
2.7 COMMERCIALISATION
“Commercialisation” is a term used specifically in higher education in respect of the exploitation of University intellectual property (for example licensing of copyright, patents, trademarks, software, designs or other technical know how).
Such commercialisation activities include the creation of spin out companies which must be formally approved by RIE.
3.RESPONSIBILITIES
3.1 DEANS AND HEAD OF ACADEMIC OR SUPPORT DEPARTMENTS
It is the mandatory responsibility of the Associate Dean or Head of Academic or Support Departments to ensure that proposals have been appropriately developed, assessed, costed, priced and documented prior to seeking formal University approval.It is then the responsibility of the Dean or Headof Academic or Support Department to ensure that contracts or relevant University agreements or terms and conditions are in place and formally accepted prior to staff commencing work, and that arrangements for the delivery, monitoring and completion of such projects for clients are satisfactory. In their role as University Senior Managers, Deans and Heads of Academic or Support Departments are also responsible for ensuring that the commercial work to be undertaken is consistent with the University’s mission and strategy, that the benefits arising from undertaking the work are properly assessed and that risks to the reputation of the University are appropriately managed.
3.2 RESEARCH, INNOVATION & ENTERPRISE
RIE is a central University function which supplies services to support staff in the development of commercial proposals, in providing a costing service using the University methodology (specified by the Finance Office) and in negotiating contracts between the University and the client to enable such activities to be formally approved. RIE is responsiblefor the timely provision of such services to meet University business requirements. RIEalso has a role to ensure that proposed activities comply with University requirements for commercial activities (as set out in this document), in contract amendment and to advise the University Executive member responsible, the Pro-Vice Chancellor (Research) in relation to matters of non-compliance prior to formal authorisation of any commercial activity by the University.
3.3 PRO-VICE CHANCELLOR (RESEARCH)
The Pro-Vice Chancellor (Research) is responsible for the pre-award approval of commercial activities on behalf of the University, including the formal acceptance of contracts, based on formal statements concerning compliance with University requirements (as set out in this document) and as certified by Deans and Heads of Academic or Support Departments and staff in RIE.
3.4. FINANCE OFFICE
Finance Office staff are responsible for securing advice for academic staff, Deans and Heads of Academic or Support Departmentsin relation to credit checks on potential clients, providing and updating the University costing methodology model and for accounts management and invoicing following formal project acceptance by the Pro-Vice Chancellor (Research).
4.COMMERCIAL PROPOSAL DEVELOPMENT AND ASSESSMENT (PRE-AWARD)
Agreement to Undertake Work
In establishing whether it isacceptable for the University to bid for/agree to a particular piece of work, the benefit of undertaking work and strategic fit must be examined.
The purpose of the project development and assessment phase is to establish an evidence based view from the University side about the benefits and risks in undertaking the project. This evidence must be documented within the School/Academic or Support Department. This will involve consideration about the motivation of the client in requesting the work and the background to their business, and how any information provided will subsequently be used. The process also involves consideration of whether the University is in a good position to undertake the work (eg. from the point of view of availability and skill-set of staff, client timescales, contingency planning) and whether it is worth doing strategically (quantifying objectively the financial and non-financial benefits).
Risk Assessment
It is a University mandatory requirement that a formal risk assessment is carried out prior to commencing any commercial work in order to devote time to thinking in a dispassionate way about the obligations to be undertaken and the wider implications for the University in so doing: eg. what is the worst case scenario? The Risk Assessment must be carried out via the University’s Risk Register:
Risk Register
Guidance regarding the Risk Register can be found here:
The Risk Register should be used for every project in order that risk can be adequately assessed. It is the responsibility of the principal investigator to complete the Risk Register and discuss any issues within the School.
5. PROPOSAL APPROVAL (PRE-AWARD)
5.1 COSTING AND PRICING
5.1.1UNIVERSITY COSTING AND PRICING MODEL
The University requires acosting to be completed for each commercial proposal.
The consultancy model is an excel spreadsheet and is available here:
Consultancy Costing Spreadsheet
It is updated annually to take account of changes to the institutional cost base therefore the most recent version must always be used. RIE will provide assistance with the completion of the consultancy model.
The consultancymodel requires that for any proposal, the amount of time needed to undertake the work is declared. The salary and salary related costs of this work are then calculated based on the University pay scales and related national insurance and superannuation contributions. Other direct costs of carrying out the work are then identified such as any travel and subsistence costs, equipment, and consumables. This provides a sub total of all direct costs incurred.
An overhead calculation is applied based on the School/Academic or Support Department budgeted overhead. The percentage rate used is determined by calculating theoverhead per member of academic staff for each School and then expressing this as a percentage of the Senior Lecturer hourly cost. This percentage is applied in the costing to the total staff costs to give the overhead to be charged. The average School rate is to be used for Non-School work.
The price that is acceptable to the School can be adjusted to reflect the School/Academic or Support Department’s view of the market rate for the activity.
The process of costing a proposal allows the School/Academic or Support Department to identify the costs incurred by the University in undertaking the work in order that an appropriate price can be set. The costing must therefore be done beforenegotiating and setting the price. The School has responsibility for setting the pricecharged to the client.
As an overarching principle, the price should be set to as much as the proposer judges that the market can bear and costs incurred should be kept to the minimum required to execute the project to the quality level and on the timescale agreed with the client ie. we should be aiming to maximise the surplus we generate.
The surplus is then calculated according to the difference between the established cost calculated including the level of overhead to be levied as determined by the School and the price to be charged, as agreed with the client. The cost is therefore an internal calculation not to be disclosed to the client. The price must be negotiated with the client after the internal cost is calculated with the aim of generating an overall surplus (price minus cost).
Continuing Professional Development and short course activity must not be costed using the RIE consultancy costing spreadsheet. The model for budgeting for courses is provided by the Finance Office and the Finance Office Business Partner should be contacted in relation to its use.
5.1.2 CONTRACT RESEARCH AND FULL ECONOMIC COST CALCULATION
The University is mandated to calculate the full economic costs of research activity for UK HEI TRAC reporting by the Government. For contract research a full economic cost (“fEC”) must be calculated, but it is for advisory purposes only. There is an additional column in the research costing spreadsheet for calculating the full economic cost of contract research which is automatically populated by the model. This fEC is entirely separate from and must not be confused with the University internal budget model on which overheads are based. However, it is a matter for Schools to set the price to be charged for the work. The research costing spreadsheet is updated annually therefore the most recent versionmust always be used.The spreadsheetto be used for the costing of contract research is available here:
Research Costing Spreadsheet
The staff costs populated in the spreadsheet must be calculated by RIE as part of the pre-award service.
Requests for costings should be submitted to RIE at . RIE will only carry responsibility for ensuring that the costing is in line with the University model howeverRIEcan provide guidance with regards to the costing and can advise on any technical issues that arise.
5.2COMMERCIAL PROPOSAL APPROVAL FORM PROCESSES
Schools/Academic or Support Departments are required to complete a University Proposal Approval Form (“PAF”) when bidding for commercial work and to supply this to RIE for formal scrutiny and approval, together with a completed costing and Risk Register.The PAF can be found here:
Proposal Approval Form
The PAF is a formal document used for the purpose of allowing the University to assess and approve a proposal for which funding is being sought (ie. a bid, quotation or tender). There is a subsequent process stage, described in section 6 of this document, in which the University formally accepts the offer of funding subject to contractual approval.
Classification of Commercial Activity
Staff leading the proposed work must complete Parts A and C of the PAF which relate to commercial activities.
In order to be classified as contract research (as opposed to consultancy) the activity must meet with the Frascati definition of research set out in the definitions in section 2 of this document. This definition is used by the Scottish Funding Council for the purposes of financial returns in relation to Research Grant Funding, and in the Research Assessment Exercise in order specifically to distinguish between research and consultancy income. The routine testing and analysis of materials, maintenance of national standards and development of teaching materials, and other forms of consultancy services are specifically excluded from the definition of research.
RIEApproval of Completed Proposals
RIE manages the PAF approval and acceptance process for both commercial and research activities. RIE will normally scrutinise proposals and then secure University level approval. It should be noted that the timescale for approval is dependent on the appropriate procedures having been followed in developing the proposal.
Proposal made to Client based on University Standard Terms and Conditions at Bid Stage
For commercial projects, the principal investigator must indicate in Part C of the PAF if he/she knows whether the University standard terms will be applicable, or if not, indicate whether the client will subsequently provide their own contract for consideration by the University.
Proposal made under conditions of tender supplied by Client at bid stage
RIE should be supplied with the conditions of tender for review at the same time as the proposal approval is sought and this should be indicated by ticking the appropriate box in Part C of the PAF.
Research & Knowledge Exchange Administrative Support within the School/Administrative or Support Departments
Business Development Managers in the School/Administrative or Support Departments will assist principal investigators with the development and costing of the initial proposal.Principal investigators will prepare the Risk Register and in conjunction with Business Development Managers, will also prepare the costing and PAF. Business Development Managers will request a credit check from the Finance Office if a credit check is required (ie. where the University has not carried out any work for the client before and where the income is greater than £1,000). The principal investigator will be required to sign the PAF and Risk Register and these will be passed to the Research & Knowledge Exchange Administrative Support function within the School or Administrative/Support Department who will arrange signature by the appropriate Associate Dean of Business Development. Thereafter, the PAF and associated documentation will be delivered to RIE.
Approval by RIE
RIE will logreceipt of the PAF and associated documentation received for formal approval. If there are any issues concerning the proposal that RIE are unable to approve, then the principal investigator will be informed of the areas requiring further discussion.When the proposal and costing are approved by RIE, the documents will be returned to the Research & Knowledge Exchange Administrative Support function within the School/Academic or Support Department for Dean or Head of Academic or Support Department signature.