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					Universities Implementing Full Costing

Country Workshop – Turkey
Ankara University, Turkey, 27 Sept. 2010

The Irish Experience: An ongoing
journey

Presented by Mike O’Malley, Chair, FEC
National Steering Group
Agenda

1.   Introduction
2.   Ireland: Some simple statistics
3.   Irish Higher Education: A short overview
4.   Irish Higher Education: A financial overview
5.   Irish Higher Education: Growth in research income
6.   Objectives of the project
7.   Project organisation
8.   Workpackages
9.   AAP Academic Activity Profile
10. Post early pilot validation
11. Reporting and Benchmarking
12. Lessons learned
13. Questions and Answers
Introduction

•   Mike O’Malley, Bursar/CFO, National University of Ireland, Maynooth &
    Chair Irish FEC Project National Steering Group.
•   A Chartered Accountant.
•   Five years with an American manufacturing subsidiary in Ireland.
•   Fifteen years as a management consultant with KPMG and Arthur
    Andersen, always based in Dublin but carried out assignments in
    Australia, Luxemburg, Sweden, Spain, Belgium, USA, UK and Ireland.
•   Activity Based Costing…and financial shared services
Ireland: Some simple statistics

1.   Population 4m.
2.   Joined the EU January 1973 (with UK and Demark making a nine
     country EEC at the time).
3.   Currency €.
4.   Deepest recession in EU in 2008, turned corner in 2010.
5.   National objective is to turn the economy into a smart, innovation
     driven, people led economy….
6.   Higher education.
                             Q u a r t e r ly c h a n g e in G D P
           3

           2
           1

           0

          -1

          -2

          -3

          -4

          -5
                             2008                        200 9                            2010

               Ir e la n d          E u ro a r e a
                                                                     S o u rc e : R e u te rs E c o W in
Irish Higher Education: A short overview

1.   A Binary System with seven universities and thirteen other HEI’s called
     Institutes of Technology.
2.   Looking to have 72% of 18 year olds enter HE by 2020, currently
     approximately 60% undertake HE studies.
3.   In 1980 14% of 18 year olds entered HE.
4.   Trinity College Dublin, University College Dublin, University College
     Cork, NUI Galway, NUI Maynooth, University of Limerick and Dublin City
     University.
5.   80,000 students
6.   C. €1,300m Income and Expenditure of which €350m is funded researc
7.   Reform and efficiency have focus along with research growth,
     participation and collaboration.
8.   HIgher Education Authority is the government Funding Agency
Irish Higher Education: A financial overview
•   Core education funding not keeping pace with rising costs
•   UG student demand growing – both 18 year old and adult learners
•   Rapid growth of research and PhDs – but not fully funded
•   Consequent stresses on university finances and infrastructure
•   Competition and collaboration sitting side by side
•   Research funders demanding substantiation of costs and plans for spending
•   Limited ability to earn non-State or discretionary income
•   Constraints on staff costs, pensions, fixed term workers directive
•   Most universities’ surpluses too small to permit necessary long-term
    investment


Not a crisis, but these are threats to sustainability of the system, and
indirectly to the autonomy and freedom of the universities
Irish Higher Education: Growth in research income


               €350

               €300

               €250
   €Millions




               €200

               €150

               €100

                €50

                 €0
                      96


                                97


                                          98


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                                                                                              03


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                                                                00
                     /


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                                                            20
                  95


                            96


                                      97


                                                98




                                                                      00


                                                                                01


                                                                                          02


                                                                                                    03


                                                                                                              04
                                                            /
                19


                           19


                                     19


                                               19




                                                                     20


                                                                               20


                                                                                         20


                                                                                                   20


                                                                                                             20
                                                         99
                                                       19




                  However low awareness of FEC…not sustainable
Objectives of the project

 1. General cost awareness and understanding of the true cost of
    activities to support sustainable management in universities.
 2. Specific financial management information for planning and
    decision-making – e.g.
     – FEC of activities
     – Surplus/deficits of schools, departments etc.
     – Direct and indirect costs of projects.
 3. Determine an institutional research overhead rate.
 4. Determine the cost, absolute and relative, of HEA subject types
    e.g. Social Studies, Humanities, Geography, Mathematics,
    Biosciences, Physics, Dentistry, Veterinary Medicine.
Project governance

                                                                    Strategy & Strategic Innovation (SSI) Group
                                                                     Strategy & Strategic Innovation (SSI) Group
                                                           •Oversight role on all SIF Projects, including FEC
                                                            •Oversight role on all SIF Projects, including FEC




                                                                                     Project Champion
                                                                                      Project Champion
                                                                                  •Overall project leadership
                                                                                   •Overall project leadership
                                                                                  •Chair of FEC National
                                                                                   •Chair of FEC National
                                                                                  Steering Group
                                                                                   Steering Group




                                                                              FEC National Steering Group
                                                                               FEC National Steering Group
                                                               •Overall responsibility of all aspects of the FEC Project (from an
                                                                •Overall responsibility of all aspects of the FEC Project (from an
                                                               oversight and decision making/approval perspective)
                                                                oversight and decision making/approval perspective)
                                                               •Comprising the Chairs of the local Steering Groups and a
                                                                •Comprising the Chairs of the local Steering Groups and a
                                                               number of Technical Representatives (Finance, IT, HR and
         University Steering Groups (7)                         number of Technical Representatives (Finance, IT, HR and
          University Steering Groups (7)                       Research areas)
•Academic Led Group made up of Academics, Finance               Research areas)
  •Academic Led Group made up of Academics, Finance
Officers, HR Directors, FEC Project Manager                                                                                                 Relevant IUA Groups
  Officers, HR Directors, FEC Project Manager
•Provide overall leadership and guidance to FEC                                                                                              Relevant IUA Groups
                                                                                                                                          •E.g. UCFOG, HR Directors
  •Provide overall leadership and guidance to FEC                                                                                          •E.g. UCFOG, HR Directors
implementation within the university                                                                                                      etc. (Advisory Role)
  implementation within the university                                                                                                     etc. (Advisory Role)
•Chair of these Groups sit on FEC National Steering                            IUA FEC Project Manager
  •Chair of these Groups sit on FEC National Steering                           IUA FEC Project Manager
Group                                                                     •National co-ordination of seven
  Group                                                                    •National co-ordination of seven
                                                                          university projects
                                                                           university projects




                    University FEC Project Manager (7)                            Technical Consultants                                Costing Consultants
                     University FEC Project Manager (7)                            Technical Consultants                                Costing Consultants
                   •Responsible for the delivery of the FEC                 •Responsible for offering technical                 •Responsible for offering costing
                    •Responsible for the delivery of the FEC                 •Responsible for offering technical                 •Responsible for offering costing
                   project within their own institution                     advice on project                                   consultancy advice on project
                    project within their own institution                     advice on project                                   consultancy advice on project
Workpackages

1.   Academic Activity Profile
2.   Payroll assignment
3.   Estates assignment
4.   Other cost assigmnets e.g. library, central administration, IT,
     student services, examination costs
5.   Web-front end for AAP data entry
6.   Reporting from the stystem


     In parallel a public procurement project selected software,
     technical and costing consultants to develop a comprehensive
     system incorporating all the workpackages
 AAP Academic Activity Profile
Academic Activity Profile Form                                                                                          Year 2008-2009
                                                                     NEXT >
                      Staff Number Or Unique Identifier                  S1234
                                                                                                                         NUIM
                             Period 1 September 08 to December 08
                                                                                        Please tick the relevant box below if on Leave for more than one week (excluding
                                                                                                              annual leave) within the reporting period
                                        PROFESSOR
                                                                                     Leave (other than Annual Leave) Why?
                                                                                     Paid Leave                Unpaid Leave                              NO                   FALSE
                          ADULT EDUCATION                                            (> 1 Week)                (> 1 Week)                                NO                   FALSE



                                                                     Percentage of    Guidance please include only time spent on university duties (click on the underlined
Activity                                                                 Time                                            text for Help)
1. TEACHING - UNDERGRADUATE
                                                                                                        Guidance on Teaching-Undergaduate
                                                                               30%
2. TEACHING - POSTGRADUATE TAUGHT
                                                                                                    Guidance on Teaching-Postgraduate Taught
                                                                               10%
3. TEACHING - POSTGRADUATE RESEARCH
                                                                                                  Guidance on Teaching-Postgraduate Research
                                                                               10%
4. RESEARCH - SPONSORED WITH OUTPUT
                                                                                                   Guidance on Research-Sponsored with Output
                                                                               15%
5. RESEARCH - NO EXTERNAL SPONSOR WITH OUTPUT
                                                                                          Guidance on Research with No External Sponsor with Output
                                                                                5%
6. OTHER RESEARCH & SCHOLARLY ACTIVITY

                                                                                                 Guidance on Other Research & Scholary Activity
                                                                                5%
7. OTHER INCOME GENERATING ACTIVITIES
                                                                                                 Guidance on Other Income Generating Activities
                                                                                5%
8. CLINICAL SERVICES
                                                                                                             Guidance on Clinical Services
                                                                                0%
9. ADMINISTRATION & MANAGEMENT
                                                                                                     Guidance on Administation & Management
                                                                               20%
TOTAL OF SECTIONS 1, 2, 3, 4, 5, 6, 7, 8, 9                                   100%


                       The total of all sections equals 100%
                                                                    Head of School Signature
Post early pilot validation

1.   Output of an early pilot shared between the universities
2.   Some concern expressed
3.   Agreed independent review should be carried out
4.   Met with Professor Robert Kaplan, Harvard University for
     guidance
5.   B&M consulting engaged to review the design
6.   SAS engaged to review the actual models built locally conformed
     to the template design
7.   SAS engaged to provide additional training to FEC Accountants
     on the use of the software
8.   Some changes recommended and adopted
9.   A move from AAP to TDABC approach rejected by NSG
    Reporting and Benchmarking
List of HEA Suite of Reports
1a Sectoral FEC - Student FTE by Student Type and Price Group


1b Sectoral FEC - Student FTE by Price Group, Institutional Summary


2a Sectoral FEC - Total Cost Control by Institution


2b Sectoral FEC - HEA costs by University by T, R and O and HEA costs by T, R and O as a % of HEA Cost Category


3a Sectoral FEC - Average Student FTE Teaching Cost by Student Type and Price Group


3b University FEC - Teaching Cost (€) per Student FTE per HEA Subject Area (for each university)



4   Sectoral FEC - Indirect Overhead Rate
 Reporting and Benchmarking
                                                                                                                          Post Graduate Research (PGR)       Post Graduate Research (PGR)
                                                               Undergraduate (UG)        Post Graduate Taught (PGT)
                                                                                                                                  Pre 4th Year                       Post 4th Year
    FEC - Teaching Cost (€) per Student
                                                                EU                           EU                        EU       Non-EU                     EU       Non-EU
       FTE per HEA Subject Area                                          Non-   Avg                   Non-                           Other Avg PGR                       Other Avg PGR
                                                              Other-                        Other-         Avg PGT      Other- HEA                          Other- HEA
                                                          HEA             EU    UG      HEA            EU          HEA               Non- pre 4th year HEA               Non- post 4th year
                                                               EU                            EU                           EU Funded                           EU Funded
                                                                                                                                      EU                                  EU

    Business And Management Studies                        X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Continuing Education                                   X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Humanities                                             X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Psychology And Behavioural Sciences                    X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Social Studies                                         X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
Avg Non-Lab                                                X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Archaeology                                            X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Architecture, Built Environmental And Planning         X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Catering And Hospitality Management                    X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Design And Creative Arts                               X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Education                                              X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Geography                                              X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Health And Community Studies                           X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Information Technology, Systems Sciences & Computer
    Software engineering                                   X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Irish, French, Spanish And German Languages            X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Mathematics                                            X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Other Modern Languages                                 X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Sports Science And Leisure Studies                     X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
Avg Fieldwork                                              X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X

    Agriculture And Forestry                               X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Anatomy And Physiology                                 X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Biosciences                                            X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Chemical Engineering                                   X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Chemistry                                              X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Civil Engineering                                      X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Earth, Marine And Environmental Science                X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Electrical, Electronic And Computer Engineering        X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    General Engineering                                    X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Mechanical, Aero And Production Engineering            X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Mineral, Metallurgy And Materials Engineering          X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Pharmacy & Pharmacology                                X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Physics                                                X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
Avg Lab                                                    X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Clinical Medicine                                      X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Clinical Veterinary Science                            X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
    Clinical Dentistry                                     X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
Avg Clinical / Preclinical                                 X         X    X         X    X        X    X       X      X     X       X       X        X   X     X       X       X        X
  Reporting and Benchmarking
                                                                                                                                     Post Graduate Research (PGR)             Post Graduate Research (PGR)
                                                     Undergraduate (UG)                  Post Graduate Taught (PGT)
  Sectoral FEC - Average Student FTE                                                                                                         Pre 4th Year                             Post 4th Year

Teaching Cost by Student Type and Price         EU                                       EU                                          EU         Non-EU                        EU         Non-EU
                                                                                                                                                     Other   Avg PGR                          Other   Avg PGR
                 Group                    HEA        Other-EU
                                                                 Non-EU   Avg UG
                                                                                   HEA        Other-EU
                                                                                                         Non-EU       Avg PGT
                                                                                                                                HEA
                                                                                                                                    Other- HEA
                                                                                                                                                     Non-    (pre 4th)   HEA
                                                                                                                                                                             Other- HEA
                                                                                                                                                                                              Non-    (post 4th)
                                                                                                                                     EU Funded                                EU Funded
                                                                                                                                                      EU                                       EU

   NON-LAB
   UCD                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   TCD                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   DCU                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   NUIM                                   X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   NUIG                                   X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   UCC                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   UL                                     X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   AVERAGE NON-LAB -                      X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X

   FIELDWORK
   UCD                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   TCD                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   DCU                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   NUIM                                   X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   NUIG                                   X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   UCC                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   UL                                     X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   AVERAGE NON-LAB                        X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X

   LAB
   UCD                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   TCD                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   DCU                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   NUIM                                   X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   NUIG                                   X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   UCC                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   UL                                     X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   AVERAGE LAB                            X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X

   CLINICAL
   UCD                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   TCD                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   DCU                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   NUIM                                   X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   NUIG                                   X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   UCC                                    X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   UL                                     X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
   AVERAGE CLINICAL                       X             X           X       X      X             X         X            X        X        X    X       X        X         X        X    X       X         X
Reporting and Benchmarking

Sectoral FEC - Indirect Overhead
              Rate

                                           UCD   TCD   DCU   NUIM   NUIG   UCC   UL   TOTAL/SECTORAL
Indirect Costs of Research
Total Costs Per FEC                         X    X      X     X      X      X    X          X



Direct Costs of Research
Total Costs Per FEC                         X    X      X     X      X      X    X          X



Overhead Rate (Full FEC)                   %     %     %      %      %     %     %          %



Sectoral Average Overhead Rate (per FEC)   %
Lessons learned

1.   Do not underestimate the work effort involved, the concept is
     simple but the implementation is difficult.
2.   Academic involvement is key.
3.   A great deal of time spent debating whether costs should be
     adressed at a summary level e.g. Finance or at a detail level e.g.
     Fees Office, Accounts Payable, Salaries, Staff Expenses,
     Accounting Team, Cash Office – a great deal of resistance to
     creating work in some universities.
4.   You cannot involve frontline staff enough.
5.   You cannot control everything. All universities are different at
     several levels.
6.   FEC is not a panacea for all management information.
7.   Communication is key.
8.   Presidential support is a must.
Questions?




             Q&A

				
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