What is Full Economic Costing?

It sounds complicated but it actually makes sense. Let me give an example. If a member of staff in any organization gets an annual gross salary of £30,000, this amount is just one part of what the employee actually costs the organization. While employed in the organization, the person will make extensive use of all sorts of resources –estates, facilities, technological and office equipment, energy, stationery etc. If all these costs are taken together and are added to the employee’s annual salary, the total amount will be as astonishing as a six-figure sum. So Full Economic Costing is a formula that has been developed to estimate the total costs associated with any kind of work carried out within the organization.

Why is it useful?

Most people tend to forget about the indirect costs associated with labour, but this doesn’t mean that they’re not there. So when money for a project is awarded, the amount is intended to cover the overall costs that the project will mean to the organization, and not solely the staff’s rates. For this reason, when applying for external funding, it is of the essence that total costs are worked out and included in the bid, or the University will be at a loss should the money is only sufficient to cover parts of the expenses. The bad thing about doing full economic costing is that the estimated amounts hardly ever match the staff’s original expectations, which means that concessions often need to be made in order not to surpass the maximum amount offered by the funding body.

Bid-writing

For such funds to be obtained, we first need to go through a long process called “bid-writing” – in other words, writing applications to external funding bodies in order to convince them that we have the relevant expertise and specialization to be awarded the grants they’re offering.

How does bid-writing work?

Obviously each institution has their own rules and policies on how to go about bid-writing and putting in applications for external funding. In my institution, we work closely with the academic concerned, as they are the ones who will be using up the funds. The academic fills out the specialized parts of an application – i.e. how they plan to go about doing the research or managing the project etc. Our office helps by providing full economic costing analysis for the amount applied for, proofreading the application to make sure it’s in plain English, adding supporting data, and occasionally obtaining references to support the application. Also, more often than not, we are the ones who will chase signatures from the academic’s managers, and the ones who will actually gather all the required documents and submit the application. Keep in mind that all this often needs to be done within very tight deadlines.

It’s hard work, but whenever a bid is successful and a grant is awarded, it’s great satisfaction!