(1) To set out the requirements for the identification, negotiation, application, and approval of project and consultancy revenue and how any surplus funds generated from project and consultancy arrangements are applied. (2) This procedure applies to all undertakings determined to be (3) Section 4 Part G and H apply to transfers from The University of Newcastle Research Associates (TUNRA) for funds identified for placement in Staff Support Accounts. (4) This procedure does not apply to activities: (5) The terms used in this Procedure have the same meanings as the corresponding terms in the Guidelines for Commercial Activities (guidelines). (6) In the context of this document: (7) All opportunities for project and consultancy work must be endorsed by the relevant Head of School, Director of an Institute, or Director of a Directorate and approved by the appropriate financial delegate prior to any contractual commitment being made to an external party. (8) Where the party approving the opportunity is also engaged with the delivery of the work, endorsement is required from the relevant Pro Vice-Chancellor (PVC) of (9) In considering whether to approve an opportunity to proceed to an application, the financial delegate will consider the following elements and any of the operational matters as a whole: (10) Opportunities that are not given approval to proceed to an application must not be pursued in a person’s capacity as (11) For opportunities greater than $100,000 and/or those that meet or exceed the threshold risk, the Responsible Officer should obtain the appropriate subject matter expertise from Legal and Compliance, the Risk Unit and Financial Services. (12) The nature of work required to complete an application will vary with each opportunity, however, the following common factors must be considered for each: (13) Each application will contain a declaration acknowledging the responsibility of the Responsible Officer to manage delivery of the contract within the identified funding and cost parameters, and a completed costing tool in the information provided for review by the Financial Delegate prior to the submission being made to the external party (Project Consultancy Costing Tool). (14) Where assigned either by the (15) To ensure that the (16) Where the price received exceeds the total actual value of labour, direct costs, and indirect costs at 30% the Responsible Officer may be entitled to transfer the surplus to a Staff Support Account under Section 4 Part G of this Procedure. (17) It is recognised that the (18) In determining whether a waiver can be applied the approver must consider whether the work in isolation and as part of a portfolio of work may be considered to represent uncompetitive behaviour under the Australian Competition and Consumer Commission Guidelines. (19) Approvers – Head of School, Pro Vice-Chancellor (20) A Head of School may endorse waivers of salary recovery, for PVC approval, after considering the sustainability of workload of the Responsible Officer and other (21) Approver – Refer to (22) All applications to waive or reduce the indirect cost rate must be endorsed by the PVC and approved in accordance with the Delegations Register. In providing this approval the financial delegate will consider the broader qualitative benefits to the (23) Approver – PVC of (24) Opportunities where the pricing is insufficient to meet the cost of labour and direct costs must be approved by the PVC/s of the relevant (25) Where any waivers are approved and applied, the Responsible Officer is not entitled to transfer the surplus to a Staff Support Account under Section 4 Part G of this Procedure. (26) All applications for contracts where any costs have been waived or otherwise have a zero or negative financial return should be reported to the relevant (27) The Register of Contracts including details of waivers will be maintained by the office of the Director of Institute or PVC / DVC office endorsing the activity and must be provided to the CFO on request. (28) All applications, submissions or similar must be submitted to the appropriate financial delegate in accordance with Delegation A32 the Delegations Register and Guidelines for Commercial Activities to allow sufficient time for review. (29) The purpose of the financial delegate review is to ensure that all (30) The financial delegate must also ensure that there is no expectation implicit or explicit of special, ex gratia or other payments of the nature of a bonus or performance payment proposed to be made via payroll or other means to any individuals responsible for the application or execution of the project or consultancy regardless of the financial or qualitative outcomes. (31) Once approved the application for work over $100,000 must be provided to the Head of School or Director after submission to the funding body and recorded in the Register of Contracts. (32) Note the financial delegate approving the opportunity, is accepting the (33) To avoid actual or perceived conflict of interests, details of negotiations between contract parties must be documented and provided to the appropriate PVC of (34) Requirements of the (35) Any adjustments to the pricing approved in the application must be approved by the relevant approving financial delegate before coming to any agreement with the third party. (36) Final commercial contract and consultancy revenue must be equal to or greater than the direct costs + indirect costs including (37) A (38) The Responsible Officer will be accountable for undertaking contract management activities after notification is received that an application has been successful. This includes liaising with the (39) On execution of the contract document by the approving financial delegate, the contract must be provided immediately to Financial Services to enable establishment of a cost collector in the appropriate fund pool, recording of any commitments, and inclusion in the relevant (40) Commercial project and consultancy are excluded from the contribution margin calculation for budgeting and forecasting purposes as the distribution to Service Divisions occurs through the overhead. (41) Variations to project and consultancy arrangements require communication and approval of changes in accordance with the costing, approval and negotiation steps above. (42) Any variations reducing the amount of a contract must be referred to Financial Services before being accepted to ensure expenditure already incurred is sufficiently covered and full costing across the life of the contract is maintained. (43) At the time a variation is executed the updated information must be provided to Financial Services. (44) Variations to contracts must be approved in accordance with Delegations of Authority (see Delegations Register). (45) A contract surplus is derived when the actual total cost of executing the relevant obligations is less than the actual revenue received from the funding party/s. (46) Contract surplus is calculated by the following formula: (47) Where contract revenue = all income derived under the contract including any adjustment for variations, bonuses, discounts, pricing adjustments or other increases or decreases to total income earned such as debt write offs and credit notes. (48) Direct costs = all costs directly attributable to the execution of the contract obligations consisting of salary and non-salary costs. The time of existing (49) All other costs are charged at full invoice value for third party charges or at the internal charge rate applicable at the time incurred for goods or services provided by the (50) The Indirect cost rate must be applied in accordance with the Indirect Cost Recovery Procedure. (51) Distribution of a contract surplus will only occur for projects where direct salary costs, other direct costs and the indirect cost has been recovered, the consultancy work is completed, and all invoices are paid by the funding party. Where delays in payment occur from the funding body surpluses may not be transferred until subsequent years and not at all if balances are written off due to bad debts. (52) To be eligible for distribution of surpluses to Staff Support Accounts or the Schools Strategic Fund the actual cost of a project must include directly salary costs and the indirect cost recovery rate at the maximum rate as specified in the Indirect Cost Recovery Guideline. (53) Any contract surplus whether generated internally at the (54) Where the (55) A Responsible Officer may elect to have surplus funds directed to the (56) There is no obligation on the (57) The purpose of a Staff Support Account is to provide a pool of funds over which a (58) Typical uses of funds in (59) Expenditure of funds from a Staff Support Account are subject to the application of any relevant (60) Funds must be applied for purposes aligned with the (61) (62) (63) A report of Staff Support Account balances will be provided on a periodic basis to the PVC of Project and Consultancy Revenue Procedure
Section 1 - Purpose
Section 2 - Scope
Top of PageSection 3 - Definitions
Top of Page
Application
means the submission made to the customer for the work to be performed, this may be via a template or list of requirements provided by the funding body; a proposal from the
Budgeted cost
means the estimated costs to complete the work at the time the opportunity is identified.
Final cost
means the actual value and volume of resources used plus the indirect costs applied at the rates in Section 4 Part C. Surplus values for distribution to staff support accounts are determined based on actual income and final costs.
Financial delegate
means the officer approved to commit funds on behalf of the
On costs
means those costs directly attributable to salary and wages that are not contained in Schedule 1 of the University of Newcastle Academic Staff and Teachers Enterprise Agreement. In 2022 on costs are applied at 36% of base salary. These costs consist of superannuation, payroll tax, workers compensation and leave accruals.
Project and consultancy work
means work subject to the Commercial Activity Guidelines and where the
Responsible Officer
means the
Staff support account
means the separate cost collector established for the deposit of surpluses determined on application of this procedure and used in accordance with this procedure.
Threshold risk
Year
means the
Section 4 - Procedure
Part A - Opportunity
Part B - Application
Part C - Pricing
Standard Approach
Waivers
Labour
Indirect costs
Generation of financial loss
Part D - Approval
Part E - Negotiation
Part F - Delivery Administration
Commencement
Variations
Part G - Identification and Allocation of Contract Surplus
Summary of Revenue Distribution
Recipient
Nature of Revenue Stream
Method of Distribution
Research and Innovation Division or TUNRA
Indirect Costs
Fixed Indirect Cost Rate
Service Divisions
Recovery of direct costs at rates determined by Research and Innovation Services (includes charges for use of equipment and built infrastructure)
Transfer of Direct Costs as incurred
Transfer of Direct Costs as incurred
Responsible Officer
Surplus
Transfer of fund balance at time of closing the cost collector
Part H - Use of Funds in a Staff Support Account
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means the risk in relation to an opportunity, where:
a. the opportunity is valued at $50,000 or more; and
i. uses a contract arrangement that is not a University standard template; or
ii. uses a University standard template that requires significant amendments,
b. the opportunity requires a capital commitment by the University to ensure successful delivery;
c. the opportunity has the potential to expose the University to moderate-significant reputational risk (whether by reference to the identity of the Funding Body, or the successful/unsuccessful outcomes of the opportunity); or
d. otherwise, the opportunity by its nature represents, or is likely to represent, a medium (or higher) risk to the University as defined by the University Risk Management Framework.
contract revenue – (direct costs + overhead + Intellectual property (IP) commitments) = contract surplus
Recovery of direct salary costs
Recovery of direct non salary costs