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Allocation
Methods
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Occasionally,
you may need to purchase supplies and then allocate those
materials and their costs to several projects. Purchases
of chemicals, glassware, or other stores, for example,
may be made "in bulk" and then apportioned to
the various projects on which they will be used.
It is sometimes impossible to precisely allocate such
costs, and governing regulations allow for the exercise
of judgment.
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From OMB Circular A-21 - Section J.8.b.(1)(c)c
"A precise assessment of factors that contribute
to costs is not always feasible, nor it is expected.
Reliance, therefore, is placed on estimates in which
a high degree of tolerance is appropriate."
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Distribution
methods must be REASONABLE and must be DOCUMENTED. A 50
- 50 allocation of costs between two projects may be appropriate,
but there must be an explanation in the project files
to support that allocation. The basis for the allocation
should RELATE TO THE WORK BEING PERFORMED on the projects.
For example, some possible allocation basis follow:
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Project headcount, or number of researchers on each
project receiving the allocation compared to the total
number of all researchers on all projects receiving
the allocation
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Number of experiments/projects being performed and
estimated usage for each project
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Square footage of lab space for each project receiving
the allocation, compared to the total square feet
of all projects receiving the allocated costs
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The amount of some other related project costs, e.g.,
lab animal costs
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| You
may have noticed a few allocation methods that are NOT
on this list. It is NOT appropriate to allocate costs
solely on the basis of which project has the most money.
It is also NOT appropriate to pool costs and charge them
all to one project in one month and then to another -
unless the materials involved are actually being used
that way. |
Some
examples of applying allocation methodologies follow:
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Maintenance agreement for scientific equipment.
If the equipment is utilized 50% on project A, 20%
on project B and 30% for general academic purposes,
the cost of the maintenance should be allocated
in the same proportions (50% to Project A, 20% to
Project B, and 30% to a departmental account).
- Honoraria
for a guest speaker. If the speaker's topic
of discussion is relevant to both a project and
to the general field of study, thus is attended
by not only the project's research staff but other
department staff as well, then one possible allocation
is based on the attendees from the project as a
percent of all attendees.
- Equipment.
If a piece of equipment is to benefit more than
one research project, an estimate of the use on
each project could be used to determine an allocation
percentage. Of course, the estimated use should
be compared to actual use after a reasonable period
of time, with any necessary adjustments made to
the allocation percentage.
- Supplies.
Supplies (for example, isotopes and chemicals) may
be purchased in bulk and then used on various projects.
It may be possible to internally requisition supplies
and charge actual cost to a project. For example,
if 100 units are purchased and placed in the Department's
central area, then 10 units are requisitioned for
Project A, Project A would be charged for 10% of
the cost. If a process for internally requisitioning
supplies does not exist, then the estimate of what
portion of the purchase is to be expended for each
project should be the basis for allocating the cost.
Of course, the estimated use should be compared
to actual use after a reasonable period of time,
with any necessary adjustments made to the allocation
percentage.
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There
is no "one right way" to allocate costs. Methods
will vary based on circumstances. The PI needs to exercise
judgment, and then to document the selected method in
the project files. A memo to the file can describe how,
in the PI's judgment, the benefits to the involved projects
warrant that allocation of costs.
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NOTE:
Clerical
and administrative costs may NOT be collected and
allocated among projects. Office supplies and other
administrative expenses are presumed to be an indirect
cost, and, in order to be charged directly, they must
be specifically identified to and budgeted for a particular
project. For Federal sponsors, this must be a "major
project". (See explanation of clerical
and administrative charges.)
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