Direct Costs vs F&A Costs

Facilities and administrative (F&A) costs are costs that are not readily identifiable with individual projects, and are also called overhead or indirect costs. They include: library operations, utility costs, depreciation of buildings and equipment, operations and maintenance costs, grant and contract administration and accounting, and general administrative expenses for central offices such as the President, Provost, Human Resources, and Purchasing.

Unpacking F&A Costs

Boston University’s current F&A rate is 65%. Why?

F&A costs are not readily identifiable with individual projects. F&A is designed to partially reimburse the University for the costs of using its facilities and administrative structure in carrying out research.

Since it would be extremely difficult to identify the appropriate rate associated with each research project the rate is established through negotiation with the US Department of Health and Human Services based on actual audited costs historically incurred by the university in the course of carrying out its research portfolio.

How much of this is for facilities and how much for administration?

Facilities costs make up 60% of our F&A. Facilities costs include utilities, maintenance and repairs, and depreciation of the cost of acquisition, construction, and improvements to University buildings.

Administrative costs make up 40% of our F&A. They include 3 components: departmental administration, general administration, and sponsored programs administration. Departmental administration is the largest component of the administrative rate at approximately 19%.

Government regulations recognize that to the extent the faculty and staff in schools and departments have research-related administrative responsibilities, their salaries and related costs are costs of research. So, there is a mechanism provided to recover these costs, through the “Departmental Administration” portion of the F&A rate. An estimate of the amount of time (and related salary) spent on administration related to research in academic departments is captured in calculating this part of the rate.

General Administration includes all the central functions that facilitate research and is 12.4% of the University’s administrative rate.

The largest component of General Administration costs, Information Services & Technology (IS&T), includes functions entirely dedicated to the support of research, such as Research Computing Services and Research Administration Systems, as well as underlying network infrastructure and desktop computing support services for faculty.

Finally, sponsored programs administration makes up 6.94% of the administrative component and is used to support Sponsored Programs, Research Compliance, and other support which is provided through the Office of Research.