University of Teesside
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Consultancy Policy
1. Introduction
1.1. This paper outlines the formal consultancy policy of Teesside University . The policy aims to encourage high levels of consultancy by providing staff with a supportive framework enabling them to contract and deliver commercial work from which they can individually benefit.
1.2. It will explain:
the benefits of consultancy to the individual and to the University; what is meant by University and private consultancy; who can deliver University consultancy and in what circumstances; how staff will be supported to undertake University consultancy; the principles of pricing, and its importance; financial rewards for staff.
1.3. This policy applies to all University employees. Support staff are positively encouraged to participate in this activity if they are eligible and capable. Where reference is made to University consultancy thresholds this would mean for academic staff over and above a normal workload. For support staff this would mean over and above a contractual working week of 37 fte hours.
2. Benefits of Consultancy
2.1. A thriving consultancy environment can bring substantial benefits both to individual members of staff and to the University as a whole. For these reasons, this policy is designed to ensure a high status for consultancy activity.
2.2. Individual benefits include:
enhanced status, reputation and expertise; broader career interests; financial reward; sustained business relationships and networking opportunities; potential research activity.
2.3. Benefits to the University include:
attraction and retention of talented and committed staff; enhanced profile with business and grant agencies alike;
1 enhanced staff expertise; enhancement of academic programmes and research.
3. Definition of Consultancy
3.1. Consultancy is defined as the provision of expert commercial services to external clients. Examples include:
problem-solving; development/delivery of commercial training courses (please see Staff Guidance Note at Schedule D); testing and laboratory-based experimental work; expert witness services; near-market research and development.
3.2. For the purposes of this policy, there are two forms of consultancy:
University consultancy; Private consultancy.
3.2.1University Consultancy
Consultancy activities delivered under the banner of the University, and paid for through University accounts are defined as University consultancy. Individual members of staff who secure consultancy through association with the University; who make use of University equipment or premises; or who opt to be covered under the University’s insurance policy are engaging in University consultancy. Where this consultancy is in addition to their normal workloads, Sections 6 and 8 of this policy apply.
University consultancy may also be delivered by members of staff who have been specifically recruited to deliver commercial services, for example through one of the University’s enterprise units; or who deliver commercial services as part of their normal workload within a School or Department. For the purposes of this policy, these staff are not subject to the consultancy thresholds or income distribution models described at sections 6 and 8.
Similarly, University consultancy may be delivered on a large scale through significant contracts negotiated through Schools or Departments. Such contracts would not be subject to the consultancy thresholds or income distribution models described at sections 6 and 8.
3.2.2 Private Consultancy
Services that do not rely on or use University resources, have not been secured through connection with the University, and whose payments do not pass through University accounts are classed as private consultancy. To avoid conflicts of interest and minimise
2 financial and legal risks to the University, all private consultancy must be formally declared in advance by notifying the appropriate Dean/Director in writing. Staff who want to undertake private consultancy need to be aware that:
they must make their own arrangements for professional indemnity, and sign a statement accepting responsibility for it; they must make their own arrangements to pay tax on their income; there must be no identifiable conflict of interest or competition with University activity; the University has no responsibility for their work; clients must be informed that the services are provided in a private capacity and have no connection with the University (a form of words will be supplied); failure to declare or obtain prior approval for private consultancy may result in disciplinary action; the work undertaken should not be of a volume likely to impact on workload/liability.
A central register of private consultancy work will be maintained by the University. Only one initial disclosure will be required where a member of staff provides a series of consultancy services for a particular client, unless there is a significant difference in the scale of activity.
Where a clear conflict of interest is identified, the University can withhold agreement to a private consultancy on the grounds where it could breach the contract of employment. Such a requirement will not be made unreasonably, will be subject to full consultation with the member of staff and will be accompanied by full written reasons.
Any member of staff seeking to undertake private consultancy who is not satisfied with the decision of the Dean/Director, may appeal to the Director of Academic Enterprise and the Director of Human Resources. Their decision will be final.
These terms will apply from the date of implementation of this policy and will not be applied retrospectively.
4. Who can Deliver University Consultancy?
4.1. Any staff member on the University payroll can deliver University consultancy, provided that these services:
enhance the reputation of the University; do not prevent the completion of an individual’s agreed University workload; are appropriately costed and priced.
4.2. All University consultancy work should follow the consultancy procedure attached at Appendix A. No member of staff should agree a price for
3 consultancy work with a potential client until the work and costs have been agreed with the relevant School/Department and with UTEL (see 7.2).
4.3. In the case of small-scale consultancy where costs and income are relatively modest and a quick turnaround is required (for example, some types of testing work), the procedure will be used to apply to a package of work up to a certain value. This will minimise paperwork for the consultant and School/Department.
5. Support Mechanisms for Consultancy Work
5.1. University of Teesside Enterprises Limited (UTEL), a University company, exists specifically to support the delivery of University consultancy. It is administered by the Department of Academic Enterprise. UTEL offers a wide range of benefits and professional services designed to cover liabilities and minimise risk for the consultant.
5.2. UTEL support includes:
professional Indemnity insurance; costing and pricing; marketing ; risk management; - protection and valuation of Intellectual Property - assessment of ability to pay - assurance of professional service - scoping of work and timescales contract negotiation; sourcing of grants/subsidies for clients; payment of suppliers and sub-contractors; invoicing of clients; debt collection; financial transactions involving staff/school/department.
6. University Consultancy Thresholds
6.1. In addition to normal workload, which may itself incorporate consultancy activity on agreement with the Dean/Director, individual members of staff may deliver up to and including 20 days of University consultancy in any calendar year.
6.2. For any University consultancy in excess of 20 days, the agreement of the Dean and DVC (Research & Enterprise) must be obtained. In such cases, the member of staff will normally be required to buy out his/her additional extra days in full.
6.3. This threshold applies specifically to individuals. Commercial services secured and delivered through enterprise units or on behalf of Schools/Departments are not subject to the threshold.
4 7. Costing and Pricing
7.1. All University consultancy contracts will be costed in accordance with a schedule of agreed rates. These rates will reflect the requirement for the University to apply full economic costing processes to research and consultancy activity. The rates will be the responsibility of UTEL and will be published on the intranet.
7.2. To mitigate financial and other risks, all proposed consultancy contracts must be approved by Deans/Directors or their representatives and agreed with UTEL before any agreement with potential clients or collaborative partners is reached.
8. Distribution of Income
8.1. University Consultancy contracts usually derive from one of the following:
the reputation and facilities of the University; the reputation and facilities of the School/Department; the reputation and facilities of an individual staff member; direct marketing efforts to promote Teesside University .
8.2. The University recognises and values the work of staff to generate and service consultancy contracts. Individual members of staff undertaking University consultancy in addition to their normal workload, and who are otherwise meeting their objectives, will be recompensed as per Schedule A to this document.
8.3. Examples of distribution of income deriving from consultancy delivered by individual members of staff are given at Schedule B.
8.4. Staff may exercise the option to pay all or part of the income into a designated account within the School/Department to support research or teaching development and/or conference attendance. In such cases this income will not be subject to NI or tax deductions.
8.5. Where the consultancy has been secured and delivered by a University enterprise unit operating on a business plan basis, payments to individual staff members shall not apply. All of the income received will go through the unit’s accounts.
8.6. Where the consultancy has been secured and delivered by or on behalf of the University or a School/Department, the income distribution shall be subject to a separate agreement between the Dean/Director, Finance and UTEL.
9. Principles of Cost Recovery
9.1. The University acknowledges the need to recover financial outlays on consultancy delivery. The University’s financial memorandum with
5 HEFCE states that the full cost, including overheads, of all research, consultancy and short courses must be determined, and should not be subsidised by the University (see 7.1).
10. Customer Charter
10.1. Staff involved in consultancy will be expected to follow the agreed consultancy procedures and to meet the requirements of the University’s Customer Charter. This charter will lay down minimum standards for provision of business services to external clients. Details of the consultancy procedure are given at Schedule C.
11. Project Evaluation
11.1. All projects with a consultancy value of £5,000 or more will be subject to a financial and qualitative evaluation post completion. This exercise will be undertaken by DAE in collaboration with Finance, and the results made available to both consultant and School/Department.
12. Review of Policy
12.1. This policy is the basis of a developing framework for consultancy and related enterprise activity at the University. The policy and its schedules will be formally reviewed at regular intervals.
6
Schedule A
Income Distribution Model for University Consultancy
This model applies to individual staff members undertaking consultancy through UTEL. It is based on the principles of:
Ease of understanding and application Incentivising staff to undertake University consultancy Appropriate costing and pricing methodologies
For a member of staff delivering up to and including 20 days of University consultancy in a calendar year, in addition to normal workload, income will be distributed as follows:
Gross Income 30% of net income OR Total indirect costs split equally between MINUS travel, materials, equipment or School/Department and UTEL, other direct non-labour costs whichever is the higher
5% to Finder
65% to Consultant
For a member of staff delivering University consultancy which exceeds the 20-day threshold, or where academic time needs to be bought out (following approval from the Dean and DVC), income will be distributed as follows:
Gross income 30% of net income OR Total indirect costs split equally MINUS all direct non-labour costs between School/Department and MINUS all direct labour costs UTEL, whichever is the higher MINUS all indirect and estates Balance to finder/consultant (in ratio costs 5:65)
Worked examples are provided in Schedule B
7 Schedule B
Worked Examples
In Examples A - C, Consultant A delivers a piece of work over 12 days in total. The work is undertaken on University premises, and incurs direct costs. The project is costed using fEC rates supplied by Finance and available on the intranet. A variety of prices is quoted.
Hourly rate of Consultant A £30.96 Total labour costs £2600.64 Hourly estate costs £2.86 Total estate costs £240.24 Hourly indirect costs £11.56 Total indirect costs £971.04 Direct costs £450/1000 Total direct costs £450/1000
EXAMPLE A
Work priced at £300/day; direct costs £450 (materials, equipment, sub- contracting, travel etc)
EXAMPLE B TOTAL Gross Income £3,600 12 x 300 = Costs deducted £450 Net income £3,150 Higher of indirect £971 costs/30% Balance to Finder/consultant £2179 UTEL £485 School/Department £486
EXAMPLE B
Work priced at £350/day; equipment costs £500 (materials, equipment, sub- contracting, travel etc)
EXAMPLE A TOTAL Gross Income 12 x 350 = £4,200 Costs deducted £500 Net income £3,700 Higher of indirect £1110 costs/30% Balance to Finder/consultant £2590 UTEL £555 School/Department £555
8 EXAMPLE C
Work priced at £500/day; direct costs £1,000 (materials, equipment, sub- contracting, travel etc)
EXAMPLE C TOTAL Income 12 x 500 = £6,000 Costs deducted £1,000 Net income £5,000 Higher of indirect £1,500 costs/30% Balance to Finder/consultant £3,500 UTEL £750 School/Department £750
9 Schedule C
Consultancy Process
UoT Consultant Completes the project risk assessment and Part 1 of the UoT Consultancy Application Form (C003). The risk assessment determines the School and Finance approval route. Prepare Terms of Reference (optional). UoT Consultant submits application to UTEL n o i s s i
UTEL s m a b
l Completes Part 2 of C003. u a s s
e Provides Terms and Conditions o r
p r
o (Legal Documentation). o r f
p
d Provides University FEC calculation and d e r n i written quotation (if required). e u q m
e Puts project onto KHIS (Project Extranet) A r UoT Consultant Completes Part 3 of C003 (deciding the amount to charge the Customer).
seek approval from School Yes School No Can Proposal School representative completes Part 4 be amended of C003.
No Does the school authorise the activity?
Yes, seek approval from Finance Finance Finance representative completes Part 5 of C003.
No Does Finance authorise the activity?
Yes UTEL Sends the Customer the Proposal (including the Terms of Reference, Quotation, and Terms and Conditions) and a Business Contract.
No Does the Customer sign and return the Business Contract?
Activity Yes does not Activity Proceed proceeds
10 Schedule D
Non-accredited training delivery: Guidance for staff
Delivery of non-accredited higher-level training is becoming an increasingly important part of the University’s workforce development strategy, offering income generation potential along with the opportunity to develop new employer links. Ensuring that we are able to exploit these opportunities, while optimising income, is critical to success, particularly in responding to tenders. This note is intended to provide clear guidance for Schools and departments on costing, pricing and income distribution for non- accredited delivery, as approved by the Vice Chancellor’s Executive.
The following principles apply to non-accredited training provision:
1. The development and delivery of non-accredited courses is considered to be part of an academic workload. Where a member of staff is agreed by the relevant Dean or Director to be working over a full workload, a discretionary payment may be made from that proportion of the income which is distributed to the School or department.
2. Costing and pricing proposals for non-accredited provision must be processed through UTEL.
3. Income will normally be distributed on a 40/60 basis (40% to the Centre, 60% to the School or department), replicating the model used for allocation of teaching funds.
4. Schools need to note that income distribution will reflect the School’s overall position relative to the 40/60 funding model:
a. For Schools operating within the existing model (i.e. where teaching costs do not exceed the 60% income), income from non-accredited delivery will be distributed on a 40/60 basis.
b. Schools not operating within this model (i.e. where teaching costs exceed the 60% income) will be funded for all additional costs associated with contract delivery, on the understanding that these will amount to less than 60% of income; and any other income distribution will be agreed on a case-by-case basis.
5. All proposals will be prepared on the 40/60 basis, on the understanding that a proportion of the 60% may be withheld for Schools operating outside the teaching model. The exact amounts will be determined via discussion between the School and the Director of Finance.
6. Additional payments may be made to staff for development of non-accredited delivery, only where it can be clearly demonstrated that this work will need to be undertaken over and above workload. These payments must be agreed when the proposal is prepared.
11 Document Control : Consultancy Policy Due for review by: Approved by: EPC on 20 February 2012 Author: Director of Academic Enterprise Department: Academic Enterprise
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