Overhead costs are ongoing, necessary operating expenses that cannot be attributed to any one department, project or product.
The costs of doing research may be separated into direct costs and indirect costs (or “overhead”). Direct costs are costs directly related to research projects and may include salaries and benefits, supplies, equipment, research-related travel, fees and consultant costs. Indirect costs are real costs that are indirectly related to research projects and include:
- Building operating costs including heating, cooling, power, cleaning, maintenance and landscaping;
- Faculty and departmental services such as machine and electrical shops, secretarial and office assistance, purchasing, shared equipment, etc.;
- Academic services such as the Library and Computing Service;
- University-provided administrative services such as Purchasing, Finance, and Human Resources, as well as the University administration itself, President’s Office, Deans, Department Heads and Directors and administrative staff;
- Research and contract administration & support such as Office of Research Services, University-Industry Liaison Office, Research & Trust Accounting, CFI Office, Health Research Office, Hospital Research Institute Administrations, etc.; and
- Faculty salaries.
Principal Changes to the UBC Overhead Policy
Overhead costs have traditionally been absorbed to a significant extent by the University, diverting vital resources away from research infrastructure. Recent changes to the Overhead Policy will help the University to recover these charges and, in turn, improve support and services to the wide community of researchers in all locations and across all disciplines.
Researchers must apply a 25% overhead recovery charge to the total cost of all research grants, contracts and agreements for research projects sponsored by industry and government with the exception of Tri-Council grants (CIHR, NSERC, SSHRC). UBC already receives an overhead allocation for these grants through the Federal Indirect Costs Program.
Special overhead rates apply to certain government and non-profit agencies - these specific rates are listed on the Overhead Rates Table page (CWL login required). Most non-profits specifically prohibit payment of overheads, so they will not be charged for it. Unless a sponsor requires the overhead recovery charge to be presented as a separate line item, the appropriate overhead chargeshould be built into each budget line item. Overhead will be automatically deducted from research accounts at the standard (or special) rate as expenses are incurred.