Transparent approach to costing (TRAC)

TRAC is an activity-based costing methodology that has been used by the Higher Education sector for several years. All universities must complete the yearly TRAC return, which is submitted to the Office for Students (OfS). The return entails assessing income and costs from audited financial documents and allocating them among the TRAC activities of teaching, research and other.

This is more than just a data gathering exercise. TRAC data is also used to generate research income through the TRAC Research Charge Out Rates (indirect rate, estates rates, lab technician rates and research facility rates), which are used to apply for funding from Research Councils.  Additionally, the data is used by the OfS for sector wide benchmarking and can influence government decisions on funding for higher education.

The aims of TRAC

TRAC was introduced across the UK higher education sector in 1999 as a government requirement and to allow a better understanding of costs incurred within individual institutions.

The TRAC process takes institution expenditure information from the consolidated financial statements, adds a ‘sustainability adjustment’ to represent the full ‘sustainable’ cost of delivery, and applies cost drivers (such as academic staff time allocation, space usage, staff and student FTE & headcount) to allocate these costs to academic departments and to specific activities.

Income is analysed through a separate TRAC process, so that the gap between the full cost of activities and the income attributed can be determined for each main institutional activity.

By complying with the requirements of TRAC, the sector receives substantial financial benefits through increased funding, particularly in support of research sustainability. By adopting the TRAC methodology, HEIs are providing confidence to funders and stakeholders that the sector is well managed financially. Because of the confidence that stakeholders have in the process, TRAC has also enabled the sector to avoid other burdensome accountability requirements.

The main activities to which TRAC allocates costs are:

• Teaching (T) – analysed between publicly and non-publicly funded activity.
• Research (R) – analysed between the main sponsor types such as Research Councils, Government Departments, Charities, European Commission bodies etc.
• Other (O) – the other primary income-generating activities such as commercial activities, residences and conferences.
• Support activities (S) – such as preparation, proposal-writing and administration, which are costed separately but are attributed to the three core activities above (Teaching, Research and Other).

The TRAC return requires institutions to provide detailed reports on income and the full economic costs associated with both publicly and non-publicly funded teaching activities. Furthermore, the return necessitates a breakdown of income and full economic costs for research activities by research sponsor type. These categories include:

1. Recurrent funding council grant (income only)
2. Institution-funded research
3. Postgraduate research
4. Research councils
5. Other UK government departments
6. European Union (EU) government bodies including European Commission
7. UK-based charities
8. Industry and other sources (commercial, overseas grant and contracts)

This detailed reporting ensures a comprehensive understanding of the financial landscape across different teaching and research funding streams.

Introduction to TRAC

More on TRAC

Introduction to TRAC course offered by BUFDG – Login through QMUL details

Annual TRAC 2022-23: Sector summary and analysis by TRAC peer group

TRAC Guidance 2023

UKRI quick guide on TRAC