Joint Costing and Pricing Steering Group

Higher Education Funding Council for England, Scottish Higher Education Funding Council, Higher Education Funding Council for Wales, Committee of Vice-Chancellors and Principals, Standing Conference of Principals, Committee of Scottish Higher Education Principals, Heads of Higher Education Wales

Integrating financial and
academic decision-making

Strategy for costing and pricing

April 1998

Purpose

The funding councils and the sector's representative bodies have developed a joint strategy to support universities and colleges in adopting good practice in costing and pricing. This document outlines the second phase of the strategy, and how it will be implemented. The aim is to help institutions make better informed decisions by integrating the financial and academic considerations.

Introduction

Universities and colleges are large, complex organisations. They operate in an increasingly difficult and demanding environment. If their decision making is to be effective, and if resources are to be deployed effectively to achieve objectives and secure value for money, they need accurate and timely information.

It is essential to know what activities cost in order to make informed decisions about pricing and priorities. The implementation of systematic approaches to costing and pricing should not diminish the academic focus that institutions must have, but should underpin and integrate with it.

The Joint Costing and Pricing Steering Group's (JCPSG) strategy described in this document has been developed jointly by the sector and the higher education funding councils. It builds on previous collaborative work by the Funding Councils which culminated in the publication of 'Management Information for Decision Making: Costing Guidelines for Higher Education Institutions'. The group's strategy also builds on the work carried out by the Committee of Vice-Chancellors & Principals (CVCP) which published its report 'Costing and Pricing of Research and Other Projects: Report and Recommendations to Universities' in June 1997.

The JCPSG aims to help universities and colleges improve their strategic and operational decision-making by developing and implementing good practice in costing and pricing their activities, products and services, and by integrating financial and academic management processes.

The implementation plan which accompanies the strategy describes how the JCPSG will set out to deliver these objectives.

The second phase of the strategy provides a means for universities and colleges to adapt the existing guidance issued by the CVCP and the higher education funding councils to meet their own institutional needs. Funds are being provided by the funding councils to accelerate the process and each will make a separate announcement shortly. These funds will be available to all universities and colleges and I strongly urge you to take advantage of this opportunity.

Professor David Westbury
Chair of Joint Costing and Pricing Steering Group
Vice-Principal University of Birmingham

Strategy for costing and pricing

• The aim of the strategy is to assist in improving strategic and operational decision-making by universities and colleges through developing and implementing good practice in costing and pricing all their activities, products and services and by integrating this with academic considerations

In particular the objectives are to:

• secure commitment from governing bodies and heads of universities and colleges to adopt and apply good practice in costing and pricing

• encourage a standardised approach in each institution to identifying cost centres, including academic, support and other operational activities and the direct and indirect costs associated with these

• promote the integration of academic, financial and other operational decision-making across universities and colleges, and to promote a joint approach by academic, operational and finance managers

• promote an approach to pricing which secures improved net contributions rather than maximisation of income without regard to costs

• identify any areas where additional guidance on costing and pricing is required or where existing guidance requires updating or expansion, and to develop such guidance

• commission training modules to improve knowledge and understanding of costing and pricing among academic and administrative managers in universities and colleges, and to work with representative bodies of the sector in delivering these training modules.

Implementation plan

Membership of the Joint Costing and Pricing Steering Group