🎙️ Podcast Link 🎙️

Do you manage the discretionary budget for a large research group or centre? If yes, then you know budgeting can be a challenging yet crucial aspect of your work. ⠀

My most recent Hacking Academia release walks through the theory and practical aspects of budget management for research entities like a centre. 📊🔬

In Part 1, we dive into key concepts that shape how you manage a budget, explore how funding amounts, time spans, and restrictions can affect your decision-making, and discuss ways to respond to unexpected costs. We also delve into the nuances of over and under spending, and the importance of indexing and leveraging your funds. 📝💡

Whether you’re a seasoned veteran or new to managing large budgets, this video will provide valuable insights and possibly overturn some budgeting wisdom you may have learned as a child.

Stay tuned for Part 2, where I’ll discuss potential spending categories you might consider allocating to a center budget.🎯📈

As always, I appreciate your engagement and look forward to your comments, questions, and experiences.

Please reshare if useful 🙏

🕒 Timestamps are as follows:

📌 (0:00) Introduction to Budgeting for Centres
📌 (0:08) Introduction to Discretionary Funding
📌 (0:30) Discretionary Budgets Enable Many Opportunities
📌 (0:41) Managing Larger Budgets Can be Daunting
📌 (0:44) Many People Receive Little Formal Budget Training
📌 (0:55) These Videos Cover Concepts and Budget Examples
📌 (1:11) Many Budget Concepts Are Common to Most Contexts
📌 (1:26) This Video Covers Key Budget Concepts and Issues
📌 (1:35) Key Factor: Budget Size
📌 (2:03) Small Budgets Necessitate Co-Funding
📌 (2:24) Larger Budgets Can Enable Staffing
📌 (2:40) Large Events and Equipment Purchases
📌 (2:57) Key Concept: Budget Timeline and Uncertainty
📌 (3:27) Prioritising Amidst Uncertainty
📌 (3:54) Ability to Make Future Co-Funding Commitments
📌 (4:06) The Vital Importance of Indexing
📌 (4:28) Indexing Example
📌 (5:03) Volatility in Expenses
📌 (5:08) Salaries Are Relatively Predictable
📌 (5:14) More Volatile Expense Categories
📌 (5:20) Examples: Travel and GPU Costs
📌 (5:42) Lots of Factors Can Drive Price Volatility
📌 (5:53) Things Can Get Cheaper Too!
📌 (6:01) Expenditure Restrictions
📌 (6:18) Examples of Expenditure Restrictions
📌 (6:37) Key Concept: Underspending and Overspending
📌 (6:46) Some People Have Learnt a Tendency to Save and Underspend
📌 (6:59) Underspending Can Be Counterproductive
📌 (7:13) Large Overspends Are Of Course Bad
📌 (7:21) Be Wary of Excessive Hoarding of Funds – They May Disappear
📌 (7:33) Funding Roll Over Is Not Always Possible
📌 (7:45) Co-Funding Can Stretch Limited Budgets Further
📌 (8:03) Example: Partial Funding of Work Travel
📌 (8:22) Make Sure Funding Schemes Don’t Exacerbate Inequities
📌 (8:33) Leverage Both External and Internal Co-Funding
📌 (8:40) Internal Co-Funding Examples: Grants and Equipment
📌 (8:49) Reality Often Doesn’t Match Budget Plans
📌 (8:57) The Timing of When Expenses Hit Your Accounts
📌 (9:10) Example: Equipment Charge Delays
📌 (9:32) Large Expenses Missing Their Planned Year
📌 (9:41) Expenses Can Sometimes Be Routed Via Other Accounts
📌 (10:06) Completely Unexpected Charges
📌 (10:24) Retaining a Strategic Reserve
📌 (10:36) Example: Unexpected Strategic Opportunities
📌 (10:52) A Strategic Reserve Needs Rollover
📌 (11:04) Recap: Discretionary Budgets Enable Lots of Opportunities
📌 (11:20) A Steep But Worthwhile Learning Curve
📌 (11:29) Video Recap and Preview of Part 2

Full Video Notes

• At some point in many people’s academic or research careers, they will end up leading a large research group or centre of some form. Where the group is much larger than that of a typical individual senior leader like a professor, they can sometimes come with their own discretionary budget. This budget is typically provided by the host organization, such as the university, and combines with other sources of funding to fund the centre’s activities. Having such a budget is a huge opportunity to do many good things that simply aren’t typically possible with specific project or grant-based budgets, but it comes with some extra challenges as well.  
• Many academics or researchers receive little to no formal budget training, and so the prospect of managing a large budget suddenly can be quite daunting. In these two videos, I will provide a detailed overview of the key broader concepts, issues and constraints that shape how to go about managing a budget, and go through a range of examples of what you might invest that funding into. As with all things, the relative emphasis on different aspects of the budget will vary between countries, research disciplines and host organizations, but many of these issues will be common to most situations. In this first video, I will dive into some of the key concepts that shape how would run a budget for a large group or centre.
• The first key factor is the amount of funding provided to the centre. Whilst you can choose lots of different ways to spend any amount of money, the magnitude will determine broadly what is possible. For example, if the funding is small, then it might not be feasible to hire a postdoc or research scientist, even at a fractional rate – instead you might have to rely on lower cost casual research assistants. On the smaller end of the funding scale, many investments or purchases will not be feasible in an outright sense: instead you’ll need to find co-funding opportunities where a number of funding sources – for example external grants – can also chip in to fund that shiny new microscope you need for your research. As the funding amount increases, you may have the prospect of employing multiple full-time staff in your centre – these could be postdocs, admin staff, communications officers, business development personnel and more. You may be able to partially or fully fund major research events like a conference or workshop, and offer substantial internal research grant schemes to your centre members. Larger outright research equipment purchases may become possible as well.
• Just as important as the funding amount is the funding time span and the certainty of the funding amount over that time span. If funding is only given on a year by year basis, you are very limited in your ability to commit to longer term investments – like for example, hiring a three year postdoc. There are workarounds – like having a backup plan involving funding someone you hire from an external grant, but none of them are great. Sometimes you may have certainty of funding for three years or more, but the exact amount funded each year is not guaranteed and may vary. In these situations, you can prioritise longer term funding commitments to the most vital long term investments – like postdocs – and vary as needed the amount of discretionary funding you have each year for less critical activities. Limited funding time spans also limit your ability to make time delayed commitments – like providing a funding contribution to an external grant or fellowship a member of your centre is applying for.  
• Indexing is incredibly important for internal funding schemes. The broad idea of indexing funding for a centre is to increase the funding each year to keep up with inflation, and salary increases. Without indexing, what was a workable funding amount can very rapidly become unworkable in a short period of just a couple of years. To give a specific example: imagine an environment where staff are getting a 3.5 percent salary increase per year. On top of that, the longer term staff with your centre may also be getting salary increments as they move up in seniority. These are all good things for retaining good talent, but also mean that after a period of 2 to 3 years, your salary costs could have increased by around 20%. Without indexing, sustaining that sort of salary increase means you need to cut costs somewhere else.
• Different types of expenses will vary in how volatile their pricing is. Salaries and salary increases can usually be projected out a few years with reasonable accuracy. However other items like travel and specialist equipment can have rapidly changing prices. Just in the last few years, we’ve seen travel pricing, primarily made up of international flights and accomodation, vary by 50 percent or more. The same goes for specialist equipment – in my field of robotics, things like computer graphical processing units recently spiked in price and then dropped rapidly. Other types of research equipment and consumables can vary in price, driven by geopolitical events, supply chain issues, natural disasters and many more factors. Unexpected pricing changes aren’t always more expensive – sometimes things can suddenly get a lot cheaper as well. 
• The funding you get will often come with some restrictions. One of the most common is categories of spending that you’re not allowed to spend that money on, often because the host organization, like the university, sees themselves as already providing that service. Examples of this could range from not being able to directly spend that money on professional or administration staff, to not being able to purchase stationery! All because these are things that are, at least in theory, already covered by the host organization.
• For those who haven’t managed larger budgets before, the situation around under or over spending your budget can often feel counter intuitive. A typical individual attitude to budgets might be to be as conservative as possible, saving some of the budget “just in case”, and often ending the financial year not having spent all the money. In many environments this can be very counter productive – the executives who have argued for the funding in the first place may face backlash because it looks like you’re not making good use of the money. The opposite – excessive overspend –  can also be bad, but a slight overspend is often the “sweet” spot. Saving money for a rainy day can serve some purpose, but most internal centres or larger groups don’t last forever, so there’s limited utility to saving too much of that money. There are also logistical constraints – you may not be able to roll over unused funds from one year to the next – so anything unspent is not recovered at the end of each year.
• No budget is ever enough for everything you’d like to do as a centre, so budget plans should always seek out funding leverage opportunities – where you only contribute some of the funding for the activity or equipment, and other sources of funding also make contributions. To take a simple example, a typical policy for funding work-related travel would be that the centre might only fund 50%, expecting 50% funding from other sources. This sort of policy means you can partially fund twice as much travel. You would still want to have some sort of exception process – for example to support early career researchers who haven’t yet established their own external funding streams. Leveraged funding opportunities don’t just have to external – you can also leverage internal funding opportunities. Many organisations will have internal grant and equipment funding schemes that respond positively to a funding commitment from your centre.
• Planning how you spend your budget is one thing: but the reality of when those costs hit you is another. Large organisations often don’t have the most efficient budgeting processes, and so the timing of when a large charge you planned for comes through can vary immensely, often by many months. This is a particularly critical issue when the costs hit your budget in another year from when you planned for it – a common issue when ordering equipment with a long fulfillment delay. Your host organization may not be able to actually pay the vendor until the equipment has been physically received and tested. When this occurs you can end up underspent in the first year, and overspent in the next year, which can play havoc with your budget.
• Another complicating factor is the situation where an organisation can also sometimes charge expenses to other accounts in the interim, both intentionally and by accident, and then shift the charges over to the correct account at some later stage. If you look at your budgets assuming that that expense has already been covered, then you can be in for a rude shock when it actually hits your accounts later on.
• There will also be occasional completely unexpected costs – like extra fees or charges on accounts that weren’t initially expected. Again the timing on these can vary hugely – sometimes occurring months or even years after the relevant activity.
• Whilst saving lots of money for a rainy day is not necessarily a good plan, you wil want to consider reserving some funding in a strategic reserve for unexpected opportunities. A good example of this would be having enough funding to be able to respond to a new major grant opportunity: where you need to suddenly fly a lot of people around the country to run workshops to develop a compelling proposal. You can only do this if the likely strategic spending opportunity is in the current financial year, or if you have some ability to rollover some of your unused funds to the next year. 
• Having discretionary funding to run a large research group or centre is a fantastic opportunity and enables you to do a lot of things that aren’t as easily achievable with only external, milestone-driven funding, or no funding at all. If you’re new to managing a large budget, it can be a steep learning curve, that overturns some of the budgeting wisdoms you may have learnt as a child. In this video I’ve covered a range of key concepts that should shape how you plan to expend your budget, and some issues that can get in the way of even the best laid budget plans. In part 2 of this budgeting series, I’ll run you through a range of potential spending categories you might consider allocating a centre budget to.