Overhead and indirect costs

Direct costs are costs that are easily attributed to activities in the project, e.g. salaries, lab materials, travel expenses and similar. Administrative expenses that are directly attributed to the project e.g. a project secretary or a laboratory technician are also direct costs. The funder will in most cases have specific rules and regulations on which costs they fund.

 

Indirect costs are also caused by - but can only indirectly be attributed to - activities in the project, e.g. rent for labs, offices and facilities; internet access and use; HR and legal services; library services, including access to scientific journals and databases; research support; and general administration. 

Administrative costs can then be both direct and indirect costs.

 

Overhead is the part of a research grant that is intended to cover indirect costs. For a typical research project at universities in Europe or the US, indirect costs make up for about one third of the project's total costs, which would be equivalent to an overhead of 50 per cent.

 

All research projects incur both direct and indirect costs. The direct costs are usually covered by the grant, whereas indirect costs should be covered by overhead. In Denmark, overhead rates for public funders are defined in legislation and grants to universities carry an overhead of 44 per cent, whereas grants to hospitals get and overhead of 3.1 per cent. For private funds the percentage varies. Public funders are by law not allowed to consider the difference in overhead cost when assessing applications.

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