“Where did all of my funding go? I thought I was spending within my budget, but now I’m in the red. To top it off, we don’t have enough for the experimental assays on order!” Nicholas, a new investigator, was frustrated with the current funding report that his funding manager presented him. All she could do was shrug her shoulders, and suggest he continue applying for new grants.
This is a common thread amongst new investigators, who aren’t used to tracking their spending. Bookkeeping is a serious matter when it comes to being able to manage your current funds and to be able to track spending trends or burn rates.
In my 20 years of experience as a research manager, I found that investigators don’t spend their funds wisely. They don’t focus their investments on the most important research objectives. They’ll spend their time on too many unfocused projects with a low chance to produce a manuscript. They tend to focus on the cheap experimental assays and reagents. They’ll buy inexpensive tips or bottom shelf antibodies, resulting in multiple repeated experiments. Or they’d rather insource their efforts. I knew an investigator who used to have his technicians fill pipet tip boxes rather than purchase pre-sterilized tips. The labor cost alone (not including quality controls) exceeded the cost of the tips by 60%!
Budgets can help you understand fixed costs, like salaries and maintenance contracts. However, everyone in science knows that the variable costs associated with research are as predictable as the hypothesis itself. Therefore, to understand what those variables are, and to predict them, requires collecting the financial data associated with the science. It requires us to be able to separate those costs relative to the projects and operations.
There are several aspects to analyzing your lab spending trends. After the initial set up or fixed costs, like equipment, service contracts, glassware, tools, personnel, and a host of other known costs, the variable expenses are the things that can ultimately spell a lab’s doom. Especially, if you’re not watching your spending trends.
If you’re wise, and track your spending, you can make some very educated management decisions that can save you time, money, and energy.
Here are 3 particular variable expenses that I focus on:
- Operational Costs
- These are common monthly costs that are variable depending on personnel size and the magnitude of your project which include: tissue culture ware, plastic ware, tips, tubes, etc. These costs aren’t necessarily fixed to any particular projects, but will fluctuate with the overall size and experimental flow of the lab.
- Project Costs
- These are only associated with specific experimental costs: antibodies, assay kits, compounds, animals, etc. These cost will fluctuate dramatically throughout the life of the project, rather than the flow of the lab.
- Service Costs
- These are associated with institute/departmental core services: flow cytometry, gene sequencing services, mass spectrometry, animal maintenance, etc. I find that these costs can have the greatest impact on a lab’s budget, because the ballooning costs associated with maintaining live animals can easily escape a young investigator’s attention. These costs are often intangible and the billing tends to be delayed, creating a lack of visceral feel for the fluctuations in spending.
In order to keep track of these types of spending, I advise finding a bookkeeping software, or tool that can help you not only create a catalog for all of your resources, but also educate yourself on the associated costs.
Doesn’t a funding manager/grants manager do that? Yes AND no. The funding or grants manager’s primary duties are to handle the accounting for the department/institute by ensuring that your funds are in accordance with the awarding funding institution. However, most often they’re not educated on your science, and the resources associated with your science. Therefore, tracking the spending trends with the associated experimental and operational costs is something that you, the investigator, are responsible for.
A funding manager can provide you with accounting reports and expected spending budgets, which are still very useful. Unfortunately, these budgets are broad analyses of the associated costs. They aren’t granular enough to give insightful reports to make experimental based decisions. For example, they can tell you how much you’re spending on your reagents, but they won’t be able to tell you if the actual reagent is a common stocking item or if it’s associated with a specific project assay. These type of variables are harder to determine and to track from an administrative perspective.
This is why it’s important to be able to track your own spending by using an internal bookkeeping system that’s specific to your lab and research goals.
There are multiple resources out there. Here are my top 3 bookkeeping tools that I tend to use and recommend to clients and colleagues:
They each have their strengths and weaknesses. (I’ll most likely go over those in another post.) However, the point is that you need a way to track your accounts and make it a habit to review them on a monthly and quarterly basis.
If you’re on top of it, you’ll be able to spot trends. You’ll be able to know exactly where your lab funding investments are going toward. This may be the difference between calling it quits on a particular project, or making cost saving deals with vendors.
What ways do you keep track of your spending and what type of costs worry you?
Share with us.