Full cost model

As of 2009, full costing has been applied by the Research Council of Finland and the Finnish universities and government research institutes to most of the funding granted by the Research Council. It affects the way in which funding applications and funding decisions are made, how funding is used, and how the use of funds is reported.

How the full cost model is applied to the funding plan

In the application, provide a cost estimate including an estimate of the annual amount of funding needed, itemised by type of expenditure. Also include a funding plan that shows all funding granted for the project as well as funding that will be provided by the site of research if the project is launched.

Before submitting the application, you must agree with the administration at your organisation on the contribution of the site of research to the funding of the project. Only costs that pass through the books of the site of the research must be included in the total costs. You must check with your organisation whether the funding planned as the own funding contribution suits this purpose. The cost estimate must be realistic.

Draft the application so that the Research Council’s contribution to the funding of the research costs is in compliance with what is stated in the call text; the usual contribution is no more than 70%.

The application must also include the overheads percentage, indirect employee costs and coefficient for effective working hours of the site of research. The site of research will see to that this information is kept up to date in the online services. The information is provided as percentages.

The commitment issuer at the site of research will ensure that the percentages and the coefficient given in the application are approved by the site of research, and commit to them when issuing the commitment by the site of research in the online services.

Full cost model: principles and definitions

The full cost model applies to how funding applications are drafted and to how funding decisions are prepared, made and executed. The model also applies to requests for payment.

In Research Council of Finland funding, the starting point for reporting in connection with payment requests is derived from project accounting based on business accounting, which records the direct costs of the project. In addition, calculated overheads and indirect employee costs are allocated to projects. Separate reports on the calculated cost items, based on the organisation’s financial statements, shall be submitted to our Registrar’s Office annually.

The overheads percentage approved in the funding decisions will be in force for the entire funding period.


  • Full cost model refers to a cost calculation method where all costs of an organisation are allocated to a cost object (e.g. a project) in accordance with the matching principle, regardless of the funding source. This is based on the direct costs for effective working hours in accordance with the matching principle. Other direct and indirect costs are directly allocated to the cost object by using a coefficient for indirect employee costs working hours and an overheads percentage. Under the full cost model, each funder decides its own funding contribution to the total costs in line with its own principles.
  • The term ‘effective working hours’ refers to the number of hours worked allocated to a specific cost item, excluding paid or other absences.
  • Paid absence covers all salary costs that result from statutory leaves of absence or other absences. This includes annual leave, family leave, sick leave, study leave, leave for trade unionism, occupational safety measures and cooperation procedures, as well as other paid leaves in accordance with the collective agreements and labour law.
  • Typically, direct costs include direct salaries and the project’s costs regrading special equipment and special premises, travel expenses and other relevant research costs (that can be directly allocated), for example chemicals or services purchased.
  • The coefficient for indirect employee costs is calculated as a percentage of the sum of direct wages allocated to the calculation item. In practice, the coefficient means that the indirect employee costs are allocated as averages. When calculating the average coefficient for indirect employee costs, the holiday pay and holiday bonus are allocated as indirect costs on an accrual basis based on the holiday earned (not taken) during the project.
  • Overheads are allocated to the final cost objects with an overheads percentage calculated as a percentage of the total sum of the salaries and indirect employee costs for effective working hours. Part of the overheads is distributed between all tasks of the organisation. If the organisation’s cost structures in different task components essentially differ from each other, the overheads percentage must be calculated separately for each task. According to the matching principle, the costs arising in one single result area (e.g. education) must be allocated exclusively to that area.
  • The self-financing percentage refers to the organisation’s own funding contribution to the total costs of a co-funded project (i.e. the contributions of all other funding bodies have been deducted from the total costs). Within the conditions for the use of funding, the organisation in question can finance its own share with, for instance, discretionary government transfers for overheads, returns from companies or business activity, donations or other external funds.
  • A funder can for various reasons define certain cost items as ineligible for support. These may include costs that arise outside the eligibility period for support, or other costs, taxes or funding costs not related to the activity in question. Instead of investment costs, depreciations are often accepted as eligible for support.

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