Full cost model

The Research Council of Finland, Finnish universities and government research institutes apply the so-called full cost model. The full cost model applies to most of the funding granted by the Research Council, and 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 at the application stage

  1. Before submitting the application, applicants shall negotiate with the site of research about the tangible support that the site will provide for the project. On the application form, give an overall cost estimate and a funding plan for your project. Draft the application so that the Research Council's contribution to funding comes to no more than 70% of the total costs of the research project.
  2. In the application, indicate the percentage for indirect employee costs, the overheads percentage and the coefficient for effective working hours applied by your organisation at the time of application submission. Calculations in accordance with the full cost model rely on these coefficients. Check the coefficients from the administration at your organisation. The organisation will supply the coefficient for effective working hours to be used in applications to the Research Council, calculated based on average effective working hours.
  3. The commitment issuer at the site of research will ensure that the information given in the application is approved by the site, and commit to them when issuing the commitment.

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 the Research Council's 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 the Research Council 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 effective 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.
  • Effective working hours refers to the number of hours worked on a specific cost item, excluding paid or other absences.
  • Paid absences cover all salary costs arising from statutory or other absences, such as annual leave, leave due to the birth and care of a child, sick leave and education periods, and time spent on trade union activities, labour protection, cooperation, etc. under collective agreements and labour legislation.
  • Direct costs typically include direct salaries and project costs for 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 amount 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.
  • Self-financing percentage refers to the organisation’s own funding contribution to the total costs of a co-funded project (the contributions of all other funding bodies have been deducted). In keeping with the funding terms and conditions, a university or research institute can finance its own contribution with, for instance, discretionary government transfers received for operational expenditure, returns from 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.

Learn more

More information

  • The report by the STREAM working group (PDF, in Finnish) involves a recommendation on costs included in the overhead percentage as well as a recommendation on costs included in the coefficient for indirect employee costs

Do you have questions or feedback for us?