Download Full Cost Recovery What is full cost recovery?

Full Cost Recovery
What is full cost recovery?
Full cost recovery means recovering the total costs of a project including
the relevant proportion of your organisation’s overhead costs.
Every project you undertake has costs directly associated with it, such as the
cost of staff or equipment. It may also draw on the rest of an organisation’s
resources eg there might be an element of line manager from an existing officer
or overlap with central functions such as finance, training, funding advice etc.
Two types of cost can generally be associated with delivering a project: Direct
costs and Overhead costs.
Direct costs are those needed to produce the output of the project or service
itself eg:
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Salaries of employees or other people working directly on the
project, plus pension, NI and redundancy costs
Travel and subsistence costs
Equipment, materials or other costs associated with the project
Overhead costs are also referred to as core, indirect or ‘back office’ costs and
can be split between various projects or activities with the lead organisation.
Full cost recovery works on the premise that both direct costs and a
relevant portion of overheads are integral to the support and delivery of a
project and must, therefore, be included when calculating the overall cost
of a project.
Why is full cost recovery so important?
If you are not calculating and therefore recovering the full costs of a project you
are creating a deficit for your organisation. This deficit will then have to be met
through additional fundraising or through other means. This means that by not
achieving full cost recovery, you could be jeopardising the sustainability of your
organisation and hence the services you provide.