Grant

This little beauty is part of a federal government product development grant application that my company is looking at right now.

“Add details of up to three types of usage. Usage costs are the costs associated with the uptake, application or adoption of research outputs by external parties that are not included in the input costs. Usage is the cost of deploying the research. The usage cost should take into account the amount of time and effort required to achieve impacts. Depending on the nature of the research activities within the project, usage might include – publication; patents; trials; products; prototypes; technologies; training packages; PhD student commencements and completions; SME or international engagement.”

I’ve read it, oooo, about ten times now and I still don’t know what they mean.

Do they mean for us to project future sales?

Or to project the costs to the company of taking the project outcomes to market, after the grant is finished and before sales start?

Or is it COGS and margin they are after?

Or to project the costs to the company of taking the project outcomes to market, after the grant is finished and before the whole thing is cashflow positive?

And why do they mention PhD students and publications?

Why do they say ‘time and effort’ when they ask for ‘costs’?

It’s oh so confusing.

Postscript: I figured it out. They see costs in three categories; the cost of the project (which they are co-funding), other ‘other costs’ of taking the technology to market including COGS when its in market, and the usages in the market – essentially the price times then number of units sold. Then they calculate a BENEFITS RATIO being the usages divided by the sum of the costs. Presumably they use this to sort the grant applications into some order of ‘impact’, probably a pre-filter so they don’t have to read half of the applications.

But it makes no sense because they don’t say use the top three in each of these categories, just any three. So it can be gamed. Also, ‘other costs’ and usages equates to COGS (to supplier) and price (to customer), so these are double counted. The BENEFITS RATIO should be (usages – other costs) / project costs – which is profit/project costs.

It shows a complete lack of understanding of business economics and finance.