Finance in English

A glossary of budgetspeak

Chief Finance Officer Greg Turner and Business Analysis Section Head Bryan Kendrick offer this brief glossary of finance-ese, at least for how it’s spoken around ORNL.

Indirect costs: The money spent in support of, instead of directly spent on, actual R&D activities—the “cost of doing business.” For instance, a direct cost would be for the researchers’ time that went into designing a new widget; indirect costs generally would pay for the host division’s management and the upkeep of the facilities where the widget is being designed and built.

Organizational burden: Management and administration costs, at a division level, that are recovered by applying varying hourly rate charges to external clients and internal accounts.

G&A: Stands for general and administration—along with Work for Others administration, materials handling and subcontract administrations, these are Lab-level indirect-cost activities that support projects and the management of the Lab.

The "stack," a Dagwood sandwich of indirect costs, now add up to $237 million at ORNL.

Stack: The indirect-cost “stack” is the $237 million sum of all indirect costs of the Lab, including Lab overhead, organizational burden, LDRD, etc.

Pool: A grouping of similar or like costs; for instance, wage pools or space pools. The cost of an hour of effort is calculated through some of these pools.

Composite multiplier rate: The key figure, currently at a lab-leading 1.95, that needs to come down. It essentially represents how much it really costs to do a dollar’s worth of research—in ORNL’s case, a buck ninety-five. Three figures make up the composite multiplier: labor, subcontracts, and other indirect costs.

Operational improvements: One-time or substantial process improvements that are intended to enhance the quality, productivity and effectiveness of Lab functions. The Lab will fund selected operational improvements if they result in significant cost savings—“spending a dime to save a dollar.”

Fixed costs: Costs that, in the short run, are set outside the Lab, such as the site usage fee charged by Y-12. Other examples are the contract management fee and taxes.

LDRD: Laboratory-directed R&D activities intended to enhance and expand Laboratory capabilities. Where ideas are nurtured.

Reserve: A fund that is allocated at the discretion of the Leadership Team for program development, hiring new staff, LDRD, or operational activities. Reserves can also be used to cover budget shortfalls, thus providing stable overhead rates for project managers.—B.C.