Cost recovery model is a common practice in many universities. But cost recovery model in centralized cost-centers in universities is not common, especially when such cost-centers only deal with internal university units (in today’s Market Society, we can internal units “clients”).
In UBC, centralized cost-centers, for example, UBC IT, usually only serves internal clients (I hate to call internal academic or administrative units “clients” but this the practice). Cost recovery model here makes little difference to university, because at university’s finance level, UBC IT’s cost recovery revenue is basically all from other units’ operating budgets. It is like moving money from one pocket to another.
However, by employing this model, much unnecessary work are added to staffs both at UBC IT and UBC IT’s clients. A great amount of time that otherwise can be used to better serve internal clients was spent on less meaning full work. Some types of routine work include invoicing, collecting payment, etc.
The practice of cost recovery model for internal centralized cost-centers is based on a few arguments,
- Cost recovery model saves money
- Cost recovery model improves efficiency (and in turn, saves money, too)
- Cost recovery model makes server providers (eg: UBC IT) more accountable to their work
Do you agree with those arguments? Personally, I agree with neither.
I firmly believe cost recovery model for centralized cost-centers in UBC is questionable and university senior leadership team should revisit this practice. The bottom line is, UBC should have a thorough review of this model to compare it with budget model.