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Shocker Lecture

Project Expenses

Overview

There will be significant project expenses associated with developing your project. Companies are aware that there could be thousands of dollars of prototyping and marketing costs incurred by the project as is the case for any product development project. All decisions on what costs to incur must be made in consultation with the primary company contact and approved by the company. Each decision is made based on analysis of the cost and benefits. The scope of approved costs will depend on the company and the project. A large company may pay $12,000 for a professional focus group or $5,000 for a contract machine shop to build parts for a prototype. A small startup might balk at buying a $200 sensor needed to do bench testing of a design idea or $500 for a mailout survey

It is essential that all project costs are forcast and tracked. Forcasting means that the team should know in advance what costs are coming up over the next few weeks and months so that everyone is prepared. Tracking means the team should know exactly what has been spent and what is left. Establishing a project budget early in the fall is a good place to start.

Each team should appoint a team treasurer. The treasurer is charged with all money matters, from keeping the web checkbook up to date, to consulting with the company about anticipated expenditures. The treasurer should be particularly diligent about tracking expense accounts. For example, there must be separate tracking of expenses paid by the team discretionary fund and expenses paid by the company.

There are three types of expenses that the project will incurr: client company expenses, NPDBD team discretionary fund expenses, breakfast treats for class lectures.

1. Client company expenses

Expenses related to prototyping and market research are paid by the client company. The client company approve expenses before they are incurred. Some companies will do the purchasing for you. Other companies will reimburse you for out of pocket costs. Still other companies will place a deposit in the NPDBD course account for use by the team. At an early meeting, discuss with your company how such expenses will be handled. Discuss what expenses are appropriate, what expenses are not appropriate, who from the company needs to give approval for expenses, and the paperwork involved for being reimbursed. Ask (don't assume) the company if they are going to cover a particular expense. For example, small startups may balk at a $200 copying fee, but a large company may not only cover it, but ask you to do it in their printing shop.

Track all company-paid project expenses in the web checkbook.

Reimbursement for expenses charged to the company

2. NPDBD Team Discretionary Fund

The NPDBD course provides each team with a $1,000 discretionary fund to cover expenses related to the project which would be inappropriate or inconvenient for the sponsor to pay. Use the fund to pay for small parts and lab supplies for the prototype, copying, occasional snacks for the team, perhaps a long distance phone card, reference books, or other project related expenses. The company should be first in line to pay any and all project expenses. The discretionary fund is there because sometimes the company approval procedure takes too long or the expense is so small that it is not worth running through the company. At the end of the course, you should have a good portion of the $1,000 remaining.

The team discretionary fund is a University of Minnesota account which comes with strict accounting rules about appropriate use. You must follow these rules to be reimbursed for expenses.

The fund will be managed as a standard University account with a University CUFS number. Because this is a U account and because the U has strict audit procedures, the rules below must be followed if team members wish to be reimbursed for out-of-pocket expenses.

1. The team treasurer is responsible for fiscal management, particularly for knowing how much of the discretionary fund has been spent
2. Expenses must be recorded on the web checkbook.
3. Single expenses over $100 must be approved IN ADVANCE by the project faculty advisor. (What this means is that if you are going to make copies at Kinkos at 2 in the morning, get approval from the advisor the day before.)
4. Fund can be used to purchase snacks for team meetings if (a) all team food costs over the nine months total no more than $500, (b) any one food event costs no more than $30, (c) any one receipt totals no more than $30, (d) no alcohol. Basically, this means pizza and bagels for some (but not all) team meetings.
5. If your company location is more than 15 miles from the U, the team can allocate up to $150 from the discretionary fund for travel by private auto using the U's regular travel reimbursement rate. No more than one car going to the location at a time so please car pool.
6. Save your receipts. No receipts no reimbursement.
7. You will not be reimbursed for state sales tax on anything other than food as UMN is a tax exempt institution. When purchasing, inform the vendor the purchase is "University of Minnesota tax exempt with MN Tax ID 8029894."
   

Appropriate expenses for the discretionary fund

1. Prototyping supplies
2. Market research
3. Occasional team snacks (see rules)
4. Report and presentation materials

Inappropriate expenses for the discretionary fund

1. Excessive snacks
2. Travel (except as noted above)
3. Parties
4. Alcohol
5. Anything else that might look bad; use your judgement please.

3. Breakfast treats for class lectures

On a rotating basis, teams will be responsible for providing breakfast for the class lectures. Expenses for lecture breakfasts comes out of the main course budget and not the team discretionary fund. (Snacks for your team, however, come from the team discretionary fund).

Save your receipts. No receipt, no reimbursement.

Record lecture breakfast costs on the web checkbook.

Reimbursement for discretionary fund and lecture breakfast expenses

The Course Administrator is Sharon Hansen, Administrator in the Center for Entrepreneurial Studies. Office: 3-330 CSOM, tel: 612-624-0226, e-mail: shansen@csom.umn.edu

1. Submit reimbursement request forms within 30 days of incurring the expense.
2. Save your receipts.
3. Record the expense in the web checkbook.
4. Download the appropriate NPDBD Reimbursement Request Form spreadsheet for your team, or for breakfast reimbursement.
5. Open the form in Microsoft Excel. Be sure to allow macros to be enabled to allow automatic calculations of expenses.
6. Fill in your name and mailing address.
7. List items purchased in the area on the form for itemizations.
8. Staple original receipts.
9. Person requesting reimbursement signs form.
10. Durfee or Adams signs form (treasurer brings printout of web checkbook to this signing)
11. Team treasurer submits form to the Course Administrator who will enter the reimbursement request into the University system.

Allow two weeks for the request to process. Reimbursement will come in the form of a check from the University sent to the person's home address or in the form of a payroll deposit if the person is a U employee. If payment is not made in two weeks, contact the Course Administrator.

Web checkbook

The record of project expenses is kept in the web checkbook provided on each teams web site. There are separate sections for company expenses, discretionary fund expenses, and lecture breakfast expenses. The treasurer must keep the checkbook up to date as it must reflect project expenses with absolute accuracy.