(version: Aug 2021)
There will project expenses associated with developing your project, including prototyping and market research expenses. Your company client is aware of this. All decisions about what costs to incur must be made in consultation with the primary company contact and must be 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 $5,000 for a contract machine shop to build parts for a prototype. On the other hand, a pre-startup company might balk at buying a $100 sensor needed to do bench testing of a design idea.
It is essential that project expenses be forecast and tracked. Forecasting means that the team should know in advance what expenses 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 semester is a good place to start.
Each team must 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 expenses.
There are two types of expenses that the project will incur: client company expenses and NPDBD team discretionary fund expenses.
1. Client company expenses
Expenses related to prototyping and market research are paid by the client company. The client company approves 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 the appropriate time, the team treasurer should discuss with the company how such expenses will be handled. Determine 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.
Suggestion: Have this discussion with the company in the Fall semeseter. If you leave this discussion until after expenses have been incurred, it is very likely that you will not be reimbursed.
Track all company-paid expenses in the web checkbook. As for getting reimbursed by the company, the process depends on the company, so ask. The course is not involved in this.
2. Team Discretionary Fund
The 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, a reference book, 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 in May, your team should have a good portion of the $1,000 remaining.
The discretionary fund is managed as a standard University account with a University EFS number (sometimes called a "chartstring".) 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.
Discretionary Fund Rules
The team treasurer is responsible for fiscal management, including knowing how much of the discretionary fund has been spent.
All expenses must be recorded on the web checkbook.
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 a web purchase at 2 in the morning, get approval from the advisor the day before.)
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.
If you purchase an item with cash or with a credit card, save your receipt. No receipt no reimbursement.
See the "How to buy" section below
Appropriate expenses for the discretionary fund
Market research expenses
Occasional team snacks (see rules)
Report and presentation materials
Inappropriate expenses for the discretionary fund
Food and drink (per University hospitality policy)
Travel (except as noted above)
Parties (e.g. a post-project celebration event)
Anything that might look unethical, so please use your judgement.
How to buy
The preferred purchase method is through U Market because no out-of pocket costs are incurred, no reimbursement is needed and shipping is free. See the U Market section below for more information.
The next best method is using a University of Minnesota purchase order. This is handled through the Mechanical Engineering Department, and the Purchasing App Form can be found on the ME web site. Fill in the form. In the justification areas, indicate "NPDBD" and your project name. Assign the form to Durfee (course director) and submit. Generally, it takes 48 hours after submission for the PO to be submitted to the vendor.
The next method is for your faculty mentor to make the purchase using their University Purchasing Card, which is an ordinary credit card. Your faculty mentor may or may not have a Purchasing Card and may or may not want to use their Purchasing Card for team expenses. Check with your mentor.
The last and least preferred method is for you to pay and to be reimbursed. This is often the most convenient for small items you need now, but has the down side of back-end logistics to process the reimbursement. See the next section for reimbursement.
Reimbursement procedure for discretionary fund, out-of-pocket expenses
Reimbursements are now done online through Chrome River (https://bit.ly/2KhGfBl), you will need to log in with your UMN ID and password. Please see the tutorials on the website or see Andy Carhart (email@example.com) in ME 1100D with any questions regarding submission. Please see Miranda Miller (firstname.lastname@example.org) for the chartstring to charge.
The person making purchases needs to have an active appointment at the University in order to receive reimbursement. In the justification areas, indicate "NPDBD" and your project name. When possible bundle receipts and submit one request because it is costly for the university to process the request. Reimbursements must be submitted within 30 days of incurring the expense. Please notify your supervisor that they have a reimbursement coming through for NPDBD program and you should attach something that notes that Will Durfee will approve.
More about U Market
Whenever possible order items through U Market because many suppliers on U Market have steep UMN discounts, shipping is free and there are no administrative costs to process the purchase. Among other suppliers, U Market has Innovative Office Solutions (kind of like Staples), Digi-Key (a leading distributor of electronics), Grainger (industrial supplies; equivalent to McMaster Carr) and Home Depot.
U Market is easy to use. Create a shopping cart. When done shopping, click Assign Cart. Assign the cart to Miranda Miller. (Click Search for an assignee and in the search box enter Miller, Miranda.) Then in the justification area, indicate "NPDBD", your project name, and why the item is needed for the project. Then click Assign. Generally, the order will go to the vendor within 24 hours after you submit the cart.
3. Record Keeping
The record of project expenses is kept in a checkbook on the team Google Drive. Set this up as a Google doc spreadsheet. Have separate sections for company expenses and discretionary fund. The treasurer must keep the checkbook up to date as it must reflect project expenses with absolute accuracy.