How to structure and set rates for facilities chargebacks

Many institutions now employ some version of a chargeback model, in which the facilities department bills individual units for the cost of all work they request. The primary goals of chargebacks is to make costs more explicit and transparent for other units to allocate facility costs fairly based on use, and create incentives and disincentives for certain behaviors.

Discover which chargeback mechanism is best for your institution

However, there is no universally accepted model for structuring chargebacks or setting chargeback rates.

Allocate central funding for the fixed costs of the facilities department

Even at institutions that implement chargebacks, central funding still pays for much of the facilities department’s work. In particular, central appropriations should pay for fixed costs such as the salaries of managers and the equipment used by facilities workers. Chargebacks should cover only the marginal costs of services provided directly to departments.

This approach promotes fairer billing, as units do not have to pay for costs beyond those directly necessitated by their requests. It also encourages fuller utilization of facilities services and ensures more competitive chargeback rates.

Chargeback mechanisms vary by institution and service but fall into two general categories: budgeted allocation and direct chargebacks.

Determine Whether to Charge Based on Estimated or Precise Usage

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Facilities Chargebacks

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