How to assess your R&D Projects

• The project creates a new or appreciably improved system process, service, product or device. (i.e. improvements in efficiency or technical sophistication of an existing system)
• Replicate an existing process or system but in a new or appreciably improved way (i.e. improving on the architecture of legacy systems).
• It must be an advance from an industry wide baseline (i.e. not just an advance your organisation). However, a competitor may have achieved a similar technological advance, but if this is kept secret then it is not standard industry practice.

• An experienced IT professional would not know how to proceed with confidence with technical aspects needed to achieve the technological advance. In other words there is a genuine technological challenge that they must work to overcome.
• The technological approach is unproven or there may be more than one technical approach option to achieve the advance and it is unclear which the best.
• Something has been demonstrated as feasible but it is unclear if a commercial version could be produced.
• Aspects of end to end performance, security or behavioural characteristics of the system may be uncertain or unproven such system architecture, design or a unique combination of technological constraints that have been imposed.
• To resolve technological uncertainties often experimentation, investigation, prototyping technical solutions or a number of iterations of software development and test phases are needed.  Often many aspects of the solution do not work first time a number of different attempts have to be made (trial and error).

Staff costs, both internal and contracted, generally make up the majority of the costs in an R&D claim.

Once you are comfortable that you do have a degree of technological uncertainty in your project(s), the next step is to consider the proportion of time that staff or contractors spent was directly related to the resolution of technological uncertainty.  It is rare that a project is 100% R&D and it is best practice to consider some of the development project as routine. For each person, consider the bullet points below when making a high level assessment of what proportion of their time was spend on R&D activities (i.e. resolving technological uncertainty). 

If the team was working on multiple projects, it may be worth constructing a matrix so you can distribute their time between projects and what tasks they carried out on those projects.  Note that the R&D scheme is an incentive for actually doing technically challenging work, so it is not expected to have to spend a significant amount of time completing this task – it is okay for this to be high level.

Examples of typical eligible R&D activities by staff

• Software/database design, architecture, development (coding) needed to resolve technological uncertainties.
• Time spent on Proof of concept, pilot or investigating different technical solutions.
• Testing (up to the point where technological uncertainty is resolved).
• Building & managing development/test environments and associated tools.
• Project Management time spent on R&D planning and directly supervising the R&D.
• Supporting activities which contribute to an R&D project such as administration or project support.

Typical ineligible R&D activities by staff

• Operation or support of a live service
• Requirements collection, market research, commercial feasibility studies, general program management (e.g. – business updates, upward reporting, client or stakeholder management etc.)
• Routine implementation of new features, low risk on-going maintenance/bug-fixing system admin.
• The handling of interactions with users. This covers areas such as development of data entry procedures and user interfaces.
• The visual presentation of information to users.
• Creating software that replicates an established paper procedure, possibly building in best practices. The fact that a previously manual task has been automated does not by itself make it R&D.
• The assembling, carrying out routine operations on, and the presenting of, data.
• Using standard methods of encryption, security verification and data integrity testing.
• Creation of websites or software using tools designed for that purpose.

Whilst personnel costs will likely make up the majority of your time, there will be other costs associated with the project that are eligible for your claim. These can include:

• Fixed fee development costs from a third party developer
• Software directly attributable to the project
• Production of prototypes
• Certain consumables