=+3. A university teacher, active in teaching, administration and research, wishes to obtain further finance from a government research agency. The new research project will build on the findings of his existing and continuing projects. Some of these findings have already been incorporated in the courses he teaches and he hopes to employ a student who has taken these courses as a post-graduate research assistant on the new project.

Submissions for research funds are handled by the university's central administration. The professor provides an estimate of his time needed to complete the project. The administration then prepares the following statement:

Research Project XYZ Cost Statement Professor X' s salary

(based on the proportion of research hours to total hours of teaching, administration and research) xxx Cen tral overhead charge

(central administration, electricity, other utilities and rates allocated on the basis of the professor's estimate of hours to be spent on this project) XXX Department overhead charge

(shared equipment costs, departmental administration costs, research assistant salaries allocated by means of negotiation between research directors and the head of department) XX Total research grant requested XXX The research agency is concerned that this system does not result in the best allocation of resources and that it is not getting 'value for money'.

Comment on the strengths and weakness of the system from: