Contracts & Grants: Budget Preparation
Budget Preparation Overview
- The budget reflects the Principal Investigator's best estimate of the actual costs for conducting the scope of work.
- Your budget justification provides an explanation of why the projected costs are necessary for the research or project, and a description of the types of costs that make up a larger budget category such as "other" or "supplies".
- Always Review Sponsor Guidelines Before Preparing a Budget. Most will provide instructions relating to budget categories.
- Be sure to consider the total project costs (direct and indirect) across all collaborators. The project budget must be within the limits defined by the program or sponsor. If a budget limit is not specified, you can review the sponsor's recently awarded projects, if available, to assess a typical award size or consult with the program officer to learn of an appropriate budget size based on the proposed project scope.
Budget Calculator (updated 01/13/2021)
ANR and its Principal Investigators are jointly responsible for the stewardship of extramural funds in compliance with federal cost principles established by the federal Office of Management and Budget (OMB) (known as Uniform Guidance (UG), or 2 CFR 200). These principles are described in the Uniform Guidance and incorporated into University policies and procedures for administering research awards.
Adherence to all cost principles is required for proper and appropriate accounting for the expenses of conducting extramurally funded activities at ANR. The consequences of failing to comply with costing principles may range from disallowance of specific incurred costs by the sponsor, to termination of the award, to federal sanctions, depending on the particular cost and circumstances in question.
The key concept of the cost principles is “allowability.” For a cost to be allowable on a specific sponsored award, it must be:
- Reasonable. It is necessary for the performance of the project and is within what a “prudent person” would pay for the particular goods or services obtained.
- Allocable. The project that pays the cost is the project that benefits from it. Expenses shared across multiple projects benefit all projects proportionately (when benefit can be clearly allocated) or reasonably (when proportionate value cannot be readily determined due to the interrelationship of the work involved).
- Consistently treated. The University consistently designates that type of cost as either direct or indirect when incurred for the same purpose in like circumstances.
When preparing your budget justification, or prior to incurring costs against an existing award, ask yourself: Is this cost Reasonable, Allocable and Consistently Treated by the University?
Additionally, the cost must not be explicitly excluded by the Uniform Guidance or the terms or conditions of the award. Some expenses that may directly benefit a project may still be prohibited by the sponsor and therefore not allowable on the award.