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Build Your Budget

As you prepare your project’s budget, thoroughly review the solicitation as well as the sponsor’s grant preparation guide. It is important to be cognizant of any sponsor restrictions regarding specific budgetary requirements, such as cost-share, tuition on grants, and allowances or disallowances.

Budget preparation is an important part of the proposal development process. Ideally, the budget should be considered as you are developing the project itself – not something hastily put together. This is important for two reasons:

  1. Developing your budget alongside your narrative assures that the budget items are specifically related to activities described in the proposal.
  2. Reviewers often examine the budget in the context of the program narrative, evaluate whether sufficient and appropriate personnel to perform the work have been included, and match the overall budget to the work proposed.

Federal agencies will generally provide either a form or a prescribed format for estimating and presenting cost; it is important to follow their instructions explicitly. We provide sponsor specific guidance in the right column. Many agencies that haven’t developed their own forms use the SF 424 as their standard format but always check the specific RFP/FOA and the agency guidelines for any unique rules.

Direct & Indirect Costs

You should present in the proposed budget your best estimate of the financial support necessary to carry out the project. Expenses can be divided into two categories:

  1. Direct costs, which are specific line items in a budget directly attributable to the project such as salaries and fringe benefits, equipment, and travel, and;
  2. Indirect costs (also called Facilities and Administrative costs or overhead), which are incurred for the general support and management of research. Indirect costs are paid as a percentage of direct costs. See F&A (Indirect Costs).

Budget Justification

Not to be overlooked is the budget justification (sometimes referred to as the budget narrative). The budget justification is the narrative in the proposal that substantiates the line items in your budget.

Other Considerations

Budgets have to be built obeying the rules of applicable cost accounting standards.

Estimating the cost of a research project is an inherently unpredictable exercise; primarily because the manner in which a research endeavor progresses is itself unpredictable. Experience makes budgeting easier and liberal re-budgeting authority from sponsors (when it is offered) makes precise estimating less critical.

Last Updated: 11/30/22