Policies & Compliance

Budget Development

6.2 Major Budget Categories

6.2.1 Direct Costs

Direct costs are costs that can be specifically identified with a particular sponsored project with a high degree of accuracy and are incurred specifically to carry out the project's scope of work. Examples include salaries for project personnel or supplies used exclusively for a defined experiment.

Sponsored project costs are categorized as either direct costs or facilities and administrative (F&A) costs (also known as indirect or overhead costs). Together, direct and F&A costs represent the total cost of a sponsored project.

6.2.1.1 Personnel Costs

Personnel costs include salaries and wages for University employees whose time and effort are dedicated to the project. Collaborators at other institutions are budgeted either as consultants or as subrecipients under a subcontract/subaward.

Proposed salaries must be consistent with approved salary scales and position classifications.

Budgets must reflect the actual percentage of effort anticipated.

Salary escalation may be included only if permitted by the sponsor. The University does not apply a default escalation rate.

Some sponsors impose salary caps limiting the amount of salary that may be charged to an award (e.g., the NIH Salary cap). Sponsor guidance must be followed.

6.2.1.1.1 Stipends

Stipends are payments made to students and trainees in support of educational or training activities. Stipends do not represent compensation for services rendered and therefore do not establish an employment relationship.

Stipends are generally allowable only for training or fellowship programs, or when explicitly authorized by the sponsor.

6.2.1.2 Fringe Benefits

Fringe benefits include health insurance, retirement contributions, Social Security, Medicare, and other employee benefit costs. Fringe benefits must be budgeted and charged in proportion to the employee's salary and the percent of effort committed to the project.

When developing proposal budgets, departments may use either University-recommended estimated fringe benefit rates or calculated actual fringe rates. Estimated rates are provided for proposal development purposes and may not reflect the actual fringe benefit charges that will be applied once an award is made.

Actual fringe benefit costs are charged to sponsored projects in accordance with current University payroll and benefits assessments. Departments using actual calculated rates in proposal budgets must be able to document the basis for those rates if requested by sponsors.

6.2.1.3 Consultants

Consultants (independent contractors) provide specialized expertise or services not otherwise available within the University and are typically engaged for limited, defined tasks.

Consultant costs:

Must be justified as necessary to the project
May be subject to sponsor rate limitations
Are included in the F&A base unless the sponsor specifies otherwise

All consultant agreements must comply with the University's independent contractor policies and classification requirements.

6.2.1.4 Equipment

Equipment purchases must be itemized and justified in the proposal.

Capital Equipment

Capital Equipment is defined as an item with:

An acquisition (or donated) value of $5,000 or more; and
A useful life of more than one year.

Capital equipment is excluded from F&A costs when the University's negotiated F&A rate is applied.

Fabricated Equipment

Fabricated Equipment refers to equipment that is constructed by combining multiple components or materials into a single identifiable unit. Fabricated equipment is typically designed or assembled in-house to meet a specific research need.

Once fabrication is complete:

individual components lose their separate identities; and
the finished product is treated as a single equipment item.

To be classified as a capital fabricated equipment, the completed unit must:

have a total cost of $5,000 or more, and
have a useful life of more than one year.

Fabricated equipment with a total cost between $1,000 and $4,999 may be recorded as insurable equipment.

Key Considerations for Fabricated Equipment

Component costs: Individual components do not need to meet the $5,000 threshold, provided the combined cost of the finished unit does.

Labor costs:

Labor charges from approved recharge centers may be included in the capitalized costs.
Other University labor costs may not be capitalized.

Account codes: Approved fabricated equipment components must be charged to designated fabricated-equipment account codes.

Repairs vs. upgrades:

Repairs or routine maintenance of existing equipment are not fabricated equipment and are subject to F&A.
Upgrades that introduce new functionality or technology, and whose total component cost exceeds $5,000 may be treated as non-F&A-bearing equipment if properly justified and approved.

Computers and General-Purpose Devices
Computers, tablets, laptops, or other general-purpose computing devices with a unit cost belwo $5,000 are not classified as capital equipment. Such items may be charged directly to a sponsored project only when all of the following conditions are met:

The device is essential to achieving the project's specific aims;
The device is primarily used for the sponsored project;
Reasonable access to alternative institutional computing resources does not exist; and
The cost is explicitly included and justified in the proposal budget.
The Principal Investigator is responsible for determining and documenting whether a computing device meets the standard of "essentiality" and how the cost is allocable to the project. Sponsor approval - explicit or implicit - confirms allowability when properly budgeted and justified.

Software

Software may be budgeted as equipment only if it meets the University's capitalization thresholds, per University policy 3-043, which include:

an acquisition cost of $100,000 or greater, and
a useful life exceeding five years.

Software licenses, subscriptions, cloud-based services, and software development or implementation costs that do not meet these thresholds must be budgeted as other direct costs or materials and supplies, as appropriate.

High-Performance Computing Resources

Charges for Center for High Performance Computing (CHPC) assets - such as cluster nodes, storage, or virtual machines - may be treated as equipment purchases when funding supports acquisition of discrete assets, regardless of whether individual components fall above or below $5,000.

CHPC charges that represent staff services or support activities (as opposed to asset acquisition) must be budgeted as other direct costs and are subject to F&A.

Insurable Equipment

Insurable Equipment includes items with:

A cost between $1,000 and $4,999, and
a useful life of more than one year.

These items are budgeted as supplies and are subject to F&A costs, but are tracked separately for inventory and insurance purposes due to their value.

6.2.1.5 Materials & Supplies

Materials and supplies include consumable items necessary for project performance, including laboratory supplies and small equipment that does not qualify as capital equipment.

General office supplies are typically unallowable unless demonstrated to be extraordinary and project-specific.

6.2.1.6 Travel

Travel costs must comply with:

Sponsor terms and conditions
Federal requirements (if federally funded)
University travel policies (when more restrictive)

Allowable travel includes transportation, lodging, subsistence, and related expenses incurred for project purposes (e.g., conference, fieldwork, collaborator meetings).

International Travel

Foreign travel generally requires advance approval and may require sponsor authorization.

For federally funded awards, travelers must comply with all applicable federal travel regulations, including but not limited to the Fly America Act, which requires the use of U.S. air carriers for international travel to the maximum extent practicable unless an allowable exception applies.

International Travel and Research Security Requirements

Proposals and awards that include international travel may be subject to additional federal, sponsor-specific, and institutional requirements related to research security, export controls, restricted-party screening, and disclosure obligations. Sponsor policies governing foreign travel and international engagement continue to evolve, particularly for federally funded projects.

Investigators are strongly encouraged to consult with the Research Security Office early when international travel is anticipated, particularly when travel involves:

sensitive research areas or technologies;
foreign government-affiliated institutions;
travel funded by federal sponsors; or
travel to countries subject to heightened U.S. government restrictions.

Current guidance on international travel, risk assessment, and required coordination is maintained by the Research Security Office and should be reviewed before travel.

6.2.1.7 Other Direct Costs

Other direct costs include project-related expenses that are allowable, allocable, and reasonable but do not fit into the standard personnel, equipment, travel, or materials categories.

Examples may include, but are not limited to:

Publication and dissemination costs
Computer or core facility services
Human subjects or participant recruitment costs
Equipment repair and maintenance (excluding capital improvements)
Animal purchase and animal care services
Project-specific communication costs
Rent or utility expenses required solely for the project
Tuition or training costs, when allowed by the sponsor

All such costs must be specifically justified, directly related to the project's scope of work, and permitted under sponsor and university policy.

6.2.1.8 Subcontracts/Subawards

A subaward (or subcontract) is an agreement under which a portion of the programmatic or scientific work of a sponsored project is carried out by another organization under the direction of a non-University of Utah investigator.

A subrecipient is distinguished from a vendor or service provider by its level of responsibility and independence, including:

Performance of a substantive portion of the project's scope of work
Programmatic decision-making authority
Responsibility for adhering to applicable sponsor requirements

When a subrecipient is identified at the proposal stage, the application must include evidence of commitment, a defined statement of work, and a detailed budget consistent with sponsor requirements. Sponsor guidelines vary, and investigators should consult OSP early in the proposal development process.

Subaward budgets include both the subrecipient's direct and indirect (F&A) costs. For purposes of calculating the University's F&A, only the first $25,000 of each subaward is included in the University's indirect cost base, regardless of the length or value of the award.

6.2.1.9 Patient Care Costs

Patient care costs are direct costs, associated with routine or ancillary medical services provided to individuals participating in clinical research studies, when such costs are explicitly authorized by the sponsor.

These costs may include:

Routine services such as room, dietary, and nursing care
Minor medical and surgical supplies
Use of facilities and equipment for which separate charges are not customarily made
Ancillary or special services (e.g., operating room, anesthesia, laboratory tests, EKG/ECGs)

When sponsors allow direct reimbursement of specific services, budgets must be structured to avoid duplication or misallocation of costs.

6.2.1.10 Participant Support

Participant support costs are defined in Uniform Guidance as direct costs incurred to support individuals who participate in project-supported activities but who are not responsible for program implementation or project delivery.

Allowable participant support costs may include:

Registration fees for training or workshops
Stipends or allowances for housing and subsistence
Travel, lodging, and per diem when participation is the sole purpose of travel
Training materials
Temporary dependent care directly related to project participation

Participant support costs:

Must be explicitly allowed by the sponsor
Must be incurred within the approved project period
Must be separately identified and tracked
Generally may not be rebudgeted without prior written sponsor approval

Participant support costs are distinct from participant compensation and must be accounted for separately in designated accounts; in many cases, this requires a companion project.

Definition of a Participant

A participant is an individual who receives a service, training opportunity, or support through a sponsored project - such as attendance at a workshop, conference, seminar, or short-term instructional activity - but who does not:

Design the project
Deliver program content
Commit effort to project implementation

Individuals such as consultants, project personnel, or staff of the recipient or subrecipient are not considered participants.

Participants may be U.S. citizens, permanent residents, or foreign nationals and must have a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) for payment and reporting purposes.

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Office of Sponsored Projects

VP for Research