Budget and Budget Justification

Overview

The budget should be designed on the basis of the technical narrative; that is, it should reflect, in fiscal terms, the proposed work and resources required to complete the work. The budget justification accompanying the budget figures should explain, by budget category, the calculations used in determining the total cost for each category, as well as any special or unusual circumstances. A budget that underestimates the cost of completing the proposed research is as detrimental to the success of the proposal as a budget that overestimates the cost.

The proposal budget is the best estimate of project costs at the time of proposal submission. Current rates for salaries, services and supplies, equipment and maintenance, travel, and tuition should be used as a basis for developing the budget. Given that project periods normally begin 6 to 9 months after proposal submission, it is important to prepare a budget that will cover projected expenses, such as salary increases each January for academic appointments or fringe benefit rate increases each fall, by using current rates plus reasonable percentage increases. For example, a current 9-month academic year salary, increased 5%, would be a fair estimate of a salary rate for a project beginning after January 1 of the following year. Budget figures should be rounded to whole dollars.

To adjust for inflation over the life of a multi-year project, it is recommended that a 5% increase for all direct cost budget categories be included in each successive budget period except for items requiring more or less than 5%, such as fringe benefits and tuition. Some federal agencies limit continuation awards to a 4% increase over the previous year's funding level; however, any known increases for future years should be budgeted at the actual or estimated rate of increase regardless of an agency-imposed limitation.

Budget forms and detailed instructions for preparing this portion of the proposal are provided by some agencies. These should be carefully followed. Where no forms or instructions are provided, the main budget categories listed below should be considered during examination of the proposal narrative for possible project costs. ORSA staff can assist in designing the budget during the proposal development stage.

A Quick Reference Card with current rates for salary and wages, fringe benefits and indirect costs is available to PIs and grant administrators for easy reference. As some rates change annually, new rates are posted on the web, and announced in the weekly listserv e-mailed to PIs and grant administrators. These rates are further explained in the corresponding subsections.