OSP Coffee Break by aoa29226



The budget justification is the first step in documenting the allowability, allocobility, necessity and
reasonableness of possible award expenditures and serves a number of critical functions.

Describes the need for or necessity of major categories of expense.

All major categories of cost should be justified, starting with the largest expense categories and according
to sponsor‟s guidelines. Key points to make include the elements below. Sample budget justifications for
NSF and NIH are available on the OSP website. These documents should be modified to fit the
application; special attention should be paid to including items that are typically unallowable.

REMINDER: All typically unallowable costs (administrative costs such as administrative/ clerical staff – if
allowed, office supplies, communication costs, or general purpose equipment or instrumentation such as
computers) should be specifically identified and the essentiality as a direct charge clearly explained.

Categories and key points to include in the budget justification:

   For key personnel – Describe the individual’s
    role (PI, co-PI, co-Inv, etc);
    effort committed to the project (Academic Year and/or Summer, or Calendar) in person months
       or percent as per sponsor‟s guidelines; and
                 NOTE: Faculty should present both AY and Summer effort separately.
               Include a statement that SU faculty have 8.5 month appointments
       responsibilities and activities to be performed in support of the project; and

    For non-key personnel – Describe the Individual’s
     role;
     effort
                 NOTE: individual’s with less than 1.0 FTE appointments should disclose the nature of
                 the appointment e.g. Graduate students (0.5 FTE, 100% effort)
       responsibilities and duties to be performed in support of the project.

    Fringe Benefits
     State that costs are charged according to rates negotiated with DHHS (provide date of rate
        agreement; changes annually), as applicable to employee category.
     Current rates are used for budgeting purposes; actual rates in place at time of expense will be

     Describe why the equipment is essential for project and why comparable equipment which may
       be available on campus or in the area is inadequate for project needs.
     Clearly describe allocobility of cost – item for exclusive use of the project (if item will not be for
       exclusive use of the project –the total cost of the item cannot be charged to the sponsor).
     Justify cost (e.g. quotes attached).
     Justify sole-source acquisition if applicable (i.e. specific brand from unique distributor).
     Include installation and space renovation costs to make equipment fully functional (e.g. air

     Describe why essential (e.g. attend sponsor-mandated conferences, disseminate project results,
     Justify cost:
            o   Number of travelers.
            o   Location (city, state, country) and duration.
            o   Airfare or ground transportation costs per trip.
            o   Lodging and sustenance.
            o   Registration fees.

        Remember, while SU travel policy does not use government per diem, however these rates can
        be consulted to assess the reasonableness of costs proposed.

    Publication Costs
     Describe page costs, copyright fees, etc.

    Subcontractors (also called subrecipients or consortium members)
     Describe who and what they will do.
     Budget detail and justification is typically required using sponsor‟s forms.
       REMINDER: OSP requires permission of authorized institutional representative (OSP equivalent)
       to include subcontractor‟s name in application.

     Describe services to be provided.
     Provide rate per day, and number of days of service and whether travel will be included (where to
       present travel can vary with sponsor).
       REMINDER: OSP requires permission of individual named to include consultant‟s name in

Assists in determining the reasonableness of budget request, quality of PI/PD judgment, and
feasibility of project approach in context of resources available and proposed.

Serves as documentation for a sponsor’s prior approval of a cost that ordinarily is not be
allowable as a direct cost.

Some examples:
   Supplies and consumables
    Office supplies (binders, copy paper and copier toner) are essential for preparation of the 100
      training manuals used in professional development activities.
    Office supplies (toner) is essential for printing color copies of maps developed during course of
      award; routine use is black-and-white only.

     A pre-paid international cell phone is necessary to communicate with project informants and
         public officials while conducting research in India, Nepal and Sri Lanka.

    Communication costs
     Cost of shipping samples from field to SU or between SU and collaborators‟ sites to perform
     Cost of mailing publication drafts among authors for review who do not posses specific software
       to view graphics electronically

Facilitates OSA ‘pre-audit’ of high-risk expenditure categories following award
       The budget narrative is the first place reviewed to confirm the allowability, necessity,
        reasonableness and allocobility of an item charged to a sponsor, particularly if the justification if
        the purchase requisition is unclear.
    Given the latitude many sponsors allow the University in managing awarded funds, adequate
    documentation to substantiate the necessity, reasonableness, allowability and allocobility of an
    expenditure is essential. This documentation starts with the budget narrative.


Applications that Do Not Require Detailed Budgets – When Are They Due, What Is Needed?
Even if the sponsor does not require a detailed budget (e.g. NIH modular grants, American Chemical
Society/Petroleum Research Foundation, foundation applications, etc.) OSP requires the complete
application be provided to the assigned research administrator by the three-day deadline.

For some sponsors (NIH modular grants, foundations or corporations), OSP may require preparation of a
detailed budget to ensure that sufficient funds are requested, and to confirm the reasonableness of the
project cost, as well as allowability and necessity of items of cost, even though this information is not
included in the application.

Modular budgets
NIH modular budgets are used for R01, R03, R15, R21, and R34 applications requesting $250,000 or
less in annual direct costs and are budgeted in $25,000 increments. Modular grants, while not requiring
detailed budgets, are still subject to federal regulations pertaining to the allowability of costs (i.e. 2 CFR
215, 220 (formerly OMB Circulars A-110, A-21), NIH Grants Policy Statement and any specific terms and
conditions of the solicitation/award), allocobility, necessity, reasonableness, and consistent treatment of

Modular budgets present all personnel involved in the project including “to be determined” consultants,
collaborators, and subcontractors; their effort in person- months; their roles and responsibilities to justify
their level of effort, consortium costs (rounded to the next higher thousand) and any items typically
unallowable as direct costs.

In the modular budget justification, faculty should clearly present both their proposed academic year and
summer effort. Personnel with 12-month appointments should present effort as calendar year effort.
Current federal application budget forms require that effort be presented as person-months. Please do
not use the NIH person-month conversion tool as it is based on 9-month appointments as opposed to
SU’s 8.5 month appointments. See OSP budget template for 8.5 month conversion.

Modular grant awards are typically constant for each year of the award; if there is a variation in the
number of modules requested (see below), the reason must be explained in the budget justification, e.g.
increase is the consequence of one-time equipment purchase. An illustration of constant modules and
variable modules is presented below.

For example:
                       Year 1              Year 2             Year 3             Year 4              Total
Constant Modules
Estimated Direct       $187,650           $197,000           $235,000           $180,000            $799,650
# Modules                 8                   8                  8                  8                  32
Direct Costs           $200,000           $200,000           $200,000           $200,000            $200,000
Variable Modules
Estimated Direct       $187,650           $197,000           $260,000           $180,000            $824,650
# Modules                 8                  8                  9                  8                  33
Direct Costs           $200,000           $200,000           $225,000           $200,000           $825,000

To ensure that the appropriate number of modules is requested, OSP requires most applicants to develop
an internal budget using the OSP budget template. This allows non-experts to have their budgets
reviewed for adequacy of: salary estimates, inclusion and accuracy of fringe benefit rates, and
identification of costs which are excluded from F&A recovery such as tuition, equipment and subcontract
costs in excess of $25,000.

         NOTE: Any essential costs that are typically unallowable (e.g., office supplies, alcohol for
         research use, communication costs such as postage, computers, etc.) should be explicitly
         identified in the modular budget narrative. In the event of an award, their inclusion will
         constitute sponsor prior approval of the cost.

Fixed Price Proposals
In proposals for a fixed price agreement, the sponsor is provided with a lump-sum cost for the research,
education or other services proposed. While no budget details are provided to the sponsor, the University
does have an obligation to estimate the price from the costs associated with the work plan. In developing
the fixed-price request, the items incorporated must comply with federal (if federal sponsor) and university
policies. That is, costs must be reasonable, allowable, and allocable to the work; appropriate F&A rates
must also be included in the cost.

Given the relative imprecision of the cost estimates, it is reasonable to expect that on some occasions the
fixed-price may result in funds remaining at the end of the award, while on other occasions the fixed-price
will not cover all costs. Fixed-price agreements that consistently result in significant positive balances will
be scrutinized so that more accurate estimates can be developed for future applications.

Effort committed for key personnel engaged in fixed-price projects is included in the effort certification

Functional or Activity-based Applications without Detailed Budgets
As a general rule, OSP requires preparation of a detailed budget to ensure that sufficient funds are
requested, and to affirm that PI effort is explicitly devoted to the project, even though this information may
not be included in the proposal.

When multiple activities or tasks are proposed, such as administrative costs or program costs, a separate
OSP budget template corresponding to each function, activity or task is recommended. The total costs
for each activity correspond to the amount to be proposed in a functional or activity-based budget. Many
sponsors, e.g. Department of State, also require the line-item details comprising the functional budget.

Working with Industry
Principal investigators may engage corporations to explore sponsored research activities through a
variety of points of contact, such as their own personal contacts or through the Office of Technology
Transfer and Industrial Development, the CASE Center, or Corporate Relations.

Regardless of the office facilitating the relationship, proposals should be reviewed and approved by OSP
prior to submission to the corporate sponsor. The Sponsored Programs Internal Routing and Review
form, signed by all key personnel and their respective chairs and/or deans, is also required prior to
Budgets and Statements of Work for Industry Proposals
Corporate sponsors frequently request that indirect costs be reduced or waived. Such requests ordinarily
should not be granted because the full costs of research would then not be recovered. In addition,
reducing or waiving indirect costs creates a situation of „inconsistency‟ where the federal government is
paying more in indirect costs than corporate sponsors.

Statements of work for corporate-sponsored research agreements ordinarily should be limited to no more
than ten pages and include the elements presented in What should be included in a statement of work?
Office of Sponsored Programs will work with PIs to ensure that all applicable information required to track
private use activities for the University‟s annual report to the IRS is included in the statement or work or
other documentation.

To top