Budget Preparation
Introduction. The preparation of a realistic and appropriate
budget for a proposal is important for two very different reasons.
First, the budget indicates, in a very concrete manner, there sources
necessary to accomplish the proposed project. Second, a well constructed
budget projects the image that the project director/principal investigator
has the necessary experience and skill to successfully execute and
complete the project. It builds credibility in the eyes of the sponsor,
thus increasing the likelihood of funding. Budget preparation can
be challenging and can consume significant time and energy. The
purpose of this section of the Proposal Preparation Package is to
provide ECU faculty and staff with information and examples that
will aid them in the preparation of their proposal budgets.
Be sure to use
the Budget Worksheet
for preparing all budgets.
Definitions of Common Budget Terms:
1. Direct Costs: Costs that can be directly attributable
to a project, e.g., salaries, wages, supplies, travel, equipment,
etc.
2. Facilities and Administrative (F & A) Costs, or Indirect Costs:
Generic costs that can not easily be attributable directly to a
project, e.g., utilities, facility maintenance services, libraries
or administrative services. Usually allocated to a project as a
percentage of a 'base' calculated from the project budget. The base
may be Salaries and Wages (S&W) or Total Direct Costs (TDC) or Modified
Total Direct Costs (MTDC).
Sometimes sponsors refer to F & A costs as "overhead".
3. Cost Sharing: ECU contributions toward financing a project.
Cost sharing should be avoided whenever possible. There are two
types of cost sharing:
A) Cash Match - ECU provides actual Dollar for dollar Matching,
of Sponsor funding.
B) In-Kind - Allocation of available ECU resources for use on the
project, e.g., faculty time,use of supplies.
4. Salaries and Wages: Compensation paid directly to ECU
faculty, staff, or students who will be working on a project. Non-ECU
individuals working on the project may be compensated through subcontracts,
professional services contracts or other mechanisms.
5. Fringe Benefits: (also called Benefits) Employer's share
of Retirement, Social Security, Medicare, and Health Insurance.
Each ECU employee working on the project needs to have the appropriate
amounts added to the budget to cover these costs. Benefits, as well
as salary, should be requested at all times. Benefits are built
into the Budget Worksheet.
6. Supplies: Usually defined as consumable materials and
small pieces of equipment, e.g., test tubes, hot plates, with a
cost of less than $500 or a useful lifetime of less than one year.
7. Equipment: Capital equipment with a useful life greater
than one year and a purchase cost exceeding $500 (state of N.C.
definition.)
8. Subcontracts: Legally binding agreements usually used
to facilitate the transfer of sponsor funds from a prime grantee
or contractor to collaborators at other institutions.
Budget Preparation Suggestions
1. Use models. The best models are budgets from similar successful proposals produced by a colleague. These models can
provide the budget categories and estimates of some of the costs. Two sample budgets prepared by OSP appear at the end of
this section.
2. Be comprehensive and realistic. Identify all possible cost items and estimate their costs over the life of the project. Use
your own past experience and the experience of your colleagues. A list of possible budget items appears later in this section.
3. Get help. Faculty need not do everything themselves. Most academic units have designated unit staff liaisons--support staff
who may be able to help prepare the budget by getting estimates of costs from vendors or other ECU offices and by preparing
the actual budget document. OSP can help identify this person. Both Materials Management (purchasing) and Human
Resources can also be contacted about the cost of certain items, such as major equipment or salary levels for new personnel.
4. Use an appropriate format. The format of the budget is very important. Most sponsors require an itemized budget and
many sponsors prescribe a special budget form or format for proposals to their organization. These prescribed formats should
always be used. When a format is not prescribed or more detail is required internally, OSP recommends the format that
appears in the Optional Budget Work Sheet and the sample budgets appearing later in this section.
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