The Award Lifecycle

Budget Justifications

  • Usually required at time of proposal submission
  • Intended to provide a more detailed explanation of costs in the budget
  • Provide the basis for rates and costs
  • Only cover the budget that is submitted to the sponsor (and any cost-sharing, if included in that budget)
  • Insure that all costs charged to the sponsored research award are allowable, allocable and reasonable

Allowability – Is the cost permitted by sponsor and NIU regulations?

Allocability - Is the cost incurred solely to support the specific project being proposed, and necessary for its completion?

Reasonableness - Can the cost withstand public scrutiny, i.e. would someone not affiliated with the university find the cost reasonable and appropriate?


What is a budget justification?

A budget justification is a narrative explanation of each of the components of the budget which "justifies" the cost in terms of the proposed work. The explanations should focus on how each budget item is required to achieve the goals of the project and how the estimated costs in the budget were calculated. When a detailed budget is submitted, all items in the budget should be justified.  Each subrecipient that is included in the project would have their own budget justification, separate from the NIU budget justification.


Who prepares the budget justification?

Some PI’s draft the budget justification. Templates are available for NSF and NIH in the Related Content links at the right.  Also, the Budget Justification Job Aid file provides detailed explanations that may be useful in preparing your budget justification. Your OSP RDS can draft a general budget justification; often the PI needs to provide additional detail for some of the items such as explaining personnel’s duties and responsibilites on the project. 


What is the format for a budget justification?

In their guidelines, a sponsor may require a specific form or a format for the budget justification. Refer to the Templates at the right for specific agencies and one that might be used for a foundation that requires a budget justification. Follow the agency guidelines for font typeface, font size, margins, and other formatting rules.     


Is there a page limit for the budget justification?

Most agencies indicate a page limit for a budget justification. NSF, for example, limits the budget justification to 3 pages. Explanations must provide detail for Reviewers to understand the necessity of the requested expense, yet be concise to fit within the page limits. 


Guidance on justifying typical budget categories

Personnel

Provide information for all roles for which budget support is being requested on the project.

In the budget justification, include the following for each role:

Name of the individual, or TBA (to-be-appointed) for roles not yet filled. It is not necessary to name graduate students, undergraduate students, or postdoctoral associates in your budget justification. However, if you do name these individuals, it demonstrates to reviewers and program staff that you have someone in mind for the position, and will therefore be able to put them to work on the project more quickly than would be the case if you had to identify a likely candidate first. Even if you name an individual in the budget justification, this does not represent a commitment on your part to hire that exact person, or a commitment from the sponsor to fund them.

Role title on this project (e.g. Principal Investigator, Co-investigator, Postdoctoral Researcher, etc.). In some cases, the individual’s personnel title (e.g. Professor) is not appropriate. The role title should reflect what the individual is doing in terms of the work of the project.

Amount of effort being devoted to this project (express effort in number of academic/summer/calendar months for Federal proposals and in percent of effort for most other proposals). When an individual’s effort varies by budget period, list the different amounts of effort and when they apply (e.g. 2 academic months in budget periods 1-2 during the data collection phase and 1.5 summer months in budget period 3).

Agencies such as the NSF and NIH require that effort be shown is person-months (PM) rather than a percentage of time. The calculation to convert percentage of effort to PM is to multiply the % effort by the appointment period (academic/summer/calendar). 

Ex: A PI requesting 5% effort (e.g. 5% of the institutional base salary) during the normal 9 month academic contract period would commit .45 academic PM towards the project (.05 * 9 = .45).

A brief description of the role responsibilities in relation to the specific goals of the project.

 Note: Committing effort to a project without also charging the salary for that effort to the project budget is considered an Institutional cost share. PIs are expected to request some level of effort support during the academic period.
Administrative and clerical salaries, in particular, must be well justified if you are including them in the budget as direct costs. Federal regulations (OMB Circular A-21) state that administrative salaries will normally be treated as F&A costs. Direct charging of these costs is usually not allowed, but may be allowable when a substantial amount of administrative work is required to meet the aims of a major project. The federal regulations define "major project" as a project that requires an extensive amount of administrative or clerical support, which is significantly greater than the routine level of such services provided by academic departments.  
See the Budget Justification Job Aid file for language that may be used in the budget justification to support the request for such costs.

Consultants

Provide the consultant's name, institution, and an explanation of the area of expertise the consultant will provide to the project. If a consulting fee is to be paid, explain how it was calculated (for example, $ XYZ/day x the number of days). The rate may be calculated on an hourly or daily basis, or may be based on completion of a task or milestone.

Consultants, by definition, are not performing part of the project work -- they are providing expert advice to the investigators as the investigators do the work. In contrast, collaborating investigators, who will be involved in the execution of the project work, are not consultants and should be included in the personnel (for NIU employees) or as subrecipients (if from outside of NIU).

Be sure that the daily rate is not in excess of the maximum allowed by the funding agency, and provide justification for the rate. If travel and subsistence costs are not factored into the daily rate, these should be justified separately.

OSP will require justification of the rate during the proposal development process. Be prepared to obtain a letter from each consultant indicating his/her willingness to act as a consultant to the project and the basis for the rate to be charged to the project.

Equipment

Only items of equipment that meet the criteria of “capital equipment” should be budgeted in this category. Equipment is defined as durable goods with a purchase price of at least $5,000 per item and a useful life of at least one year. Items that do not meet both criteria are considered materials/supplies.

In the Budget Justification, specify the type of equipment, and if known, the model and vendor name. Explain how this equipment will be used in the project and why it is necessary to purchase equipment dedicated to this project rather than using shared resources. If possible, provide a detailed vendor quote. If a quote is not available, indicate how the amount budgeted was determined (e.g., website price list, standard equipment catalogs, prices from University purchasing contracts, etc.).

General-purpose equipment is not eligible as a direct cost on a grant budget unless it is primarily or exclusively used in the actual conduct of the research. This includes items such as desktop and laptop computers, word-processing software packages, and the like. These types of purchases are unlikely to total $5,000 or more and would typically be included under Other Direct Costs (or elsewhere, according to the agency’s budget categories). 

Travel

Domestic Travel: Explain the purpose of the travel in terms of the project goals. Specify the number of trips and destinations anticipiated and the number of individuals traveling. Explain how the costs were estimated. (For example, $XYZ roundtrip airfare + $XYZ lodging for the number of nights, plus $YZ per diem for  the number of days.) You do not have to specify exactly which conference(s) you propose to attend, but you can name them if you have some in mind.

For field work and other research-related travel (collaborating with researchers at another institution, for example, or projects at a national laboratory or other external facility), you should provide information about the number of people making each trip, its duration, and other details such as whether you will be traveling by automobile or by plane, how you estimated the travel costs, etc.

Local Travel: In addition to indicating the purpose of the local travel In the budget justification, indicate the most recent Illinois travel reimbursement for mileage rate, the approximate number of miles, and how many trips per year or project period.      

International Travel: Federal regulations require that all air travel paid for from federal grant funds must be on a U.S.-flagged carrier. Foreign travel estimates should be based on use of U.S. flag carrier if one is available, although this can be on a code-sharing basis (i.e., the flight is on an airline that is technically not a U.S.-flagged carrier, but the ticket was issued by a cooperating partner that is). The NIH defines foreign travel as any travel outside of Canada and the U.S. and its territories and possessions, or for an organization located outside Canada and the U.S. and its territories and possessions, foreign travel means travel outside that country. The NSF includes Canada as a foreign country. Review sponsor instructions!

Supplies

All non-permanent, disposable supplies such as chemicals, drugs, assays, lab glassware, syringes fall into this category. Small equipment purchases costing less than $5,000 per item should also be included in the supplies category. Provide a list of the types of supplies needed on the project and explain how the costs were estimated. Except in rare cases, you do not have to provide an exhaustive list or show catalog numbers or other documentation for the amounts; but you should provide sufficient detail to demonstrate to reviewers and program staff that (a) you have anticipated the materials needs for the research plan you are proposing, and (b) there is adequate justification for the amount requested for materials and supplies.

Subrecipient (Consortium) Costs

A subaward or a subcontract (sometimes called a consortium agreement) is required when a third party (the subrecipient) will be responsible for execution of a portion of the project work. When the NIU budget includes funding for subrecipient(s), the NIU budget justification should state the name(s) of the subrecipient organization(s) and include a brief justification for subcontracting to each entity by explaining the project goals involved in their work. This may include one or two sentences describing why the work cannot be done at NIU and why you chose the partner(s) you did (for example, because of a pre-existing collaborative relationship, proximity to the NIU campus, availability of the necessary instrumentation and/or expertise, etc.).

The specific items in the subrecipient budget(s) should not be explained here. The budget and justification from each subrecipient should be included in the proposal, separately from NIU’s budget and justification.

NIH Modular Budget guidelines require an abbreviated budget justification of the Consortium (subrecipient) costs: Provide an estimate of total costs (direct plus facilities and administrative) for each year, rounded to the nearest $1,000. When more than one consortium is involved, provide this estimate for each. List the individuals/organizations with whom consortium or contractual arrangements have been made, along with all personnel, including percent of effort (in person months) and roles on the project. Do not provide individual salary information. Indicate whether the collaborating institution is foreign or domestic. Provide an estimate of total costs (direct plus facilities and administrative) for each year, rounded to the nearest $1,000. When more than one consortium is involved, provide this estimate for each. List the individuals/organizations with whom consortium or contractual arrangements have been made, along with all personnel, including percent of effort (in person months) and roles on the project. Do not provide individual salary information. Indicate whether the collaborating institution is foreign or domestic.

Other Costs

This category is for all other project costs not captured in prior categories, and typically includes such items as:

  • Publication/Documentation/Dissemination costs. Specify the annual amount requested, and provide details on how you arrived at this number, particularly for documentation, storage, and preservation of samples, database cleanup, and other less-common costs that fall under this category.
  • Participant Support Costs. This category is specific to NSF only. Indicate the number of participants and the amount per participant, and what the cost is being provided for them to participate in the project (such as subsistence allowances, travel allowances, tuition and stipends, registration fee).
  • Human Subject (e.g. participant) Payments: Describe the incentive and cost of the incentive to be provided to the subjects who will be participating on the study. 
  • Vendor Services. When an entity does not contribute a significant portion to the project as described in the Statement of Work and is instead is providing goods and/or services that are ancillary to the operation of the sponsored program, this entity is classified as a vendor rather than a subcontractor.
  • Facilities and Rental Costs. When a project requires the use of non-NIU owned facilities, the rental costs associated with the use of such space may be charged to the project. Specify the rental rate, basis for such rate and why the use of non-NIU facilities are necessary to support the project.
  • Tuition Remission. Tuition remission is provided to all Northern Illinois University graduate research assistants employed on non-sponsored as well as sponsored activities and in accordance with the provision of OMB Circular A-21.

For each budget item, itemize the expenses, explain why they are needed to conduct the project, and explain how the costs were calculated.

Facilities and Administrative Costs

The budget justification may include a statement about the F&A cost rate (also referred to as indirect costs or overhead) that has been applied to the budget. See the OSP templates for typical language to include in the budget justification.

Matching Funds and Cost Sharing
Some sponsors or grant programs require institutions to support part of the costs of performing the project. The terms used for this institutional support are "matching funds" (cash contributions) or "cost sharing" (cash or in-kind contributions).

There are three different types of cost sharing that can occur on sponsored projects:

Mandatory Cost sharing: It is required by the sponsor as a condition of obtaining an award. It must be included or a proposal will receive no consideration by the sponsor.
If the sponsor requires matching or cost sharing by the institution, explain in the budget justification what is being provided and its value. For example:

  • The University will contribute 10% effort by Dr. Jane Smith as in-kind cost-sharing for this project, which represents $15,450 in salary, fringe benefits and unrecovered F&A costs.
  • The University will provide $50,000 matching funds for the purchase of the XYZ equipment.

Voluntary-Committed Cost sharing: It represents resources offered by the university (documented and quantified in the proposal) when it is not a specific sponsor requirement. It becomes a binding commitment which the university must provide as part of the performance of the sponsored agreement.

When the institution determines that it is in the best interest of the project to provide voluntary-committed cost share, the commitment should be explained in the budget justification as identified under Mandatory cost share.

Voluntary-Uncommited Cost sharing: It is cost sharing that is over and above an amout that was committed and budgeted for in a sponsored research agreement. It is neither pledged explicitly in the proposal nor stated in the award documents, but it occurs in the course of executing a project, often when an individual expends more effort on the project than his or her commitment requires.