Managing fixed price agreements involves overseeing projects for which the funding amount is predetermined and does not fluctuate based on actual costs. Accurate budgeting, cost control, and successful project delivery are essential components of a fixed price agreement because the PI must perform the work, even if the funding is inadequate.
The expectation is that project expenses will closely match sponsor revenue if the costs were accurately determined with the proposal and that actual charges, including all salary effort and related costs, incurred for the project are applied to the grant account.
To satisfy fixed price award requirements:
Fixed price agreements follow the same timelines as other proposals. See Submitting a Proposal for these timelines.
When preparing a proposal for a fixed price award, the fixed amount requested from the sponsor should reflect an accurate estimate of anticipated direct and indirect costs for the specific statement of work.
Some important considerations to keep in mind when planning a fixed price agreement:
A detailed budget breakdown should not be provided to the sponsor; however, SPA will need one to document how requested funds were estimated to ensure cost allowability and price reasonableness and to facilitate award setup in PeopleSoft.
See Preparing a Budget for budget guidance and templates.
Fixed price proposals follow the same timelines as other proposals. Submitting a Proposal for these timelines.
The fixed price agreement must be signed prior to the start of project work. SPA will obtain the Authorized Organizational Representative signature for the agreement.
Once the fixed price agreement is executed, the award will be set up in PeopleSoft based on the internal detailed budget developed with pre-award. SPA will designate the award as fixed price in both PeopleSoft and InfoEd.
The payment schedule for a fixed price award is outlined in the sponsored agreement and SPA will invoice based on the payment schedule, rather than on a cost-reimbursable basis as funds are spent. A payment schedule may be established by task, milestone or lump sum and it is not unusual to have the final payment withheld until project completion or submission of the final deliverable to the sponsor.
Principal Investigators will need to coordinate with their SPA Grants and Contracts Associate (GCA) to initiate invoicing when payment schedules are based on task or milestones. The GCA will need to know when tasks or milestones are met.
During the life of the project, SPA expects the PI to charge project expenses to the PeopleSoft grant account. If rebudgeting becomes necessary, there may be greater flexibility to manage these changes internally since the sponsor agreed to a fixed amount for the work, rather than a line-item budget. Your SPA GCA can provide rebudgeting guidance depending on your specific award.
Expenses for a fixed price award are not subject to detailed financial reporting to the sponsor but can still be subject to audit. Capturing all project expenses in the grant account allows NIU to easily identify these expenses to ensure costs are allowable, reasonable, and properly allocated to the program.
PIs need to review the project budget regularly to ensure that expenses are being charged to the grant account and that the project is progressing at an expected pace. See Accessing Your Budget to learn how to obtain your budget.
Consult with your GCA right away on any revisions to the project budget that could signify a change to the scope of work, as scope changes require sponsor approval.
While cost proposals for fixed price agreements should be estimated on a cost basis consistent with NIU’s budgeting procedures, it is possible that a balance may accrue because of efficiencies or economies of scale developed during the conduct of the project or other cost savings were found for necessary supplies or services.
Upon sponsor concurrence that all deliverables have been satisfactorily completed, distributions of residual balances will be transferred based on the below balance thresholds.
For all balances greater than $500, SPA will assess the applicable university full federally negotiated indirect cost rate prior to transferring funds. This assessment applies regardless of whether a waiver or other lower rate was initially approved for the project.
| Remaining Balance | Required Documentation | Receiving Unit |
|---|---|---|
| ≤$500 | None | PI designated department account |
| $501 - $10,000 | Confirmation of the following to the SPA GCA
|
PI designated department account |
| ≥$10,001 | SPA transfers all balances at or above this level to the Division of Research and Innovation Partnerships. The PI will need to contact the Vice President for Research and Innovation Partnership (VPR) to determine disposition and any return to the PI | Division of Research and Innovation Partnerships |
Pre-award and Proposals
asosp@niu.edu
Post-award and Award Management
GrantsFiscal@niu.edu
InfoEd Questions
erahelp@niu.edu