Budget Construction

Constructing a budget can seem like one of the most daunting parts of submitting a grant proposal. It is often viewed as a tedious technicality; however, it is a key element of any proposal. A budget simply outlines the proposal in fiscal terms. Budgets are often used by reviewers to obtain a quick sense of how a project is organized. Some of the main items to consider in estimating costs for projects are listed below and can be categorized in two ways.

Identify the direct costs:

• Identify personnel for the project - How many people and what types of qualifications are needed to carry out the project? This is usually the major budget item, so it should be carefully evaluated. Budgets should be broken down to indicate the number of professional and support staff, and effort (specified in person months for NIH submissions) to be spent on the project by each individual. Salary compensation should always be based on the amount of time an individual spends on the specific project.
• Estimate resources such as space, equipment, lab expenses, and travel
• How much time is necessary to adequately carry out project objectives?
• What are current tuition rates?
• What are current fringe rates?

Identify the indirect costs:

• How is overhead accounted for in the budget?
• Will the project include personnel from another Penn State campus? If so, what is the overhead rate for that campus?
• Does the sponsor limit overhead rates and can this rate be negotiated?

Within University guidelines, principal investigators must be able to justify a cost as direct or indirect on a case-by-case basis, and those justifications are reviewed by the Office of Research Affairs and, ultimately, the Controller's Office.

Remember, many departments have budget administrators who can assist investigators with internal budget development. As always, Research Affairs is happy to help with any budget questions.