Getting Started; The Basics

This page contains information on what you should know if you have never before prepared a budget for a sponsored project.

Why is a proposal budget important?

  • It justifies your request and shows how you calculated costs.
  • It provides a financial "blueprint" for your project if you are funded.
  • It shows that you—and the University—will manage the sponsor's funds, which are usually public money, responsibly.

allowable allocable & reasonableThree key words: Allowable, Allocable & Reasonable

If you remember nothing else when calculating costs for your proposal budget, it is this: the Office of Management and Budget (OMB) Circular A-21, Section C says, "The recipient institution is responsible for ensuring that costs charged to a sponsored research agreement are allowable, allocable, and reasonable ...."

What does allowable, allocable, and reasonable mean?


  • Costs must not be expressly prohibited by the sponsored program regulations, the sponsored agreement, the University's own policies, or the Federal Cost Principles (found in OMB Circular A-21).
  • Costs must be treated consistently by applying the generally accepted accounting principles appropriate to the circumstances (such as the Federal Cost Principles).


  • Costs are incurred solely to support or advance the work of a specific sponsored research award (and only during the sponsor-approved project period).


  • Costs must be able to withstand public scrutiny, i.e., objective individuals not affiliated with the institution would agree that a cost is reasonable and appropriate.
Further Tips for Budgets
  • Calculate what the project will cost, and make sure your budget is realistic; do not "pad" costs - but don't short-change yourself in an effort to be more "competitive" either (though you will want to check whether or not the sponsor has a maximum request amount).
  • Be sure everything in your budget is referenced in the project description/project narrative—and be sure everything mentioned in your project description that would incur cost is shown in the budget.
  • Discuss your project and its costs with your chair/director and/or your dean.
  • Start early!!
  • Check to see if cost-sharing is required.
    • If so, where will it come from?
    • Discuss this with your chair/director and/or your dean.
  • Read the sponsor's guidelines!
    • Does the sponsor have a minimum and/or maximum request amount?
    • Does the sponsor want you to use a specific budget form?
    • Do they require a budget justification as well?
    • Check to see if the sponsor REQUIRES certain items (example: travel to a conference or planning session).
    • Check to see if the sponsor DOES NOT ALLOW certain items (example: salaries & wages, foreign travel, F&A/indirect costs, etc.).
  • You may find it helpful to refer to the Start and Manage Projects section of this website when constructing your budget.


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