Build a Budget

Budgets are detailed statements that provide the sponsor with the estimated costs needed to support your project. They should be developed directly from your proposal’s project description or statement of work. They are computed on a 12-month basis unless your project has a different time frame. Generally, budgets contain both Direct Costs and Facilities & Administrative (Indirect) costs but the level of detail required varies from sponsor to sponsor. It is important to request sufficient funds to cover all the anticipated costs, including likely cost increases such as cost of living adjustment and inflation for multi-year budgets. An increase of three to five percent is typical for mulit-year budgets.

The first step in preparing your budget is to read carefully the sponsor’s announcement or guidelines for instructions specific to that proposal. Costs must be allowable, reasonable and allocable, as defined by 2 CFR 200, Subpart E - Cost Principles, published by the Office of Management and Budget (OMB), and based on the sponsor’s guidelines and University of Arizona financial policy. Additional information is available on the Allowable Costs page. When submitting a proposal to a non-federal sponsor that includes direct costs not allowable under federal guidelines, you must include those costs and clearly justify them.

Common budget elements are shown below. Each category is explained in the Budget Category pages.

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