Projects may be budgeted in two primary ways: (a) cost-reimbursable or (b) fixed price (rate or unit). For a cost-reimbursable project, a line-item or category budget is prepared to cover the estimated costs. These line-item budgets will follow the guidelines for budgeting according to Cost Accounting Standards. Funds are expended for authorized purposes and reimbursement is provided by electronic transmission of funds (draw downs) or as payment for an invoice for expenses incurred. Fixed price (rate or unit) applies when a project is bid on a not-to-exceed basis for specific deliverables or performance. In fixed-price budgets, the sponsor is not usually provided with a line or category-line budget and pays for completion of performance. However, fixed price quotations should be based on a reasonable estimate of the costs to be incurred to complete the performance or deliverables. The PI is expected to use the project funds in the performance of the project. Refer to Contracts/Grants/Cooperative Agreements for more information on contracting and When Your Grant is Ending/Closeout Procedures for additional information.
Many sponsors are moving to a model of performance-based contracting and budgeting. This method requires that the project outcomes be described in specific deliverable terms with a cost estimate for completing each discrete outcome or deliverable. This model requires the investigator to budget with care separately for each outcome or deliverable in order to be able to place a cost value on its completion. Deliverables should be identified that are measureable, achievable, but realistic and within the control of the investigator or costs may not be recoverable from the sponsor. For assistance in this area, contact your RSP Grants Specialist for assistance.