Budgeting & Costs
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The Grant Services & Analysis Office curated the following information on budgeting various types of proposals.


Institutional Cost Sharing Policy - This policy describes the process and conditions for obtaining a research cost share commitment from the Medical School Dean's Office, HHC, or EVPMA. Further, this also addresses the process for Medical School units seeking a cost share from the Office of the Vice President for Research (OVPR).
Indirect Cost Recovery Policy - This policy describes the Medical School's expectations regarding recovery of indirect costs.
Indirect Cost Waiver Policy - This policy describes the process that should be followed by Medical School units seeking an indirect cost waiver.
Indirect Cost Waivers on Federal Patient Pass-Through Costs - This policy describes the process and conditions for Medical School units seeking a reduction of indirect costs on pass-through expenses related to clinical trial patient payments.
Recovering Full Indirects: Industry-Funded Research - This policy describes the required process that should be used to negotiate the indirect cost rate with industry sponsors.
Data & Biospecimen Sharing - University of Michigan policy is that data and biospecimens should be collected under transparent, informed consent that permits and promotes the maximal use and value of the data and biospecimens consistent with the permission of the donors.

Budget Templates

We have been asked to provide tools to facilitate budgeting and translation of the budget into sponsor forms. These formats may help ease the transition. If you have any comments, improvements, or suggested new formats, please contact [email protected].

All templates have formulas embedded. They will "break" if formulas are overwritten. We recommend always doing a "Save As" to preserve the original formulas. Please read all instructions included!

SF424 Modular (Excel) 
This excel form will help you take cost estimates, average over time, and determine how to populate a modular SF424 budget. It includes both a worksheet for drafting a budget, as well as carrying the totals into replica 424 forms. Also provides calculations for face page and PAF routing form. 

SF424 Categorical (Excel)
Like the modular, this includes a worksheet for details in the non-personnel categories that will roll up into the main form and this will give you the placement of costs on the 424 pages. Also provides numbers for face page and PAF form.

PHS 398 Single Budget with a Straight Increase (Excel)
This form is all but obsolete for use with NIH and the form has not been updated, so the subcontract costs are totaled a bit differently on the current 398 form and the checklist is no longer a combined multi-year total. HOWEVER, this is a good format for checking a budget, playing with internal budgets, or mocking up numbers for another sponsor.

PHS 398 Budgets Change Year to Year (Excel)
This form is also old and does not conform to current 398 placement of subcontract costs or checklist information. However, it is a reasonable template for mocking up internal budgets, especially complex ones that have constantly changing costs. It will increase costs by a standard %, but requires re-entry of all effort and other costs with space to enter detailed information.  It has similar functionality to the SF424 Traditional, but is for those that are more comfortable in the 398 world.

PHS 398 Program Projects with a Straight Increase (Excel)
This form allows you to add up to 8 budgets and calculate your cumulative totals. You may also track indirect cost exclusions by project and have those accumulate for the final checklist calculation. Like the two previous, it has not been updated for the change in subcontract position or the indirect cost calculation by year instead of total, but it does offer a very close look and feel with final numbers.

Quick Calculations (Excel)
This is a non-form driven template that allows you to quickly calculate the Modular and K Award costs, including numbers for face page and PAF form.

MoUs are required to be filled out for all faculty with a dual VA/UM appointment. The attached Excel form contains all needed MoU, cost share, and HR distribution information – including the application of PHS Salary Cap I & II. Please see below for Salary Cap guidance.

See Handling Salary Over the Cap.

Budgeting Personnel

As you are building budgets, or looking at rebudgeting in post-award, it is important to understand the different methods of calculating effort and the impact of different employment arrangements for those at the UM and expectations of particular sponsors on what to implement.

In addition to instructions on handling effort in budgets, we also have a few YouTube videos to explain effort appointments and calculating effort spent on a project. Please consider watching the videos in our Video Library for more context.

Internal budgets and some external sponsors tend to calculate in terms of a percentage.   Whether the individual has a full 1.0 FTE or a partial appointment, for example 0.8FTE, all employees of UM have 100% appointments to allocate.  Budgets should be built on the institutional base and the % of time (out of 100%) is applied to calculate the reasonable amount to charge the sponsor.  See additional information further below in the UM/VA Appointments section

Example 1: Full 1.0 FTE:

The staff member will work half their time on the project, it is 50% requested.

Example 2: Partial 0.8 FTE:

The staff member will work half their time on the project, 50% of their university appointment requested.

Note: The institutional base for the two individuals will be different, but the effort % is the same.

Many sponsors require that effort be requested in person months rather than by %.  Person months can be broken down into calendar, academic and summer months.  Medical School faculty typically have calendar year appointments, therefore effort is reflected in calendar months.  We highly recommend working with a participating academic unit closely if you have participants that are on an academic or summer month appointment.   Some high-level notes are below.

To calculate calendar months take the % effort the person will spend on the project and multiply by the FTE appointment at the U and multiply by 12 (for the 12 months in the year). 

Example 1:  Full 1.0 FTE:

The PI will be working on the project at 25% effort.  25% (or .25) x (1.0 FTE x 12 months) = 3.0 calendar months

Example 2:  Partial 0.8 FTE:

The PI will be working on the project at 25% effort.  25% (or .25) x (0.8 FTE x 12 months) = 2.4 calendar months

Note:  To calculate academic or summer months, it is a similar method of applying effort against the FTE and base calendar months; however, the calendar months become the number months of the appointment (9 months for academic/summer months depend on the home unit and the individual’s employment arrangement.  This is why it is important to stay in close contact.)

Occasionally sponsors (including federal contracts) ask for budgets based on a per labor hour calculation. It is important to know that the University’s effort tracking system does not allow exempt employees to track effort on an hourly basis. Instead, we recognize a work week that is “normalized” to 40 hours and a total work year of 2080 hours. The Medical School requires that a statement to this effect be listed on the budget shared with the sponsor so that the institutional practices are clear. A statement could be phrased: Effort represented is based on a standard 40 hour work week. Effort tracking systems will be collected in % effort and converted for the recovery. It is easiest to think about the effort needed in terms of a percentage and convert it to the needed hours requested.

Example 1: Full 1.0 FTE:

A technician will be working on the project at 25% effort. 25% (or .25) x (2080 hours) = 520 hours

Example 2: Partial 0.8 FTE:

A technician will be working on the project at 25% of their partial appointment. 25% (or .25) x (0.8 FTE x 2080 hours) = 416 hours

The National Institutes of Health (NIH) and other sponsors under the DHHS (CDC, FDA, AHRQ, HRSA, SAHMSA, etc) will not pay requested salary above their congressionally mandated salary cap regardless of which type of effort representation (%, months, or hours). If salary is requested above the imposed salary cap, the sponsor will adjust the total amount of the award accordingly. Please visit our page on Handling Salary Over the Cap for additional information on how this should be handled in both pre- and post-award.

The VA MoU & VA Cost share template file contains all needed MoU, cost share and HR distribution information. Please see above for guidance.

When working with faculty that have a dual appointment with the VA, it is important to remember that you must always calculate % of University Effort starting with hours (not $$). For each of the cases below, please consult their VA MoU for hours at the UM and calculate:

% of University effort = avg # hrs/wk on the project divided by # hrs/avg wk at the UM

With the % of University Effort calculated, proceed with the type of sponsor:

  • If it is a non-federal or a federal non-NIH proposal requested in effort:
    • Indicate effort proposed (in budget and justification) out of 100% of the University appointment  (University effort = avg # hrs/wk on project divided by avg # hrs/wk at UM)
    • Indicate that all effort on the proposal comes from the University appointment
    • Institutional Salary Base to use:  University Comp Rate
    • Calculation of Salary Requested:  University Comp Rate * % of University Effort
    • Language to use in Justification:  Dr. X will have 50% of his University appointment devoted to this project.
  • If it is a non-federal or a federal non-NIH proposal requested in calendar months:
    • Indicate months proposed (in budget and justification)
      • # of months at the UM as reflected on the MoU worksheet * % of University Effort
      • Example: 3 months at the UM * 50% UM effort = 1.5 calendar months
    • Institutional Salary Base to use:  University Comp Rate
    • Calculation of Salary Requested:  University Comp Rate * % of University Effort
    • Language to use in Justification:  Dr. X will have 1.5 months devoted to this project.
      • Note: In calendar months, you do not have to say “of University appointment”
  • If it is a federal NIH proposal requested in calendar months:
    • In the traditional budget grid (if required), include:
      • Name – UM  /  Months devoted to project in the Calendar Months column  / Univ Comp Rate  / salary requested

Note:  You are not required under NIH guidelines to list the Institutional Base (Comp Rate) on the SF424 form at time of application. If you do list it, because it is calendar months, the math may look “funny” and you will need to include an explanation in the justification (see below). You also may choose to leave the Institutional Base blank and provide that information to NIH if/when it is requested. Departments may institute rules on how all applications will be treated. Please contact your department Grant Administrator for any local practice.

In the justification:

  • Indicate months proposed (# of months at the UM as reflected on the MoU worksheet * % of University Effort)
    • Example: 3 mnths at the UM * 50% UM effort = 1.5 calendar months
  • Indicate that there is a dual appointment with the VA, but all effort charged to the proposal comes from the University of Michigan  (you may have additional time from the VA appointment reflected and no dollars recovered)
  • Indicate that a Memorandum of Understanding is on file
    • Example Language to use: Dr. X will have 1.5 months devoted to this project.  He also has a VA appointment, however all effort on this project will be from the University appointment. A MoU is on file describing the relationship.
  • Institutional Salary Base to use:  University Comp Rate
  • Calculation of Salary Requested:  University Comp Rate * % of University Effort
  • Additionally, if you are listing the Institutional Base on the budget grid, it is appropriate to say:  Dr. X has a 0.00 FTE at the university and the institutional base reflects the reduced appointment.

If it is a NIH K-Award proposal

  • In order to apply, the applicant must have University hours available at least equal to the % stated in the announcement times 40 hours OR must have University months available at least equal to the minimum months required in the Program Announcement.
    • Examples: If the announcement requires 75% effort or 9 calendar months, then 75% of 40 hours is 30 recorded hours reflected on the University side of the MoU to apply OR 75% of 12 calendar months is 9 calendar months documented.
  • Indicate effort proposed (in justification) in terms of effort OR calendar months (depending which threshold is met).
    • % University Effort is avg # hrs/wk on the project divided by avg # hrs/wk at UM
    • # Calendar Months is # of months at the UM as reflected on the MoU worksheet * % of University Effort
  • Indicate that all effort on the proposal comes from the University appointment
  • Indicate that a Memorandum of Understanding is included in the proposal
    • Example Language to use: Dr. X will have Y calendar months from his University appointment devoted to this project.  He also has a VA appointment and a copy of the Memorandum of Understanding between the VA and University has been included in the proposal.
  • Institutional Salary Base to use: University Comp Rate
Budgeting Research Proposals

Below are some common components of proposal budgets. You are encouraged to also discuss expected approaches with your department as the financial risk for cost overruns and short fall for budget lies within. Therefore, the sub-units may have preferences in budget approaches. A list of your department contacts are available here.

Project Teams assembling budgets are encouraged to think about the full cost of the project.  Any work proposed under the aims that does not recover funds from the sponsor (whether because we didn’t budget in the proposal or accept the aims without full funding) is a form of institutional “investment” in the project.

Below are the categories that are traditionally requested to be addressed and justified. While always recommended, some sponsors do not require the detail in the budget or even provision of the justification. In those cases, it is the Principal Investigator’s decision on how to address with the best grantsmanship outcome. See our Budget Justification page for more information on the justification component, particularly when working with the NIH.

Personnel Salary

Salary of personnel who will be spending time on the project are included in the budget. Provide the name, title, amount of time on the project, institutional base salary (not necessarily full-time rate) and the amount of support requested. In addition, include a narrative on what each person will do on the project and tie to the specific aims presented.

For information on calculating calendar months, dealing with the NIH cap or Split UM/VA appointments view Budgeting Personnel above.

Personnel Fringe Benefits

Fringe Benefits are calculated on all salaries. Many departments have a standard rate they use when preparing budgets. You may choose to use an average rate over the project or actual. Actual fringe rates are available from the campus website.

Consultant Costs

Consultant services may be deemed necessary as a part of a grant proposal. The consultant’s expertise, primary organizational affiliation, and amount of proposed compensation are normally detailed in the budget justification. You will want to compare to the work statement provided by the consultant.


Equipment is defined by the federal government as an item of property that has an acquisition cost of $5,000 or more and an expected service life of two or more years. Proposed equipment should be itemized by descriptive name and estimated cost. Shipping and/or installation charges associated with equipment acquisitions should be included in the cost estimates but generally are not itemized.

Items costing less than $5,000 or with a life expectancy of less than two years normally should be included under "Materials and Supplies." Also, non-federal sponsors have a different threshold and individual instructions from the sponsor need to be consulted.


Detail on each trip, the destination, purpose, and expense, should be incorporated, including transportation, lodging, and per diem.  Some sponsors request explicit explanation if there is foreign travel.  Occasionally, sponsors also want extreme detail (e.g., miles driven * rate per mile).  Be aware, scrutiny of the mathematical validity will be applied in the review process.

Materials and Supplies

Consumable supplies such as office supplies, glassware, chemicals, and computer supplies would normally be included in this category.


The costs of preparing and publishing the results of the research project may be included in the budget request for most sponsors. Sponsors have a vested interest in making sure results are distributed and normally welcome this budget line. Costs may include printing, illustrations, and other journal costs.

Subcontract Costs

Subcontracts are typically established when funds awarded to the University will be paid to an organization outside of the University for work performed on the project. For more information view Consortium/Contractual Arrangements on our NIH Specifics, Tips & Tricks page.

Facility & Administrative Costs (F&A or Indirect Costs)

Overhead must be requested at the institutionally established rate based on the type of activity being proposed. This may only be waived if a sponsor has a published policy restricting the payment of indirect costs that applies to all applicants. See the University’s indirect cost rates and the Medical School’s position on recovery of overhead.

Further, for federally sponsored projects and non-federally sponsored projects that recover the federal rate, the University uses a Modified Total Direct Cost (MTDC) base for calculating indirect costs. The following expenses are excluded from the direct costs base under MTDC: 

  • Equipment purchased for $5,000 or more with a life expectancy of less than two years
  • Alterations and renovations of facilities
  • Tuition
  • Patient care costs (as charged through the Clinical Pricing Tool)
  • Subcontracts – the first $25,000 of each subcontract is included in the base for calculating indirect costs, any amount over $25,000 gets excluded from the indirect costs base
Budgeting Industry Studies & Clinical Trials

Industry sponsored studies may be for activity related to investigator-initiated research, acting as one of multiple sites on a clinical trial, or performing service agreements for standard activities.  Regardless of activity or contract method, there are some approaches and costs to keep in mind.

When preparing a budget for an industry sponsor, consider using a full cost budget. A full cost budget shows only the total costs of conducting the study, as opposed to the standard budget where direct and indirect (F&A) costs are shown separately in addition to the total cost. For example, instead of requesting $1,000 for travel and $500 for overhead, ask for $1,500 for travel. Representing costs as a full cost may remove some of the discussion about the institutional overhead recovery.

Industry Sponsored Agreements are not limited to Clinical Trials. Below are some tips that will help smooth the negotiation with the sponsor, as well as project execution on all types of industry agreements.

Read the Protocol or Research Plan

  • Whether it is industry or investigator-initiated, the protocol or work plan will help determine many budget issues and planning concerns as you go forward
  • Ask the PI to consciously determine if the level of scientific endeavor is worth exploration of the relationship

Determine the Timeline

  • With project plan in mind, determine the amount of time the project will take, keeping in mind the patient population, milestones (including enrollment targets, adverse events), and final publications that might influence the timeline

*Decision Point: Is it reasonable to pursue the project?

  • If it is, and this is a clinical trial with a draft agreement provided, complete a CTRF in the eRPM system in order to provide ORSP with the draft agreement to begin negotiation of non-financial terms.
  • If it is not, please cancel any related activity created in the eResearch systems.

Determine the Costs

Independent of any financial indications from the sponsor, internally determine the cost of doing the project. Cost out all real expenses over the life of the project. 


  • Personnel:
    • Faculty time
    • Technical staff support time (i.e. research assistants, nurses)
    • Administrative/financial accounting time (non-federal sponsors allow recovery of these costs as a direct item)
    • GSRA?  If yes, must include tuition as well as time
  • IRB fee (if applicable)
  • Administrative unit start-up fees (i.e. Cancer Center or MICHR CTO, MCRU initiation)
  • Drug set up and dispensing
  • Advertising
  • Screen Fail Compensation
  • Patient Visits
  • Patient Tests
  • Patient Reimbursements (subject fees, travel reimbursement, volunteer parking, focus group food)
  • Adverse Event Reporting
  • Animal Expenses (purchase, housing, care, maintenance)
  • Publications
  • Travel
  • Computer for data collection
  • Filing Cabinets for data storage
  • Off-site Space
  • Compensation to other investigators for subject recruiting time
    • Note: This may not be in the form of an incentive per patient!  That would be against IRB requirements and University compensation.  Instead, compensation for recruiting time must be done as a component of institutional effort.
  • Indirect Cost (F&A) Recovery - Need help deciding which rate applies? Call the Grants Office 734-763-4272 or email [email protected]

After all potential costs have been determined separate the costs into two categories:

  • Requested from the industry partner
  • Institutionally supported

For the expenses being requested from the industry partner, separate budget items by type of cost

  • Fixed costs associated with project start-up where costs have to be recovered no matter how much of the project is completed
    • IRB, Advertising, Screen Fails, Drug Dispensing Set-Up, Cancer Center Clinical Trials Office administrative fee, Investigators’ meetings during the trial
  • Variable costs associated with ongoing effort or supplies needed to complete the project
  • Patient-dependent activities that need recovery based on patient enrollment or activity completed per patient
    • Office Visits, Tests, Blood Draws, Screen Fails, Subject Fees
  • Project dissemination, close-out or post-project costs of maintaining records
    • Publications, Data Storage, IDS Pharmacy Maintenance and Closeout

Negotiating the Budget

List all costs as a Total Cost (a combination of direct and indirect costs)

  • Industry sponsors are likely to be looking for a bottom line to fund, so provide only a total cost for the project or by line item. 
  • Don’t confuse the budget issues by separating direct and indirect costs – it could cause the focus to move from the science to the overhead rate.
    • $500 for travel to a meeting would show up as $775 with an indirect cost rate of 55% ($500 direct + $275 indirect = $775)
  • In Post-Award, how expenses are applied in the General Ledger will assign the costs appropriately  

Consider negotiating flat up-front or close-out costs as separate reimbursements, rather than rolled into a per patient cost.

  • A contract that garners $1800 for an IRB Fee and $1562 for advertising regardless of patient enrollment is much more viable if it enrolls no patients in competitive enrollment than one that has those costs built into the per patient amount.

*Decision Point: Revisit the protocol and budget again:

  • Is it still worth doing the project based on the funds you can recover from the sponsor v. costs of doing project? Is the patient population still viable and attainable at this point?
  • If it is not, please cancel any related activity in the eResearch systems.

Routing the Industry Project on a PAF

Once you have a draft agreement, expectation of doing the project, and a reasonable budget agreement with the sponsor (even if it is not in the final contract terms, as long as you have email confirmation of the representation) route the PAF through eRPM with the following attachments:

  • Statement of Work (can be the opening sections of the protocol)
  • Draft of agreement (unless investigator-initiated)
  • Budget
    • If it is cost-reimbursable and a budget with built in overhead was used, there should also be an internal budget attached showing the split of DC and IDC.
    • If a per-patient reimbursement, include a copy of the payment terms from the draft agreement

Routing Hints:

  • If a payment schedule is included in the contract, the PAF should equal the contract “worth”
  • Estimate a probable maximum number of patients to budget against – any increase in dollars over the original PAF means routing an incremental PAF for the project down the road
  • Include on the PAF any budget comments that would be helpful in determining the contract worth (i.e. number of patients anticipated, basic breakdown of costs, etc.)

The Clinical Trials Support Office (CTSO) is the management team for the seven trans-departmental Clinical Trials Support Units (CTSUs). The CTSO offers enterprise-wide standards, policies, and a common infrastructure. All clinical trials at U-M are required to be supported by a CTSU.

Budgeting Fixed Price Agreements

As part of the Contracting Demonstration Project to streamline the contracting of industry-sponsored clinical trials, the Medical School Office of Research has engaged ORSP and Sponsored Programs in conversations about the inclusion of internal budgets as part of the official University file – specifically for sponsored fixed price or capitated agreements. 

We have agreed it is the fiscal responsibility of the department to ensure that the use of capitated/fixed payments are accurately budgeted and expended to the benefit of the project. In order to recognize where that responsibility lies and to reduce the administrative burden of responding to other campus units, ORSP, Sponsored Programs, and the Medical School Office of Research will not require review of an internal budget. 

Effective immediately, these agreements will be reviewed based on the draft agreement and protocol attached to the Proposal Approval Form (PAF) in the eResearch Proposal Management (eRPM) system. However, departments are strongly advised to create a culture where a protocol budget is formulated by the project team and then evaluated for feasibility at the chair level before authorizing the protocol and draft agreement to go forward in the eRPM system.  

Further information provided through the departments and administrative structure advising how dollars should be described on the eRPM PAF, as well as best practices in reviewing the financial obligations, are included below. 

Specific Instructions and Principles Regarding Fixed Price/Capitated Payments

Departments are advised to evaluate a full cost budget of the protocol prior to PAF approval. Reviewing for: 

  • Accuracy of costs based on the protocol requirements and institutional cost structure
  • Reasonableness of effort budgeted for the time period
  • Margin of needed finances for institutional costs v. the amount the sponsor is willing to pay under the contract  

Complete the PAF using the following bullet points as a guide: 

  • Attach to the PAF only the draft version of the contract and the protocol. No internal expense budget should be attached.
  • The correct IDC rate should be listed on the PAF.
  • Brief notes may be added to the PAF budget notes section (or an attachment may be uploaded under the internal documents section) that explains the estimated contract recovery – based on number of enrollees, clinical services provided, or start-up costs included. This will be similar to what has been historically referred to as the “Revenue” representation on the internal budget.
  • The DC / IDC split of the revenue amount may be added to the PAF project dollars as well as Initial Budget period. For help with the calculation, feel free to contact the Grants Office. These figures are captured for school data purposes. IF the unit chooses not to fill out for fixed price agreements, we will complete on the unit’s behalf at the Medical School.
  • If the department chooses, you may also capture effort related to the Key Personnel for data use on the PAF in the personnel section, but these numbers will not be validated by any unit in the review process past the Department level. 

As we continue reviewing the clinical trials process and introducing measures to streamline the contracting process, further instructions on completion of the use of the system, PAF, and routing may be issued.

What is an IRBMED Fee?

There are three types of IRBMED fees:

  • A full IRBMED Fee is assessed on industry projects that are industry sponsored and the MEDIRB serves as the local site IRB. 
  • A ceded IRBMED fee is assessed on industry projects where U-M will cede oversight to an external IRB (typically commercial).   
  • sIRB IRB fees are assessed when MEDIRB will serve as the single IRB of record for the project.

The fees help underwrite a portion of the office and the administrative support needed to handle the IRB review and approval process. Not all sponsors allow this type of a fee (for instance, it is prohibited on federal agreements).

When Is an IRBMED Fee Charged?

A full IRBMED fee will be charged if the following conditions are met:

  • new project/contract
  • is using our IRBMED for IRB review of a project
  • is sponsored by industry/for-profit
  • and is awarded.

A ceded IRBMED fee is charged if the following conditions are met:

  • new project/contract
  • is using an external IRB for review
  • is sponsored by industry/for-profit
  • and is awarded.

Single IRB (sIRB) fees are charges when

  • IRBMED is the IRB of Record for the study.
  • More information about the fee structure for qualifying studies and budgeting for these fees in grant applications and contracts is located at IRBMED sIRB Review Fees in Section II: IRBMED Accepts Oversight (sIRB).

It is key to note that currently the industry full and ceded IRBMED fees are charged on each new sponsor contract and not multiple charges throughout the life of the contract/protocol. Amendments are not subject to an IRBMED recovery; however, stand-alone contracts, even if affiliated with an existing IRB approval, are assessed the fee.

For more information about the fees and local budgeting, please refer to our internally facing IRB website. Language to share with sponsors during the negotiation process is available in Section V: Fees and Budgeting for Industry-Sponsored Research on our externally facing IRB website.

The IRB Fee is assessed after the award notice is issued in the eRPM system and will be charged in two components (SUB and additional funds). If you have questions about a fee charged to your P/G or the applicability when formulating a budget, please contact Grant Services & Analysis at [email protected].

Whether you’re working on an industry sponsored study and/or a clinical trial the following tips, listed by class code, will help you get the PAF through the routing process.

On-Campus Organized Research (22000):

  • If a payment schedule is included in the contract, the PAF and internal budget should equal the contract “worth”
  • If no effort is in the budget for the investigators, indicate in the budget notes whether the time needed will be provided from departmental (or other) funds.
  • Estimate a probable maximum number of subjects, procedures, and invoiceable items to budget against – keeping in mind that any increase in dollars over the original PAF means routing an incremental PAF for the project later on
  • Remember to include the IRBMED Fee in the budget for all industry sponsored studies (see above)

Clinical Trial Site Activity (31200):

  • An internal budget is not required for fixed price reimbursements
  • Remember to include the IRBMED Fee in the budget for all industry sponsored studies (see above)
  • Estimate a probable maximum number of subjects, procedures, and invoiceable items to estimate the amounts for the PAF – keeping in mind that any increase in dollars over the original PAF means routing an incremental PAF for the project later on
  • Remember a Clinical Trial Routing Form (CTRF) is required
Additional Resources

After an institutional review of patient care related charges on federal grants that fall under our negotiated Research Patient Care Agreement* and related agency policy statements, we have affirmed that these expenses are exempt from indirect cost recovery.

If you are working on a federal project (or any sponsored project recovering the full federal rate) and have expenses that fall under the Research Patient Care Agreement, these costs should be reviewed back to 7/1/2011 to make sure that they are not recovering IDC in post-award. Additionally, as you prepare proposals for external sponsors, please be sure to exclude costs under the agreement from the Modified Total Direct Cost (MTDC) base. Proposals have been submitted to federal agencies with these costs excluded from IDC recovery since FY12.

If you have any questions about the review of expenses on an active project, please contact your Sponsored Programs Coordinator.  If you are preparing a proposal or have questions about the impact to awarded budgets, you may contact Heather Offhaus of the Medical School Grant Review & Analysis Office ([email protected]).

*The rates in the Research Patient Care Agreement have been loaded into the clinical pricing tool and MBECT systems.

NOTE: On non-federal projects that are recovering less than our negotiated research rate (currently 55.5%), the MTDC and exclusions do not apply.  For instance, non-federal projects termed clinical trials would have no Research Patient Care exclusions, but are already able to use the substantially discounted recovery rates.

This content was last reviewed 6/2013.

Both Principal Investigators and core recharge units themselves, sometimes have difficulty explaining the roles of recharge units in the budgets and justifications of grant proposals. There is a grantsmanship struggle representing specific personnel with effort on the proposal budget and justification in the ”Personnel” section, versus including the recharge activity as an ”Other” expense. Investigators often feel that proposing use of a recharge unit may not carry as much weight under peer review as a named individual might.

To further complicate the issue, there may be times when faculty (or staff) - particularly Core or Unit Directors, serve multiple roles on the same project. A portion of the Director’s effort could be expended on the recharge activity and accurately reflected as a component of the recharge rate, and s/he is also asked to serve in a capacity that requires unique scientific contributions on the same proposal. 

On the other hand, the University is required by federal law to treat costs consistently, therefore all recharge service units must have their rates approved prior to charging customers for the services they provide. And because they are approved recharge rates, they must be demonstrated on budgets as standard service fees and not personnel or other separate costs.

The scenarios below walk through the steps of preparing a budget with core activities included. Further, we have prepared a comprehensive document that contains additional information on these struggles as well as full examples that can be used when preparing grant proposals.

Scenario 1: Recharge activities only

Project team should:

  • Budget the anticipated core expense as a single charge under “Other Expenses”
  • Justify the anticipated core expense as the overall core service, not the individual activities that make up the charge’s components, under “Other Expenses”

If grantsmanship calls for a detailed description of the service providers, you may use one or all of these optional justification references:

  • Include A-21 language to explain treatment of the budget 
  • In the “Other Expenses” section describe specific individuals that MAY work on the project as a part of the recharge unit
  • Describe Core Director or staff in “Personnel” section of justification with no mention of effort or amount, noting that the expense is included as a part of the line item for Core Charges under “Other Expenses” AND is budgeted under “Other Expenses”

Any of the last three options must include very specific language. You may contact the Grant Review & Analysis Office ([email protected]) for assistance in crafting this type of justification.

Scenario 2: Effort includes recharge along with other project specific activities of individuals

Project team should:

  • Split activities into two separate descriptions:
    • Budget/Justify the anticipated core recharge expense under “Other Expenses”
    • Budget/Justify the additional activity under “Personnel” and “Materials/Supplies,” depending on items.

If the PI doesn’t think that is detailed enough description of the services, they may use an optional justification reference (see optional justification references in Scenario 1).

The purpose of this page is to give a working definition of budget terms that turn up in pre- and post-award administration. These are not the "legal" definition. If there are terms you would like to suggest adding or if a link to the "legal" definition would be helpful, please send an email to Heather Offhaus.

Sponsored Research v. Gifts

Although alphabetically this isn't first, this is one of the first distinctions to be made. Sponsored Research is auditable. In exchange for the money sent to you to do research, the sponsor expects it to be used for a particular project with certain restrictions on spending, a financial report due, services in return, or some auditable promises were made from the university. A gift is a sum of money with no strings attached. They aren't specific on what research you have to use it, they aren't interested in more than a blurb for their financial offerings, and there is no commitment of how funds might be spent. Sponsored research can be broken down into several categories such as grants, contracts, clinical trials, material transfers, other sponsored activity, etc.

A-21 Items

This is a peculiar term for certain budget items. The Office of Management and Budget (Federal Government) publishes rules and conditions for use of federal moneys. One of their circulars was numbered A-21 and it directly impacts institutions of higher education that conduct research. In it, they spell out that certain costs cannot be charged to a grant unless they are specific to the project. Most of the components are costs that would normally be covered under the Administrative portion of the F&A rate (see below.) For instance, if you want to charge a sum of money to a grant for copying charges, it has to be justified in the application as project specific (i.e. why do you need it?) for it to be allowable (Copy charges are requested to cover disseminating data results to the 3 subcontract sites). If it is not justified and approved, the charges cannot hit a federal account. This applies mainly to federal proposals. See Cost Accounting Standards for the implications on non-federal sponsors. 

Conflict of Interest (COI)

Many institutions now ask you to declare long before award if you will or will not have a conflict of interest. At UM it is the following statement (Yes/No): Do the Project Investigator, Participating Investigators, or other key investigators has significant financial or management interest in the proposed project that may constitute the basis for a conflict of interest? 

Cost Accounting Standards

Although it has many issues involved, the basic ideas are that all sponsors should 1) be treated equally and 2) be able to audit for university support "promised" in a proposal. The first of the two basically means that the government wants us to be consistent in how we account for items. If someone non-federal gets a "break" for something, in the same way the government should get that break. Whether it be an indirect cost rate, how we charge out salaries, or allowable costs on grants. Conversely, if the government guidelines limit us, we should also be limiting what we charge other sponsors. So, A-21 items, although a government requirement, should be a non-federal guideline. This isn't to say that you cannot charge certain A-21 costs to a proposal, but should try to be consistent on the allowable charges. As far as the 2nd principle, see Cost Sharing. The term most synonymous with Cost Accounting Standards might be consistency. 

Cost Sharing

This easily could be also termed Resource Sharing. Any time we commit effort, supplies, space or other item to a sponsor as indication of support for the project within the university, we have to account for how that commitment will be matched. If you represent that a faculty member will be on a grant with 10% effort, it is assumed that the agency awarded the project taking that into consideration. At any time they can come and ask us if the resource (in this case salary) is being provided and audit us for this cost. At UM it is extremely important to account for where that support will come from before submission of a sponsored research project. There are two types of cost sharing. The definitions vary from institution to institution, but UM has a fairly mainstream understanding. 

Mandatory Cost Sharing

Any time the resource is quantifiable, it is considered mandatory (and auditable.) This would be an effort level (which is translatable into dollars), a specific amount for a piece of equipment or supply, or anything else you can put in terms of dollars.  

Voluntary Cost Sharing

This consists of things that are non-quantifiable. This may be a statement in the justification that says: "The PI will provide other necessary supplies to this project." or "The tuition will be paid from departmental funds." Another instance is when the sponsor imposes a limit. The NIH salary cap is congressionally set. Any time a person's academic base exceeds that amount, the department has to voluntarily cost share the amount over the imposed cap. (Current cap is available here.) 

Direct Costs

These are the dollars directly associated with research investigations. It could be professional salary, travel, consulting fees, or equipment (among others). The cost must have a direct benefit to the project. 

Indirect Costs (or Overhead or Facilities and Administrative Costs (F&A))

These are what in the business world would be considered overhead. Facilities charges include lights, water, electricity, network hook-ups for the computer, telephone lines. A good rule of thumb is anything behind the wall. Administrative costs are secretarial support, general office supplies, and the cost of people that administer sponsored projects. Basically anything "common" that does not directly benefit a specific project. 


These come under a variety of names. They are costs that have to be borne in certain circumstances under a university's accounting/charging system. They all have separate rules and will vary by institution. We bring them up so that you know the types of fees to look for and examples of what they might do. See the Institutional Review Board Fee (IRBMED Fee) webpage for more information.

Patient Care

Many times, institutions that have clinical care as part of research charge less for certain procedures on a research proposal. In these cases, you need to find out if the prices include the F&A/Indirect charges already. If they do, you can't charge a sponsor for the F&A associated since it is built in and charging would constitute "double-dipping."

Research Participation

There are several different titles of those who participate on a project. In many cases they are different shades of gray.  

Project Director - The person who meets the eligibility requirements of the university and is responsible for the academic and budgetary performance.  

Principal Investigator - The person who meets the eligibility requirements of the sponsor and is responsible for the academic and budgetary performance (usually the same person). 

Co-Investigator - The NIH defines this as people who contribute significantly to the scientific progress of the proposal.

Collaborators and Consultants - These terms are fairly interchangeable? The only distinction that has been explained is that Collaborators tend to be those who work in the field of the research and are willing to offer advice and consultation on the direction of the project. Consultants then would be outside the PI's realm of expertise that are willing to advise from a different professional perspective. Then again, the definitions have also been flipped. 


This is an agreement between another site (corporation, university, hospital) and the parent institution submitting the proposal to perform a component of the research. It is a subcontract if the site’s work involves specific people who impact the course of research. They would be subject to their own internal cost structures. Sometimes the term is confused with contracted services. If you have questions on the differences, please contact your department research administrator.

Contact Us

BMRC Bridginq Questions:
[email protected]

Grant Services & Analysis 
Phone: 734-763-4272 
Email: [email protected]

About Us
The BMRC (Biomedical Research Council) is a standing committee of the Medical School with a broad representation of the research faculty that helps select limited submission applicants in the health sciences, drive the bridging program, and advise MM leadership on trends in biomedical research.

The BMRC and BMRC bringing program are supported by the Grant Services & Analysis office, a unit of the Medical School Office of Research, where our mission is to foster an environment of innovation and efficiency that serves the Michigan Medicine research community and supports biomedical science from insight to impact.