With the Kentucky Derby quickly approaching, coupled with my twelve years in Louisville, Kentucky, I couldn’t help but market our recent series of hands-on budget workshops as a “trifecta.”  For those of you unfamiliar with horse racing, a trifecta is a bet in which the person betting forecasts the first three race finishers in the correct order.  As you can imagine, successfully predicting which horses will finish first, second, and third, in the exact order, is not easy and comes with big payouts.  While there is big science behind making accurate predictions, including algorithms that factor in horse pedigree and physiology, training and race experience, weather and track conditions, rider, and more, you cannot discount that some factors will be unknown and unpredictable as the race unfolds.

Writing a triumphant grant budget is a lot like forecasting the outcomes of a horse race.  There are a number of known factors to consider upfront (project needs, sponsor limitations, and State/University policies), coupled unpredictable factors that arise as the project unfolds.  Below are three considerations to help accurately forecast budget needs while dealing with the unknowns.

The Triple Crown of Budgeting

Scope of work:  Understanding what the Principal Investigator (PI) plans to do is paramount in writing a successful budget.  Take the time to ask the PI about their project activities, including who is going to be involved, where the work will take place, when the activities will occur, what is planned over the course of the project, and how the activities will be carried out, including how processes and outcomes will be evaluated and shared.  Talking through the fine points with your PI will ensure that nothing is missed between all they plan to do and what is being proposed in the budget.  Don’t be afraid to ask detailed questions.  Doing so will help you to more accurately predict and categorize the costs associated with the activities to be performed.  Additionally, your questions might get the PI thinking about things they had not planned for, such as costs for outcome dissemination (e.g., travel to conferences, publication charges, etc.).

Allowability:  Allowability is one of the cost principles outlined in the Uniform Guidance (2 CFR 200) and should be considered when developing a budget and when charging expenses to a grant.  An allowable cost is one that:

• is eligible for reimbursement according to sponsor, State, and University policies;
• is necessary and reasonable for the performance of the Federally-funded work;
• is consistent with policies and procedures that apply uniformly to both Federally- funded and other activities of the non-Federal entity (i.e., us);
• is consistently treated in terms of allocation as direct or indirect costs;
• may not be included as a cost or used to meet cost sharing or matching requirements of any other Federally-financed program; and
• can be adequately documented.

As you talk through project needs with your PI, be cognizant of what the sponsor and University will and will not allow in terms of activities (e.g., lobbying, fund raising, athletics, etc.) and transactions (e.g., advertising, moving costs, proposal preparation costs, etc.).  Understanding cost allowability and budgeting/charging accordingly will help guarantee a successful outcome.

Communication:  “If we knew what it was we were doing, it would not be called research, would it?” -Albert Einstein.  Realizing that research doesn’t always go as planned is a big step in establishing a comprehensive budget.  While not much can be done at the proposal stage, communication with the PI on unplanned events that impact our original predictions are important for re-budgeting and reporting back to the sponsor:

• Data failed to support the hypothesis- project objectives were not met
• Airfare doubled between proposal and award time- unpredicted inflation occurred
• Shipment of essential enzymes was placed on back order- unanticipated set-backs happened

While we cannot always predict or even plan for these occurrences, we can be proactive in communicating with our PIs and our sponsors to ensure that our budget and expenditures accurately reflect the work performed.

Like the science behind horse betting, there is a method behind accurately budgeting for anticipated grant expenditures.  We make our best predictions when we ask questions upfront and communicate with our PIs.  And while we can’t plan for every unknown, we can work with our PIs and sponsors to make allowable adjustments as the project unfolds.

Just like betting on the horses, budgeting should be informative and fun.  And while drinking a mint julep at work is frowned upon, you can always don your favorite wide brimmed hat and enjoy the ride!