A budget narrative (aka, budget justification) is a categorical description of proposed costs. The purpose is to explain why the proposed costs are necessary to accomplish the project objectives. A thorough justification will explain the necessity of the costs as well as the basis for the proposed costs.

For example:

Personnel Justification

Nobody Owens, Ph.D., Principal Investigator (effort = 2.0 calendar months). Dr. Owens will be responsible for the overall coordination and supervision of all aspects of the study, including hiring, training, and supervising staff/students. Additionally, Dr. Owens will oversee data collection, data management, and statistical analyses and will be responsible for reporting the study’s findings.

The above personal justification includes a description of the PI’s role on the project as well as a basis for the proposed costs in terms of person-months on the project.

NIH Detailed Budget Justification

For an NIH detailed budget, all cost categories (personnel, equipment, travel, trainee costs, and other direct costs) should include specific details on how the cost estimates were developed. A categorical breakdown of the costs requested in the application should be provided.

For example:

Travel

$3,000 is requested per year for PI travel to professional conferences to present findings associated with the project.

Pay close attention to the following in the NIH detailed budget justification:

1. Salary caps: For salary over the NIH salary cap, NIH instructs that requests are based on actual institutional base salaries, not the salary cap. At the time of award, NIH will reduce the salary requested over the cap to the current salary cap limit.
2. Equipment: General purpose equipment, like laptop computers, that will be used on multiple projects or for personal use should not be listed as direct costs. Also, while most NIH applications do not require a price quote for new equipment, including a price quote may aid in the evaluation of the equipment costs to support the project.¹
3. Travel: Include the destination, number of people traveling, and dates or duration of travel. Clearly state how the travel is directly related to the proposed research.
4. Tuition: Include undergraduate and graduate tuition rates as appropriate. Include both in- and out-of-state rates.
5. Consortiums/Subawards: Include an independent budget form for each consortium. Each consortium should also provide a detailed budget justification that follows their budget.

¹ CSU’s purchasing requirements may require a quote on file even though a sponsor does not.

NIH Modular Budget Justification

The NIH uses a modular budget for most research grants to request direct costs up to $250,000 in any given year. Costs must be estimated to the nearest $25K increment or module.

The use of the modular mechanism streamlines the budget process and keeps the reviewers blind to budget details. Therefore, the modular grant application does not require a categorical breakdown of the direct costs requested in the application. In fact, a categorical breakdown should not be provided. Only a Personnel Justification is required, along with a consortium and additional justification if applicable.

Personnel Justification: Includes name, role, and the number of person-months for every person on the project. No salary or fringe benefit rates should be included. When preparing a modular budget estimate, use the current salary cap when determining the appropriate number of modules.

Consortium Justification: Include the total costs (direct + F&A), rounded to the nearest $1,000 for each consortium. Any personnel should include their roles and person-months. Indicate if the consortium is foreign.

Additional Justification: Include explanations for any variations in the number of modules requested annually. Describe any direct costs that were excluded from the total direct costs (e.g., equipment, participant support costs, tuition remission) and any work being conducted off-site (especially if it involves a foreign study site or off-site F&A rate).

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A good budget justification will aid reviewers and agency administrative staff in understanding how the requested budget items support project objectives. Always consult agency guidance when developing the budget and related budget justification.

“Budget justifications are like recipes – if it’s your recipe, you know it by heart and don’t need instructions to make it – but if your friend would like to prepare it, they need to know all of the details. Like your friend trying to make the recipe, reviewers need those details in order to understand why those costs are necessary.” – University of Texas, Dallas

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Information sourced from https://grants.nih.gov/grants/how-to-apply-application-guide/format-and-write/develop-your-budget.htm#modbud