Budget Development

Items to Consider When Developing a Budget

Types of Costs

Budgets generally include two basic categories of costs: 

  • Direct Costs – Costs identified specifically with the sponsored project or that can be relatively easily assigned to it with a high degree of accuracy. Examples of direct costs may include salaries, fringe benefits, consultants, equipment, materials and supplies, travel and subcontracts.
  • Facilities and Administrative (F&A) Costs - Costs incurred for common or joint objectives and not readily or specifically identified with a particular sponsored project, or any other institutional activity. Examples of F&A costs may include building & equipment depreciation, operations and maintenance, costs of University’s libraries, materials, supplies and services of a more general nature, such as routine administrative support, office supplies and office equipment.

For additional information regarding direct costs and facilities and administrative (F&A) costs, please refer to Charging Sponsored Projects  and Use of On-campus vs. Off-campus F&A Rates. For information on what direct costs in a budget may be exempt from facilities and administrative costs, refer to the Facilities and Administrative Rates page.


Sponsors may impose limitations on a project budget's total costs (such as a total funds-per-year ceiling), the direct costs (such as a salary cap or maximum travel costs) or the F&A costs.  The FOA and sponsor guidelines as well as university policies should be reviewed with regard to those limitations.