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Preparing a budget for external research funding

Bringing a budget together can take time and as such, budgets should never be left until last. Start early and remember, the project should dictate the budget rather than the other way round.

When preparing an external funding application, it is vital the budget is written alongside the research proposal. Without this dual approach, ambitious projects may prove unaffordable under the scheme's guidelines, or an excellent project can miss submission because budget preparation deadlines have not been met. 

There is detailed support below and remember to contact the Research Officer for Grants for support with obtaining staff costings and how to approach budgeting non-staff costs.

A research application budget should be a realistic estimate of the resources needed to carry out the project. Reviewers will look for evidence that the resources are appropriate given the nature and scale of the proposed work. Full justification of the requested resources should be provided and value for money demonstrated. 

  • Understand your funders terms and conditions: Every funder has very specific regulations on what can be funded. Exclusions will be clearly defined in the scheme guidance. Many funders will use full Econonmic Costing (fEC) terminology, more information on understanding fEC is below. 
  • Start with the project: If the funding scheme you have chosen specifies a budget cap, it's important not to focus too much on the cap. Notwithstanding the need to first understand what the funder will pay for (see above), when it comes to budgets you should always start with the project: what do you want to achieve; what resources will it take to achieve that; then, how much do those resources cost? It is best to write everything out and assign a cost (the Research Office can support with this) and then cut if required. 
  • Get your costings right: most funding schemes are capped to the amount specified at the time of the announcement, meaning you cannot go back and ask for more. Your budget needs to be right when you submit it, you can always tweak your research questions and methodologies as the project evolves; you can’t tweak your awarded budget.  
  • Resources and narrative should match up: if you describe holding a conference in year two of your project, it should appear in the budget; if you include a cost for a three year postdoc, it should appear in the narrative. The case for support and your budget are two sides of the same coin, and should match up.
  • Justify your resources:a compelling justification of resources is not one that lists, in more detail, the items in a budget table. It is designed to explain and validate all that you are asking for. No cost is by definition too high or too low, as long as it is justified appropriately. However, a cost may be viewed as superfluous without proper explanation. 
  • Understand your value for money: many funders are distributing public or donated money and are increasingly concerned with value. This is not the same as being cheap. If a scheme has a financial range, it is not simply that those projects towards the lower end of that range are the best ‘value’. Value for money considers the the impact of your research and the long-term benefits. An excellent proposal can miss being funded, if the long-term value of the funder's investment is not articulated. 

At present, Finance do not run a full economic costing model for every application, unless the funder requires it. However, it is useful to understand the breakdown and methodology behing fEC as funders will often use this terminology. 

The cost of research projects is calculated using the full economic costing methodology (fEC). fEC is a component of the Transparent Approach to Costing (TRAC) which is now used in all UK Higher Education institutions. The implementation of fEC was a commitment on the part of Government and the Research Councils to fund research in a more sustainable way and make a contribution towards the infrastructure costs of the institution within which the research project takes place. The full Economic Cost of the project therefore represents the total that the University needs to fund its research in a sustainable manner.

fEC breaks down into 4 categories:

Directly Allocated (DA)

Cost of staff time and resources that already exist but will be committed to the project, e.g. 10% of the PI’s time.

Directly Incurred (DI)

Project specific costs, costs that would only exist if the project goes ahead, e.g. travel and subsistence, new research posts.

Indirect costs

Infrastructure costs for the university, management and administrative services, including the personnel and finance departments, library, central computing and some departmental services.


Costs related to buildings and premises, maintenance, utilities costs, cleaning, security and safety.


Funders who pay a % of fEC are often deemed the “gold standard” for research income, for example Research Councils and EU funding most commonly pay 80% fEC.

Charitable funders, usually pay Directly Incurred costs only, or on occasion Directly Allocated and Directly Incurred.

The university needs to find a balance between funders who pay a % of fEC and funders who pay DA / DI only. Funders should be assessed not only on funding level, but on other benefits as well, e.g reputational, potential for larger projects, outputs.

So if you are unsure whether an application is worth pursuing, never rule it out, come and talk to the Research Office. 

All costs for staff time, must be accurately produced by the Finance team. The start and end dates of a project are vital to ensure accuracy, so never rely on an old costing to be accurate or the University can end up with a shortfall. Always ask for staff costs from the Research Officer for Grants, as early as possible. Finance may take up to 5 days to return a costing and time must be factored in for any revisions. 

For non-staff costs, as detailed above, it is important to ask for exactly what is required, not more or less. Bear in mind, you cannot go back to the funder for more budget. There isn't an exact science in preparing a budget, however, there are average and typical costs that can be used. If you are unsure how to assign a cost to a specific amount please liaise with the Research Office.

For some average costs and guidance on costings, please refer to the Costing Guide (PDF, 120KB) 

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