Research Budgeting Tools

UFS strip research

Introduction to research project budgeting

Research project budgeting is the process of estimating and allocating resources for a research project. This involves identifying all cost drivers, including the quantity of the cost drivers required and the market rate to procure the same determining the amount of money needed to pay for that expense item/cost driver.

The first step in creating a research project budget is to identify all the cost drivers associated with the project. This includes direct and indirect expenses such as equipment, supplies, personnel time, travel, and overhead costs. It is important to consider both direct and indirect costs when creating a budget.

Once all cost drivers have been identified, it is necessary to estimate the cost of each item. This can be done by researching the market price of the item or service, consulting with experts, or using historical data from previous projects.

Next, it is important to prioritise the expenses and allocate funds accordingly. It is essential to ensure that all essential expenses are covered within the allocated budget.

After creating the budget, it is important to monitor and track expenses throughout the project. This will help to ensure that the project stays within budget and to identify any potential issues requiring engagement with the sponsor early on.

In summary, research project budgeting is an essential aspect of any research project. By accurately estimating and allocating resources, researchers can ensure that their projects are completed successfully and within budget.

As a research-driven university, coupled with the current economic conditions and resource constraints, the University of the Free State (UFS) recognises the need for an accurate and consistent approach to costing research projects. That is why the UFS Directorate Research Development has implemented a comprehensive policy for costing and pricing of research and research-related contracts and grants. This policy applies to all research-related funding projects supported by internal and external funds, all UFS employees, and other university resources utilised for the purposes of research.

Why is the UFS Policy for Costing and Pricing of Research important?

The UFS Policy for Costing and Pricing of Research is crucial for several reasons. Briefly, it ensures that all research projects at the UFS are costed accurately, ensuring a complete understanding of the project commitment, loss, profit, and university contribution where applicable. This approach takes full cost principles into account, which means that all direct and indirect costs associated with a project are considered.

Furthermore, the policy ensures that all research and research-related projects are costed based on similar costing principles. This helps to prevent inconsistencies in costing across different projects and ensures that all costs associated with a project are considered.

Finally, the policy ensures that the UFS can recover the full costs associated with research projects. This is important, because it allows the UFS to continue to invest in research and provide the necessary infrastructure and support to researchers.

What are direct and indirect costs?

Direct costs are those costs that are either directly incurred by the project or directly attributable to the project. This may include staff costs, travel costs, equipment costs, and consumables.

Indirect costs are those services and benefits provided to the project through the university. This may include the use of university facilities, such as libraries and computer labs, the services of the research, finance, and human resources offices, as well as support staff, and the cost of utilities repairs and maintenance, insurance, lawyers, and other service costs.

Access the UFS Policy for Costing and Pricing of Research here.

The faculty plays a critical role in ensuring the success of the proposal approval process. Its responsibilities include

  • conducting a final review of the proposal approval form to ensure that potential operational, financial, regulatory, and other risks have been thoroughly evaluated and addressed (Note, DRD review will also provide guidance/input on these matters);

  • key risk areas to be considered by the faculty, including appropriate project costing, appropriate staff time and costs allocated, adequate planning for new staff members, proper budgeting for VAT (Note, DRD review will also provide guidance/input on these technical matters) and inflation, and consideration of ethical approval; and

  • monitoring and approving staff time budgeted for and spent on the project. Reasonable hours should be utilised and should be in line with the project scope.

By carefully examining each of these factors, the faculty can help to mitigate potential issues that could negatively impact the success of the proposed project.

As a principal investigator (PI), accurately estimating project costs is critical to ensuring project success. A detailed cost estimate helps to identify potential budget constraints, minimise risks, and maximise profits. However, creating a comprehensive cost estimate can be a challenging and time-consuming task.

To overcome this challenge, PIs can use a costing template to generate a full cost estimate for their proposed project.

Without a detailed cost estimate, it can be difficult to identify potential budget constraints and risks. This can lead to cost overruns, project delays, and even project failure. Therefore, mastering project cost estimation is critical to project success.

A budgeting tool is a pre-designed spreadsheet that includes all the necessary categories and line items to estimate project costs. It is a useful tool for PIs to quickly generate a comprehensive cost estimate.

The PI can use this template to develop an appropriate budget for their research project. The budgeting tool can be customised to meet the specific needs of the project.

To master project cost estimation with the costing template, PIs should follow these steps:

Step 1: Identify the project scope

The project scope includes the objectives, deliverables, and outcomes of the project. The PI should identify the scope of the project to determine the categories and line items necessary for cost estimation.

Step 2: Gather information

The PI should gather all the necessary information to estimate the project cost. This includes the project requirements, specifications, and timelines. The PI should also identify the resources required for the project, such as labour, materials, and equipment.

Step 3: Customise the costing template (where necessary)

The budgeting tool can be customised to meet the specific needs of the project. The PI should add or delete categories and line items as necessary. They should also update the formulas and calculations to ensure that the template calculates the project costs accurately.

Step 4: Estimate the project cost

Using the budgeting tool, the PI should estimate the project cost for each category and line item. They should ensure that all costs are accounted for, including indirect costs such as overheads and contingencies.

Step 5: Review and validate the cost estimate

The cost estimate should be reviewed and validated by the project team and stakeholders. Any errors or discrepancies should be corrected before finalising the estimate.


Project cost estimation is a critical process for project success. Using a comprehensive budgeting tool can help PIs to quickly generate accurate and detailed cost estimates. The template can be customised to meet the specific needs of the project and can be used for a wide range of projects.

Access the budgeting tool here.

Creating a detailed budget proposal for a research project is a critical aspect that needs to be thoroughly thought through. The budget is the financial plan that outlines how you will fund the project, and it needs to be well-structured and comprehensive to ensure that all the expenses are covered.

To begin with, it is essential to note that the budget proposal must be submitted to the DRD (Directorate for Research Development) for review and approval. Therefore, you must ensure that your proposal meets the required standards to avoid delays in funding.

The UFS provides a budgeting tool and travel policy, together with relevant rates that you may require, depending on the nature of your project. These rates should be used as a benchmark, and ideally, you should consider the benefits of the project to the broader community as well as market-related costs, especially where stakeholders are in the private sector/industry and work is being done for their sole benefit.

When developing your budget proposal, the following budgeting principles should be taken into consideration:

  1. Salaries: Salaries must increase in line with the inflation rate for each alternative year for multiple-year projects or when the project start date is in the future. It is important to note whether the sponsor – as a foundation/grantor – allows for salary recoveries and the base year of the project start date, and budgets accordingly (this is applicable to grants); however, contracts with industry/private sector, etc., should not have constraints for the university’s personnel time.
  2. Staff rates: Note that the university’s costs for permanent staff differ from costs for contract staff.  University contract staff costs are generally higher, as these are short-term appointments. Personnel time on projects should be costed basis rates obtained in the market for consultancy.
  3. Project management cost: Where allowed, project management cost should be charged, allowing the researchers to focus on research and other research activities.
  4. Bursary costs: Note whether bursary costs can be recovered.
  5. Student payments: If students are used, it is important to consider if they are being paid. You will need to recover per contract, considering the maximum allowed hours per week in terms of the university’s policies.
  6. Overhead recovery: Unless overheads can be costed per cost driver, e.g., water, electricity, support services, etc., overhead recovery should be recovered by applying a percentage to direct costs (refer to UFS costing policy for minimum overhead recovery rate).  Note that in scenarios where intangible property (IP) is generated and the sponsor requires ownership of the IP, the university’s NIPMO-approved rates, in line with government regulations, must be used to calculate overhead recovery. If no IP is generated or where IP is generated and owned by the UFS, then a rate lower than the NIPMO overhead recovery rate can be used as stipulated in terms of the UFS costing policy, unless the grant terms and conditions specify otherwise. If a percentage recovery rate for overheads is not allowed, you should estimate expenses for electricity, water, printing, telephone, data, stationery, support staff time, lawyers’ fees, and all other indirect costs. You can estimate based on the size of the team or floor m² of the lab used, etc.
  7. Consumables and equipment: Please include all consumables, equipment, laptops, etc.
  8. VAT implications: VAT implications are applicable where benefits accrue to the sponsor and the same are consumed in the RSA, e.g., clinical trials, reports, results, branding, and marketing.
  9. Multi-year contracts: Multi-year contracts must include inflation.
  10. Foreign receipts and purchases: Receipt of funding in foreign currency and payment of expenses in foreign currency require consideration of forex fluctuations and the timing of the cost payment. For foreign receipt of funds, it is best to budget in rand to avoid foreign exchange fluctuations. If not allowed by the sponsor, discuss whether the sponsor will absorb the foreign exchange losses. For foreign purchases for material values, ensure forward cover etc.

Terms and conditions: Terms and conditions/budgetary guidelines of the proposal should be submitted to DRD along with the budget for a correct review of the budget to occur. You can get this from the applications or share the website link (where applicable).

Total project costs: Total project costs should be supplied to DRD for review. It will then be compared to the application budget amount requested. Ideally, the two should be the same, unless there is a discount/UFS contribution. If there is a discount, the PI should motivate why the full project costs was not budgeted for.

DRD will review the full project cost and then the same will be compared with the budget amount requested, along with the motivation provided for requesting a discounted budget.

Note, the budget guideline may have a maximum budget amount allowed; however, you will still be required to show what the full costs is in the budgeting tool, then reflect the discounted value requested and elaborate why e.g., sponsor terms and conditions on maximum are allowed.

Note: Please consult DRD for the latest rates, as these rates may change periodically.

Access the VAT structure here.

Contact us

Sugan Moodley
Director: Research Development Finance
T: +27 51 401 9448
E: MoodleyS4@ufs.ac.za

Lebohang Mahlabe
Officer: Research Development Finance
T: +27 51 401 7490
E: MahlabeLE@ufs.ac.za

Johannes Brill Building, First Floor, Bloemfontein Campus 

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