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How to Build a Research Project Budget in Six Steps
Every rule and number on this page was read on the funder page cited or computed by Editverse in R from public data. The funder rules below are scoped to the page and date we read, and your call text and institution decide what applies to you.
- 1List the activities. Write down each task and deliverable, then the people, equipment, travel, materials and services each one needs. Our suggestion: attach every budget line to an activity so the justification explains itself.
- 2Price each line in the funder categories. Use the categories on the funder form, not your own, so a reviewer can find every cost. The comparison table below shows the headings NIH, UKRI and Horizon Europe use.
- 3Check that each cost is allowable. Read the call text and the funder cost rules before you enter a line. The US federal tests are in the next section.
- 4Add indirect costs the way the funder says. The method is different for each funder: a negotiated rate on a base at NIH, a single figure at UKRI and a flat rate at Horizon Europe.
- 5Write the justification. NIH asks you to indicate general categories of materials and supplies with an amount for each, and categories under $1,000 do not have to be itemized.1
- 6Keep the records. UKRI advises keeping copies of receipts, invoices and contracts, because awardees must provide evidence of project costs.2
What Makes a Cost Allowable
For US federal awards, 2 CFR 200.403 sets the tests a cost must meet. Among them, a cost must be necessary and reasonable for the award and allocable to it, conform to any limitations in the rules or the award, receive consistent treatment, and be adequately documented.5 Consistent treatment has a concrete meaning: a cost must not be charged as a direct cost if another cost for the same purpose in like circumstances has been charged to the award as an indirect cost.5
A cost is reasonable if it does not exceed what a prudent person would incur in the circumstances when the decision was made, and the regulation lists market prices for comparable costs in the geographic area among the factors.6 The EU annotated grant agreement makes a related point from the other side: which kinds of cost are direct or indirect depends on the action and may vary between programmes and calls.3
Cost Categories Compared: NIH, UKRI and Horizon Europe
The same cost can sit under different headings at different funders. The table lists the headings as each funder page words them.
Desliza el dedo hacia los lados para ver todas las columnas.
| Financiador | Direct cost headings | Costos indirectos |
|---|---|---|
| NIH (detailed budget) | Personnel (sections A and B of the SF424 (R&R) Budget form). Other direct costs (section F): materials and supplies, animal costs, publication costs, consultant services, ADP/computer services, alterations and renovations, research patient care costs and tuition.1 | F&A costs: your organization’s negotiated F&A rate applied to your direct cost base.1 |
| UKRI (general guidance) | Directly allocated (estimates, for example staff time, research facilities, estates) and directly incurred (actual costs, for example travel and subsistence, consumables and equipment, auditable payroll, NHS research costs). Exceptions apply only if the funding opportunity specifies them; they are costs funded at 100% by UKRI, subject to actual expenditure, or items outside full economic costing.2 | A single figure for the project, covering the share of centralised services such as IT and human resources. It does not need to be justified in the application.2 |
| Horizon Europe (EU annotated grant agreement) | Personnel, subcontracting, purchase costs (travel and subsistence, equipment, other goods, works and services) and other cost categories. These are the categories that usually apply; programme-specific ones may be added.3 | A flat rate. In programmes with a 25% flat rate, including Horizon Europe, it is applied to eligible direct costs excluding subcontracting, financial support to third parties and volunteers costs.3 |
Funders also differ on what the applicant types in. UKRI says to enter 100% of each cost at current prices including VAT where applicable, with no inflation because indexation is applied automatically, and the percentage UKRI covers is calculated for you. It also advises making costs as accurate as possible, without underestimating or leaving out essential costs.2
Indirect Costs: Rates, Bases and Worked Examples
NIH describes F&A costs as necessary costs incurred for a common or joint purpose that benefit more than one cost objective and are not readily assignable to the objectives specifically benefitted. The amount comes from applying your organization’s negotiated rate to a direct cost base, and NIH tells applicants to ask their sponsored programs office for the negotiated base.1
The modified total direct cost base
For most institutions NIH says the negotiated rate uses a modified total direct cost (MTDC) base, which excludes items such as equipment, student tuition, research patient care costs, rent and sub-recipient charges after the first $25,000.1 The US Uniform Guidance definition, as it read in eCFR on 29 October 2026, includes salaries and wages, fringe benefits, materials and supplies, services, travel and up to the first $50,000 of each subaward, and excludes equipment, capital expenditures, patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the part of each subaward above $50,000.7 The two figures for subawards differ, which is why your rate agreement, not a web page, is the document to check.
For recipients with no current federal negotiated rate, 2 CFR 200.414(f) allows a de minimis rate of up to 15% of MTDC.8
An arithmetic illustration (invented round numbers)
The numbers below are invented by Editverse to show the arithmetic, not a real budget or a real institutional rate. They use the 2 CFR 200.1 definition and the 15% de minimis rate.
Desliza el dedo hacia los lados para ver todas las columnas.
| Line | Cantidad | In MTDC base? |
|---|---|---|
| Salaries and fringe benefits | $180,000 | Sí: |
| Materiales y suministros | $30,000 | Sí: |
| Viajes | $10,000 | Sí: |
| Equipos | $40,000 | No |
| One subaward | $120,000 | First $50,000 only |
| Costos directos totales | $380,000 | MTDC = $270,000 |
| Indirect costs at 15% of MTDC | $40,500 | Computed by Editverse |
| Total with indirect costs | $420,500 | Computed by Editverse |
A Horizon Europe flat rate
The EU annotated grant agreement works through a 25% flat-rate example, marked for Horizon Europe and the European Defence Fund and set in an innovation action: 40 day-equivalents of personnel at EUR 240, EUR 1,400 of other goods and services and EUR 1,500 of subcontracting. The flat rate is applied to the EUR 9,600 of personnel plus the EUR 1,400, not to the subcontracting, so indirect costs are EUR 2,750 and total eligible costs are EUR 15,250. At the 70% funding rate in the example the funder reimburses EUR 10,675.3 We recomputed each figure in R and they match.
NIH Modular or Detailed Budget
NIH applications include either the R&R Budget Form or the PHS 398 Modular Budget Form, but not both.1
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| Modular budget | Presupuesto detallado | |
|---|---|---|
| Formulario | PHS 398 Modular Budget Form | SF424 (R&R) Budget Form |
| Lo que usted solicita | Up to $250,000 of direct costs per year, in modules of $25,000, excluding consortium F&A costs | Itemized personnel, other direct costs and the other lines of the form |
| Not accepted for | SBIR and STTR applications; applications from foreign (non-U.S.) institutions | Required where the modular format is not accepted |
| How to count modules | Subtract consortium F&A from total direct costs, then round to the nearest $25,000 | No es aplicable |
For salaries, NIH says it will not pay requested salary above the annual salary cap and will reduce an over-cap line to the cap, which lowers the total award. NIH advises basing a detailed budget on actual institutional base salaries, not the cap. It has no policy on salary escalation in an application and advises requesting the actual costs needed for the budget period, with escalation only if it is consistent with institutional policy.1
A Real Case: What NIH R01 Budgets Look Like in Fiscal Year 2024
To see how budgets split in practice, we analysed NIH R01 awards for fiscal year 2024 in NIH RePORTER. The RePORTER API returned 29,700 project records with direct cost and indirect cost fields on 31 October 2026. We removed 65 records with a missing cost field, 13 with a zero or negative cost value, 211 where direct plus indirect costs differed from the award amount by more than $1 and 2 that shared a project number with another record. That left 29,409 awards.4
These are public NIH data: the NIH data access policy lists RePORTER among the funding data available to the public.9 The API page states no licence, so we publish only aggregate counts and percentages computed by Editverse and no project-level records.
Direct costs peak in the band just under $250,000
NIH says the modular format covers up to $250,000 of direct costs per year.1 We grouped awards by direct costs for the year into bands of $25,000, such as $225,001 to $250,000. The most common band is $225,001 to $250,000, with 2,941 awards (10.0% of the 29,409), against 1,823 in the band below and 1,642 in the band above.
In all, 7,837 of 29,409 awards (26.6%) have direct costs of $250,000 or less, and 1,131 (3.8%) have exactly $250,000. The median direct cost is $348,635.
Indirect costs by size of award
Across all 29,409 awards the total was $15.61 billion, of which $10.75 billion (68.8%) was direct costs and $4.86 billion (31.2%) was indirect costs. The share of the award that was indirect was higher in smaller awards and lower in the largest.
Desliza el dedo hacia los lados para ver todas las columnas.
| Direct costs for the year | Premios y Reconocimientos | Median direct costs | Indirect share of total award | Median indirect as % of direct |
|---|---|---|---|---|
| Hasta $ 250,000 | 7,837 | $213,400 | 35.1% | 55.3% |
| $250,001 a $400,000 USD | 10,688 | $326,246 | 34.7% | 55.2% |
| $400,001 a $600,000 USD | 9,463 | $471,866 | 29.6% | 43.7% |
| Más de $ 600,000 | 1,421 | $692,287 | 21.3% | 24.7% |
The median award has indirect costs equal to 52.8% of its direct costs (quartiles 37.7% to 59.5%). That ratio is not a rate: a negotiated rate applies to a base such as MTDC, and the base excludes items that vary by project.
Calculado por Editverse en R
- Awards analysed: 29,409 of 29,700 records returned.
- Total award $15,612,228,430, direct $10,747,855,802, indirect $4,864,372,628; indirect share 31.16%.
- Direct costs of $250,000 or less: 7,837 awards (26.65%); exactly $250,000: 1,131 awards (3.85%).
- Band counts: 7,837, 10,688, 9,463 and 1,421 awards for the four direct-cost bands.
Lo que demuestra este caso: where fiscal year 2024 R01 awards sit relative to the modular ceiling, and how the dollar split between direct and indirect costs varies with the size of the award. Lo que no muestra: which awards used a modular budget, why awards sit where they do, the negotiated rate of any institution, or what a new application should request. We did not test causes, and one fiscal year of one award type is not a benchmark for other funders or years.
Estimating Costs and Contingency
Estimate from the bottom up: price each activity line from quotes, pay scales and your institution’s rates, then add the funder’s indirect method. The funder pages we read agree on accuracy rather than on a method: UKRI asks for costs that are as accurate as possible and not underestimated, and NIH asks for the actual costs needed for the budget period.2,1
We found no contingency percentage on the NIH Develop Your Budget page or the UKRI costing page as of 31 October 2026.1,2 The EU annotated grant agreement describes a contingency reserve under a heading marked RELEX, the abbreviation it defines as external action programmes, where the maximum grant amount can be raised by amendment; that is a funder mechanism and not a line you add, and we did not find it marked for Horizon Europe.3
Budget Checklist Before You Submit
- 1Categorías. Every line sits under a heading from this funder’s form or call, not a heading of your own.
- 2Allowability. Each cost passes the funder’s rules: necessary, reasonable, allocable, documented and consistently treated.
- 3Costos indirectos. You used the method and the base the funder specifies, and checked the base against your rate agreement.
- 4Límites. Salary caps, modular ceilings, travel or equipment limits in the call are respected.
- 5Precios. Costs are at the price basis the funder asks for, with or without VAT and inflation.
- 6Justificación. Each major line has a sentence tying it to an activity, and the records to support it exist.
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Preguntas frecuentes
What goes into a research project budget?
Direct costs priced line by line, then indirect costs added on the funder terms. On the NIH detailed budget form, personnel sit in sections A and B and other direct costs in section F, which covers materials and supplies, animal costs, publication costs, consultant services, computer services, alterations and renovations, research patient care costs and tuition. UKRI groups costs as directly allocated, directly incurred, indirect and exceptions. The EU annotated grant agreement lists personnel, subcontracting, purchase costs, other cost categories and indirect costs as the budget categories that usually apply.
What is the difference between direct and indirect costs?
The EU annotated grant agreement defines indirect costs as costs that cannot be identified as specific costs directly linked to the performance of the action, and says that which kinds of cost count as direct or indirect depends on the action and may vary between programmes and calls. NIH describes facilities and administrative costs as necessary costs incurred for a common or joint purpose that benefit more than one cost objective and are not readily assignable to the cost objectives specifically benefitted.
What is an NIH modular budget?
A format for requesting up to $250,000 of direct costs per year, in modules of $25,000 and excluding consortium facilities and administrative costs, instead of a full detailed budget. NIH says the modular format is not accepted for SBIR and STTR applications or for applications from foreign institutions, which must use the detailed budget. To count modules, subtract consortium facilities and administrative costs from total direct costs and round to the nearest $25,000.
What is the 15 percent de minimis indirect cost rate?
Under 2 CFR 200.414(f), a recipient of US federal awards that has no current federal negotiated indirect cost rate may elect to charge a de minimis rate of up to 15 percent of modified total direct costs. It is a rule of the US Uniform Guidance, so check the indirect cost rules of any other funder separately.
How does Horizon Europe calculate indirect costs?
The EU annotated grant agreement gives a worked example, set in an innovation action, for programmes with a 25 percent flat rate, including Horizon Europe. With personnel of EUR 9,600, other goods and services of EUR 1,400 and subcontracting of EUR 1,500, the flat rate is applied to EUR 11,000 and not to the subcontracting. That gives EUR 2,750 of indirect costs and EUR 15,250 of total eligible costs, and at the 70 percent funding rate used in the example EUR 10,675 is reimbursed.
What do I enter as costs in a UKRI application?
UKRI general guidance says to enter 100 percent of the value of each project cost, at current prices including VAT and other taxes where applicable, without inflation, which is applied through an automatic indexation calculation. The share that UKRI covers is calculated automatically. The guidance does not apply to Innovate UK grants.
How much of an NIH R01 award is indirect cost?
In an Editverse analysis of 29,409 R01 awards from fiscal year 2024 in NIH RePORTER, indirect costs were 31.2 percent of the total award amount. The share was 35.1 percent for awards with direct costs up to $250,000 and 21.3 percent for awards above $600,000. These are shares of the dollars awarded, not negotiated rates.
Should a research project budget include a contingency line?
We found no contingency percentage on the NIH Develop Your Budget page or the UKRI costing page as of 31 October 2026. The EU annotated grant agreement describes a contingency reserve under a heading marked RELEX, the abbreviation it defines as external action programmes. There the maximum grant amount can be raised by amendment, which is a funder mechanism and not a line an applicant adds. We did not find the reserve marked for Horizon Europe. Ask the funder or your research office before adding a contingency line.
Referencias
- National Institutes of Health. Develop your budget. NIH Grants and Funding, How to Apply: Application Guide. Page last updated December 3, 2025; read 31 October 2026. grants.nih.gov/grants/how-to-apply-application-guide/format-and-write/develop-your-budget.htm
- UK Research and Innovation. How to include costs in your application. General guidance; does not apply to Innovate UK grants. Page last updated 17 July 2026; read 31 October 2026. www.ukri.org/apply-for-funding/develop-your-application/how-to-include-costs-in-your-application
- European Commission. EU Grants: AGA, Annotated Grant Agreement, version 2.0, 1 April 2025 (EU programmes including Horizon Europe); read 31 October 2026. ec.europa.eu/info/funding-tenders/opportunities/docs/2021-2027/common/guidance/aga_en.pdf
- National Institutes of Health. NIH RePORTER API, project search for fiscal year 2024, activity code R01. Records retrieved 31 October 2026; aggregates computed by Editverse in R. api.reporter.nih.gov/
- Electronic Code of Federal Regulations. 2 CFR 200.403, Factors affecting allowability of costs. Version dated 29 October 2026; read 31 October 2026. www.ecfr.gov/current/title-2/section-200.403
- Electronic Code of Federal Regulations. 2 CFR 200.404, Reasonable costs. Version dated 29 October 2026; read 31 October 2026. www.ecfr.gov/current/title-2/section-200.404
- Electronic Code of Federal Regulations. 2 CFR 200.1, Definitions (Modified Total Direct Cost). Version dated 29 October 2026; read 31 October 2026. www.ecfr.gov/current/title-2/section-200.1
- Electronic Code of Federal Regulations. 2 CFR 200.414, Indirect (F&A) costs, paragraph (f) de minimis rate. Version dated 29 October 2026; read 31 October 2026. www.ecfr.gov/current/title-2/section-200.414
- National Institutes of Health. Access to NIH Grant and Application Data for Scientific Research. Lists NIH RePORTER among the NIH funding data available to the public. www.report.nih.gov/sites/report/files/2020-07/DataAccessPolicy.pdf
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