A federal budget is not a price. It is a reconstruction of the work: how many hours of whose time, on what tasks, with what materials, in what months. Reviewers and grants specialists read it as a second description of your project, and they compare it to the first one. A budget that does not match the work plan reads as a project nobody has thought through.

The standard line items

Agencies use different forms, but the categories are broadly the same:

  • Personnel. Each person by name or role, their base salary or rate, and the effort committed — expressed as person-months or a percentage of time. Effort, not a lump sum, is what a reviewer checks against your task list.
  • Fringe benefits. Employer payroll taxes, insurance, retirement, and leave, applied to salaries at your company's rate.
  • Materials and supplies. Consumables, components, test articles. Itemize anything substantial.
  • Equipment. Durable items above a capitalization threshold your accounting policy defines. Treated differently from supplies, and often restricted on an award.
  • Travel. Conferences, site visits, agency kickoff meetings, with destination and purpose.
  • Subawards and consultants. Outside organizations doing part of the research, and individuals paid a daily or hourly rate. Both carry limits on how much of the work may leave your company.
  • Indirect costs. Overhead applied as a rate against a defined base.
  • Fee or profit. A separate line, where the instrument allows one, that is not tied to specific costs.

The budget justification does the real work

The numbers alone persuade nobody. The justification narrative is where you say why this engineer is on the project for that many months, why the test fixture costs what it costs, and what the trip is for. Write it task by task, referring to the same aim numbers your technical volume uses, so the reader can move between the two documents without translating.

Ranges and quotes belong here too. If a subcontracted test costs several thousand dollars, say you priced it and roughly how. Unsupported round numbers are the most common thing a grants specialist pushes back on, and several other classic budget mistakes that sink an application are really failures of the justification rather than of the arithmetic.

Every number traces to the work plan

Run one check before you submit: take each budget line and point at the task it pays for. Lines with no task are padding. Tasks with no line are unfunded work, which is worse, because a reviewer who spots labor you have not paid for stops believing the schedule. Watch the reverse case as well — effort committed here should match what your milestones and reporting obligations after the award will later hold you to.

Budget scale differs by phase and by agency, and ceilings are adjusted over time, so take the current figure from the solicitation you are answering rather than from an older award. What stays constant is the ratio question: a Phase I feasibility study and a Phase II development effort are funded to do different things, and a budget shaped like the wrong phase gets noticed.

This is general information, not accounting or tax advice — have your CPA review the budget before it goes in.

Projects House scopes the engineering tasks, hours, and prototype costs that sit behind an SBIR budget. Send us your project through the contact form.