Overview of Project Management
Effective sponsored project management supports the PI in accomplishing the statement of work on time, within budget, and in compliance with University policy and sponsor regulations.
What Qualifies as a Direct Cost?
According to Stanford Policy and federal regulations, an expense qualifies as a direct cost of a sponsored project only when it meets all four of the following criteria:
- Allowability: Allowable and unallowable costs are defined in OMB CircularA-21, the Uniform Guidance AND in the terms of specific awards.
- Allocability: Only those expenses that BENEFIT a project may be charged to that project.
- Reasonableness: Costs must reflect what a “prudent person” would pay.
- Consistency: Costs must be handled consistently across the University by following Stanford policy.
Everyone who authorizes the expenditure of University funds for any purpose must confirm prior to approving a transaction that the expenditures are:
- reasonable and necessary
- consistent with established University policies and practices
- applicable to the work of the University, including instruction, research, and public service
- consistent with sponsor or donor expenditure restrictions
Prior to you purchasing or incurring an expense you must assure that it is allowed by the university and by the sponsor. Stanford does not allow reimbursement for:
- Personal amusement, social activities, or entertainment (outside of activities directly related to University functions or purposes, including employee-employer relations, performance improvement, etc.)
- Stanford Faculty Club dues for individual members
- Personal, social, or travel club dues
- University parking permits for employees or students
- Traffic citations for either personal or University vehicles
- Personal services or personal purchases
- Interest charges incurred by individuals for late payment of their own personal bills
- Or any costs specifically disallowed by school or department policy
Once you determine a cost is allowable according to Stanford policy, you must determine whether it is allowable for reimbursement according to federal regulations. Costs are defined as allowable or unallowable for reimbursement by the government in OMB Circular A-21 or the Uniform Guidance. The federal government will not allow federal funds to be used to pay unallowable expenses. Unallowable expenses may NOT be charged either directly or indirectly to the federal government.
Expenses that are unallowable for federal reimbursement may be reasonable and necessary business expenses permitted by the University. Departments may incur these expenses but they must code them as unallowable.
Use the "Oracle Expenditure Codes and Descriptions" to find the appropriate code for your expense.
Expenses unallowable for federal reimbursement include:
- advertising (only certain types are allowable)
- alcoholic beverages
- fundraising or lobbying costs
- fines and penalties
- memorabilia or promotional materials (allowable if used for "employee morale")
- moving costs if employee resigns within 12 months
- certain recruitment costs, e.g., color advertising
- certain travel costs, e.g., first-class travel
- cash donations to other parties, such as donations to other universities, except for small contributions for purposes of "Employee Morale," e.g., a donation in lieu of flowers at a memorial
- costs in excess of University severance policy
- interest payments, except certain interest specifically coded as paid to outside parties and authorized by the Controller's Office
- memberships in civic, community or social organizations, or dining or country clubs (seldom reimbursable by Stanford)
- goods or services for the personal use of employees, including automobiles
- insurance against defects in Stanford's materials or workmanship
In addition, Stanford University voluntarily treats the travel and subsistence expenses of University trustees as unallowable.
Federal regulations also require some institutional activities be coded as unallowable for federal reimbursement. These activities include:
- fund raising
- commencement and convocation (can be allowable when charged to a Task with the appropriate Student Services - Service Type)
- general public relations and alumni activities
- certain student activities, e.g., intramural activities, students clubs, etc.
- managing investments solely to enhance income
- prosecuting claims against the Federal Government
- defending or prosecuting certain criminal, civil or administrative proceedings
- housing and personal living expenses of University Officers
- selling or marketing of goods or services (does not apply to selling goods or services internal to the university by its Service Centers)
It is crucial to code and categorize expenses correctly to comply with Stanford’s obligation to the federal government for both direct and indirect cost recovery. Our ability to obtain federal grants and contracts is dependent upon our performance in meeting federal requirements.
We must understand the distinction between allowable and unallowable costs whenever we record University expenses. The integrity of the University's financial systems depends on the knowledge and skill of each of the individuals who process the thousands of financial transactions here every day.
Unallowable Costs Can Be
|Unallowable by Stanford||
Allowable by Stanford Unallowable for reimbursement by Federal Government
Unallowable by Sponsor
University expenses that are:
University expenses that are:
but are unallowable for federal reimbursement.
Expenses that do not conform to the sponsors terms and conditions and OMB Circular A-21 or the Uniform Guidance (if applicable), or are:
These expenses will not be paid for by Stanford.
If incurred, they must be paid for by the individual.
These expenses will not be paid for by the sponsor.
Stanford may pay for the expenses, code as appropriate.
Costs unallowable for reimbursement by Stanford:
A Senior Research Associate purchases a leather brief case and would like to use university funds to pay for the item. The designer briefcase is made of fine grain leather with brass trim and costs $1250.
The cost is not reasonable, it is not necessary for the performance of the person's job, and is not permitted by University policy because it is a personal item. It must be paid for by the individual.
Costs unallowable for reimbursement by the federal government, but allowable for reimbursement by Stanford:An important faculty member is retiring from 35 years of service to Stanford. A party is given in his honor.
Although this is something the federal government should not pay for as a direct or indirect cost, it certainly is an appropriate Institutional expense. This event should use the expenditure types: 52310 ALCOHOL BEV UNALW for all alcohol, and 52240 EMP MORALE for the food cost. The expenditure types designated unallowable for reimbursement by the Federal Government in both cases.
Costs unallowable for reimbursement by the sponsor, but allowable for reimbursement by Stanford:
Your State of California grant explicitly states no travel outside of the state of California. Professor Smart would like to travel outside the state to present a paper about her research.
No matter how great a speaker she is or how interesting her research may be, the expense is unallowable as a direct charge to the sponsor per the award terms and conditions. If Professor Smart does travel, the expense must be charged to a PTA where the travel is Allowable, Allocable and Reasonable. The expenditure type would be: 52410 DOMESTIC TRAVEL ALLOW.
Terms and Conditions of a Sponsored Project
UNALLOWABLE costs may also be identified in the specific terms and conditions of a sponsored project. These can be more specific than those outlined in A-21 or the Uniform Guidance.
For example, if a sponsor specifies that international travel costs cannot be charged to a particular project, then those costs may NOT be charged to that project, even though Stanford and federal regulation may allow them.
Monitoring Project Expenses within Funding Limitations
It's important for the Research Administrator to monitor the rate of expenditure on a sponsored project because PIs are responsible for the ongoing fiscal management of awarded projects, including regular monitoring against project period budgets. Federal regulations establishe the approved project budget as the financial expression of the project, and sponsors may evaluate the project against the budget at any time.
Although sponsors allow certain flexibility's with respect to re-budgeting, un-obligated balances, and pre-award costs, Stanford University and sponsors expect expenditures to be reasonably consistent with the approved project and budget.
Sponsors may question or restrict expenditures that appear inconsistent with the project plan and budget. PIs are obligated to request prior approval when budget and program plan revisions indicate a significant change in scope.
Indicators of a change in scope can include, for example, significant expenditures beyond the amount authorized on the award, or requests for additional funding. PIs are obligated to request prior approval when budget and program plan revisions indicate a significant change in scope. Consult with OSR or your school based management team for additional guidance and for endorsement of the formal request to the sponsor.
For federal grants, advance written approval by the sponsor is required for:
- Change in the scope or the objective of the project or program
- Change in the PI
- Absence for more than three months or a 25% reduction in time devoted to the project, by the approved PI
- Additional federal funding
The transfer, by contract or other means, of a significant part of the
research or substantive programmatic effort (i.e. subaward).
In all cases prior approval must be in writing from the authorized grant or contract officer.
The Uniform Guidance is effective for federally sponsored agreements and new funding increments awarded on or after December 26, 2014. Federal awards received before December 26, 2014 must continue to follow the requirements in OMB A-21.
The Uniform Guidance recognizes that a PI can be absent from campus but fully engaged in his or her research team by means of skype, video, computer or other means of communication.
The Uniform Guidance States (regarding PI effort):
Recipients are required to report deviations from budget or project scope or objective, and request prior approvals from Federal awarding agencies for budget and program plan revisions, in accordance with this section.
(c) For non-construction Federal awards, recipients must request prior approvals from Federal awarding agencies for one or more of the following program or budget-related reasons:
(1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
(2) Change in a key person specified in the application or the Federal award.
(3) The disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator.
Note that number 3. above does not use the term "absence" but "disengagement" from the project. The distinction is a PI/PD can be off campus and still engaged in the research, which would not require prior written approval.
My PI is working in New Zealand on coral reef research as part of the statement of work. She is absent from the Stanford Campus still engaged in the research.
During the life of a sponsored project, it may become necessary to modify certain aspects of the original award. Such changes may involve rebudgeting of funds among expense classes or adjusting the length of a project period. Many federal agencies have transferred the authority to approve such changes to awardee institutions. Review the terms and conditions of your award.
Approvals Delegated to Stanford
Federal granting agencies have delegated to Stanford the ability to initiate:
To create a sponsored research account for the purpose of incurring pre-award costs up to a maximum of 90 calendar days prior to award start date. Note, however, that any expenditures that precede the award are solely at the financial risk of the unit requesting these expenditures (i.e., PI). Use the PDRF to initiate an early PTA.
No Cost Extensions
To initiate a one-time extension of the award expiration date of up to 12 months (funding agency must be notified of extension at least ten days prior to original termination date). This extension may not be exercised merely for the purpose of using any unobligated balance.
Internal prior approvals are made through your Institutional Representative (OSR or RMG). All requests for a no-cost extension must be approved in advance of the original date of project termination, to allow adequate time for agency notification.
A cost transfer is an after-the-fact reallocation of costs associated with a transaction from one PTA to another PTA. Costs should be charged to the PTA for the benefiting sponsored project when first incurred. However, at times it may be necessary to transfer a cost to a sponsored project subsequent to the initial recording of that cost.
Timely cost transfers involving sponsored PTAs are allowed in the following circumstances:
- Error correction
- Transfers between tasks of the same sponsored project
- Disallowed costs
- Clearing an overdraft at the end of a project
Cost transfers that represent corrections of errors should be completed within 3 months of when the error is discovered, and no later than 6 months after the expense is posted to an award. The 6-month deadline allows 1 month to correct any errors discovered by PIs during the certification process.
Errors found during the required monthly expenditure statement review process should be corrected upon discovery.
All cost transfers must be supported by documentation that fully explains the error as detailed below. An explanation merely stating that the transfer was made "to correct an error" or "to transfer to correct project" is not sufficient.
Cost transfer documentation must include a justification that clearly shows:
- The expense directly benefits the receiving PTA
- The expense is allowable on the receiving PTA
- The reason the expense was charged incorrectly to the first PTA
- That any systematic reasons which might cause this problem to be repeated have been addressed
- The reason for any delay in the timely processing of the transfer
Large transfers, and transfers within the first or last 90 days of a project, receive additional central review. Detailed documentation for these transfers will facilitate their timely review by OSR.
Limitation of Funds
The Limitation of Funds clause is typically inserted in to Federal contracts that are incrementally-funded cost-reimbursement contracts. The clause requires us to notify the sponsor that we are coming to the end of obligated funding, and send notification to the contract officer that obligated funds will be spent within the next 60 days. OSR will initiate the notice to the sponsor. You may also notify OSR when you will require additional incremental funding within the next 60 days. Refer to FAR 52.232-22 for additional information.
Limitation of Costs
The Limitation of Costs clause is inserted into federal contracts when they have been fully funded. The clause requires us to notify the sponsor when we expect in the next 60 days to have spent 75% of the estimated cost, or expect expenses to be greater or substantially less than previously estimated. Refer to FAR 52.232-20 for additional information.
No Cost Extension (NCX)
As a project comes to the end of the period of performance, additional time may be required to complete the project. You can request a no cost extension (NCX). In doing so, you affirm that additional work remains to be completed on the project and that resources are available to continue to support the project, or that additional time is needed to provide for an orderly closeout. The fact that funds remain at the expiration of the grant is not, in itself, sufficient justification for an extension without additional funds.
Many federal agencies allow for Stanford to approve a one-time no cost extension for a period of up to 12 months beyond the original expiration date shown in the NoA if all the following criteria are met.
No term of the award specifically prohibits the extension,
No additional funds are required to be obligated by the NIH awarding IC, and
The project's originally approved scope will not change
Contracts typically require a formal request to the sponsors contracting officer and a subsequent modification to the contract.
Review the terms and conditions for more guidance.
To request a NCX consult the Sponsored PTA Manager - Dept User Guide