4.2 Prepare a Modular Budget

1. How to Create an NIH Modular Budget

Select the PHS398 Modular Budget Component form for your submission package, and use the specific set of instructions in your FOA and the SF 424 (R&R) Application Guide. You do not need to submit the SF424 (R&R) Budget Component form if you submit the PHS398 Modular Budget form.

Creating a detailed budget internal budget for OSR. Include salaries, equipment, supplies, graduate student tuition, etc. for every year of funds requested. While the NIH will not ask for these details, they are important for you to have on hand when calculating your F&A costs base, writing your justification, and for audit purposes.

In order to determine how many modules you should request, subtract any consortium F&A from the total direct costs, and then round to the nearest $25,000 increment:

  • Start with an itemized (internal) budget
  • Create out-year budgets
  • Divide total direct cost dollars by numbers of years to get average cost
  • If applicable, subtract all one time costs
  • Round to the nearest module amount
  • 5 year direct cost $973K / 5= $194,600
  • Module request for each year would be $200,000
  • Request same number of modules each year (there is an exception for equipment)
  • List all personnel with responsibilities in person months in the budget justification
  • NIH may request detailed budget information

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2. Modular Budget Justification

A modular budget justification should include:

  • Personnel Justification: The Personnel Justification should include the name, role, and number of person-months devoted to this project for every person on the project. Do not include salary and fringe benefit rate in the justification, but keep in mind the legislatively mandated salary cap when calculating your budget. [When preparing a modular budget, you are instructed to use the current cap when determining the appropriate number of modules.] 
  • Consortium Justification: If you have a consortium/subcontract, include the total costs (direct costs plus F&A costs), rounded to the nearest $1,000, for each consortium/subcontract. Additionally, any personnel should include their roles and person months; if the consortium is foreign, that should be stated as well.
  • Additional Narrative Justification: Additional justification should include explanations for any variations in the number of modules requested annually. Also, this section should describe any direct costs that were excluded from the total direct costs (such as equipment, tuition remission) and any work being conducted off-site, especially if it involves a foreign study site or an off-site F&A rate.

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3. ​RMG Budget Best Practices

RMG (Research Management Group) suggests you use the following best practices when preparing a budget.

  1. Begin with an actual detailed internal budget, determine total cost, round up and then request enough modules

  2. 3% inflation per year

  3. NIH Purpose for a modular budget is to streamline the award process, so there is no need for reviewers to focus on the budget-they can focus on the science.  Note:  We do not include a detailed budget in the application. 

  4. Provide additional narrative budget justification in the application if there is a variation in the number of modules requested.

  5. Request Other Support information “just-in-time” to determine overlap for likely award candidates.

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4. How to Complete the Form

The Modular Budget Form provides budget fields for up to 5 years of support (e.g., budget periods 1 - 5). If requesting less than 5 years of support, complete only those years requested and leave the others blank.

Start Date Enter the requested/proposed start date of the budget period. Use the following format: MM/DD/YYYY.End Date Enter the requested/proposed end date of the budget period. Use the following format: MM/DD/YYYY

Direct CostsDirect Cost less Consortium F&A Enter the amount of Direct Costs, less actual consortium F&A costs for this budget period. This figure must be in $25,000 increments, and it may not exceed $250,000. Any consortium F&A costs are excluded from this figure. This field is required.Consortium F&A If this project involves a consortium, enter the actual consortium F&A costs for this budget period. If this project does not involve a consortium, leave blank.

Total Direct Costs This field auto-calculates

Indirect CostsIndirect Cost Type Indicate the type of base typically the Modified Total Direct Costs,  and indicate if Off-site. If more than one rate/base is involved, use separate lines for each.

Indirect Cost Rate (%)Indicate the most recent Indirect Cost rate(s) (also known as Facilities & Administrative Costs [F&A]) established with the cognizant Federal office

Indirect Cost Base ($) Enter the amount of the base for each indirect cost type.

Funds Requested ($) Enter funds requested for each indirect cost type.

Cognizant Agency (Agency Name, POC Name and Phone Number) Enter the name of the cognizant Federal Agency, name, and phone number of the individual responsible for negotiating your rate.

Indirect Cost Rate Agreement Date Enter the agreement date

Total Indirect Costs This field auto-calculates.

Total Direct and Indirect Costs (A+B) Funds Requested ($) The total funds requested for direct and indirect costs. This field is required. Once you have entered all required information for budget period 1, press the Next Period button to enter information for the subsequent budget period.

A. Cumulative Budget Information

All values for the Cumulative Budget Information are calculated automatically. They equal the summations of the amounts that you have entered previously for each of the individual budget periods. Therefore, no data entry is allowed or required, in order to complete this “Cumulative Budget” section.

If any of the amounts displayed on this form appears to be incorrect, you may correct it by adjusting one or more of the values that contribute to that total. To make any such adjustments, you will need to revisit the appropriate budget period form(s), to enter corrected values.

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5. Modular Budget Justification

Personnel Justification List all personnel, including names, percent of effort and roles on the project. NIH and other PHS agencies use the concept of person months as a metric for determining percent of effort.

No individual salary information should be provided. Since the modules should be a reasonable estimate of costs allowable, allocable, and appropriate for the proposed project, applicants must use the current legislatively imposed salary limitation when estimating the number of modules. For guidance on current salary limitations contact your office of sponsored programs. The salaries of administrative and clerical personnel should normally be treated as F&A costs. Inclusion of such costs may be appropriate only if all of the following conditions are met:

  • Individuals involved can be specifically identified with the project or activity;
  • Administrative or clerical services are integral to a project or activity
  • Such costs are explicitly included in the budget or have prior written approval of the Federal awarding agency; and
  • The costs are not also recovered as indirect costs.

For all individuals classified as secretarial/clerical, in addition to the name, percent effort and role, provide a justification documenting how they meet all four conditions. NIH ICs may request additional information for these positions in order to assess allowability.

NIH grants also limit the compensation for graduate students. Compensation includes salary or wages, fringe benefits and tuition remission. This limit should also be used when estimating the number of modules. 

Save the information in a single file and click the add attachment button to complete this entry.

Consortium Justification Provide an estimate of total costs (direct plus Facilities and Administrative) for each year, rounded to the nearest $1,000. List the individuals/ organizations with whom consortium or contractual arrangements have been made. List all personnel, including percent of effort, using the metric of person months, and roles on the project. No individual salary information should be provided. Indicate whether the collaborating institution is foreign or domestic. While only the direct cost for a consortium/contractual arrangement is factored into eligibility for using the modular budget format, the total consortium/contractual costs must be included in the overall requested modular direct cost amount. Save this information in a single file in a location you remember. Click Add Attachment, browse to where you saved the file, select the file, and then click Open.

Additional Narrative Justification If the requested budget requires any additional justification; e.g, variations in the number of modules requested, save the information in a single file and click the add attachment button to complete this.

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6. Moving On

Once all data have been entered use the scroll bar to scroll up. You will be returned to the Grant Application Package screen. To remove a form from your application, uncheck the box next to the form name in the Optional document section.

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