Factors to Consider in the Preparation of Proposal Budgets

Measuring Success

 

 

 

 

 

 

 

 

Author Note

I have no known conflict of interest to disclose.

Correspondence concerning this article should be addressed to

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MEASURING SUCCESS 2

 

 

 

 

 

 

 

Costs of Proposal/Service

Introduction

The budget of any proposal, including the costs of materials, resources, and the time frame of the project must be prepared in an accurate, appealing, and justifiable way to help the organization realize profitability. The preparation of a proposal budget requires one to consider five key factors including research and development, salaries, travel costs, the profit margin, and operational costs.

Factors to Consider in the Preparation of Proposal Budgets

The effective estimation of costs on a proposal budget requires the consideration of commitment and efforts among the stakeholders including employers and employees, estimating methods, cost sharing, and allowability. For example, in relation to a principal investigator proposing budgets for Stanford University, it is the responsibility for the PI to assure Stanford University, and the potential sponsors that the finances of the projects are represented in an accurate way. Moreover, the federal government must define certain prerequisites, such as the cost principles under §200 of the Uniform Guidance. Furthermore, the PI must ensure that the budget proposal is consistent to the requirements imposed by the CAS (federal Cost Accounting Standards) board; must be observed and at the proposal phase, in addition to where the funds will be used.

Salary Costs

The process of preparation of proposal budgets involves the need for an individual to calculate the salary costs for the proposals. Determining costs also requires one to determine the participants of the projects and how these people will be compensated for their efforts. For instance, an advertising agency could support their clients with media buyers, copy writers, account executives, art directors, and creative directors (Shim et al., 2011). In contrast, a software firm could depend on an implementation specialist, a support representative, and a customer success representative. Upon identifying the people who will support the project’s prospect if they decide to work with the organization, it will be necessary to determine the amount of money they will make in an hour (Shim et al., 2011). On the other hand, calculating the salary costs will require one to multiply the amount of money they make per hour with the number of hours needed to complete the project.

Research and Development Costs

Alongside estimating salary costs, it is crucial to consider the costs of research and development when preparing budget. When preparing budgets, it is important for the budget planners to determine whether the firm had a viable market and offering (Shim et al., 2011). For instance, Apple Inc. invest heavily in research and development to help its marketing to understand, market trends, the changing preferences of customers in relation to changing technologies, as well as what their competitors are offering in the tech industry. In determining Apple’s research and development costs, the marketers had to determine the amount of capital the firm spent creating the products and other offerings in its portfolio. As such, Apple Inc. recognizes that, although the firm would not put the burden to recoup the R&D costs on a single market segment/ customer base, it is important to consider these costs as they help the company realize profitability.

Travel Costs

Travel costs are also an important factor to consider, especially if the employees must travel. For example, when a company wants to have its products reach emerging markets, it would require that the firm sends some employees-marketers, to assess the potential for profits in that market (Mauskopf et al., 2015). In other words, if personnel must travel to satisfy the needs and outcomes of the proposal, it would require budget planners to calculate and estimate travel costs. For instance, when Samsung wanted to expand its customer base in emerging markets across Africa, the executives had the responsibility of not only identifying the trainers, salespeople, account managers, and implementation specialists, but also estimate and allocate travel costs for these delegates’ on-site visits to target clients (Mauskopf et al., 2015). Therefore, to estimate travel costs, an individual must multiply the number of travelers, with the costs of return tickets to their destinations.

Operational Costs

Another cost to consider in preparing budget proposal is operational expenses. Operational costs include expenses like utilities, general staff, rent, marketing, maintenance, and sales expenses. which organizations must incur to continue its business operations (Buckley, 2017). The process of estimating operating costs of a proposal or service also requires the budget planners to outline the aspect of cost sharing. For instance, in a university setting, when a principal investigator proposes a specific project, the University usually agrees to cost share University resources. According to Buckley (2017), to ensure effective utilization of resources and reducing operational costs, the University is obligated to provide the stated resources in the performance of the project. Furthermore, based on the administrative responsibilities and requirements that are integral within the cost sharing efforts, the PI must weigh the cost effectiveness versus the expected benefit of each cost.

Conclusion

The preparation of a proposal budget requires planners to consider various factors, including travel costs, salary costs, operational costs, and research and development costs. Effective implementation of projects requires the optimal utilization of resources, materials, and time, aimed at reducing operational costs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Buckley, S. (2017). Preparing the budget. Making an Effective Bid: A Practical Guide for Research, Teaching and Consultancy, 73.

Mauskopf, J. A., Earnshaw, S., & Mullins, C. D. (2015). Budget impact analysis: review of the state of the art. Expert review of pharmacoeconomics & outcomes research, 5(1), 65-79.

Shim, J. K., Siegel, J. G., & Shim, A. I. (2011). Budgeting basics and beyond (Vol. 574). John Wiley & Sons.