The first step involves estimating those expenses which contribute to the direct costs, such as personnel salaries, laboratory supplies, scientific equipment, and travel. The last step in preparing the budget is to tack on the indirect cost. If the proposal describes a typical laboratory-based investigation, then an equivalent of 44 percent of the total direct costs is added. If the proposal involves a clinical trial, the rate of 23 percent is used. The sum of the direct costs and the indirect costs constitutes the total financial request and, if accepted by the sponsor without modification, becomes the sponsor s financial obligation.
Investigators add indirect costs to the budgets of most proposals.
This addition has become so routine that the only energy expended is a phone call to the Research Office for the latest indirect cost rate. Unfortunately, few investigators and business managers understand the basis for calculating indirect cost rates. More grant and contract management responsibilities are moving into departments, and departments are sharing more of the indirect costs. A better understanding of the use of indirect costs will help avoid audit difficulties. By complying with CAS standards, MUSC accepts responsibility for developing a set of operating principles and guidelines which, among other things, clearly delineate those research-related expenses identified as direct costs vs. indirect costs.