As different granting bodies require different type of reporting - I would choose a system based two factors - the reports you'll need to generate and long term aspects for this project - if this project is going to go beyond the scope of the current grant you might want to invest in proper research documentation tools (ELN / LIMS ) ** -
- if the agency requires only time tracking - and minimal milestone progress reports -
You can go with simple tools - such as bascamp, clarizen or even google docs.
** I don't suggest starting to use a LIMS or an ELN just for reporting purposes - the investment is considerable - it should be a decision made by the lab leaders (PI / Lab Manger) based on how they want to see the lab run in the present and in the future - putting the digital infrastructure for proper research documentation, sample management, experiment documentation and lab logistics. The longer you postpone thinking about these issues the harder it will be to implement a solution for you lab.