Treatment of Specific Types of Costs

Guideline Date: April 2015     Revision: 1     Last Review: August 2017

Direct Costs (specifically identified with a sponsored project with a high degree of accuracy)

Direct costs may include the following:

  • Compensation of employees for their effort on the project
  • Materials consumed or expended in the performance of the work, e.g., lab supplies
  • Equipment
  • Consulting costs

Indirect Costs (incurred for a common or joint purpose that cannot be readily and specifically identified with a particular sponsored project or activity)

Indirect costs may include the following:

  • Custodial costs for building maintenance
  • Utilities
  • Department administration
  • Department computers
  • Sponsored projects administration

Whether a cost is allowable as a direct or indirect cost is often questioned. The following sections provide brief explanations and examples of exceptional circumstances that might allow an item to be charged as a direct cost to a project or projects.

Note that in most circumstances, there is an associated burden of documentation or justification placed upon the principal investigator (PI).

  • If the cost is anticipated, include it in the budget and budget justification at the proposal stage.

Specific Costs