Academic Sponsored Project Cost Overrun Policy
Purpose
To ensure that cost overruns incurred on academic sponsored projects are minimized to the maximum extent possible, and where they exist, that they are monitored and justified, or funded from alternate resources on a timely basis. Overruns can put a unit at risk because these costs are not covered by sponsored agreements and cannot be billed or reported to the sponsor.
Scope
Any Principal Investigator (PI) or departmental staff who initiate, review and/or approve transactions on academic sponsored projects.
Policy History
Effective Date: December 2, 2025
Approval: December 2, 2025
Policy History:
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Approved in original form: December 2, 2025
Maintenance of Policy: Vice President for Academic Research, Office for Academic Research
Policy
In carrying out sponsored projects, Principal Investigators are generally expected to limit charges so that the funds awarded by the sponsors of those projects are sufficient to cover all costs. However, where expenditures exceed the available budget awarded by sponsors (hereafter referred to as "cost overruns"), Principal Investigators and those providing administrative assistance are expected to resolve those cost overruns on a timely basis, in accordance with the process set forth in this Policy.
Principal Investigators and those responsible for assisting in financial oversight over sponsored projects are expected to continually monitor expenditures incurred on each individual project so that all expenditures incurred are within the total authorized budget and cost overruns are avoided. In the event of a cost overrun, the PI is responsible for the transfer of such overrun off the project. It is recognized, however, that in carrying out sponsored projects, it may sometimes be necessary to incur such cost overruns on a temporary basis, pending identification of alternate resources, in order that the work performed under the sponsored project is not adversely affected by a delay in identifying those alternate resources. The following rules apply to the University's expectations as to how cost overruns are to be resolved:
If an overrun has incurred, and there is documentation from the sponsor indicating that there will ultimately be sufficient funds to cover the overrun, and that these funds may be used for the period of incurrence (e.g., a temporary deficit which arises during a single year of a cumulatively funded, multi-year project that will resolve itself over the remaining life of the project, or a request for supplemental funding), then the temporary overrun may in most cases remain charged to the project pending its clearance by appropriate unit personnel.
Where an overrun exists and there is no expectation that there will ultimately be sufficient sponsored funds to cover the overrun, the PI or responsible party shall notify the Office of Academic Research as soon as possible. The division is required to take immediate action to eliminate the overrun. Cost overruns should be cleared by an internal funds transfer (IDC distributions, unit funds, etc.). If the overrun is caused by expenses charged to the project in error the department should remove expenses via the mechanism through which they were originally charged to the project.
Once a project has expired and a final financial report has been prepared and submitted to the sponsor, any remaining overrun must be cleared immediately, unless there is an expectation that additional funds from the sponsor will be provided.
Throughout the year, the University Controller’s Office shall send a list of all overruns to each Principal Investigator and Department Administrator to ensure that responsible parties are aware of their liability. Upon receipt, the department is expected to review the list and either 1) justify the overrun, if additional funding that will cover the overrun is anticipated, or 2) clear the overrun, if the overrun is not expected to be covered by the sponsor.
The Vice President for Academic Research may choose to not approve future grant applications submitted by any PI who has recently or repeatedly allowed a grant fund to go into an overrun state.