Fiscal Fitness: How to Create a Lab Budget

Awise man once said, “Never base your budget requests on realistic assumptions, as this could lead to a decrease in your funding.” That man was Scott Adams, the author of the famous comic strip Dilbert. As he aptly points out, budgeting is a complicated process that can be influenced by institutional politics in addition to an evaluation of anticipated expenses and available funds. Not many people like to juggle the Excel spreadsheets, meetings, and paperwork that go into a budget, but it can be done — and done well — by following a few simple steps.

Step One: Executive Bargaining

A laboratory manager’s performance evaluation largely relies upon his or her ability to create and follow an efficient budget. Th is involves tracking expenditures, employing staff , keeping an inventory of lab supplies, and, perhaps most importantly, convincing the higher-ups to provide funding for these operations. Naturally, the authorities in charge of financing vary based on whether one works as a practitioner, academic, or industry researcher. A smart first move requires identification of the appropriate leadership and in-depth budget discussions.

Lab Manager magazine conducted a survey of laboratory managers to discover how they maneuvered through this budgetary process. Dennis Busiere of the Monroe County Environmental Lab in Rochester, N.Y., replied that, “Prior to creating the budget, I meet with the senior management and highlight possible constraint issues and funding requirements.”

By fostering a positive relationship with executives, a lab manager or researcher is more likely to obtain ample funding. Meetings should be scheduled well before fiscal deadlines to provide room for negotiating and presentations, if necessary. Like Busiere mentioned, there may be eligibility hoops to jump through and financial constraints to consider. Designing a budget prior to discussions with the approving authorities or reviewing grant guidelines will likely result in an extensive rewrite and a lot of wasted time.

Business discussions can also provide valuable insight from the finance team. Their interpretation of the previous year’s expenditures may be able to off er areas with saving opportunities, while upper management will have the chance to explain their expectations and goals for the coming year. Some negotiating may be required to gain support for one’s projects, but engaging leadership in early discussions should improve the likelihood of reaching an agreement.

Step Two: Experimental Research

Once the total sum of available funding has been confirmed, researchers and lab managers must select the experiments that can be feasibly completed within the budget. A list of desired projects and necessary equipment should be compiled. Th e list can then be categorized by primary, secondary, and tertiary items — with primary items including the absolute necessities and the tertiary items working as a “wish list.” Secondary items are those strongly desired but not absolutely critical to operations.

Th is can be a good time to consult with colleagues who have conducted similar projects to see the amount they wound up spending in the lab. Their experiences can act as a baseline to build and learn from.

An important point of comparison is personnel. How should funds be divided between technicians, postdocs, and other staff ? A dollar amount needs to be assigned to each individual that encompasses all payment and expenses related to employing that person. Looking at the budget sheets for other research projects will help ensure that each member of the team is paid the “going rate” for his or her position.

Th e projected expenses for staff must also include “fringe benefits” like healthcare. According to Science magazine, this amount can range anywhere from 17% to 30% of total employee costs. Each institution varies, so it is important to confirm with the appropriate authorities before performing calculations.

Another major cost category is equipment. Ask vendors for price quotes on the list of machinery and materials needed for the year’s proposed experiments. Keep in mind that finding funding for equipment later in the year or project may prove challenging, especially if cash has already been allocated elsewhere. Again, learning from the successes and mistakes of others’ budgets can help anticipate the expenses that might arise.

Costs like utilities, waste disposal, and maintenance should be relatively predictable. However, keeping a close watch on these bills — like all others — is necessary to avoid any unwanted surprises.

Step Three: Monitor Monthly

Even the most elegant budget does little good if it is not properly executed. After adding up projections for costs and making sure that their total fits within lab funding, one needs to closely follow spending month-by-month to make sure that operations are running according to plan.

Anyone who works in the laboratory needs to be kept in the loop as to the progress of finances. By teaching researchers and employees to be judicious in their use of lab materials, costs can be minimized — potentially saving enough funds for the secondary and “wish list” items from step two.

Science magazine recommends a simple method called “calendarizations” for monthly tracking. Th e annual budget for basic needs like reagents and salaries is divided by 12. These numbers are a marker for measuring progress. Each individual can be assigned an annual supply budget that, once “calendarized,” determines whether he or she is using his or her fair share of resources in a given month.

If costs are consistently higher than anticipated, one might have to find additional funding mid-year. Where the money comes from depends, of course, on the type of lab or research, but financing tends to be universally more difficult to obtain after the start of the fiscal year. However, it is far better to submit a request or apply for a grant that is justified by monthly data than to run out of cash without any hard numbers to demonstrate additional needs.

Step Four: Analysis

At the end of a project or year, the final crucial step of any budget is analysis. Crunching numbers can yield great insight into the strengths and weaknesses of one’s initial budget plan. Th is process can be highly educational and will likely inform projections for the next budget.

A researcher that proves deft at managing funds appeals greatly to potential grant-givers and corporate or university leadership. Th us, effective budget design can be highly beneficial to any scientist’s career. Bigger, better projects with a larger bottom line are more likely to find their way to the labs of a good money manager. Science always comes first, but studies require funding, and funds will not last without a budget.

— Mapes is a Washington, D.C.–based freelance writer and a
frequent contributor to Endocrine News. She wrote about the
“Plan B” pill and overweight women in the August issue.

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