Excess Residuals

     

OSU Guidelines for Management of Excessive Residuals on Fixed Price Contracts

 

In accordance with Uniform Guidance 2 CFR 200.403, 2 CFR 200.404 and 2 CFR 200.405, project costs charged to grants and contracts should be "allowable, reasonable, and allocable." Uniform Guidance also requires the consistent treatment of costs regardless of the funding source. For Fixed Price proposals and awards, Oklahoma State University expects for budgets to be adequate and appropriate for the expected scope of work requested by the sponsor. The Principle Investigator (PI) should prepare a budget to cover the total cost of the work, including the full recovery of the Facilities & Administrative (F&A) Costs. If the scope of the project changes in advance of completing the work, such that there is the foreseeable potential for over-expenditures or excessive residuals, the budget should be revised accordingly in consultation with the sponsor.

 

Given that projects should be proposed in an effort to break even based on a given scope of work, an excessive residual at the completion of a project (in the absence of a change in scope, as described above) is a cause for concern. An excessive residual could indicate:

• Problems with university's process for estimating costs for a project at the time of the proposal
• The full scope of the project was not executed
• Project costs were charged to incorrect funds
• Other extenuating or unusual circumstances arose

Because it is difficult to propose a project that will be completed precisely on budget, small residuals are common and can be managed according to prevailing policies and practices. But for projects ending with residuals at or above 25% of the total budget, a systematic analysis of the budget and charges to the project fund must be conducted under the oversight of Grants & Contracts Financial Administration (GCFA) prior to closing the project. Such an analysis will determine if any costs associated with the project were not properly charged to the project fund, and ensure that such charges are transferred to the project fund. If, after all the charges associated with the project have been appropriately recorded, the residual remains at or above 25% of the total budget, the PI, in consultation with the Associate Dean of Research of the respective college, must either:

• Contact the sponsor and offer to refund residual funds to the sponsor
• Contact the sponsor and arrange to apply the residual funds to a newly-contracted project
• Contact the sponsor and obtain consent to allow the residual funds to remain at the university to fund research unrelated to the original project (fully disclosing the amount of the residual
• Obtain permission from the Vice President for Research to pursue a different course of action based on extenuating circumstances

In addition to ensure that the specific project is closed out in a responsible manner, the GCFA analysis will also attempt to identify any administrative or systematic problems that might be causing difficulties properly estimating project costs. If such problems are identified, a plan to mitigate them in future proposals will be devised, implemented and communicated to appropriate administrators.