Planning a Budget for a Proposal in 5 Easy Steps (+ Example)

This is a guest article by author Edoardo Binda Zane. We start with 5 steps for how to put a proposal budget together and then Edoardo shares a worked (fictional) example to show you what the budget would look like once it is completed.

A proposal budget is similar to a project budget, but with a very different goal.

A project budget is meant to guide you step-by-step throughout the project phases, and is meant to be changed and adapted (within limits, of course) to what happens during the project itself.

A proposal budget instead aims to convince the evaluator that reads your proposal that you have a solid grasp of your plan and that you are worthy of being trusted with funding.

Granted, if the budget you build in the proposal phase is carefully put together and everything goes according to plan, you will end up using that directly as your project budget, but for the purposes of this article, let’s just stick to the proposal phase.

(For more on how to create a project budget, this article has all the info you need.)

So, how do you convince an evaluator that your idea will work?

First, you need to explain your project and process well in the narrative of your proposal. This is key to doing a presentation to management.

Second, you need to provide solid justification for the costs you will incur in each phase. Not only a solid justification, actually, but also a synthetic one.

In a nutshell: the evaluator needs to be able to read a one-to-two-page document and feel reassured enough to give you the £600k you need. In this article, I will show you exactly how to do that.

Step 1: Build a Gantt Chart

Gantt charts are loved and hated. It is undeniable, however, that they are the clearest overview you can get of a project in its entirety.

If you’re trying to convince the evaluator, then plot every work package and task on a Gantt chart and provide him or her with a clear picture of what will happen when. This will also tell them that you have thought that part out carefully.

The Gantt chart is one of the documents every project needs — but for now, at this point in the work, you won’t need to complete every one of those in detail.

Step 2: Add Person-Days Per Company

This is a core point. In order to estimate costs well, you first need to estimate the amount of work you need to put into each activity you have planned.

Not only that: you need to estimate who will do the work. I don’t mean who personally (name and surname), I mean what type of person or role will work on each task.

Is it developers? Is it marketers? Is it researchers? Each one has a different hourly rate and a different pace of work.

Plan your person-days accordingly. If you are part of a consortium, remember to separate these estimates per company, as you will also need to present the budget broken down per company. In the example below, Almira has been allocated 656 person-days for work package 1.

Example chart of work packages and tasks
There are more examples in Edoardo’s book, Writing Proposals: A Handbook of What Makes your Project Right for Funding

Step 3: Estimate Labour Costs

Once you have the duration and the person-days or hours for each project task, it’s time to write down how much their work would cost.

To do this, you simply need to multiply the hourly or daily rate of each category of personnel in each company by the amount of days/hours they will be working.

If you want, you can also work with a weighted average, your call. As for the daily rate, if you are not familiar on how to calculate it, take a look at the end of the article as I’ve included a brief how-to for you.

In the example below, Almira’s 656 person-days have been broken down into four staff categories with four daily rates.

Multiplying daily rates by person days per category and summing the four totals gives the budget allocation for Almira for WP1 (540,25*122 + 489*255 + 262*255 + 125*24 = 260.415,50).

Estimate Labor Budget chart

Step 4: Add Subcontracting and Travel Costs

Subcontracting and travel costs are the two other categories of costs you need to take care of. You can add a third category “other” to use for whatever costs are still left out (e.g. purchasing specific equipment).

For Travel Costs, multiply the number of travelers by the cost of a return ticket to their destination. Slightly overestimating the costs is a good idea. After you have that, add a daily allowance for each traveler.

If you don’t have estimates for daily allowances you can refer to the official ones used for the OECD staff (available here). Remember to note what work package each travel is grouped under.

For subcontracting you merely need to indicate who you will hire, in what work package and for what.

Step 5: Bring It All Together

As mentioned in the beginning, presenting everything in a clear and simple way is the number one requirement of a good budget.

You’re combining resource management, schedule management and project financial management (important project management Knowledge Areas) to prepare a package for your proposal that no one will be able to resist!

So how does this budget information look in your proposal? Below is an example of how it all comes together.

This is taken from Edoardo’s book: Writing Proposals: a handbook of what makes your project right for funding. All company names are made up.

Example of Proposal Budget

Here’s an example of a proposal budget.

Our Consortium proposes a total price of € 2,223,471,26 (19% VAT excluded) for this project, distributed as follows:

  • Staff Costs: 897.231,26
  • Subcontracts: 260,00
  • Travel Costs: 980,00
  • Other costs: 000,00

The tables below provide a further breakdown of the budget. (WP stands for ‘work package’ in the tables below.)


The table below shows the overview. This is what you’d put at the beginning of your project proposal document to show the overall costs at a glance.

Table showing sample budget overview

Staff Costs

Here’s the worked example table of the staff costs. For each work package (which would be detailed elsewhere in the proposal documentation), we have said which individual and company would be incurring what cost.

Then the staff costs per work package are totaled across the line, and then the total per work package is summed at the bottom.

Remember, this table is just staff costs, not the overall cost of the work package.

staff costs table


We also need to include detail of subcontracting costs, if your proposal relies on other parties to complete the work. In the example below, the table shows the partner, the work package they will be involved in, the total cost for that element and then what the cost is for.

Subcontracting costs include things like external consultancy fees, survey agency payments, any fees related to contractors using special materials, a creative team and so on.

Table of subcontractor costs

Travel Budget

All partners except Lerei will be sending 2 people to each meeting. 9 meetings have been planned, totaling 18 travelers per partner (9 for Lerei).

We can show the travel budget in another table. The example travel budget for this project is shown in the table below. It sets out the partner, the work package where the travel costs will be incurred, the cost per traveler and the number of people who will be traveling at that time. There is also the total cost and the description.

Travel costs are generally people going to meetings. The more you can demonstrate your expertise in running a virtual team, the lower you can make these costs (although they may be offset by some extra tech or licenses required for remote working software).

Table of travel costs

Other Costs

The listed cost of €25,000 is for the purchase of a specific accounting software package for WP1.

Make sure you record any other costs that don’t fit neatly into the categories above. All these tables are going to be in the back of your proposal documentation as an appendix, so there should be plenty of space for you to include everything you need. This is also important for transparency.


The picture below outlines the timing of the project throughout the 41 planned weeks as well as the deliverables throughout the project.

Timing of project

This is a worked example of a Gantt chart for this example project. Your timings are obviously going to be different, but you can see that the tasks are listed per work package with a number of weeks duration clearly marked.

The Gantt chart is relatively high level and for the purposes of communication rather than for project tracking and monitoring.

Worked Example: Hourly Rate Calculation

Your hourly rate must be related to the actual working hours you have in a year (this is based on The European Commission’s Horizon 2020 Methodology). Follow the steps in the image below to get started.

Table of hours worked

In summary, you work out the working days per year, then take off annual holidays, bank holidays and an estimate for sickness absence and other days out of the office e.g. training.

That gives you the number of working days per year your resource will be available. Then work out the working hours per day. Typically this is 8 hours per day.

With the number of hours per day (8) and the number of working days (around 210) then you can calculate the hours worked per year.

Hourly rate calculation

Once that is taken care of, it is time to estimate the hourly rate. To do this you need to have the following information for each person:

  • Employee’s salary
  • Employer’s social security charges per year per employee
  • Other Direct costs per employee (Lunch tickets, car, telephone…)
  • Overhead (if any)

Sum the above costs and divide the total by the hours worked per year to obtain the hourly rate.

About the author: Edoardo Binda Zane is an innovation trainer and creativity consultant. He’s the author of Effective Decision Making and Writing Proposals: A Handbook of What Makes Your Project Right for Funding.

Want to keep reading? Check out the only guide you’ll ever need for Project Estimating.

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planning a proposal budget in 5 easy steps