Cost Overruns

Learn about overrun monitoring and resolution on sponsored projects at Columbia University.


A cost overrun in a sponsored project occurs when total expenditures charged to the sponsored project exceed the total project budget. Overrun spending can place the University at risk because overrun costs are not covered by sponsored agreements and cannot be billed or reported to the sponsor.

The University expects that Principal Investigator (PIs) and Department Administrators (DAs) will monitor each sponsored project to ensure that the funds awarded by the sponsor will be sufficient to cover all of the expenses incurred in support the project, and that, if necessary, other resources will be identified and utilized in order to avoid incurring an anticipated cost overrun.

When an overrun exists, it is expected that the PI and/or DA will justify the overrun to the Sponsored Projects Finance (SPF) Finance and Compliance Manager or clear it to an alternate funding source.

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, wherever possible, cost overruns are avoided. 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 none of the above applies, the overrun must be cleared.

The method used to clear an overrun depends on how the overrun occurred.

Method 1

When the expenses generating the overrun are in support of the sponsored project's goals, the overrun should be cleared via an ITF.

  • Credit the natural account 70435 on the sponsored project for the direct-cost portion of the total overrun, and
  • Debit the natural account 75435 on the non-sponsored project for the same amount

Reminder: To calculate the direct-cost portion of an overrun, divide the amount of the overrun by 1 + the Facilities and Administrative (F&A) rate for that project. For example: if an overrun is $1,620 and the F&A rate is 62%, the direct cost portion to move is $1,000 or ($1,620/1.62)

The department must submit any overrun clearing transactions, obtain all department approval, and notify the SPF Finance and Compliance Manager of the pending transaction(s) by the deadline.

Method 2

If the overrun is caused by expenses charged to the project in error (i.e., not in support of the project's goals), the department should remove expenses via the mechanism through which they were originally charged to the project (such as AP journal or payroll cost transfer). When moving costs to another sponsored project, please note that existing polices on the timing of such transfers apply.




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