Fixed price accounts are established when a contract or agreement carries with it terms that provide a fixed or firm price in exchange for a specific scope of work or designated service. Under a fixed price contract or agreement, it is expected that the scope of work will be met by the PI for the fixed price amount defined in the contract or agreement. If labor costs exceed the fixed price, such become the responsibility of the PI – the contact or agreement indicates that the work will be performed for the stated fixed price. Similarly, if labor costs do not fully expend the funds designed in the fixed price contract or agreement, the funds remaining are then available to the PI for future related work. Note that in the latter case, remaining funds are released for future related work only upon confirmation that the work on the project has been fully completed, deliverables have been provided, the sponsor/agency has acknowledged acceptance, and payment in full has been received.
Some fixed price contracts or agreements do include clauses allowing for adjustment of pricing throughout the contract/agreement period.
When submitting a proposal under a fixed price option, it is expected that the PI will develop a reasonable and logical detailed budget. Once funded, it is expected that all costs directly associated with performing the work will be charged directly against the fixed price contract/agreement. It is critical for the PI to ensure that proper expenses and effort be charged to these projects. With proper proposal development and accurate application of expenditure, it should be unusual for funds to remain at the end of a project, and even more unusual for such remaining funds to be significant. If unspent funds remain, a PI should clearly be able to explain why the project cost less than projected.
Fixed price contracts/agreements are established with designated begin and end dates. When an end date has been reached and full payment has been received from the sponsor/agency, documentation should be retained on file detailing that the project is completed, all deliverables have been provided, and the sponsor/agency has acknowledged acceptance. Any documentation the PI has in this regard is to be provided to CALS Research Division and to RSP.
Once the project is confirmed as completed and paid, the project can be considered for close-out and PIs may request that funds remaining be transferred to a residual balance account. Utilize a Transfer of Residual Balance from a Fixed-Price Project form available on RSP’s website at http://www.rsp.wisc.edu/awardmgt/residbal.html. Please forward this form to Sandy Fowler in the CALS Research Division for CALS’ review and approval.
Note: If the amount remaining is minimal in regard to the full project amount (i.e., less than 25% of the full project amount), the remaining funds may be transferred to a residual balance account without question. However, if the amount remaining is excessive (i.e., more than 25% of the full project amount), an explanation needs to be included with the transfer request indicating what has occurred that caused a sizable/excessive balance to remain on the project.
Request for further information or questions can be directed to Sandy Fowler at email@example.com or (608) 262-3947.This entry was posted in Research by . Bookmark the permalink.