The document discusses key factors to consider when preparing budgets for proposals, including research and development costs, salary costs, travel costs, operational costs, and profit margins. It explains that estimating these costs accurately requires determining project timelines, required personnel, and their compensation. The budget must also account for expenses like utilities, marketing, and maintenance. Considering all relevant costs helps organizations effectively utilize resources and reduce expenses to realize profitability.

1. Measuring Success
Author Note
I have no known conflict of interest to disclose.
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2
MEASURING SUCCESS 2
Costs of Proposal/Service
Introduction
The budget of any proposal, including the costs of materials,
resources, and the time frame of the project must be prepared in
an accurate, appealing, and justifiable way to help the
organization realize profitability. The preparation of a proposal
budget requires one to consider five key factors including
research and development, salaries, travel costs, the profit

2. margin, and operational costs.
Factors to Consider in the Preparation of Proposal Budgets
The effective estimation of costs on a proposal budget requires
the consideration of commitment and efforts among the
stakeholders including employers and employees, estimating
methods, cost sharing, and allowability. For example, in
relation to a principal investigator proposing budgets for
Stanford University, it is the responsibility for the PI to assure
Stanford University, and the potential sponsors that the finances
of the projects are represented in an accurate way. Moreover,
the federal government must define certain prerequisites, such
as the cost principles under §200 of the Uniform Guidance.
Furthermore, the PI must ensure that the budget proposal is
consistent to the requirements imposed by the CAS (federal
Cost Accounting Standards) board; must be observed and at the
proposal phase, in addition to where the funds will be used.
Salary Costs
The process of preparation of proposal budgets involves the
need for an individual to calculate the salary costs for the
proposals. Determining costs also requires one to determine the
participants of the projects and how these people will be
compensated for their efforts. For instance, an advertising
agency could support their clients with media buyers, copy
writers, account executives, art directors, and creative directors
(Shim et al., 2011). In contrast, a software firm could depend on
an implementation specialist, a support representative, and a
customer success representative. Upon identifying the people
who will support the project’s prospect if they decide to work
with the organization, it will be necessary to determine the
amount of money they will make in an hour (Shim et al., 2011).
On the other hand, calculating the salary costs will require one
to multiply the amount of money they make per hour with the
number of hours needed to complete the project.
Research and Development Costs
Alongside estimating salary costs, it is crucial to consider
the costs of research and development when preparing budget.

3. When preparing budgets, it is important for the budget planners
to determine whether the firm had a viable market and offering
(Shim et al., 2011). For instance, Apple Inc. invest heavily in
research and development to help its marketing to understand,
market trends, the changing preferences of customers in relation
to changing technologies, as well as what their competitors are
offering in the tech industry. In determining Apple’s research
and development costs, the marketers had to determine the
amount of capital the firm spent creating the products and other
offerings in its portfolio. As such, Apple Inc. recognizes that,
although the firm would not put the burden to recoup the R&D
costs on a single market segment/ customer base, it is important
to consider these costs as they help the company realize
profitability.
Travel Costs
Travel costs are also an important factor to consider,
especially if the employees must travel. For example, when a
company wants to have its products reach emerging markets, it
would require that the firm sends some employees-marketers, to
assess the potential for profits in that market (Mauskopf et al.,
2015). In other words, if personnel must travel to satisfy the
needs and outcomes of the proposal, it would require budget
planners to calculate and estimate travel costs. For instance,
when Samsung wanted to expand its customer base in emerging
markets across Africa, the executives had the responsibility of
not only identifying the trainers, salespeople, account managers,
and implementation specialists, but also estimate and allocate
travel costs for these delegates’ on-site visits to target clients
(Mauskopf et al., 2015). Therefore, to estimate travel costs, an
individual must multiply the number of travelers, with the costs
of return tickets to their destinations.
Operational Costs
Another cost to consider in preparing budget proposal is
operational expenses. Operational costs include expenses like
utilities, general staff, rent, marketing, maintenance, and sales
expenses. which organizations must incur to continue its

4. business operations (Buckley, 2017). The process of estimating
operating costs of a proposal or service also requires the budget
planners to outline the aspect of cost sharing. For instance, in a
university setting, when a principal investigator proposes a
specific project, the University usually agrees to cost share
University resources. According to Buckley (2017), to ensure
effective utilization of resources and reducing operational costs,
the University is obligated to provide the stated resources in the
performance of the project. Furthermore, based on the
administrative responsibilities and requirements that are
integral within the cost sharing efforts, the PI must weigh the
cost effectiveness versus the expected benefit of each cost.
Conclusion
The preparation of a proposal budget requires planners to
consider various factors, including travel costs, salary costs,
operational costs, and research and development costs. Effective
implementation of projects requires the optimal utilization of
resources, materials, and time, aimed at reducing operational
costs.

5. References
Buckley, S. (2017). Preparing the budget. Making an Effective
Bid: A Practical Guide for Research, Teaching and Consultancy,
73.
Mauskopf, J. A., Earnshaw, S., & Mullins, C. D. (2015). Budget
impact analysis: review of the state of the art. Expert review of
pharmacoeconomics & outcomes research, 5(1), 65-79.
Shim, J. K., Siegel, J. G., & Shim, A. I. (2011). Budgeting
basics and beyond (Vol. 574). John Wiley & Sons.