Budgets. They're kinda important when it comes to writing a grant proposal. Not only does it let the agency know how you plan to spend their money, but it also tells your financial office how to categorize the money when you get it. In this way, every federal or foundation dollar you bring in finds itself predetermined for a certain function. Some agencies are more or less stringent on money moving between categories or how strict those categories are, but you get the point.
Beyond that, there is certainly pressure to keep the dollar amount of a proposal as low as possible while making sure you can do the work. If you don't think that panels notice the "bang for buck" of grants when deciding between two similarly rated proposals, think again. Therefore "padding" numbers to ensure you have some leeway in the final accounting is a fine line to walk.
Where all of this comes to a head is when numbers change during the time between when you make your budget and you have to spend the money. Sudden spikes in the cost of reagents, services or personnel can soak up grant funds too quickly and leave PI scrambling for ways to rob Peter to pay Paul.
The one place you might expect to understand this issue would be a university, right? Right?
In writing my proposals for this round, I mistakenly used the grad student tuition and stipend numbers for the `11-`14 academic years and postdoc health care costs for that same time period. When I went to review my budgets with my college, they had different numbers (I'll give you a guess which direction the numbers went). Okay, got that all sorted. When I sent the budgets for approval at the grant office it turns out that my college didn't have the brand new shiny number from three weeks ago, so the numbers needed additional alteration.
In a six month period the numbers we were given that projected out to 2014 went up, twice.
Okay, I can handle making the changes to my budget, but you can see where this is going. If my proposal is funded at $X and the cost to the grant in year three (or even year one) is $X+20%, where does that money come from? I'm not sure yet, but I wonder why we bother giving exact projected numbers to faculty ($15,812? Really?) for budgeting purposes when someone somewhere is just throwing a dart at a board to come up with them.