Project Expenses


There may be significant project expenses associated with developing your project, including prototyping and market research expenses. Your company client is aware of this. All decisions about what costs to incur must be made in consultation with the primary company contact and must be approved by the company. Each decision is made based on analysis of the cost and benefits. The scope of approved costs will depend on the company and the project. A large company may pay $12,000 for a professional focus group or $5,000 for a contract machine shop to build parts for a prototype. On the other hand, a pre-startup company might balk at buying a $200 sensor needed to do bench testing of a design idea.

It is essential that all project costs are forecast and tracked. Forecasting means that the team should know in advance what costs are coming up over the next few weeks and months so that everyone is prepared. Tracking means the team should know exactly what has been spent and what is left. Establishing a project budget early in the Fall semester is a good place to start.

Each team should appoint a team treasurer. The treasurer is charged with all money matters, from keeping the web checkbook up to date, to consulting with the company about anticipated expenditures. The treasurer should be particularly diligent about tracking expense accounts.

There are two types of expenses that the project will incur: client company expenses and NPDBD team discretionary fund expenses.

1. Client company expenses

Expenses related to prototyping and market research are paid by the client company. The client company approve expenses before they are incurred. Some companies will do the purchasing for you. Other companies will reimburse you for out of pocket costs. Still other companies will place a deposit in the NPDBD course account for use by the team. At an early meeting, discuss with your company how such expenses will be handled. Discuss what expenses are appropriate, what expenses are not appropriate, who from the company needs to give approval for expenses, and the paperwork involved for being reimbursed. Ask (don't assume) the company if they are going to cover a particular expense.

Suggestion: Have this discussion with the company a week or two after the kick-off meeting. If you leave this discussion until after expenses have been incurred, it is very likely that you will not be reimbursed.

Track all company-paid project expenses in the web checkbook. As for getting reimbursed by the company, the process depends on the company, so ask. The course is not involved in this.

2. Team Discretionary Fund

The course provides each team with a $1,000 discretionary fund to cover expenses related to the project which would be inappropriate or inconvenient for the sponsor to pay. Use the fund to pay for small parts and lab supplies for the prototype, copying, occasional snacks for the team, a reference book, or other project related expenses. The company should be first in line to pay any and all project expenses. The discretionary fund is there because sometimes the company approval procedure takes too long or the expense is so small that it is not worth running through the company. At the end of the course in May, you should have a good portion of the $1,000 remaining.

The discretionary fund is managed as a standard University account with a University EFS number. Because this is a U account and because the U has strict audit procedures, the rules below must be followed if team members wish to be reimbursed for out-of-pocket expenses.

First, whenever possible order items through U Market because shipping is free and because there are no administrative overhead costs to process the purchase. Ask an instructor or the Course Administrator if you don't know how to use U Market. U Market, among other suppliers has Innovative Office Solutions (kind of like Staples), Digi-Key (a leading distributor of electronics) and Grainger (industrial supplies; equivalent to Grainger).

Discretionary Fund Rules
  1. The team treasurer is responsible for fiscal management, particularly for knowing how much of the discretionary fund has been spent.
  2. All expenses must be recorded on the web checkbook.
  3. Single expenses over $100 must be approved in advance by the project faculty advisor. (What this means is that if you are going to make a web purchase at 2 in the morning, get approval from the advisor the day before.)
  4. Fund can be used to purchase snacks for team meetings if (a) all team food costs over the nine months total no more than $300, (b) any one food event costs no more than $30, (c) any one receipt totals no more than $30, (d) no alcohol. Basically, this means pizza and bagels for a few team meetings.
  5. If your company location is more than 15 miles from the U, the team can allocate up to $150 from the discretionary fund for travel by private auto using the U's regular travel reimbursement rate. No more than one car going to the location at a time so please car pool.
  6. If purchased out of pocket, save your receipts. No receipts no reimbursement. You will also not be reimbursed for state sales tax on anything other than food as UMN is a tax exempt institution. When purchasing, inform the vendor the purchase is "University of Minnesota tax exempt with MN Tax ID 8029894." 
Appropriate expenses for the discretionary fund
  1. Prototyping supplies
  2. Market research expenses
  3. Occasional team snacks (see rules)
  4. Report and presentation materials
Inappropriate expenses for the discretionary fund
  1. Excessive snacks
  2. Travel (except as noted above)
  3. Parties
  4. Alcohol
  5. Anything else that might look bad; please use your judgement.
How to buy
  1. The preferred purchase method is through U Market because no out-of pocket costs are incurred and no reimbursement required. In your justification please indicate your project name and assign the cart to Victoria Piorek.
  2. The next best method is for your faculty advisor to make the purchase using their University Purchasing Card, which is an ordinary credit card. Your advisor may or may not have a Purchasing Card and may or may not want to use their Purchasing Card for team expenses. Check with your advisor.
  3. The next best method is using a University of Minnesota purchase order. Check with your faculty advisor for the logistics.
  4. The last method is for you to pay and to be reimbursed. This is often the most convenient for small items you need now, but has the down side of back-end logistics to process the reimbursement. See the next section for reimbursement. 
  5. The treasurer must know about all purchases and all purchases must be recorded in the web checkbook.

Reimbursement procedure for discretionary fund, out-of-pocket expenses
Follow the instructions on the NPDBD reimbursement form, and submit the form to the Course AdministratorThe person submitting the reimbursement form must also submit a a W-9 form (one-time activity).  One person per team (preferably the Treasurer) can submit reimbursement requests as long as they are the ones making the purchase. When possible bundle receipts and submit one request because it costs the university a lot of money to process the request. Reimbursements must be submitted within 30 days of incurring the expense. 

Record Keeping

The record of project expenses is kept in a checkbook on the team Google Drive. Set this up as a Google doc spreadsheet. Have separate sections for company expenses and discretionary fund. The treasurer must keep the checkbook up to date as it must reflect project expenses with absolute accuracy.