The document provides guidance on preparing a budget estimate and narrative for federal grants and state/local RFPs. It emphasizes compliance with cost principles outlined in 2 CFR Part 200, requiring budgeted costs to be allowable, allocable, and reasonable. The budget narrative must detail various cost categories, such as Personnel, Fringe Benefits, Travel, Equipment, Supplies, Contractual, Construction, and Other Direct Costs. Each category requires clear justifications and documentation to support the projected costs, including breakdowns and itemizations for specific expenditures. Applicants must include a cost-sharing plan, detailing contributions such as in-kind services and third-party donations. The narrative must describe the necessity of each expense and demonstrate how it directly relates to project execution. Indirect costs are also addressed, with options for including federally negotiated rates or using a de minimis rate for those without approval. Overall, the guidance aims to ensure projects are financially prudent and comply with federal funding requirements, providing a structured approach to budgeting in grant applications.