At that time, as I understand it, NSERC committees had an envelope and a lot of the discussion was about how to allocate the funding to the researchers they wanted to fund. New researchers often got small amounts to “prove themselves” on the expectation that if they made significant contributions their funding would go up in future. And the amounts also linked somewhat to quality.

The new process you outline seems to be trying to move more towards allocating funds based on needs. And a “normal” cost is being used as a baseline for needs in particular areas. If that is the case, then your advice to justify costs above “normal” is a good one.

Of course all of this is in the context of trying to distribute not enough money to as many researchers as possible. The real problem is the low budgets of all 3 councils.

BTW, the SSHRC process if very different. It is based on “essential costs”. So if the committee thinks you need what you asked for to do the research, you’ll get it. If they think it is too high, they will give you the amount they think you need. If they think it is too low, you might be in danger of not being funded on the grounds that the research isn’t feasible at that budget.