Budgeting For Production ManagersBudgets for film projects are created months or even years before shooting begins.  As a Production Manager, you may be brought in during the development phase to create the first budget.  Alternatively, the Producer may write the initial budget and bring you in later.  Either way, it’s essential to understand how to read and write budgets.  This article will cover budgets and common budgeting issues Production Managers may face.

The Anatomy of a Budget

The first component of a budget is the assumption memo.  It details all the assumptions that were used to create the budget.  The second component is the top sheet.  The top sheet breaks the budget down into categories and summarizes the information. Financiers will see this page when they sign the agreement with the Producer.  The final section is the budget detail page.  It shows the calculations for each cost.  This section should be as detailed as possible.  You may use the information later when adjusting the budget.

The budget header includes basic information such as the author’s name, the date, the location, the currency being used, the production company, the name of the Producer, the format of the shoot, how many days you will be filming, how many weeks are in post, union information, the cost of location vs. studio shooting, and the document version number.  Having this information in the header will help you refer to important information at a glance.

A budget can take on many forms.  Each studio has a particular structure and their own accounting codes.  The placement of categories may differ and sometimes the labor costs are budgeted separately from purchases and rentals.  Despite any minor differences, all good budgets follow a logical order.  Using studio budget formats can be beneficial as the template is already in place.  You can use their existing format and modify it for your use by adding or deleting categories as necessary.

Keep in mind when structuring your budget that it will be audited after production is complete.  The Financiers will want to know how all the money was spent.  If your budget is poorly structured, it will be more difficult and expensive to analyze during the audit.  Try to be realistic and logical right from the start.

The Budget Breakdown

Before you start your budget, it’s a good idea to break down the schedule.  A full breakdown will give you the most accurate result, but there may not be time to complete a full one.  If that’s the case, there are two quicker ways to break down the schedule.  If you are short on time, you may want to use one of these methods.

The first way is to use lists to estimate costs.  Using several sheets of paper, list the locations, the number of scenes, and any special items needed during filming such as extras or CGI.  Note uncommon circumstances, such as an extra long scene or a night shoot.  This will give you a good idea of where the money will be spent.

The second method involves using a spreadsheet.  Make columns for the scene number, set description, number of pages, cast, extras, and special notes.  As you read the script, fill in each column.  This will give you a rough estimate of the size and scope of the project.

Regardless of which method you use, take note of questions that come to mind as you go through the script.  Also note your assumptions, as this will help you write the assumptions memo later on.  This is also a good time to jot down ideas about special shooting considerations during filming.

Budgeting Decisions

If you join the project before the budget is locked, be sure to look it over and revise allocations as needed.  Once the budget is locked, you will be comparing all actual costs to this budget, so you want it to be as realistic as possible.  Discuss budgetary issues with the Producer and Director.  They will provide valuable input but, in general, you will make the final decisions about budget allocations.

Development costs are paid back on the first day of production.  These costs include fees for writers, editors, producers, and researchers, holding fees for actors, startup costs and travel expenses.  It may also include costs for casting, location scouting, and for the budget creation.  All of these costs are included in the production budget.  Be sure to get all important documentation and receipts from the development phase.  The Production Accountant will need these items to prepare for the final audit.

You can incorporate the developmental costs into the production budget in two ways.  The first is to insert a breakdown of the development budget as an “above the line” item. Some calculations may be involved to deduct double-booked lines.  For example, writers may have received partial payments during the development phase.  Be sure those payments are reflected in the production budget.

The second way to handle development costs in the production budget is similar to the first.  The main difference is that the list of Financiers is itemized in the budget.  Note how much is owed to each Financier and the amount of each check.  Then be sure to deduct double-booked lines as with the first method.  Take extra care when documenting these items, as it’s easy to inadvertently double-book items.

Modifying and Existing Budget

Sometimes you will become involved with a project after the preliminary budget has been created.  It is wise to look carefully at the calculations.  Look for detailed calculations for each allocation.  If there are none, the quality of the budget is questionable.  Large budgetary items, such as picture and sound post, should not be lumped into one category.  If you find areas that need revision, you can replace the figures with more accurate estimates based on calculations.  Detail the breakdown of costs as much as possible.  Attention to detail will help you when cost reporting during production.

If you are new to budgeting, take the time to look up all the calculations and to double check your numbers.  Creating your first budget can be a long process, but you will get faster with practice.  The learning process takes time.  These tips will help you get started so that your budget is as accurate as possible.