This new monthly series (Part 1 of 3) illuminates some of the mysteries associated with budgeting. This is not a step-by step guide, as each film and budget is unique and dependent on numerous variables, but rather, an overview that helps you enact best practices for your next project. Preparedness and adaptability are the most vital tools when maintaining a budget over the life cycle of a film.
See the full publication here, which includes a break down of a detailed sample budget for International and Canadian filmmakers.
Starting Points
First establish broad parameters when creating a budget:
• Schedule delivery date: How long will you be in development, production and post-production?
• Location: What travel and accommodation needs are there?
• Formats: Will the project require archive or re-enactment? How much and what kind? The more you reduce your budgets or defer your fees, the less of a safety net you have and the more likely you are to take risks. It’s only when you have money in your budget that you are able to move things around. However, if you overestimate your budget, you risk not being able to close financing.
• Don’t do guesswork on costs—make calls, get quotes, get rates, try to negotiate flat fees where applicable.
• It is best practice to demonstrate market-level prices for labour. Consult an experienced production manager to go over your budget; even if you have to pay them, it’s worth it. Base your finance plan, and hence your budget, on how much you think can actually be raised and the market value of the film. Be honest with yourself; there’s no point in creating a budget that you’ll never be able to raise the money for.
• BEST PRACTICE: Find out the value of your film by speaking with distributors, sales agents and broadcasters to ascertain what the value of certain films are. Review trades for case studies.
The Core Team For Your Production
• A production manager/production coordinator, either or both, are essential.
• A line producer or production manager; someone who can complement your specific skills, especially if you are a creative producer.
• Team work with another producer or an executive producer is the best support and a good sounding board.
The Core Financial Team For Your Budget
• A line producer or production manager who facilitates production and keeps the budget on track.
• An accountant deals with tax issues and reports funds correctly.
• A bookkeeper makes sure payments and bank statements match, and inputs actual costs to date.
Finding a Balance
As the producer, you constantly cross-reference your expenses with your budget, and constantly move money around based on what ends up costing a little more or a little less than estimated. Continually compare the original budget against weekly or bi-weekly cost reports.
• Cost reports detail the costs to date, weekly costs and estimates to complete the film.
• Cost reports are typically done every one or two weeks, based on when your bookkeeping is done.
• A cash flow report outlines projected cash inflow and outflow by month, and can help a production plan out how they will flow cash in/out of the production, e.g., whether to take out a loan to pay bills until their next payment comes in. This is because most financiers pay in installments, based on schedules.
• In the Estimate to Complete section, you can adjust any additional costs it will take to finish the film by line item.
• A cost report will show you how much you have left to spend on each line item, so is crucial to help you stay on track with your budget.
Getting Paid
Do not defer director and producer fees if this is can be avoided. If the director and producer are deferring their fees, try to have all financiers agree that the deferrals come out of any recoupable funds first. This is not traditional for fiction, but in documentary this can be negotiated.
• BEST PRACTICE: Even if you cannot afford much, try to give your crew per diems. Think forward on crew expenses and try to alleviate some stress by avoiding having your crew pay for things out of pocket.
See the full publication here, which includes a break down of a detailed sample budget for International and Canadian filmmakers.
Thank you to John Choi, Nicolina Lanni, Al Morrow, Stewart le Maréchal, Kristina McLaughlin, Yael Melamede and Karam Masri for offering their advice and expertise