Don't Fudge on Your Budget: Toeing the Line Items

A well thought-out budget
is a clear plan for making a film. And a good budget reveals a lot about how a
film is going to be made, what kind of story you'll be telling, what kind of
crew you plan to use and what sort of equipment you've selected. But how do
you prepare a budget that fits your documentary? This article provides a
nuts-and-bolts primer on documentary budgeting.

Preparing to Create a
Budget

It is often said that there
is a triangle of quality in production: the story itself, the production
schedule and the production budget. Changes to one of the three "corners" of
this triangle affect the other two. Thus, before you can think about your
budget, you must think about your story. What is the story you're trying to
tell? Who are the characters? What elements will it requireInterviews?
Archival research? Vrit? Narration? Re-enactments?

Then you must sketch out a
schedule. How long will you research? When will shooting begin and how long
will it take? What about editing and post-production? Are there any special
constraints on the schedule, such as a tight shooting window or an immovable
delivery deadline?

Once you've drafted a
schedule, try to list the key assumptions that you'll need to prepare the
budget. How long will the film be? What tape or film format will you use? How
many people will be on your crew? How many "hats" will you wear yourself? What
will your shooting ratio be? How much travel will be required? What
deliverables will be needed?

With a description of the
story, a draft schedule and a list of assumptions in hand, you're almost ready
to start budgeting.

A Common
Question

"But how can I make a
budget if I don't know how much money I'll be able to raise?" While some
filmmakers are lucky and persistent enough to raise the necessary funds before
they begin, a vast number begin shooting and even editing while still
fundraising. In these cases, you'll probably need two budgets. The
first budget should include "professional" rates and will be the budget that
you'll submit to potential funders. The second should be the "bare bones"
budget that you'll keep hidden in your desk drawer. This will be the absolute
minimum amount of money needed to complete the project in a way that is
acceptable to you.

This article will focus on
creating the "professional" budget. Once created, you can make a "bare bones"
budget by reducing and deleting appropriate items.

Software

If you're savvy with
spreadsheet programs like Microsoft Excel, you can create a budget fairly
quickly without any specialized software. But several software packages are
available that are designed specifically for film budgeting, including EP
Budgeting (formerly Movie Magic), Production Pro Budgeting, Axium Budgeting
and Showbiz Budgeting. Avoid using Microsoft Word for budgets. Long tables can
quickly become unmanageable, and it's much harder to work with formulas in
Word.

The Budget
Topsheet

The topsheet is a one-page
summary of the budget. As you can see in the sample below, expenses are generally
divided into two sections. "Above-the-line" costs include the so-called key
creative costs such as the producer, director, writer and actors (if
any), and may also include the costs of rights required to make the project.
"Below-the-line" costs normally include the hard production costs such as
crew, equipment and services. Budgets can be organized in a number of ways, of
course. For example, some place post-production in a separate section and some
have an additional section for general overhead.

The Detail
Budget

Creating a detailed budget
requires a lot of research. Every budget is different and you'll need to call
potential crew members, vendors, post facilities, hotels and airlines for
guidance and bids, and to start negotiating rates. The budget shown here is
merely a sample. Please don't rely on the rates shown here; you'll need to
research rates for each individual project.

Above the actual budget, it
is common practice to list some basic assumptions about the project. The
sample budget shows that the project will be shot on DV, the plan calls for
two months of research, 35 shooting days will be spread across 12 weeks, etc.

The sample budget includes
a number of line items where no money is being spent. Normally, these "empty"
or "zero amount accounts" would not be shown. But they are included here to
make the sample budget more useful as a template, so that you don't forget
anything when you begin making your own budget.

Now, let's examine the
budget section by section:

1000 Research--This
section includes money for the books, videos, meetings and other expenses
required to research the project.

2000 Directors,
Producers, Writers--
These fees vary widely but should be reasonable for
each person's experience level, production locale and overall budget level.
Since many projects arise from a director's passion, some directors accept a
lower fee in order to get more "money on the screen." In this sample budget, a
single filmmaker is serving as director/producer and plans to spend about a
year on this project. On union projects, be sure you understand the terms of
any applicable guild agreements.

3000 Story & Other
Rights
--If your project is based on a book, an article, a song or other
copyrighted material, you may have to pay for the rights to make a documentary
based on that material. Consult an attorney.

3100 Archival
Photographs & Stills--
Research the sources for any still photographs
that you plan to use. Will you need to hire a researcher? How much will it
cost to get preview copies of photos and license the images that you select?

3200 Stock Footage &
Film Clips
--As in section 3100, you must think through the costs of both
researching and licensing material. The devil is in the details, and you'll
need to carefully understand the pricing for each clip. For example, some
archives charge a 30-second minimum, no matter the length of the clip that you
use, and you must budget accordingly.

3300 Talent--If you
are planning to do re-enactments with actors or hire a narrator, you'll need
to list them here. Depending on how well-known an actor is, rates can vary
considerably. If you are working with union performers, be sure to follow the
agreement that governs your project. And be especially cautious if you're
preparing a project that includes shooting in a theater, concert hall or
sports arena that falls under union jurisdiction. Thoroughly understand all
such constraints before you begin to budget.

3400 Music--Music
rights can become both complicated and expensive. To control these costs in
the sample budget, it is assumed that all of the music will be written
specifically for the project by a composer. Many projects, however, must
budget for licensing additional music rights and may hire a music supervisor
to manage all issues relating to music.

4000 Production
Staff
--The composition of the crew and their rates can vary considerably.
In the sample budget, the director/producer has decided to hire a production
coordinator but do the rest of the producing herself. In this case, the
shooting crew consists of a director of photography, sound recordist and
production assistant. Keep in mind that while crew rates are certainly
negotiable, it's important to maintain parity among different crew members.

4100 Editorial
Staff
--Given the great importance of editing to documentary-making, the
money allocated for an experienced editor who is passionate about your story
is perhapsmay just be the single most important line item in the budget. The
editorial team usually includes an editor and an assistant. On low-budget
projects, the director or an intern may perform some assistant functions, such
as logging and capturing footage. This can be a good cost-saving measure, but
be careful not to slow the editing process and be sure that you have access to
a good tech support person in case problems arise.

In both of the staff
sections above, the last line item is called "Personnel Taxes," also known as
"Fringes." These are the costs that an employer must pay in addition to an
employee's salary and include Social Security, Medicare, federal and state
unemployment insurance, workers' compensation and payroll service fees, if
any. A payroll service can provide you with current rates and applicable
cutoffs for the states where you'll be shooting, and can also process these
payments. In the sample budget, these fees add up to about 21 percent. On
union projects, there may be additional fringes. Check the terms of any
applicable Guild agreements.

Beware: Some producers try
to avoid paying fringes by classifying crew members as independent
contractors. The IRS, however, has very specific rules about who can and
cannot be classified as an employee, and most positions on a film crew are
considered to be employees. Consult your attorney or accountant.

5000-5800 Production
Expenses
--These sections detail the camera, sound, lighting and grip
equipment, the facilities and the services required to shoot the documentary.
In a few cases, equipment is being purchased because it is less expensive than
renting. At the end of the production, such assets should then be resold. The
quantity for these purchases is listed as "0.5" to indicate that the items
will be resold for half the purchase price, and thuss the ultimate cost to the
production is half the purchase price.

"Production Film & Lab"
covers videotape stock and would include film stock and processing, although
none is budgeted in this sample.

Take special note of line
5830, "Crew Meals." Production work is hard and nothing tells a crew that you
respect their work and talent more than providing proper meals. I once
line-produced a low-budget feature where we decided to serve hot breakfast in
addition to lunch, and the crew arrived early every day just to have
breakfast. Sometimes a little money goes a long way.

6000 Travel
Expenses
--Travel expenses add up quickly and are scrutinized by funders.
Try to keep travel to a minimum and hire local crew whenever possible. When
you must travel, research airfare and hotel rates meticulously and seek out
advice from people who have shot in the location where you're planning to go.

"Per diems" allow crew
members to pay for their own meals and expenses. Investigate your funders'
rules carefully before budgeting per diems, however, as some funders do not
allow them.

7000-7700
Post-Production
--As problems arise during production, someone will
invariably suggest that you "just fix it in post." But that can get expensive.
It might be better to think of post as the second half of a marathon. You
can't afford to carry too much baggage from the first half. You're best
prepared for post by doing plenty of research before you even pick up a
camera. Call your editor, online facility, colorist and sound designer. Talk
to them about the intricacies of the camera that you'll be using, frame rate,
time code, sync and delivery requirements. Discuss every detail that could get
complicated later. These conversations will help you budget your post
workflow, and may also lead to suggestions that will save you time and money
during production.

Note that the cost of some
elements of the post process depend in part on how much money you have. For
example, should you spend 24 hours or 30 hours doing color correction? It
depends on how slowly you would like to go but also on what you can afford.

8000 Insurance--Film
production is like war. Cars and property get damaged. People get hurt. You
need insurance. There are a number of different kinds of coverage for film
productions and the best way to assess your needs is to talk to several
brokers who specialize in the entertainment industry. Note that some coverage,
like workers' compensation, is required by law.

9000 Office &
Administrative Costs
--Most of these items are self-explanatory. Note that
in order to rent a production office you may be required to provide an
insurance certificate.

9100-9200 Promotion,
Publicity, Website--
The line items shown in the sample budget could
certainly be increased, but keep in mind that some funders, especially
broadcasters, won't allow these items as part of the production budget.

9300 Professional
Services
--Talk with your attorney ahead of time to estimate the cost of
legal expenses. Unexpected legal services add up quickly.

10000-10200 Other
Required Items--
Professional publicity and production stills are critical
to securing placement in press and film festival catalogs. Closed-captioning
is required by a number of broadcasters.

Contingency--This is
a buffer, typically between five and ten percent of the total budget.
Production is unpredictable, and contingency prepares you for the unexpected.
This is a commonly accepted line item, but as always, you should check your
funder's guidelines. Some do not allow for a contingency line in the budget.
In these cases, you may have to adjust certain line items in the budget to
help prepare for the unexpected.

Fiscal Sponsor
Fee--
If your project is fiscally sponsored by a nonprofit organization
(allowing you to receive grants, donations and funding
from organizations or individuals that give monies only to a nonprofit), you
probably have to pay an administrative fee to that organization. In the case
of the sample budget, that fee is five percent.

Now You're Done, Right?

Not
quite. It's time to think about the big picture again. You've budgeted your
film the way you'd like to shoot it, but can you raise the full amount that
you've budgeted from at much money from foundations or from a television
network? You may want create a short budget for the funds that you expect to
raise.

Suppose you feel you can
only raise $250,000. What compromises can you make to reduce the budget to an
appropriate level but still maintain the project's initial vision? What kinds
of deals can you get? Can you shoot for fewer days? Use a smaller crew?
Eliminate travel? Shorten the edit period? Use different equipment?

As you can see, there is
more research to be done and there are more careful judgment calls to be made.
And those are the real essentials of good budgeting.

This article is based on
a workshop that was originally presented at Doculink meetings in Los Angeles,
San Francisco and New York in the Spring of 2005.

Cost Reports: Knowing
Where You Are

A budget is not something
to be written and left in a file cabinet. It is a living document, and if you
keep careful track of your expenses and compare them to your budget
periodically, you'll have a powerful tool for managing your production. For
example, suppose you're early in the edit process and your editor asks whether
the production can afford to keep the assistant editor on for two additional
weeks. You have money in the bank today. But if you spend it now, you worry
that you will not be able to cover costs later. How do you make a good
decision?

The answer is to look at
your cost report. A cost report shows where you are in comparison to your
budget at a given time, and is usually created on a periodic basis. The faster
you're spending money, the more often you should create cost reports. And many
funders will require cost reports at certain intervals.

By examining the report,
you'll quickly be able to see if you're under budget in some areas and can
allocate extra money to keep the assistant editor on, or if you're over budget
in most areas and simply can't afford the additional expense.

A short excerpt from a cost
report is shown here. In the left section you see the project budget. The
center section shows "actual costs" that have already occurred. The right
section shows "committed costs" (purchase orders, etc.) and the "estimate to
complete" for each line item. This "estimate to complete" column is the most
subjective and perhaps the most important. It is where a producer must decide
how much more money to spend in a given area. By making good decisions, you
can keep the overall project from going over budget.

For example, in the excerpt
shown here, the camera department is running over budget by $530. This cannot
be avoided, so the producer has reduced the amount that will be spent in the
sound department by $580 to compensate. The two variances balance each other
out and the project remains on budget. Without a cost report, the producer
wouldn't have known that the camera department was over budget. And without
creating cost reports frequently enough, there wouldn't have been time to make
an adjustment in another department to balance things out.

A good cost report also
lets you predict future problems. For example, if early in production you see
that you're spending more on tape stock than you had planned, you can predict
that the amount of time and money needed to log, transcribe, digitize and edit
the footage is likely to increase as well. As in the previous example, it may
not be desirable to reduce the amount that's being shot, but perhaps everyone
can agree to conserve money in another area to keep the project on budget.

A cost report is only as
good as the data you enter into it. And you'll need to be able to back up that
data in case one of your funders asks to audit your accounting files. To
create a simple audit trail, you need three things:

  • A cost report
    that shows where you stand in comparison to your budget at a given
    time.

  • Ledger pages
    that list your expenses by category for a given time period.

  • Receipts
    that prove that each expense actually occurred.

Download Sample Budget: SampleBudget.pdf

Download Cost Report Illustration: CostReportIllustration.pdf

Here's a template you can use to customize and create your own budget.
Download the Template: DocSampleBlank.xls

Download a PDF version of this article:
IntroDocBudgetBahar.pdf 

 

Robert Bahar serves on IDA's Board of Directors. He is director and co-founder of DocuLink (www.doculink.org), a grassroots organization fordocumentary filmmakers, and he works as a producer and line producer of documentaries. He can be reached at rbahar10@yahoo.com.

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