Building a production budget | One Stop Business

let's get to it welcome everyone to today's session of one-stop business workshop I'm Lisa Clarkson I lead the team at CBC business and rights and I'll be your moderator these virtual sessions are happening on indigenous nations lands land acknowledgments are specific to each region so we ask you to visit the native land digital website to identify the first nations territories on which you're located I'm in Toronto so I'm on the traditional territory of many nations including the Mississauga's of the credit the Anishinaabe the Chippewa the Hutt nashoni and the wend at people's today you'll be hearing from Alex Lane and Amy Whelan who will give you an introduction on how to build a production budget alex is the senior director of production at cbc where she oversees production budgets on cbc shows prior to working at cbc alex was a line producer on over 600 hours of scripted and unscripted programs amy is an associate production manager at CBC she's worked on budget costing for many years and currently often works with emerging producers like you I'll ask Amy and Alex the questions that you provided please send any additional questions in to the email address which is on your evite and I see that some of you are repeat customers because you've already started sending your questions in so with that I'm going to turn it over to Alex and we'll strain her credibility credibility but I'm gonna ask her to imagine that I'm an emerging producer and tell me where do I start in creating a production budget Alex thanks Lisa first I'd like to say to everybody thank you for having interest in learning how to build a production budget many of us go into this industry because we're creative at heart and we want to develop programming and ideas that we have but some of the basic business functions of the job are just as important as the creative elements so thank you for having an interest every producer should understand the basic fundamentals of a production budget if you can't write your own budget that's okay but you should understand all of the elements that go into it next slide please so where to start what are those basic fundamentals that are in a budget that I talked about and what format do I use and where do I get started so there are different budget programs and different budget templates depending on the type of budget you are going to write telephone Canada or the Canadian media fund are good sources of information in order to access templates for those budgets I'm going to focus mainly on a long-form series type budget in this conversation or a documentary budget or if a feature budget those are pretty much the same types of budgets and I won't get much into development budgets etc but if you have questions you can always send them along next slide please what you need to know to build your budget so the first thing you're going to want to do is understand what the network's deliverables are for the budget that you are building and they should have a clear comprehensive guide that they can send to you once you are discussing your project with a specific network that will give you details in regards to things like what format they want the show in what length they want how many commercial breaks they want whether they want closed captioning or descriptive video what publicity requirements they may have those are all the things that you're going to want to read and have knowledgeable in your toolkit before you start building a budget the other thing is you need to ask yourself if there are any union agreements that apply to the labor or any of the works that are being done for your program and you're going to want to read them understand them and and refresh your memory in regards to how to pay people correctly to stay on side with union agreements that does not mean that every project has union agreements so if you are a non union production you won't need to worry about that step you also are going to want to sit down and put together a very comprehensive production schedule very difficult to build a budget if you don't understand and you can discuss this with your director if you're the executive producer you can set us up with the director you can discuss it with maybe your showrunner your supervising producer and certainly your post-production supervisor or the person managing the post workflow that you're going to want to establish how much prep you need to get ready for your your project how many shoot days you need to do for your project how long are those shoot days that you're going to need to work and how long is it going to take for the post-production process you're also going to want to while you're going through the process of building a budget get adequate quotes from different suppliers in regards to what you're entering into your budget so what I mean by that is if you're hiring a camera person you're going to want to speak to actual camera people and engage them in what they would charge you for their rate in order to participate in your project you're also going to want to get quotes from equipment rental houses facilities like post-production facilities etc the more information you can arm yourself with in regards to actual quotes the easier it will be for you to put together your budget I hopeful tip that I always say that everybody is build your budget from scratch what I mean by that is don't open up a budget that was the last show that you did and start adjusting it if you're going to do that I always say go back to a blank production template budget open it up because you're going to want to go through it account by account so that you can make sure you've thought about whether that particular item pertains to your project or not if you open an older budget you can easily skip open it over a section or miss a section or or not properly fill in an area so you don't want to do that just just to avoid unnecessary errors and I also always say to everybody don't be afraid to engage the services of someone who's done this before if you are doing this for the very first time especially if you're in an emerging filmmaker this is your very first project you're the executive producer you own this property and this is this is your baby you're assuming all of the risk in regards to this project you're going to want to make sure that you have somebody who's guiding you and tell you get to an expert level of being able to write your own budgets in the future also that cost can go into the budget it's not something that has to come out of your profits oh so don't avoid doing it next slide please there are four main sections that go into a production budget the type of budget that I'm going to discuss here is really your telefilm standard industry budget it has four sections section a which is considered above the line for those of you don't don't understand what above the line is that's the industry standard of the costs for the individuals that have that mold the creative of the show so what I mean by that is that they have the control to make the show go one way or another and they are responsible for it they are influencing the final product that includes your writer your director your self as a producer as the executive producer and/or producer anyone with key creative direction also depending on the format that you're doing you might have a format agreement in there or some rights in there in the above the length section you also need to include in the above the line section pre-production any work that you did any expenses that you incurred creating shopping this idea around getting this project developed to the point where you've gotten it to where you are today that someone's interested in it for a dreamlike purpose so you're going to want to make sure that you put those costs into the pre-production section in section a above the line section B is the production budget section this is where the meat of the bones are for the entire production so there is everything in this category it's the production office staff it's your locations your permits your trucking your equipment etc there are also other producers in this category that may work on your project to help you get it across the finish line but they are more like associate producers segment producers story producers etc so there are many categories in this section you're going to want to go through it line by line and make sure that you ask yourself is this somebody who I need on this project and budget accordingly section C the post-production portion of the budget is where almost everything from the post-production area falls into so that's going to include your post-production facilities your editing your audio mix and graphics that you might have any music clearances you might have stock footage all of those items closed captioning descriptive video color correction they all find fall into the post-production section of the budget I also caution people here you might be a very strong producer and you might understand section a and Section B of the budget extremely well but section C you may want to engage or at least have a conversation with a post-production supervisor to help make sure that you've included everything you need in the post-production process for your film in order to deliver it without any error to the network section D is where all the other stuff goes it's kind of a catch-all this includes advertising distribution publicity festivals insurance the important stuff insurance audits legal fees banking financing fees and after the section section D there is your contingency which is all important and you're going to want to prepare for that correctly and now there is a new section in the at the very end of the budget which is for digital support of a program which is a new space that we're moving into and you're now allowed to budget some costs that go to socially marketing your product next slide please common mistakes in regards to building okay so you can make mistakes in your budget and that's perfectly fine you're just going to want to have an answer for any mistakes that you make for you your network executive who's reviewing your budget so what I often say is a network executive will likely point out mistakes in a budget that affect their contribution or don't make sense but they won't catch mistakes like you haven't budgeted an appropriate daily rate let's say for a camera person that is really up to you to make sure that you've budgeted it correctly if you tell us you can hire a camera person for a certain amount of money and that looks low to industry standard we will just assume that that is your camera person you've spoken to you that camera person and they've agreed to work for that so just make sure that you do your homework before you submit a budget and you want to make sure that you can back up the rates that you've put in it produce your fee and corporate overhead which is a really important part of the budget because that's how you get paid you're gonna there are industry standards for once you're in production for budgets $500,000 or over which is the majority of the work that I work in you are allowed a 10% calculation of the B and C portion of the budget for your producer fee and you are also allowed a 10% fee in corporate overhead of the B and C portion of the budget and that is to cover essentially the expenses that you have incurred to do what you do for a living to get your project to this point you also want to make sure you put in your contingency industry standard is budget for a six percent contingency I have seen contingencies higher or lower but if you do go if you stray off of the six percent average you're going to want to have a good rationale last a lot make sure you understand tax credits understanding that certain items generate more tax credits than other as in putting items into labor can generate higher tax credits which helps you fund your show ultimately at the end of the day and and perhaps will help you put more money into your pocket it's a good idea that you get a good sense of what the rules are for the tax credit around your project and if you don't have any idea about tax credits and it's too much for you to digest when you need to build your first budget don't shy away from hiring either a good accountant or a professional line producer or a production manager someone who writes budgets for a living to help you through these difficult sections and/or write them for yourself and again there their expense is covered in the budget just make sure you list it there next slide please what are the next steps once you start drafting your your budget before you send it into the network I'm gonna remind you to always check your work most people use Excel for their programming budgets which is a great tool because it doesn't cost you anything and it works perfectly fine but we can all mess up our formulas in an Excel document so make sure you double check all of them and make sure everything is being picked up and carried forward always get accurate quotes for things instead of guessing what it's going to cost you it's better that you get a quote and you know that you can deliver on it then finding out after the fact that you didn't budget appropriately save every version of your production budget under a different name this is critical when you start working with a network and somebody's interested in commissioning your program you send in version 1 of your budget they review it they ask you to make changes your next budget is version to your next budget is version 3 very often you will hear us refer to why in version 1 can we go back to version 1 and if you write over top of every version of your budget you're not going to be able to pinpoint and find what it is we're looking for in version 1 so it's just a good habit to get into every time you go to make a change in the budget save it again as the next version there's nothing wrong with having a hundred different versions of your budget until you get it right know when to lock your budget at the end of the process so understand when you have reached the point that the network has approved your budget and now your budget is locked that means don't touch it again don't open it up don't change what somebody gets paid it does not mean that you can't pay somebody more than what you put into your budget or pay somebody less than what you put into your budget but it does mean you're not going to change it on the budget you were going to make those changes now in what we call a cost report next slide please now we're at the questions part antastic Alex thanks so much so I'm gonna start off the questions just you know with a question to Amy and that is thinking about what Alex just said she talked about you know budgets for series and features and Docs can you tell us does everything that Alex said also applied to smaller budgets say under 40,000 first so I would say a lot of it is applicable no matter the size of the budget that you're creating having a production schedule super important you know getting quotes accurate quotes and knowing how many people you're going to need on your show that being said with a budget that's about 40,000 which would be an average cost of one that we would do here at CBC for called CBC short Docs we've actually taken the telefilm budget and shrunk it because for a first-time emerging filmmaker looking at a 70 page budget template from telefilm can be a little daunting so we've for ease for those who are interested we have shrunk it down to two pages and just included the accounts and the sections that are most commonly used in this short talk so we've made that part a little bit easier but the same the same process applies so taking a look at your script or your shoot plan and working backwards and thinking okay oh that part if somebody said you know what they wanted an aerial shot oh well we need to budget for a drone so it's still the same and making sure that you have accurate numbers and again hiring someone if you're not sure and because they'll have that know that experience and you can always charge that that person that line producer or accountant as part of the budget thanks Amy and for those of you that are listening we will supply some links in the follow-up Doc's to the short budget template the telephone template but that leads me to a question for you Alex is there do you have a recommendation about a specific computer program or a template that you think is best for emerging producers to use so first off there are a lot of different programs out there that you can use and I have no issue with people who would like to use basic Excel because it has no expense and it's easier for them and anybody can really write a television budget with Excel I will say that there are software options out there and when you get into large scripted series and/or you get into feature films you might be more interested in purchasing but they do have an upfront cost and they are industry standard tools which are either movie magic budgeting showbiz budgeting or EP budgeting all of which work well with payroll service companies when you get into really really large budget large format programming but I would say that you don't have to spend that money or take on that expense you can just use Excel and you can get access to these links of budget templates through either Canadian media fund or telefilm right online so Ock's I'm just going to ask you another question that's come in for an early filmmaker do you recommend creating where do you recommend starting and a dream budget a mid-range budget or a probable budget I tell everybody to start with a probable budget so the worst thing that you can do is undercut yourself on your budget to get a network pickup and then have to tell the network after the fact that oops sorry when I thought I could do this project for X numbers of dollars I really meant I needed more so you're going to want to make sure that you go in where you can deliver a product that you will be happy with if you want to put in a little bit more go for it and see what they say and see you know if they ask you to take it out it's always easier to take some out of budget than it is to add into a budget nobody really wants to have a conversation where they say I under budgeted and I actually need more money from you because it could take a green light and turn it into an off progress okay so Amy thinking about that probable budget when should I start creating my budget some questions so sometimes if you've been lucky enough to get a development deal with a broadcaster you would actually sometimes build your budget at that stage because sometimes it's a deliverable that you'll need to send to the to the broadcaster is a full production budget if you're just starting from scratch though when you do your pitch you should it's a good idea to have a top-level budget have an idea in your head you know do a bit of research and think about broad strokes about how much a range that you think it would be and then once the broadcaster has indicated that they have some interest that's when you want to start building it into a more fulsome budget and instead of just using a top sheet you're going to want to use that full telefilm or other template with all of your line items going by you know everyone's daily rates or hourly rates or weekly rates and laying it all out every little bit of it Amy Alex what is a related party transaction and how does it connect to production budgets okay so really the party transaction is a list so that you will be asked for when you do submit your budget your related party transaction is anything that you have that pays yourself that's within the budget you have to list it there there are certain costs that are related party transactions that go into the 10 percent calculation of your producer fee and your overhead fee which I was discussing those are really any producer based functions or any functions that have an ultimate say in regards to the process of the film or the project the other related party transactions that are outside of the 10% are things like if you are the director if you're the writer still lifts them there and then entirely as if there's any family members who are working on your film even if it's your cousin they are a related party transaction if you have any business partners who are officers on the Articles of Incorporation that you found to create this project and that are working under they are considered a related party transaction so you need to list all of your related party transactions if you own the edit suite that is going to be used for cutting the film even though you're not the editor and and doing the work yourself but this the rental of the edit suite is going back to you you need to list that on your related party transaction and you're gonna want to be really transparent there and overshoot the information that you share and discuss it with your network executive to get it just make sure everything's on side with all of the rules you don't want to have a problem with one of your related party transactions putting you off side for when you go to file your cab Co be at the end of the program I know acronyms are always so hard when you're just breaking into a business you know one of the things I've heard is RP T's people talk about rpts which is related party transactions I'm going to ask this next question that's come in to both of you maybe I'll start with you Alex how much time does it take I'll ask Alex how much time does it take for the first draft of a pilot budget and then I ami if you could answer how much time does it take for a first draft of a smaller under 40k short Docs budget takes me I've been doing budgets for 25 years and I would say that I I can I can now build a budget for a pilot or for a TV series in probably 24 hours but not consistent but about it takes about 24 hours to build out something that detailed and really where the time goes in is getting quotes to substantiate the amounts of money that you're putting in each line item sometimes I builded by for a program that a producer wants to get greenlit and they're out shopping it around for a year or two years two networks and then when it finally gets picked up they're like hey thanks I like she wrote the budget for me I paid for it two years ago it's not a problem and then I say to them you know what we need to sit down and do it refresh because price points have changed deliverables have changed the network guide might have changed so it might take us a little more time but we can usually do like a second pass of the budget in a few hours but you're just really gonna want to put the time in you're not going to want to sit there and count every minute that it takes you to do it right you're going to want to do the planning portion of the budget building and then you can populate rather quickly yeah I mean I would I would guess you know I from when I first started building budgets so for an emerging person who is is just starting I mean it could take a week because really what you want to concentrate your time on is getting those quotes and getting comparative quotes you want to get at least three so that you can compare and contrast and see which one it would be the best fit as well as waiting to hear back from people you know you might need a quote for insurance or you might need a quote for a title search or any number of the stock footage and those aren't always immediately available and you need to give those people time to get back to you Amy's staying with you how to clearances work and how do I know what amounts to put in my budget for clearances another good question so the first thing you want to check is what kind of rights your broadcaster is going to need is and so what platforms is your piece going to appear on is a television only is it going on YouTube is it going to be geofence to Canada or will it be available worldwide once you have those answers from your broadcaster you'll be able to reach out to the people who have that footage that you need whether it's privately owned by let's say the subject of your documentary or it's from a news source such as CBC or you know anyone else and they'll be able to give you those quotes based on the rights that you require and the length of time that you'll need them as well as based on how many minutes that you estimate that you will need Alex do I include personal expenses in my budget like things like home office costs or my phone costs ah the answer is absolutely if you are using them to do your job as the producer on the project so for example if you did not go and rent a production office elsewhere but you are housing the production office out of your home then yes you make sure to include those expenses if you're using your personal cell phone to take all of your business calls and you're running over your data dable daily you're gonna want to make sure that you put that into your budget you really need to when you're writing your budget you need to sit down and think about the pieces that go back to you that are in the budget whatever you what are you putting into the budget and what are you giving the budget and make sure that you budget appropriately for yourself to be reimbursed for that there's no reason why we should be getting those charges for free because you're the person who came up with the idea and you're the person taking the risk on for the program those are true expenses those are hard costs put them in the budget they should be fair market value that's a term that you'll hear all the time is a budget according to fair market value that is how much would it cost if I had to go and rent a cell phone from Bell for three months to do this job well if they charge $75 a month and you put your cell phone in the budget for $75 a month Amy this is a session for emerging underrepresented creators do you have any advice specific to that group when it comes to building a budget I think just really doing your research and not being afraid to reach out to people who can help who for the most part are going to be very happy to help and and again you can hire those people and put them in your budget and they can do some of that work with you and mentor you if you need it and so help you get to that place where you can understand you know how to build a budget and you'll one day you'll be able to do it on your own and and yep just make sure you do all your research and be ready to back up what you have written in your budget for when you do that broadcaster review Alex what about the situation with Kovac does kovat have any impact on production budgets yeah so this is obviously new territory for all of us but we are seeing that there are covet costs specific covin related costs that are having to go into production budgets and that's to keep you and your crew members safe during filming so we are currently as an industry working through what that looks like but we are at the CDC asking you to create mini Kovac budgets which are an extension to your original budget that shows what we need in order to be compliant with industry standard or provincial standards in regards to producing your film to make sure that it's added into the budget and you're going to want to keep track of that and it includes things like PPEs and the fact that it might take you longer to may take you longer to set up a set because you can't have as many people working on and at one given time and they have to be socially distancing so it may take more labor more time than it normally would have in a non kovat situation thanks Alex the the last question I'm gonna I'm going to post to you and that is if I'm building a budget first series do I build it for each episode or do I just ballpark the total amount and divide by the number of episodes all right more complicated question so when you're writing a budget for a series when you've gotten to the point that you have a serious that's greenlit and you're talking about that level of budget detail I would recommend to you that you get a software like movie magic budgeting show budgeting or EP budgeting the good thing about that is that every series is different so sometimes every episode does cost the same on a episodic series program as the previous episode normally each episode needs to be reviewed in its own section but then there is also the overarching series budget that comes out of it so if you use a tool like movie magic budgeting you will have what you'll have different Global's which is the term that they use for within the budget of pocketing costs out so you'll be able to filter it to see it as an entire serious budget then you'll be able to filter it down to see episode eights budget versus episode ones budget but to give you an example if you're shooting a scripted series and you have stunts in one episode and not in the other episode then you have a big car chase and a lot of danger and fire and things and then the next episode is more about love scenes and people hanging out at home those two episodes cost different amounts of money you'll never just build an entire budget and then say divide it by 12 is my 12 episodes so maybe maybe billion and you may get a grand total from a network a network may say to you we'll only pay you 10 million dollars for this series and then you got to figure out how it works with the creative free Johnson so I think we're out of time but let's leave it on the love scenes note I like that happy notes I want to thank Alex and Amy for a really informative session and I encourage everyone who's listening to tune in tomorrow where we'll talk about how to finance your documentary thanks so much everyone thanks guys bye bye you you

2021-01-29 12:09

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