WHAT ISN'T A BUDGET?

5 May 2020

Episode 5 of: The Facts of Live - The Series: What Isn't A Budget? If you work with, in, or around live events, exhibitions or anything live, four of the most confused words are budget, quote, cost and estimate. Universally misused or misunderstood, they lead to poor value, crap procurement and a myriad of other issues. We look at what each word means in the context of live events, and in turn, what a budget isn't... which can then lead to better live events, better procurement and creating more value and impact.

VIDEO TRANSCRIPT:

Hi, I'm Will Glendinning, I'm a Producer, Designer, Writer and Director.

And in this fifth episode and we're talking about money. Or more specifically four words which are so often misunderstood or confused when it comes to live events, exhibitions or anything live.

Budget, quote, cost and estimate.

Four words almost universally misunderstood or misused. Four words that are, unless a live event is formulaic or straightforward, almost universally a cause of poor value, crap procurement, bad management and causing a live event to have less impact than it might otherwise.

A budget is an amount of money you make available on allowance, it's a target or a limit, an event's budget is not the cost of an event. Unless you're in complete control of everything and know everything, which is impossible, it's impossible to know what an event will cost. However, creating a budget that covers everything and protects you against all reasonable eventualities is relatively straightforward, provided the people doing so have the right content and contextual experience. And you can jump back to episode two for more details on each of those.

If you find yourself basing a budget on quotes you've received for briefs that are open to interpretation, which is, by their nature - every brief, you need to make sure that either you have the expertise to manage such a project personally and protect your budget, or you must assume that any quote is going to rise. It may not, but you cannot possibly know this, at the early budgeting stage.

A quote is just a number. It's a number that someone gives you in return for a specification or their interpretation of your brief. If you're asking for a quote, maybe from a supplier, an agency, or a contractor, this quote will be based on what you ask them to quote for, but it's unlikely that whatever you're asking for a quote on will remain the same between the quote stage and the event happening. There are so many variables at play, some within your control and some beyond your control.

Do not regard any quote you receive as a cost. It's merely a quote upon which you can base your budget. Someone with relevant content and contextual experience will need to make a judgment call on whether any quote is realistic, and whether to accept the quote and work with whoever provided it to make sure the cost ends up being the same as the quote. Or allow some additional funds within the budget on top of the quote as a contingency for the changes and additions that are inevitable or at least possible.

Time and time again, I see people asking for a quote to be a fixed cost for something. Unless you're providing a highly detailed specifications, for example makes and model numbers or specific types of work, a fixed cost is never going to be a fixed cost. A quote may come back looking like a fixed cost, it may even say fixed cost, but it will be accompanied by so many caveats, or exclusions, that it's merely a guide. Consider too, that even if you receive and accept a quote as a fixed cost, as the live event evolves and the parameters change, the person, supplier or agency you're dealing with may end up facing increased pressures in trying to honor the quote.

If you take a pure, cold-hearted contractual approach, you may see this as the supplier's problem. However, given the speed at which live events move and the fact you have a deadline that can't move, if a supplier or agency fails or lets you down in any way, the problem that was and is theirs contractually quickly becomes yours in reality. No contract is then worth the paper it's printed on at the moment you're about to go live. There needs to be some give and take, some flexibility on both sides of any contract as parameters change.

It is, of course, possible to ask a supplier or agency to include realistic contingencies within their quote. In fact, this is normal and common. Then the quote isn't really a quote, it's merely a budget or a portion of a budget that someone else is managing on your behalf.

The cost or price of an event, or part of it is what it ends up actually costing. In all but the rarest of occasions, it is impossible to know what the final cost of an event will be, until the event has happened. Until then, there is no such thing as a cost of an event, there is merely an estimate. The cost of an item or service is the final cost. The amount in pounds, dollars or any other currency that actually leaves your bank account. When you're looking at quotes, the cost of something will only match the quote if nothing changes. If you're getting quotes on unit costs, things with part numbers or clear descriptions open to zero interpretation by a layman, these needn't change and should be fixed. Assuming no parameters surrounding those units or their use change.

However, if you're getting quotes for turnkey solutions, products, a whole event or similar, things will change. You won't know the final cost of an event until that event is completed, no one does.

An estimate is exactly that. An estimate, or best guess as I like to call it, ideally backed up with some experience. Everything money-wise involved with a live event is essentially an estimate until the event has happened.

The budget is an estimate, quotes are largely estimates, and no one knows the actual cost until you're done. So if you hear anyone using the word cost for anything other than a specific, quantifiable unit of something, they mean an estimate. It's safest to view any figure wherever it is, as an estimate at all times.

These four small, innocent words, cause so much chaos and confusion. They needn't though, in that in a part is what this series is about.

First though, three key takeout.

Never rely on quotes, pricing or costs received as part of a tender or RFP or anything else resembling a price as anything more than a guide. It's just part of the information you need to help inform budget levels.

Never assume a fixed price is a fixed price, unless it's for unit costs. It may look like one, but in over 20 years I've rarely seen anything called a fixed price actually being such a thing. It will be a fixed price against a grey or moveable scope or specification, whether you realise it's moving or grey or not.

Never assume traditional procurement processes will find you the best value and solutions. They won't, they'll merely create that illusion.

For these reasons and more, it's clear to see what a budget is, and more importantly what a budget isn't.

A budget isn't what your event will cost, it's merely a guide.

A budget isn't what your event should cost, it should be more than your event will cost and give you room to move.

And a budget isn't something you can develop based on paperwork alone. A budget is something that needs managing and manipulating by those with relevant content and contextual experience making constant tweaks and changes as everything changes, and change is the one thing you can be certain of.

Having now looked in this series at the value of live events, how to structure them, how to get and keep them moving and how money should be considered, in the next episode we're going to look at how to actually go about getting anything you could possibly need. Any live event or exhibition, or anything you need to make them happen, regardless of their type, scale or purpose.

And it's incredibly simple as there are only six types of things you will ever need.

Thanks for your time, thanks for watching and I'll see you in the next episode.