Document Actions
 

Budget development

An accurate and detailed budget should be developed as part of the feasibility study for the event, if the numbers don’t add up the event (in its current form) will not be viable. Once the budget has been created, ensure that it is peer reviewed by both financial and event budgeting experts.

A highly detailed budget will help provide prospective funders/sponsors with the confidence to invest and will help avoid surprises down the track.

The feasibility budget should be refined, throughout the lifecycle of the event, as revenue and expenses become more certain. In order to keep control of the budget, it is vital that variances (actual and estimated) are measured and reported against.

 

Budget activities

  • Feasibility/initial budget - created based upon all available information
  • Forecast – the expenses and income from the budget split into time periods
  • Reforecast – the forecast is periodically updated as planning progresses
  • Updated budget – the budget is updated to reflect any changes that impact upon income and expenses
  • Cash-flow forecast – estimation of the timing of cash inflows and outflows.

 

Creating a feasibility/initial budget

The initial budget that is created as part of the feasibility study should be as comprehensive as possible.

The feasibility budget should be created from scratch, as using existing budgets or templates can lead to areas/activities being overlooked. There are many factors that need to be taken into account when creating an event budget, different events will have different income and cost drivers and quantification of these drivers is also likely to be different from event to event.

 

Outlined below are some useful sources of information:

  • If the event is being bid for, the event tender documents should be a useful guide as to the expected areas of income and cost for the event (as well as who is responsible for each of the areas).
  • If the event has been held in the past, then it is worthwhile requesting previous budgets from the event owner. This information should be treated as a guide only, as the event owner’s requirements may have changed, the last event may have taken place several years ago and/or in a country with different economic conditions and challenges to those in New Zealand.
  • Request budgets from similar events or events that have recently taken place in the same area or venue.
  • Talk to local suppliers about the likely cost of various goods and services required to run the event.
  • Use budgets and financial information from the national body as a guide to likely areas of cost.

 

Budgets can be created in several different ways. Below is a methodology that is effective without being too complicated:

  • Split the event up into its major components (e.g. central management, HR, leverage and legacy, finance, legal, accommodation, accreditation, logistics, security, technology, ticketing, travel and transport, VIPs, antidoping, judicial, match management, event officials, medical, venues, training venues, commercial, branding, marketing, broadcasting, communications, media operations, digital media etc).
  • Select each individual component in turn and work out the relevant cost and income drivers.
  • Once the cost and income have been identified, each driver then needs to be quantified.

 

Some of the major factors to consider when quantifying cost and income include:

  • the length of the event
  • the estimated number of competitors, officials, spectators, VIPs
  • the required quality of accommodation, food, transport etc.

 

It is important to include a contingency in the budget as it is almost inevitable that the original budget will change as planning progresses. The amount of the contingency may well be restricted by the available funds, however it is advisable to include a contingency of at least 5% of the overall costs.

For events that have a very tight budget it is a good idea to split the budget into areas of essential activities (must-have) and discretionary activities (nice-to-have). Then ensure that funds are allocated to essential activities first, with remaining (or new) funds allocated to the discretionary activities as and when those funds materialise.

 

Examples

 

Last updated 21 April 2016