Over the last 10 years, or so, Film Director’s have slowly started to be on the weekly distribution list to receive the weekly cost report – especially by the Major Studios (Disney, Warners, Universal, etc.). But, hey, very few film directors have a clue what to do with it. (Mind you, no one else but a chosen few ever get to see it, so why would the Director know about it?).
The poor director who gets a copy of the film production’s Weekly Cost Report is caught up as a character in a living ‘Dramatic Irony’ (per my dictionary that’s: ‘the irony occurring when the implications of situation, speech, etc. are understood by the audience but not by the characters in the play’.) The audience (the Studio, and to a lesser degree, the Producers and Production Accountant), feel that the Director/Department Head/etc. (the characters in the play) should know what’s going on with cost over-runs, or cost savings, but those poor characters in the play only use the cost report as a place mat for leaky coffee cups, agonizing the outraged audience.
Okay, so I’m being overly dramatic here, but…knowing how to read and influence the presentation of the Weekly Cost Report is a very important key to surviving, and expanding, in the film production business. It really doesn’t matter your position in the film industry, if you work in film & video production at all, you need to be familiar with the basics of how to present your costs incurred in the best light. If you gleaned one thing from the previous articles, let it be this:
MONEY IS VERY IMPORTANT TO THOSE WHO HOLD THE PURSE STRINGS!!!
All right. I promised you a bit of practice in this final article of this series. So, let’s investigate ways to ‘direct’ the costs of producing your film, regardless of your position in the film industry.
There are several ways to categorize the ways you can ‘Direct’ the costs. In all of them you’re looking hard at the Estimates-to-Complete. Have a look at the chart below. It’s a typical representation of the Electric Department of any Cost Report: (if your computer screen sees this chart as fuzzy, then you can either print it out – the print on the page shows very clearly – or click the attached PDF file for page 92 of my book).
Keep in mind that you’re looking for one of two things,
(i) Available ETC’s (Estimates-to-Complete) which can either be used to satisfy the Director’s creative vision more effectively, or to cover off known cost overruns in other areas, or
(ii) Under estimated ETC’s which when found, allows you the luxury of not being blindsided with an embarrassment but rather grants you the ability to plan an offsetting cost savings.
So, how do you look at this department to see if there’s any fat in the Estimate-to-Complete?
As you might expect, about 25% of the production departments are some form of labor cost. Labor is usually paid the week after it’s worked (the only exception is New York city). Look at Column 3, the Actual Costs This Period. The amounts in the first 4 lines are what the crew in the Electric Department is paid for the previous week’s work.
Look at the Best Boy Electric line – you can see in Col. 3 that he was paid $3,060 for his work last week. So, rounding to an easy number to work with, we can say that he will probably make $3,000 per week for the rest of the shooting period + let’s add another week for wrap (wrapping out the equipment, ensuring there are no missing rental items, etc.).
Now, still looking at the Best Boy’s labor line, have a look at Column 7, the Estimates-to-Complete – you can see that we have $21,930 left in ETC’s to pay for the Best Boy’s labor for the rest of the show. Again, rounding to an easy number to work with, we can say that there’s $22,000 left to pay the Best Boy.
Here is the simple rule that Producers and Production Managers use all of the time:
Take the rounded number in the ‘Actual This Period’ column and multiply it by the number of weeks left to shoot + 1 for wrap. Compare that number with a rounded amount of ETC.
In the Electric Department example above let’s say that there are 6 weeks left to shoot and one week of wrap for a total of 7 pay-weeks to go.
Best Boy $3,000 x 7 Pay-Wks = $21,000
Compared to the ETC = $22,000
Nope. No fat there; but, at least we’re not in trouble there, either. After practicing this for a while it only takes about 20 minutes to go through all the labor accounts in a 12 page cost report, which will tell you a surprising amount. Anyone who plays cards, like bridge or whist, will tell you that this is child’s play.
One of the labor accounts in the Electric Department is in trouble – the projection of the labor cost is quite a bit less than the ETC. Can you tell which one? (If not, check out page 93 of my book.)
When projecting the labor cost in this way keep in mind two things:
1.It doesn’t work on accounts that have on-again-off-again labor, like Riggers, Special Effects labor, Construction labor, Stunts, etc. However, it does cover most of the crew.
2.Allow a little for ‘hard’ weeks and for ‘easy’ weeks. For instance, in our last example you could have said to yourself that the Best Boy had a particularly hard week last week, and reduce the amount. But, don’t get too complicated. It’s just a quick analysis tool.
I call this procedure ‘Projecting the Labor Cost’ rule. It’s not a new thing. Producers, UPM’s, and Department Heads use this rule every week in film & video productions everywhere. It works.
There are several more simple procedures to ‘direct’ the costs. They all work just as easily. I call them:
-Offsetting the +/- variances within the department
-Offsetting the +/- variances to the bottom line
-the Hot Cost savings or over-runs
-Projection Through to Completion
-Projected Fringes Technique
-The Missing Purchase Order
They’re available in my book – see my web site here “Walk The Talk”. All of them are simple but effective.