by Louise M. Felsher, CMP, CMM | September 01, 2007

I am fairly certain that if I visited the office of every meeting planner I know, I would be hard-pressed to find one without a budget book or accounting primer within reach on his or her bookshelf. And that’s as it should be. Solid event budgets are our primary source of credibility, our selling tool and the blueprint of every event.

Textbooks might show you how to format a budget, but it’s impossible to create an accurate, viable budget with textbooks alone. Some things numerically magical can be learned only through experience. Furthermore, some of us have an inherent talent for numbers, while others struggle to calculate vending machine change. Fortunately, those of us who are technically and/or algebraically slow typically have a sixth sense allowing us to pull accurate numbers from virtually nowhere.

Therefore, relying on the science alone and shunning the innate “force” of the budget inevitably will leave both your face and your balance sheet crimson red.

While I addressed budgeting nuts and bolts like Generally Accepted Accounting Principles in M&C’s Back to Basics column last month, this article focuses purely on tapping into that supernatural insight that ultimately drew most of us to this industry. Hoping to shave at least 10 or possibly 20 years off your trials and tribulations, I have compiled key lessons that I learned over the years, including several purposefully (and some accidentally) debunked myths.

Let me start by saying that perfect budgets frolic with unicorns and magical gnomes. Almost-perfect budgets, while elusive, are realistic and attainable.

In order to master near-perfection, however, you need to recognize that budgets generally exist in four major stages, and each phase has its unique strengths and vulnerabilities.


Projected budgets are created in order to anticipate what the event will cost. In addition, projections function to assist in prioritizing an event’s initial goals and objectives. For example, many projected budgets will adjust registration fees, while others might reduce sponsorship goals. Below-the-line expenses (“optional” program costs such as upgraded attendee gifts or an additional band playing at the gala dinner) that may or may not be included in the final program budget would be shown in the projected budget.

Hazard: Projected budgets often are used as part of a pitch, either to sell an event internally or externally. Projected budgets very often suffer from overly conservative calculations. Either the budget is too low -- driven by concern that high numbers will scare away prospective clients or senior management -- or it is estimated far too high, out of concern that it may not include every possible expense.

Myth: “Projected budgets very often have hidden costs.”

There is no such thing as hidden costs. A hidden cost is merely a cost you have neglected to include. A projected budget is often an incomplete budget.


The final projected budget that everyone agrees upon becomes the locked budget. A locked budget is also referred to as an “as sold” budget for independents/agencies/third parties. This budget becomes part of the contract/agreement that you have with either your internal or external stakeholders. Even without an accompanying legal document, such as a memorandum of understanding, you are essentially agreeing to match or stay under this budget. Most importantly, the final locked budget represents the blueprint from which change orders would apply.

Hazard: The locked budget should not have any “below-the-line” costs listed except those that will be paid for by another department or individual, unless these expenses need to be shown for posterity and accuracy.

Myth: “Locked budgets do not need to have their formulas checked on a regular basis for possible corruption.”

Locked budgets might not be as vulnerable to errors as working or projected budgets, but they still require regular checks and balances.