Budgeting: Four Phases

A step-by-step guide for meeting planners

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.

Some planners put reserves in specific line items, others have reserves by category and still others swear by a formal “contingency” line. As long as you know where the slush is, your methodology is driven purely by preference. A good rule of thumb is that your slush fund should be 15 percent of your total spend for a new event and 5 to 10 percent for a repeat event.

Myth: “You don’t need a slush fund if you know how to estimate your line items correctly.” This is far too brazen an attitude at a time when events are planned with minimal lead time and leveraging your contingency plan is the norm, not the exception. -- L.M.F.


The working budget is the ever-changing or active budget that will be adjusted as expenses and quantities are changed and posted. Classic working budgets are formatted with the locked budget numbers in an adjacent column, with a third column showing variances between the two.

It is appropriate to note here that the working budget will illustrate whether you decide to use cash or accrual methodology. When done correctly, the working budget is a real-time snapshot of the event and will show at a glance the relatively good or bad health of your program. You also should be able to detect specific problems, such as a shortage of sponsor revenue, and can work proactively to address these issues.

Hazard: Failing to update budgets regularly is a common and dangerous pitfall. One of the best habits you can develop is to enter your actual costs as soon as you get them.

Myth: “Working budget numbers do not need to be accurate.” Although they do not need to be “to the penny,” you do need to be as accurate as possible.


Final reconciled budgets will show all actual costs, as well as variances.

Hazard: Entering final costs before getting actual invoices. Has the invoice been calculated correctly? Were you charged tax when you are a reseller? Jumping the gun leads to errors.

Myth: “It is perfectly OK to round off numbers.”

It’s only OK if you can count on never being audited. In other words, use the real numbers.


Savvy meeting professionals know how to get the most out of a limited budget. What follows are some planner-tested strategies compiled by M&C’s editors from various sources.

Venue selection

It might seem cost-effective to save on travel expenses by keeping as many functions as possible within one hotel, but in reality, it could well cost more to do so, due to the absence of competition among venues anxious to snag the business. Solution: Go off-site; look for more affordable venues within walking distance of the property.

One good idea is to approach some hip bars and trendy lounges near the hotel. These venues might be packed to the rafters on weekend nights but crying out for business during the week, when they’ll be willing to offer rates at a substantial reduction for your group.


Running a series of airport meet-and-greets can result in a budget-busting tab when it comes to staffing. Try consolidating the welcomes, and save accordingly. Note: Bear in mind the pecking order; don’t keep the CEO waiting for the same taxi as the administrative assistants.

When it comes to ground transport, beware the ultra-cheap supplier. The low price for that bus could come at the cost of an engine that hasn’t been serviced for far too long.


Don’t sniff at the seemingly high price of a hotel’s own audiovisual services. The cost usually is negotiable, and those experienced in-house staffers are likely know all the particular eccentricities of the meeting rooms than someone from the outside.

In general, don’t try to save by skimping on the on-site staff. Most meetings inevitably will run in to an unexpected challenge that will require quick thinking -- and proper staffing. Note: Students from a local hospitality school or program can man information desks or perform other helpful functions for as little as $10 an hour.


Large props tend to drive up costs. Think smaller. For example, instead of a replica of a battleship taking up the center of the room, try for more subtle -- and affordable -- nautical touches via wall and table decorations.

Sometimes simple but well-placed lighting can accomplish wonders at a far lower cost than props. Consider a backdrop doused in a luminous primary color to make a statement.

Another way to save is to share the cost. Is the venue hosting another event a day before or after yours? Find out from the hotel whom to contact and try to work out a way to use the decor more than once; with proper attention the materials should weather both events well, and attendees likely won’t be aware of the arrangement.

Food and beverage

Here’s a part of the budget simmering with simple ways to save. Try any or all of the following tactics.

* Instead of breakfast and lunch, offer a brunch. Instead of a full-blown dinner, throw a heavy hors d’oeuvres reception. But notify attendees of same in advance, so as not to disappoint.

* Explore per-dozen (or per-platter) charges for breakfast and cocktail receptions, where per-person rates can be unnecessarily expensive.

* Work directly with the hotel’s chef to create appealing menus for your group within a given price range.

* Find savings where you can. Use pitchers of water instead of more expensive bottles in the boardroom, for example.

* Control alcohol costs by limiting bar offerings to wine and beer, or offer tickets good for two free drinks instead of having a completely open bar.