Budgeting is a critical part of the event planning process. It is important to develop an effective budget from which you can rely so appropriate decisions and adjustments, if necessary, can be made. Budgeting is an important component of financial success. Budgeting makes it easier to make conscious decisions about how to allocate their money. Most budgets will require you to project and track some or all of the following

  • Fixed expenses – These will include things like room rentals and marketing, that will not change despite the attendance at the event.
  • Variable expenses – These will include items like food, beverages and transportation, which will vary according to how many guests attend the event.
  • Indirect expenses – Often overlooked, these include paid supplies that may be needed during the course of the event.
  • Hidden expenses – No matter how experienced you are at preparing an event budget, hidden expenses nearly always occur so you should leave some room in your budget for them. These types of expenses often include things like rush or overnight fees for items you may have ordered at the last minute, taxes and overtime for employees.
  • Revenue – The income for your event may come from registration fees or ticket sales, monetary or in-kind donations, etc.
  • “Cost centers” are program or management areas, and “cost objects” are specific elements in each area. For example, entertainment is a major cost center for events, with specific cost objects including each performer, the equipment, staff and venue rental.

Within each of these categories there will be multiple line items for expenses such as entertainment, food and beverages, facility costs, personnel, insurance, equipment rentals, signage and decorations.

Most event budgets will be of the “line-item” type, in which the focus is on expense elements like labor, rentals, supplies, and entertainers, and revenues from admissions, sales, etc. But a “program-budget” might also be appropriate, concentrating on the costs and revenues associated with each program element, venue, or sub-event. Line-item budgets naturally require more detail, whereas program budgets might require sub-budgets from each program area.


Budget helps to aid the planning of actual operations by forcing managers to consider how the conditions might change and what steps should be taken now and by encouraging managers to consider problems before they arise. It also helps co-ordinate the activities of the organization by compelling managers to examine relationships between their own operation and those of other departments. Other essentials of budget include

  • To control resources
  • To communicate plans to various responsibility center managers.
  • To motivate managers to strive to achieve budget goals.
  • To evaluate the performance of managers
  • To provide visibility into the company’s performance
  • For accountability

In summary, the purpose of budgeting is it

  • Provide a forecast of revenues and expenditures, that is, construct a model of how a business might perform financially if certain strategies, events and plans are carried out.
  • Enable the actual financial operation of the business to be measured against the forecast.
  • Establish the cost constraint for a project, program, or operation.

The Budgeting Process

The budget will initially reflect the goals of the event and the organization producing it. There will be a big difference in budgets for events designed to make a profit versus those for which it is acceptable to break even or incur a loss. Three normal steps in the budgeting process are

  • guidelines sent to operational managers or committee chairs, along with notification of constraints and guidelines for the area’s budget proposal
  • estimates are submitted, including justification
  • review and approval; cost-benefit evaluation can be used to review new programs; ratios can be employed to compare areas or programs on their cost-effectiveness; negotiation might be part of the process

Budgets must be discussed, as it sets both financial goals and spending limits. The budget, for example, will allocate projected revenue among possible competing functional area managers, thereby determining their activities for the coming year. The budget will also prioritize (explicitly or implicitly) elements of the event program. This happens when “entertainment”, as an example, is allocated X amount, while “ceremonies and speakers” is allocated less.

If the budget is initially kept general and flexible, the program elements might be costed out at a later date. Thus, the program manager might first have to fight for a larger piece of the financial plan, then allocate the resources among competing program elements. In this way, budgeting and programming go hand in hand. The budget might also have to be prepared and revised in conjunction with the business plan, especially if sources of revenue are not fixed. The business plan, including a budget, is used in such cases to secure resources.

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