MPI Global Certificate in Meetings and Business Events

1. MPI Global Certificate inMeetings and Business Events

2. Project Budgeting Presented by Jan Shaw

3. Objectives • Compile data • Budget reviews • Budget performance • Budget vs actual • Reporting

4. Budgeting The process of creating documents (budgets) that project income and expenses in relation to individual account entities

5. A budget is a financial forecast • operating plan • financial targets • period of time

6. Budgets are developed by: Looking back Assessing the present Anticipating the future

7. Reasons for a budget • Monitor the financial situation as it relates to goals and objectives of meeting • Understand where income is coming from and where it is going • Identify % of income and expenses from individual areas • Analyze and control expenditure • Determine areas flexible for  revenues and  expenses  avoid losses; determine program options

8. Development of the budget • Objective of the meeting • To serve the membership • To impress • To pass on information • To allow network • Budgetary Goals • Achieve breakeven • Produce profit – how much? • Absorb deficit and subsidize if necessary

9. Use of information • Examine history of previous meeting budgets • price ↑ because of the date and location of the meeting • differences in programming, attendance, and other aspects of the meeting will also dictate ↑ / ↓ in income and expenses • first-time meetings (zero-based budgeting) • research other meetings of similar size and scope and identify all possible expenses to determine a realistic budget • demographics of the participants will also impact budgeting • e.g. the financial status of attendees and the amount they are willing to pay for registration

10. Steps for building a budget • Determine number of people • Identify expenses • Distinguish fixed and variable • Establish revenue sources • Clearly explain budget data

11. Break-even analysis How many attendees needed to achieve break-even? Fixed Costs + Profit (0) Contribution Margin (Registration fee – Variable Costs/person) • Contribution margin refers to the portion of the price that is used to cover fixed & indirect costs e.g. Registration fee is $200, Fixed costs are: $5,000 room rental, $2,000 audiovisual, & $1,000 speaker fee. Variable costs are $15 per person for refreshment break.Calculate the number of attendees to break even. $8,000 = 43.24 therefore 44 (Attendees) ($200 - $15)

12. Break-even analysis What registration fee should be set to reach break-even? (Fixed Costs + Variable Costs) + Profit (0) The number of attendees e.g. Fixed Costs are $5,000 room rental, $2,000 audiovisual, & $1,000 speaker fee. Forty four attendees are expected to show up. Variable costs are $15 per person for refreshment break.Calculate the registration fee required to break even. {$8,000 + ($15 X 44) } = $196.7, Therefore $200 44

13. Break-even analysis • Profitable meeting: • What amount of registration fee per person should be set to earn a profit? (Fixed Costs + Variable Costs) + Profit The number of attendees e.g.) Fixed Costs are $5,000 room rental, $2,000 audiovisual, & $1,000 speaker fee. Forty four attendees are expected to show up. Variable costs are $15 per person for refreshment break. Calculate the registration fee required to make $1,000 meeting profit. { ($8,000 + $1,000) + (44 X $15)} = $219.5 Therefore $220 44

14. Case: Break-even delegate number/registration fee • The International Association of Honey Manufacturers’ (IAHM) annual forum is being planned for 1,000 attendees (no exhibits) and the budget is under development • Financial objective: break even

15. Expenses

16. Income

17. Expenses - Wish List

18. Expenses: document estimates & assumptions

19. Expenses: estimate high

20. Income: document estimates & assumptions

21. Income: estimate low

22. Income: multiple scenarios (what ifs?)

23. Budget philosophies: associations

24. Budget philosophies: corporate

25. Budget philosophies: government

26. Activity 1 Identify some scenarios from the Global Chocolate Forum that could impact the budget

27. Expenses Expenses are the $$ that need to be spent for the MICE event. Typical expenses include fixed, variable, and indirect costs. • Fixed costs are costs that have to be met. These expenses remain the same regardless of number of attendees. • Variable costs are costs that vary with the number of attendees. These expenses are on per-person basis. • Indirect costs are listed as overhead or administrative items in a program budget and are organizational expenses not directly related to the event.

28. Review on different types of cost Below is a list of expenses. What type are they? Fixed, variable, or indirect? Morning tea Audiovisual equipment Meeting rooms Photocopier repairs

29. Managing the budget

30. Monitoring: Create a schedule for reviewing the budget

31. Schedule to include • - Frequency • Who will review • - Reporting • Budget vs actual • Variances • Possible future adjustments

32. Activity 2 Identify: what is to be reviewed who should review it

34. Know the budget • Flexibility • Authority • Process • Recommendations

35. Post event reconciliation Collect & review invoices promptly Agree to adjustments

36. Planned vs Actual

37. Narrative

38. MPI Global Certificate inMeetings and Business Events