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MPI Global Certificate in Meetings and Business Events

MPI Global Certificate in Meetings and Business Events. Project Budgeting. Presented by Jan Shaw. Objectives Compile data Budget reviews Budget performance Budget vs actual Reporting. Budgeting. The process of creating documents (budgets) that project income and expenses

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MPI Global Certificate in Meetings and Business Events

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  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

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

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

  35. Planned vs Actual

  36. Narrative

  37. MPI Global Certificate inMeetings and Business Events

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