BUDGETS AND CONTRACTS

LEARNING
OBJECTIVES
 Correctly identify the
components of a contract
At the end of this learning  Discuss properly the importance
experience, the students will
of developing budgets and
be able to:
contracts
 Identify all budget items common
to events
 Calculate accurately an event’s
net income and revenue streams
 
 Budgets and contracts are the backbone of
any event. Budget must be aligned with the
organization or client’s financial goals for
the event. The final budget is mutually
agreed upon by the client and event
INTRODUCTIO organizer.
N

The contact seals and binds both parties

with this agreement. An event manager
who effectively handles budgets and
contracts is a responsible manager.
WHAT IS BUDGET?
 A Budget is more than a pre-event balance
sheet; it is an action tool that guides the
event manager in decision-making
regarding all the expenses and revenues
whether the event is managed for a client
or for the company itself.
 PRODUCT CUSTOMER

The budget will help the event manager to assess the

viability of the event before it is even presented to the
management, client, and stakeholders.
Revenues or Income
There are three common financial goals or budget philosophies
for an event:
 Profit – revenue exceeds expenses
 Break-even – revenue equals expenses
 Loss-leader or hosted – expenses exceed revenue (the client or
event host provides funds to meet expenses)
 
IN DRAFTING THE BUDGET, THE FOLLOWING CONCERNS
SHOULD BE CONSIDERED:

Is there a given budget? What is the

First client’s or organizer’s financial goals?
feature Where will the operating expenses come
from?

Second Is there an available operating fund?

feature

Will the client give the operating funds

Third ahead of time so that deposits on the
feature venue and other early bookings can be
secured?
IN DRAFTING THE BUDGET, THE FOLLOWING CONCERNS
SHOULD BE CONSIDERED:

Fourth If not, does the event company have

feature funds to pay these in advance?

Fifth Given these conditions, what is the most

suitable type of event? What are the
feature venues suited for the event?

Who are the primary audience? Are there

Sixth secondary targets?
feature Why will people pay to attend the event?
If the primary purpose of the event is to gain profit, you have to understand
why people will want to pay to attend your event or dole out sponsorship.

Once all these concerns are addressed, the budget items can be tabulated in a
balance sheet. The event manager can assign values – can be easily verified
with current industry rates and charges.

The event manager / organizer should carefully and properly study an event’s
financial feasibility to avoid shouldering the loss.
To augment the expenses, the event manager may utilize
other revenue-generating activities depending on the
agreement with the client or organizer. Below is the list of
some revenue-generating activities:
REGISTRATION FEES
ORGANIZING
EXHIBIT SALES
Implementing vendor
fees
SPONSORSHIP
Companies wanting exposure for their brands can participate as
event sponsors or partners. This type of arrangement is usually
paid through a combination of cash and free products or services
in exchange for a visible presence during the event.
What benefits can the event organizers give the sponsors?
 Media mileage – airtime or exposure on TV,
radio, outdoor advertisement
 Inclusion in event merchandising materials
– posters, tickets, banners
 On-site merchandising
 Promotional activities within the event
 Product/ brand mentions
 Competitive lock out
Define sponsorship packages
and rank sponsor categories
National Domestic International
 Presentor – enjoys all access to sponsor
benefits and has the most expensive
sponsorship package

 Major Sponsor – package cost is usually half

the cost of the presentor

 Minor Sponsor – gets tertiary billing and the

least benefits
o Send out letters well in advance. For big conventions, sponsorship
letters are sent out as early as 12 months before the event. A
minimum of leas time of two (2) months is customary.

o After getting the sponsors to agree, have the sponsorship contract

signed and make a timetable for deliverables. Make sure that you
deliver all your promises. Treat sponsors the way valued customers
are treated and establish long-term relationships with them.
ADVERTISING
SELLING
MERCHANDI
SE
ITEMS
ENTRANCE
FEES
Expenses

There are two categories of

expenses that must be
considered in preparing the
budget, the fixed cost and
variable costs.
WHAT IS THE
DIFFERENCE?
WHAT ARE THE
EXPENSES INCURRED
IN AN EVENT?
Some of the important
expense items in the
budget are as follows:
VENUE
PROGRAM
MARKETING
MEALS
STAFF
TRANSPORTATION
LICENSES AND PERMITS
ACCOMMODATIONS
PRODUCTION
AND STAGING
FACILITIES
PERFORMERS/
ENTERTAINERS
PRODUCTION CREW
SECURITY
CONTINGENCIES
A detailed breakdown of each budget item must be prepared to ensure that the assigned
teams are familiar with the scope and limitations of their area of responsibility.
Sample budget item template for Conventions Budget
Revenue
 Sponsorships
 Delegate’s fees
 Registration fee
 Merchandising

Expenses
Venue Rental Event Documentation
 Dressing Room  Photographer
 Main Convention Venue  Videographer
 Accommodation
 Function Room

Venue Set Up Marketing and Promotions

 Registration system  Communications
 A/V equipment  Mobile apps
 Stage  Advertising
 Décor
 Lights and Sounds
 Signages
Sample budget item template for Conventions Budget
Food and Beverage Transportation
 Pre-event meals  Shuttle services
 Convention snacks and meals  Air, land, water transportation
 Free flowing water
 Free flowing coffee
 Staff meals

Event Programming Miscellaneous

 Speakers Plaques / certificates
 Hosts/ Emcees (talent fee) Giveaways
 Performer’s fee Raffle prizes
 Video production Permits
 Interpreters Insurance

Manpower Materials
 On-site staff  Badges / ID’s
 Security guards  Invitations
NET INCOME
AND BREAK-
EVEN POINTS
Registration Fee – Variable Cost = Contribution Margin
Example: Registration Fee - ₱500.00
Variable Cost per person - ₱ 250.00
Fixed Cost - ₱ 10,000.00
Contribution Margin - ₱500.00 – ₱ 250.00 = ₱ 250.00
Fixed Cost ÷ Contribution Margin = ₱ 10,000.00 ÷ ₱250.00 = 40
Break-Even Point = 40 (the event will break even at 40 attendees)
 
Sample Computation:
Registration Fees (40 x ₱500.00) ₱20,000.00
Less: Variable Cost (40 x ₱ 250.00) 10,000.00
Fixed Cost 10,000.00
Income or Loss 0
Fixed Cost ÷ Contribution Margin = Breakeven
Example: Fixed Cost - ₱10,000.00
Estimated number of attendees - 100
Variable Cost per person - ₱250.00
Registration Fee (₱10,000 ÷ 100) + ₱250.00 = ₱350.00
Registration Fee = ₱350.00
 
Sample Computation
Registration Fee (100 x ₱350.00) ₱35,000.00
Less: Variable Costs (100 x ₱250) 25,000.00
Fixed Cost 10,000.00
Income or Loss 0
 
ANOTHER ANALYSIS CAN BE MADE TO CALCULATE THE
REGISTRATION FEE TO MAKE A SPECIFIC PROFIT USING THE VALUES
OF EXAMPLES 1 AND 2

Specific Profit = ₱ 50,000.00

Fixed Cost = ₱10,000.00
Estimated number of attendees = 100
Variable Costs per person = ₱250.00
Registration Fee (₱50,000.00 + ₱10,000.00) ÷ 100 + ₱250.00
Registration Fee = ₱850.00
 
Sample Computation
Registration Fee (100 x ₱850.00) ₱85,000.00
Less: Variable Costs (100 x ₱250) 25,000.00
Fixed Cost 10,000.00
Income ₱50,000.00
 Let’s Try

Compute using the formula/s

Given:

Registration Fee: ₱1,000.00

Variable Cost: ₱500.00
Fixed Cost: ₱10,000.00
Estimated no of Participants: 100
Specific Profit: ₱85,000
A contract is an agreement between two or more competent
parties which is noted by a legal witness, usually a lawyer. A
contract defines the rights and duties of the contracting
parties and should be a clear roadmap of the expectations
and responsibilities of both parties.
Numbers 30:2

If a man vows a vow to the Lord or

swears an oath to bind himself by a
pledge, he shall not break his
word. He shall do according to all
that proceeds out of his mouth.
A CONTRACT HAS
THE FOLLOWING
CHARACTERISTICS:
 WRITTEN
 it is best to require all the event
management contracts to be in
writing so that the terms are
easy to verify, the expectations
are clear and future conflict
may be avoided.
OFFER
 a contract contains a proposal, promise, or expression to deliver specific obligations
under proposed terms with another party. In this case, the detailed event plan is the
offer.
 CONSIDERATION
 the price paid for the
offer which may be the
contractor’s fee or the
total budget and the
benefits to be derived
by both parties signing
the contract should be
indicated in the
contract.
this is signified
when the party
receiving the
offer signs the
contract

Acceptance
CAPACITY

the people signing the

contract are legally
authorized to sign
 Contracts are very detailed and specific; thus,
the event professional has to carefully read
all the contracts and their fine prints.

 If there are unclear terms/items in the

contract, the event professional should not
hesitate to seek clarifications regarding those
items. For instance, a rider’s contract must
involve possible risks and challenges so that
the client is fully aware of the risks that arise
from the activity.
 Contracts should also clearly identify how
risks are distributed between the contract
parties.

 For example, an engagement contract with

entertainers and speakers should stipulate
conditions such as length of performance,
appropriate attire, and behavior, needed
equipment, and appropriate material or
content.
Key Component of an Event Management Contract
An Event Management Contract should contain the following general information and
clauses:
• Names of contracting parties
• Status of Signatories
• Dates when the contract must be finalized and dates by which contract must be
singed and returned
• Detailed of list of items and services being rendered
• Detailed list of fees and charges including taxes, service fees, rental fees,
commission, rebates, and discounts
• Schedule of payments – refer to the list of due dates for billing and specific
amounts to be paid
• Cancellation – a Notice of Contract Termination is a formal declaration when both parties plan
to cancel a contract without performing the obligations. A Notice of Contract Termination
creates a record that you notified the other party about the cancellation and the end date.
• Attrition – occurs when the service is performed or delivered but the contracting parties fail to
fully deliver their obligations. For example, a caterer fails to provide the sufficient food for
the contracted number of participants.
• Terms – refer to the scope of work, event details, service conditions, mode of payment, and
delivery of service.
• Billing – refers to the process of preparing statement of expenses and sending an invoice for
collection of payables.
• Time – pertains to the duration of the contract and the specific dates when the contract is in
force.
• Events insurance or public liability insurance – is a very important coverage for event
organizers. It provides protection against injury or participants or damage to property
that may occur during events.
• Hold harmless and indemnification – this provision means that the event management
organization is not liable for certain damages under the contract. This clause
effectively bars the party responsible for indemnification (being the client or host)
from suing the party being indemnified (event management company).
• Reputation – is the opinion of belief of people about an individual, organization, or
association.
• Complete agreement – this clause in the contract signifies that all parties are in
agreement with the terms.
• Changes to the agreement – when a change to a contract is needed, the affected party
should give written notification of the changes within one month of the effectivity of
change.
• Sequence of execution – is the manner and flow by which the contract will be
implemented
• Attachments – depending on the contracts to be signed, these can be floor plans, maps,
photos of equipment and layouts and other important documents.
• Non-disclosure – often referred to as the confidentiality provision which covers the
type of information, parties responsible, duration, legal obligations, etc.
• Budget – the budget is usually an attachment or appendix to the contract. It may also
include provisions for budget adjustments such as additional facilities, program
elements, and major changes in the event design.
 October 4, 2021
 
Ms. Cynthia Cruz
Philippine MICE Academy
Contact Number: 9024923
Email: Cynthia.Cruz@philacademy.com

Name of Function Philippine MICE Convention

Date and Time of Function December 22, 2021

Guaranteed Number of pax for 50 pax

F&B

Sample Minimum Revenue

Requirement
50,000.00

Contract
Venue Private Dining Room
 
FUNCTION SET UP
Ingress and Egress
 Ingress 6:00am
 Egress: immediately at the close of the event
Chosen Venue
 Private Dining Room
A Events Banquet Team
 Registration table: Provision of one (1) rectangular table with white linen and three (3) banquet
tiffany chairs
 Banners: provision of space beside the registration table; to move inside the venue after registration

Venue Tech Team

 Provision of two (2) speakers and two (2) wireless microphones
 LCD projector and screen
 To set up equipment by 6:00am and assist client in set-up, use, and connections

From venue housekeeping

 Make sure that the venue is clean 1 hour before the event.
 FOOD AND BEVERAGE
Note to Kitchen: Strictly follow service time
Customized Menu (₱1,000.00/head inclusive of 12% VAT and
subject to 10% SC
Minimum of 50 pax
Sample
AM plated snacks (time of service 10am) – Peach Danish
Contract Lunch plated menu (time of service 12:30pm) –
Soup
Cream Soup with toasted almonds
Main Course
Seared Chicken Breast
Dessert
Apple Pie
PM plated snacks (time of service 3:30pm) – pasta with pesto
sauce
 Terms and Conditions:
1. The Patron agrees to pay for the stipulated number of persons, beverage,
incidentals, and other charges herein.
2. All food and beverage items shall be exclusively purchased from A Events Venue;
Patron is not permitted to bring in food and beverage of any kind within the
premises unless there is a significant agreement to the contrary.
3. Cancellation Policy: Function Rooms/Venues pencil booking will automatically be
released if deadline of confirmation dates has passed and no payment and signed
conformed has been submitted to A Events Venue. The venue reservation fee and
50% down payment for the use of the function room shall be charge if

Sample cancellation is made less than 30 days prior to the event.

4. Ingress and Egress schedule of the Patron’s employees, agents and/or contractors,

Contract or the employees or agents of the contractors, must be approved by the A Events
Venue event officers and coordinated with security.
5. The patron ensures that nothing shall be attached to the floor, walls, ceilings, and
columns of the premises by nails, screw, pins, tapes, or other means; otherwise,
any damage caused to the premises shall be for the account of Patron.
6. A Events Venue will not be responsible for any damage or loss of merchandise left
in the premises prior, during, or after the event.
7. Patron warrants that it shall secure any and all city or national permits or
licenses before holding of event covered by this agreement.
8. The patron will conduct the function in an orderly manner and full compliance
with all the applicable laws, ordinances, and regulations.
 As standard policy, the Patron is required to give a 50% deposit and the signed
conformed proposal is required to reserve the venue. Balance shall be settled before
the event (October 6, 2021). Incidental charges are to be settled immediately on the
BILLING day of the event.
Once minimum guaranteed orders are contracted, decrease in count and orders are
AGREEMENT no longer allowed. Guaranteed number of head count for food and beverage
requirements should be submitted / confirmed before contract signing on
September 26, 2021, 2:00pm.
Please make checks payable to A Events Venue, Inc. Down payment can also be
deposited to our BPI bank account under A Events Venue, Inc. with account
number 123456-789-0, reference number 1011. Please send us a copy of the deposit
slip to confirm the transaction.
On behalf of the management and staff of A Events Venue, thank you for your
patronage. Rest assured that all efforts shall be done to guarantee the success of
this event.
 
Very Truly Yours,
 
_______________
Caroline Mendoza Conforme
Banquet Sales Associate _________________
A Events Venue Cynthia Cruz
Philippine MICE Academy
Date: _______________
 WHAT IS A MEMORANDUM OF AGREEMENT?

A memorandum of
agreement is a document
that conveys a consensus
between two parties to
cooperate in order to
achieve an agreed objective.
The purpose of this
document is to have the
mutual understanding
between parties transferred
to written form.
This type of agreement is similar in
nature to a memorandum of
understanding. These documents tend to
not contain legally binding terms.

Often the parties have no intention for

their agreement to be legally
enforceable. This is what generally
separates memorandums from contracts.
WHAT IS A A contract essentially takes the understanding between

CONTRACT parties in an agreement and makes them legally binding.

This can only occur where the parties have intended to
? enter an agreement that is legally enforceable. In order
for a legally binding contract to be formed in Australia,
various elements must be present. The essential elements
require:
 An offer
 Acceptance
 Intention to create a legal relationship
 Consideration from both parties
 Establishing an event budget is a crucial
step during the planning phase, right
after setting your goals and objectives.

SUMMARY A budget is a detailed forecast of what

will be happening financially at your
event. It helps control your expenses and
revenues and measures the success of your
meeting or event performance.
Event planning, also known as event management, is the
process of creating and coordinating the execution events.
Events in this context can be small, large, private, or public.

An event planning contract is a formal agreement between the

event planner and the client to set conditions for which event
management services are performed.
THANK YOU
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