Lecture 1. Things you need to know before you start
The purpose of a budget is to work out in advance what it will cost to deliver against an agreed set of objectives.

1. Objectives 

The first thing to check therefore is that you have a clear set of objectives. That’s the difference between being asked to prepare a budget for ‘an exhibition’ and being asked to prepare a budget for an exhibition which will run for a month in July next year and will show the work of five artists with a mixture of 2D and 3D works in the gallery (which you work for) and to which we are aiming to attract 2000 visitors.

So as the person preparing the budget you need to get as clear an answer as possible to the question of ‘What are you trying to achieve?’ In an ideal world you would be using a set of SMART objectives – specific, measurable, achievable, relevant and timely.

2. Is there a general ball park?

The second question to ask is again to help you focus your time. The budget for putting on an exhibition of local artists and aiming to reach a local audience is likely to be very different from the budget for an exhibition of international artists where the artists and work has to be flown in and where you are aiming to achieve international audiences and recognition. For this reason there obviously is no such thing as an average budget so it is worth finding out if there is a sense of approximately what an organisation or a funder wants to spend on the project in question.

There are times when a funder or sponsor has a sense of what the upper limit is that they will spend. If this is the case this is definitely worth knowing so that you can work within these limits and establish the best way to deliver the greatest value. Your organisation may or may not be bidding competitively for funds. If it is a competitive environment then a budget is a key part of demonstrating that your organisation’s bid should win the funds. In a competitive environment you are looking to demonstrate that your budget is both cost-effective and realistic. There is no point under-pricing if you would not be able to get the work done for the sum budgeted. Equally if you are either overly cautious about the costs you risk coming in with too high a budget which is not competitive.

So the questions you need to ask here are ‘Is there a rough ball park for the budget that I need to stick to?’ and ‘how risky/risk averse should I be when putting costs together?’

A third question you could ask at this stage is ‘Have we done this sort of thing before?’ because if you have and there is a budget for a past project then this is always worth looking at. Not because it will be the same this time but because you can see what type and level of costs the organisation or the funder is used to seeing in a budget and you can take account of this when you prepare your own.

So as you can see what we are trying to do here is prevent you having to start with a blank sheet of paper or an empty excel workbook. The final version of this question is to ask whether anyone has mapped out the project activities for the project you are preparing the budget for?

By the time you sit down to write a budget with luck you will have acquired one or more of the following:

  • A set of project objectives or goals with as much detail on the outputs/outcomes as you can get

  • An idea of the approximate ball park you need to operate in for this project to meet the expectations of the organisation or funders

  • Examples of past project budgets

  • A set of project activities or timeline for this project

This information is important because it provides a set of boundaries within which you can work or a set of key assumptions against which you can make budget decisions.

So now you can:

  • Work out what other documents you need available to you before you start to prepare a budget

  • Work to a pre-determined timeline or approximate project cost

  • Take account of the level of risk that is appropriate for the organisation or funder

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