1. Hashim Fadzil AriffinHashim Fadzil Ariffin
EVENT MANAGEMENTEVENT MANAGEMENT
TOUR2100TOUR2100
Week 7Week 7
Financial Management and the Budget
2. 2
IntroductionIntroduction
Objectives and financial planningObjectives and financial planning
Creating a budgetCreating a budget
The detailed budgetThe detailed budget
LECTURE OUTLINELECTURE OUTLINE
Who spends whatWho spends what
Other sources of incomeOther sources of income
Sponsorship and public fundingSponsorship and public funding
10. 10
INTRODUCTIONINTRODUCTIONCOMPANIES AND THEIR ROLESCOMPANIES AND THEIR ROLES
Reasons for sponsorship
by the sponsor
SPONSORSHIP AND PUBLIC FUNDINGSPONSORSHIP AND PUBLIC FUNDING
1
2
3
4
12. The BudgetThe Budget
LECTURE OUTLINELECTURE OUTLINE
Forecasting Finance and ROIForecasting Finance and ROI
Control and Financial RatiosControl and Financial Ratios
Costing and EstimatingCosting and Estimating
IntroductionIntroduction
13. INTRODUCTIONINTRODUCTION
Financial management is defined as decisions that concern the
sourcing, planning, allocation, monitoring and evaluation of the
money resource.
Mismanagement of finance can lead to unforeseen operational
risk, such as safety, crowd control and legal problems
14. Scope-feasibility Stakeholder Marketing
Finance forecasting
and sourcing
Cost/benefit analysis
Economic impact
Trend analysisTrend analysis
Cost analysis-classification
Deadline algorithmDeadline algorithm
Tools and techniques
Cash flow management
Leverage
Cost control planning
Commitment accounting
Create budget and controls
•Grants
•In kind
•Ticket sales
•Loans
•Sponsorship
•Merchandising
EventEvent
Client
approval of
budget
Increase
funding or
decrease
costs
Change
Evaluationoffinancemanagement
Financial management process from the project management point of view
15. FORECASTING FINANCE AND ROIFORECASTING FINANCE AND ROI
ROI or return on investment is the measure of the financial
return for the investment in the event.
ROI or return on investment is the measure of the financial
return for the investment in the event.
17. THE BUDGETTHE BUDGET
A budget can be described as a quantified statement of plans
The budget process includes;
•Costing
•Estimating income
•Allocating financial resources
A budget can be described as a quantified statement of plans
The budget process includes;
•Costing
•Estimating income
•Allocating financial resources
19. THE BUDGETTHE BUDGET
Constructing the BudgetConstructing the Budget
Establish what is the
economic
environment
Establish what is the
economic
environment
Establish budget
guidelines to fit
objectives, including
sub-budget
Establish budget
guidelines to fit
objectives, including
sub-budget
Identify and estimate
cost areas and
revenue sources
Identify and estimate
cost areas and
revenue sources
Prepare a draft
budget for
committee and
sponsor approval
Prepare a draft
budget for
committee and
sponsor approval
Evaluate draft
budget and prepare
final budgets and
control ratios
Evaluate draft
budget and prepare
final budgets and
control ratiosThe budget process
20. CONTROL AND FINANCIAL RATIOSCONTROL AND FINANCIAL RATIOS
The process control involves the following steps;
1.Establishing standards of performance
2.Identifying deviations from standards of performance by
comparing the budget to the actual spend
3.Correcting deviations
The process control involves the following steps;
1.Establishing standards of performance
2.Identifying deviations from standards of performance by
comparing the budget to the actual spend
3.Correcting deviations
21. CONTROL AND FINANCIAL RATIOSCONTROL AND FINANCIAL RATIOS
The Break-even ChartThe Break-even Chart
Fixed costs
Income
Variable costs Break-even point
Numbers through the gate
Amount(s)
22. CONTROL AND FINANCIAL RATIOSCONTROL AND FINANCIAL RATIOS
Ratio AnalysisRatio Analysis
Current assets
Current liabilities
Ratio
Net revenue
Investment
ROI
Perceived value/cost pax
23. CONTROL AND FINANCIAL RATIOSCONTROL AND FINANCIAL RATIOS
Cash FlowCash Flow
Cost
FinishStart Event organizing
Ability to correct deviations from
the plan
EVENT
Abilitytocorrectdeviations
Time
Costofcorrection
0%
100%
Control, cost and time
24. COSTING AND ESTIMATINGCOSTING AND ESTIMATING
Fixed costs or
overheads
Fixed costs or
overheads
Variable costsVariable costs
Two types of
costs
Two types of
costs
25. COSTING AND ESTIMATINGCOSTING AND ESTIMATING
Venue/site
rental
Venue/site
rental
PromotionPromotion
TalentTalent
Operational or
production
costs
Operational or
production
costs
Costs of an event [Catherwood & Van Kirk,(1992)]
26. COSTING AND ESTIMATINGCOSTING AND ESTIMATING
Tools of project management that can be used to estimate event costs
[O’Toole and Mikolaitis,(2002)]
30. COSTING AND ESTIMATINGCOSTING AND ESTIMATING
Tips for Increasing Projected IncomeTips for Increasing Projected Income
31. COSTING AND ESTIMATINGCOSTING AND ESTIMATING
Financial ReportingFinancial Reporting
The report should relate directly on the event management area to which it is
addressed
The report should relate directly on the event management area to which it is
addressed
It should not contain extraneous information that can only obscure its function.
Brevity and clarity are key objectives
It should not contain extraneous information that can only obscure its function.
Brevity and clarity are key objectives
The figure in the report must be of the same magnitude and they should be
comparable
The figure in the report must be of the same magnitude and they should be
comparable
The report should describe how to take remedial action if there is a significant
problem
The report should describe how to take remedial action if there is a significant
problem
The budget report is a means of highlighting problems and suggesting solutionsThe budget report is a means of highlighting problems and suggesting solutions
