Why should a writer bother to learn about production budgets? Isn't that the Production Manager's responsibility? Let me tell you why. Though the writer may not be directly involved in the business side of making the film, the script that he or she writes will be.
A completed script is not a finished product unto itself; it is the production's road map to making a finished product: the completed film. Moving from development of the script through production and post of the movie adds an enormous number of collaborators and factors that affect the original story on its journey from script to screen.
Taking, then, a production manager's point of view, here are seven aspects about production budgeting that writers should understand:
1. Writing A Budget = Making Production Decisions
Just as the writer is making story decisions with every word chosen, the production manager is making production decisions (in advance of the shoot) with every number added to the budget. The PM balances the creative needs of the script with the limitations of the financing and allocates part of the production financing to each department. The script is the road map in determining which department needs how much.
Although there may never be enough time and money to make a film "the way it should be," there will always be a way of realizing the creative vision (the script plus the director's vision) with enough imaginative collaboration... especially when the crew knows where in the script the story is.
2. Where Is The Story?
All critical production decisions will be made based on the answer to this question. It sounds like the answer is obvious, but during production, the script may need to be modified to reduce the number of locations, scenes or scene duration, for example, since the number of shoot days is fixed and you do not want to make it to the end of the shoot missing something critical to the story arc.
The production team, then, will examine the script at a micro-level to ensure that the story is coherent should a scene need to be dropped or combined with another one. The PM will look for opportunities of simplification when drafting the budget and allocating funds - to number of locations, for example.
3. Budgeting Starts With The Bottom Line (Financing)
Sure it would be nice to read a script and create a budget based on how much is necessary to realize that script with the director's vision; however, in truth, budgeting starts with this: here is a script and here is how much money there is to make it... go. Budgeting starts with the financing's bottom line. The PM allocates the available funds across all budgeting categories so that the film can be completely finished. Discussions and compromises are inevitable on where in the budget and when in the production process to spend that money. At very minimum, "the story" must be captured.
4. Drafts Of Budgets Are Like Drafts Of Scripts - As Input Is Incorporated
The first draft budget is not complete, just like the first draft script is not either. The budget will undergo many changes and refinements before it becomes "locked" for production's use. Since filmmaking is a collaborative effort, the PM takes the input of many sources in order to complete the budget.
The PM will draft the first pass of the budget, for example, based on the script, the total financing available, and the vision notes from the producer. Later drafts will adjust the money allocations to various budget lines to more closely incorporate the director's vision - like using many long takes, moving camera and wide vista shots versus lots of close up shots and edits using handheld equipment. Later drafts will reflect early discussions about financial deals made on cast, crew and equipment.
By the time official preproduction has begun, the script will be "locked" and may no longer be revised - just like a locked script. Of course, changes still happen to both script and budget throughout the production process, so while the script evolves to colored pages for subsequent revisions, the budget's changes are recorded on the weekly cost reports as money is shuffled between line items to effectively complete the production.
5. What Are The Expensive Elements?
There will always be expensive elements in a script: stunts and/or special effects; star cast or crew; animals & children; computer graphic imagery; many locations; historical scenes; large vistas; night scenes; weather-dependent scenes; time-sensitive scenes, like rush hour, hockey season, etc.; travel for distant locations; prototype equipment; and music requiring rights purchase. The trick is for a script not to have too many expensive elements otherwise some will have to be removed to make the film achievable. Where the story is in the script will be the determining factor for what stays and what goes.
6. You Need E&O Insurance... And The Changes It Demands
The finished film is being made for distribution to a large audience - not just your friends and family. There may be references in the script that expose the participants and companies in the making and distribution of the film to lawsuit. Script research and E&O (Errors & Omissions) insurance needs to be budgeted and arranged.
If, for example, the script identifies the villain in the story as Dr. Smith, a dentist from a certain city, and script research finds out there is only one Dr. Smith who happens to be a dentist and he lives in that city, the script appears to be representing that particular dentist as a villain. There now is a legal risk to the participants and companies involved in making the film that Dr. Smith might sue for how he is represented on the screen. Change the name of the dentist to a "clear" name and you are OK. You have done the research and made the necessary changes.
A research report will identify these potential hot spots in the script and production is advised to make the numerous changes. Often the writer is involved to make some of these changes - especially name changes. Although the advised changes may seem petty, the research company will have done a thorough job and modifications now - at scriptwriting stage - are easier and can address the story more thoughtfully than removing problematic scenes in postproduction.
Once the script is deemed legally "clear," E&O insurance can be arranged - which is a kind of malpractice insurance for filmmakers (it protects the participants and companies involved in the production from future suits of this nature).
7. There Will Always Be Costs That Are Out Of Your Direct Control Or Influence
Changeable weather, travel costs due to financing that requires shooting in a certain zone for tax benefits, a (rare) insurance claim and so on. There will always be costs that the PM (or writer) cannot anticipate or influence. Some costs will be covered by the contingency allowance in the budget, whereas others must be covered from direct production costs, forcing other line items (like equipment rentals, locations or other costs) to reduce to cover them.
The PM and production crew will try their best to maximize the production's money making it "to the screen" instead of being spent on behind-the-scenes costs that one would never notice in the final, finished film.
I am far from recommending that writers draft scripts based primarily on business elements; the writer's first priority is the story, especially when writing the earlier drafts. The writer should be busy penning a great story, but knowing the journey that lies ahead for the script in the production process - especially the budgeting process - will give the writer a leg-up in also drafting a story that is not only great, but also shootable. You want a story that can be financed - one that can make it from page to screen.
Though the writer may not be directly involved in the business side of making the film, through the script, the writer does most definitely influence the business side and the whole production process. It’s best to know how your influence plays out.