Tuesday, May 19, 2009

Backing Out...

I read a great piece by Jerry Solomon on Cost Consultants today:


One of his points is that he is often no longer required to bid a job. Instead, he is asked to ‘back out’ of a figure presented to him by an agency.

It’s an expression I’m hearing a lot more of these days. We have often asked an agency ‘Well, how much DO you have for effects?’ after several rounds of bidding a job and being told ‘We don’t have that kind of money’. I can see the sense of cutting to the chase and being told up front exactly how much money they have. That way, we can either accept that or politely decline.

The problem I have though is when the job happens to be a significantly FX heavy job (i.e. 60% or more of the final master will be originated as VFX/CGi). We are still being told that for a job that we have bid for around $600k in terms of VFX/CGi - and that after applying a voluntary discount of 30% - that they have backed out a figure and they only have $150k for us. It does not seem possible, or fair, for us to do produce the majority of what will end upon the screen (in some cases we even provide the ‘talent’ in the form of a Computer Generated Star) while receiving only a small portion of the budget.

If the overall budget for the spot is $500k, our bid for the FX came in at $600k (discounted) and we are being told that there is only $150k left for FX, experience tells me that the fact that we are being asked to bid on this could mean one of the following:

a) The agency producer wants some ammunition to help kill a particular idea from creatives who had a great idea that was totally out of line with the budget.

b) The hope is that someone will ‘fall in love with the idea’ and will invest some of their own time and money to get it onto their reel.

c) They think that someone may be desperate enough to take it on.

All this is understandable. These are challenging times. My problem is when there is a budget of over a million dollars on a heavy FX job but the numbers back out to leave us with under 10% of that budget. Less than 10% to produce over 60% of the total visual content of the spot? Really? And what could be taking up so much of the budget on a heavy FX spot? It’s not the music, it’s not the sound design. It could be the agency travel and accommodation allowance on the shoot. But that couldn’t be all of it.

No, it would appear that directors are more willing than ever to propose that they shoot a lot more in camera. So naturally shoot costs are higher. Back when techniques weren’t as advanced – and there were many more commercials being shot – we would ask the production to shoot elements that we needed to make the FX work. We were often told that there was no time and that we could just ‘make it work’ in Post. Now, most jobs appear to require more time to shoot material that we end up not using.

I understand that these productions are underfunded and that another shoot day is another shoot day. We all need to make our money. I certainly can’t fault a Production Company trying to get as many shoot days as possible – I’m sure for that most part they feel like there is never enough time.

However, from my perspective, companies such as ours have some of the highest Capital Expenditure requirements and some of the highest fixed staff costs so whether a job comes in or not we will be spending out hundreds of thousands of dollars a month in overheads. So when an agency asks a Production Company to back out of an overall budget for an FX intensive spot, and it leaves a figure that doesn’t cover costs, that constitutes a problem.

There are still productions which don’t operate in this way and, understandably, it’s with clients and production companies with whom we have the best relationships. There is still never enough time or money but even at the budgeting stage the allocation of money shows the amount of respect given to our part of the process and it should come as no surprise that these are invariably the most collaborative, most creative and best executed productions of all.