Film Accounting Glossary
Contingency
What is contingency?
Contingency is a budgeted reserve, customarily around ten percent of the below-the-line and post total on an independent film, held against the unforeseen.
It is not a slush fund for scope creep: guarantors and financiers usually require approval to draw on it and treat the draw rate as a health indicator. A picture that has consumed its contingency before the halfway point is a picture in trouble.
Example
On a $6M film, a 10% contingency on the $3.7M of below-the-line and post is $370,000. Spending $260,000 of it in the first two weeks of a seven-week shoot is the signal that matters, not the total left.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
A single line near the bottom of the top sheet. Draws usually need financier or guarantor approval, and the draw rate is read as a health indicator.
Common mistake
Spending contingency on scope the producers wanted anyway. It is a reserve against the unforeseen, and a draw rate that outpaces the schedule is the clearest early warning there is.
Related questions
- How much contingency does a film budget carry?
- Customarily around ten percent of below-the-line and post on an independent film. Studio pictures vary, and bonded pictures have the figure set at closing.
- Who approves a contingency draw?
- Normally the financier or completion guarantor above an agreed threshold, which is also how they monitor the draw rate as a measure of the picture's health.