Two different habits
Independent films, shorts and documentaries. Financiers expect a contingency inside the budget, often around 10% of the total. It is spent only when something unplanned is real, and what is left at the end is not a bonus. If your financier names a different percentage, use theirs.
Commercials and branded content. The AICP bid lists contingencies with the job information, and the label is contingencies, not billed. A weather day, an extra pre-light or another social cut-down is disclosed so the agency knows what the total does not include. It is not added into the grand total. If it happens and the client approves it, it is an overage, billed beyond the contracted total.
What to name
- A weather day, when you are outside.
- Extra hours, when the boards are tight for the day length you bid.
- An additional deliverable: another cut-down, another language, another still.
- A technical reserve for visual effects or a specialty rig you have not quoted yet.
- Pickups, on a documentary.
A named item is more useful than a round percentage nobody can explain. A percentage is more useful when the risk is spread across the whole film and no single item covers it. Many films do both: a percentage, plus two or three named items in the notes.
How to keep it from disappearing
- Decide whether it is inside the total or listed as not billed. Do not do both for the same item.
- Write the assumption in the bid notes: what the number includes, and what would change it.
- Once the bid is locked, do not quietly spend contingency as if it were an overrun. On a commercial, an approved extra is an overage.
- On a film where contingency is inside the budget, watch it on the cost report so it is still there in week three.