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How to define a video production?

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Clients want to have a fixed price offer and production companies a secure calculation. Video productions are project management and if productions are not properly defined then everybody will lose. The risk, not to finalize a video production at the initially proposed budget, or not to complete on time and not to deliver what was agreed initially is much greater if a production isn’t defined prior start. A couple of days a potential client called me for a TV-Spot and had no idea about how many actors are necessary, no idea about music, but the price was pretty much fixed – impossible just to buy the basic licenses. Being burned a couple of times I always use a project initiation sheet prior start – and if it isn’t signed I don’t start, simple as that. But how do we define a video production? I am not talking about a production on a Hollywood level – a plain simple production up to a level of about – let‘s say 50.000€. You think it is a lot of money – well for a TV-commercial, which is aimed to be broadcasted in Europe you burn about 25.000€ just for the licence rights of a single actor, the music and one proper voice-over actor.Project management methodology recommends using two documents in order to define your project in advance. Well, there are others as well but the most important once are (i) the „project charter“ and (ii) the „project scope statement“.

Every video production should have these documents in place (even if it is a small production). I will provide a bit later a project initiation document, which combines both.

Project Charter

The “project charter“ defines the following points:

It identifies the mayor participants within the project and their roles, the project manager of the client, the project manager of the production company (her just called producer – even though there are different types of producers), all those, which get paid for the project (ok – the most important once) and who pays for the project – this is the „project sponsor“;
The project charter formalizes the project and should identify the „project sponsor“, who should sign the charter. Only with its signature the project is officially authorized.
It should define on a high level the scope as well as what needs to be done, the so called statement of work (SOW)
It should summarize the milestones on a time scale;
And should quantify the “budget“ and financial support.

The project charter is the official authorization of the project. It is an overview document and should normally not exceed two pages. Quite frequently, project participants start with the shooting and preparation work prior this signed document. Unfortunately, without such a signed document the project “officially“ doesn’t exist and the work already spend on the film project might develop as unpaid substitution business.

Even if it looks trivial to point out and name the “project sponsor“ – however, within today’s jungle of co-productions and subcontractors, such task sometimes develop more complicated than originally thought because transparency isn’t always requested. Production companies often appear to the outside world as one single company but behind the walls a variety of jobs are given to subcontractors. Which production part is handed over to a subcontractor should be made transparent on a project charter. Frequently marketing companies act as the main contractor – however, rarely run their own video production business and therefore subcontract the actual production part.

Definition of „Rights of Use“

Transparency is important as well in order to define the “rights of use“. If „the rights of use“ are not defined properly then all participants take a big chance or, at same later point in time, trouble occurs. All participants should therefore insist to have the “rights of use“ defined prior project start. A well written project charter should include the “rights of use“ as well.

Why are the “rights of use“ so important. Creative people often invoice the client for the times spend on the project. However, clients can utilize the work in a variety of ways. Please keep in mind that I am writing here from the German perspective and copyright laws vary significantly from country to country. For example “a complete buy-out phrase“ is in Germany not quite legal. These “rights of use“ are treated as property asset and treated equally as commodity. In copyright contracts it needs to be clarified which “rights of use“ the client receives for the payment. So the “rights of use“ are facilitated to determine the payment.

In Germany the daily rate of an actor falls between 800 to 1200€. If a video production is aimed to be broadcasted within Europe then the license cost are about 1200% of the daily rate. If the same TV-spot is going to be broadcasted just in Germany then license fees are 100% of the daily rate. The total cost of an actor will count up to about 13000€ for a transmission in Europe and 2000€ for a German transmission. The license cost, which are associated with the “rights of use“ are justified because an actor is unlikely to get during the transmission time an additional engagement for an equal territory.

The “rights of use“ can be defined by the following parameters:

Exclusive – and non exclusive „rights of use“
Territorial limitations
Limitations in time (for a year for example)
„type of use“, such as online media, TV, internet, exhibitions, video on demand

The “right of use“ are also important to be defined for voice-over actors as well as the music.

“Right of use“ define how the video production is finally used and are required to be negotiated and sorted out prior project start. They need to be incorporated within the project charter and don’t belong in the invoice. “Rights of use“ as a position within an invoice are a one-way declaration of the client and legally irrelevant.

Project Scope Statement

The project charter should be accompanied by a detailed description of the project scope.

In order to clarify the scope of a video production the most important constraints need to be known, such as

Production format;
Length on the final video;
Quality and technical requirements;
locations;
actors;
voice-over actors;
music;
animation;
medium required to be delivered (quantity) ;
extent of connectional work ;
project risks and mitigation strategy;

The list above isn’t complete at all. Additionally, it is recommendable also to write down the items, which are not part of the scope.
Project risks are frequently forgotten. However, most risks can easily been mitigated by the use of insurances or other strategies.

Project Initiation Document

For smaller productions I frequently use a document, which combines the project charter as well as the project scope statement, which is labelled as project initiation document. I have included such a document as a PDF file – however, please don’t use it without modifications. It really needs to be adjusted to fit to the project circumstances present. And please don’t forget to get the signature of the project sponsor. I found this document helpful particularly if I get called-up by my clients and they have no idea what they want.

I have included a little template, which should give you an idea on how video productions can be defined.

Project initiation document

Final Comments

Even if you start with a small video production – it needs to be properly defined prior start. Good preparation work reduces stress for all participants. And don’t forget to define the „rights of use“! Later you can rarely extend them.