1. COST ALLOCATION AND MANAGEMENT Frans Huneker, Technical director Dutch National Opera & Ballet

2. AGENDA 1. ACTIVITY OVERVIEW 2. COST ALLOCATION PROCESS 3. COST MANAGEMENT

3. ACTIVITY OVERVIEW ORGANIZATION PRODUCTIONS PROJECTS COST

4. CLIENTS Benvenuto Cellini Narnia

5. FINANCIAL COST STRUCTURE Opera costs Ballet costs Theater costs Central cost Central costs For accounting purposes there is also a cost center “Central” Costing principles All direct costs are allocated within the same cost center Central costs are divided across these three costs centers

7. COST ALLOCATION Costs are allocated through Indirect costs - allocation keys based on: FTE’s floor space, housing Subsidized funds Services (like heating and electricity) Direct costs – assigning costs directly where they are used – are: Labor Materials Consumables Deliverables

8. THIRD PARTY CONTRACT AND COST MANAGEMENT Two computer systems are used to register and track external obligations DCI – purchase orders and invoice management FMS – budget control and analysis

11. Production budget planning

12. COST MANAGEMENT PROCESS Each technical department prepares a budget for materials, deliverables and in hours based on the annual planning for opera and ballet productions Set workshop Costumes Make-up and Wigs Props and special effects Stage Light Audio Video Communication

13. DEPARTEMENTAL BUDGET ASSIGNMENT Each department receives a budget from Opera and Ballet for Materials Labor 3 rd party work (deliverables, advices) For each production a theatre - artistic concept is created including detailed budget (covers both time and material) A feasibility study is performed A proof of concept is build, followed by a final design, including updated budget The final yearly budget is assigned to each technical department

14. PROCUREMENT Materials, services, consultancy Based on quotes, bill of materials and drawings Approved purchases are raised in DCI system Receipt of goods are confirmed in DCI system Invoices are processed by Finance department Through FMS system procurement costs are allocated to associated cost centers for each production

15. Labor = internal assignment of costs for labor Hours are estimated for a year for Technical and Costumes Make-up & Wigs department, based on seasonal planning Hours are collected into hour budget for a year Production schedule is drafted 4 week schedule is made Production schedule is setup in Harmony (= planning system) Allocation of assigned hour budget Draft individual work schedules per employee Changes on work schedules are processed on an ongoing basis Final work schedule per employee Allocation of actual spent hours on projects and productions Technical evaluation of production including cost

16. Calculating allocation rates Operational budget per department Salaries Social security Fees Hiring additional capacity Specific workshop fees Administration Available net capacity in hours + additional = total available capacity Cost / available capacity per dept = rate per hour per dept

17. Assigned budget

18. Good luck!