completion bond

Here's one of the important reasons they call it Show Business and not Show Art.

At that happy and magical moment when a bank has agreed to loan a producer the money to make an Independent Feature Film, the bank will require the producer to obtain insurance against exceeding the film's budget, in the form of a completion bond.

The producer must then persuade yet another financial entity--the completion guarantor--that the project is properly budgeted and staffed, in order for the guarantor to underwrite the film. He or she will provide the following documentation to the guarantor:

• the Screenplay
• the Budget
• realistic production and post-production schedules
• detailed breakdowns of notoriously costly budget areas such as special effects and distant locations, and any contracts that may be germane.
• contracts with producers, the director, and starring actors.
• special contracts for items that--were they not to be provided--would cause expensive problems during production. If a film were to be shot on the Statue of Liberty, for example, all relevant agreements (with the city, the state, participating insurance companies, even the boat-owners that would ferry the company to Liberty Island) would have to be presented to the guarantor.

The guarantor--or bondsman--will meet with the producer(s) and director and clarify any areas of the budget that may be troublesome. At this point the completion guarantor will demand approval over the production manager and the production accountant, who generally must have a proven track record in order to participate. If all goes well and the completion bond is obtained (usually at a cost of from three to five percent of the budget), the bank completes the loan and the expensive time-clock of feature filmmaking starts ticking.

During production of the film, the bond company is provided numerous reports that help it monitor the process:

• Call sheets detailing exactly what the company is scheduled to shoot on a given day
• daily production reports
• hot costs, which detail variable expenses on a daily basis
• weekly production reports

Cost projections are examined as well. These projections evolve from the trend of the shoot. If excess overtime accrues, for example, or if the director is shooting too much film, and film stock, developing, printing and laboratory costs are not consistent with the budget, the company may have to endure a less-than-friendly visit from the guarantor's representative.

Think of this individual as the hatchet man. He is rarely welcome on the set. He will seem to have an unnatural interest in everything that goes on around him. He may decide to provoke an audit of the books, and--if things are really going badly--he may decide to intervene in the manner of how the film is being shot.

Once the completion bondsman starts telling the director and producer how to make their film, heads will start to roll. If the director of photography, for example, is perceived as working too slowly, he may be replaced.

Ultimately, in the worst possible scenario, the director himself may be replaced. General pandemonium ensues, usually, when the captain of the ship is asked to step down.

The point is: once the show is over budget, nobody's job is safe. Producers, production managers, accountants--all are fair game. At the bond company's sole discretion, a legal takeover of the film can be accomplished.

The truth is, the bond company seldom wants to go to that extreme. They're in the money business, not the filmmaking business, and an intelligent approach for any filmmaker is to welcome the bond company to the set, maybe break out a nice (but affordable) bottle of wine, and discuss--in an adult manner--just what can be done to bring the film in on time and on budget.

And that, dear readers, is the point where Show Art finally gets the chance to strut its stuff.