Creating a Budget for a Program or Initiative

Key Stages:

1. Disaggregate a “high-touch” and a “low-touch” approach to the budget

a. High-touch = Pulling out “all the stops”, higher costs for budgeting for a more expensive or high-end project
b. Low-touch = Lower cost approach to tackling a project, “boot-strapping” and running with as few resources as possible

2. Break out the costs into distinct buckets

a. Common buckets for costs include: Wages, Equipment / Machinery, Training, Marketing & Advertising, Inventory Costs

3. Disaggregate and break down costs into underlying drivers

a. Common formulas include: (i) Unit Cost x # of Units, (ii) Employees x Hourly Wage x # of Employees Needed, (iii) Cost per Click
(CPC) x # of Clicks, (iv) Cost per Impression x # of Impressions

4. Make assumptions about each of the underlying drivers for both a high-touch and low-touch scenarios (high-touch may have additional
costs from programs that low cost does not include)
a. Running a quick market sizing may be helpful in determining the scope of the costs
b. Ensure to explicitly lay out the key assumptions being made for each scenario

5. Create a summary of total costs for both high-touch and low-touch scenarios

6. Illustrate the key differing assumptions between high-touch and low-touch cases and highlight the benefits each program can be
expected to drive over the long-term

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Example Budgeting Exercise:
Roll-out of Cricket Program in Canada

This document outlines the details of the program, the cost elements involved to run the program, and the assumptions being made to
perform a budgeting exercise
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High touch and low touch cricket
There are two alternatives being considered for the cricket program: high touch and low touch.

High Touch (HT) Low Touch (LT)

• Cricket training that closely
simulates real cricket games
• Full equipment is needed by
all players
• Cricket training that focuses
on the fundamental skills of
cricket
• Full equipment is not needed
by all players

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Unit cost elements and assumptions

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Aggregate cost assumptions - Equipment

Cost: Equipment
Low Touch Cost
(30% of HT Cost)
Price of a Cricket Kit (HST included) $95.77
Number of Kits Per School 4
Total Equipment Costs Per School $383.07

High Touch Cost

Price of a Cricket Kit (HST included) $282.50
Number of Kits Per School 4
Total Equipment Costs Per School $1,130.00

Number of Schools with LT Program 40

Number of Schools with HT Program 40

Total Equipment Costs for Entire Program $60,522.80

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Aggregate cost assumptions - Wages

Cost: Instructor Wages

Hourly Instructor Wage $20.00

Length of Training Session (hrs.) 1

Number of Training Sessions Per Week 3

Number of Weeks at Each School 16

Total Cost of Instructor Wages Per School $960.00

Total Cost of Instructor Wages for Entire Program $76,800.00

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Aggregate cost assumptions - Sponsorship

Cost: Cricket Registration Fees & Equipment

Number of Sponsored Players per School 2

Average Cost of Program Registration (HST included) $109.24

Equipment Costs (HST included) $282.50

Cost of Player Registration Sponsorship $62,677.94

Assumption:
Average Cost of Program Registration is based on player fees for three youth
programs located in British Columbia
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Aggregate cost assumptions -
HT vs LT Comparison

High Touch (HT) Low Touch (LT)

• Assumption that all 80 • Assumption that all 80
schools are HT schools are LT

• Total Costs (SG&A • Total Costs (SG&A

excluded): $230,555.94 excluded): $170,801.54

• Total Costs (SG&A • Total Costs (SG&A

included): $265,139.33 included): $196,421.77