# How to Run a Shutdown Cost: Pricing a Hiatus vs a Full Stop

Source: https://storiara.com/blog/how-to-run-a-shutdown-cost-for-film-production
Last updated: 2026-09-14
Author: Nick Harty, Storiara

> A shutdown cost is the production accountant's estimate of what it costs to stop shooting, either for a set hiatus or for good. It separates money already spent, commitments that can't be cancelled, the weekly cost of holding the production together, the cost to restart, and the cost to wind down, then subtracts what insurance is likely to cover. The studio or financier uses it to decide whether to pause, push through, or abandon.

Nobody asks for a shutdown cost on a good day. It gets requested at 11 PM after the lead has been taken to urgent care, or the morning a stage roof leaks onto a finished set, or when a financier's wire doesn't arrive. The people deciding what to do need a number by the next morning, and the question is always the same: what does it cost to stop, compared with what it costs to keep going?

The accountant who has run one before on a calm afternoon, with a template ready, answers that question in hours instead of days. This post is that dry run. For the definition, see [shutdown costs](https://storiara.com/glossary/shutdown-costs).

## Decide which question you're answering

"Shut down" can mean two very different things, and the calculation is different for each.

A hiatus stops shooting for a defined period, then restarts with the same cast, crew, sets, and locations as far as possible. The question is how much each week of pause costs, plus the cost of starting again.

An abandonment stops the film for good. The question is how much has been spent, what's still owed, and what it costs to close everything down.

Most of the time you run both. The studio or financier compares a three-week hiatus against abandonment against pushing on with a workaround, like shooting around the injured actor, and picks the cheapest path that still delivers a film they can sell.

## The five buckets

Sort every account in the budget into one of five buckets. The [cost report](https://storiara.com/glossary/cost-report) is the starting point, because it already shows actuals, commitments, and the estimate to complete by account.

| Bucket | What goes in it | Where the number comes from |
|---|---|---|
| Sunk | Money already spent and not recoverable | Cost report actuals |
| Committed | Owed regardless of what happens next | Contracts, POs, pay-or-play deals |
| Holding (per week) | What it costs to keep the production intact while paused | Leases, skeleton staff, holds, storage |
| Restart | One-time costs to get shooting again | Re-prep, travel, rebooking, re-dressing |
| Wind-down | One-time costs to close for good | Strike, returns, wrap payroll, loss and damage |

The hiatus cost is committed + (holding x weeks) + restart. The abandonment cost is sunk + committed + wind-down, compared with what the film is worth unfinished (often nothing).

## Going through the contracts

The holding and committed buckets live in the paperwork. Pull every agreement and read the termination, suspension, and force majeure clauses. The usual suspects:

Start with cast deals. Look for [pay or play](https://storiara.com/glossary/pay-or-play) language. A pay-or-play actor is owed their fee whether or not the film finishes. Also check stop dates: if a supporting actor has another job starting in five weeks, a three-week hiatus may push their remaining days past their stop date, which means recasting and reshooting their scenes.

Director and producer deals are usually pay or play once the film is in production. Check whether their fees continue during a suspension or are deferred.

For crew, check deal memos and the union agreement. The IATSE Low Budget Theatrical Agreement's text says there are no guarantees of employment beyond one day for daily employees and one week for weekly employees, which limits the layoff cost on shows under that agreement. Its terms summary also says a call can't be cancelled after 5 PM of the previous day's work, and a cancelled call after that point pays the 8-hour minimum. So if the decision comes after 5 PM, tomorrow's crew are paid regardless.

Stage leases often run weekly with notice periods. Location agreements may allow rescheduling for a fee, or may not allow it at all, and some owners will rent to another production the moment you release the dates.

Rental houses may put a package on hold at a reduced rate or require it back. Specialty items (a crane, a picture car built for the show, a custom rig) are the ones that can't easily be re-sourced.

Catering, security, trucks, and housing vendors often have short cancellation terms; some have minimums.

## A worked example: three-week hiatus on Day 12

A $6,000,000 feature is on Day 12 of a 30-day schedule. The lead is injured off set and the doctor says three weeks before she can work. All numbers here are illustrative, built for the example.

### Holding costs per week

| Item | Per week |
|---|---|
| Stage lease (set left standing) | $18,000 |
| Production office and parking | $4,500 |
| Skeleton staff: UPM, accountant, coordinator, art director, location manager, with fringes | $17,500 |
| Camera and grip packages on reduced hold | $6,000 |
| Picture vehicles and specialty props on hold | $2,200 |
| Security for stage and storage | $3,100 |
| Housing for out-of-town keys kept on | $5,400 |
| **Total per week** | **$56,700** |

Three weeks: $56,700 x 3 = $170,100.

### Committed and one-time costs

| Item | Amount |
|---|---|
| Tomorrow's crew call (decision came after 5 PM; 8-hour minimum for 48 crew at an average $30) | 48 x 8 x $30 = $11,520 |
| Remaining weekly guarantees for laid-off weekly crew | $38,000 |
| Supporting actor past stop date: recast and reshoot 2 scenes | $64,000 |
| Location fees lost on two dates that can't be moved | $9,000 |
| Restart: one week of re-prep for 12 department crew, travel back for out-of-town crew | $52,000 |
| **Total committed and restart** | **$174,520** |

### Offsetting insurance

If the production carries cast insurance covering the lead, the extra expense caused by her injury may be claimable above the deductible. Suppose the broker's early read is that $300,000 of these costs are covered causes and the policy deductible is $25,000 (both figures are assumptions for this example; your policy sets them).

- Hiatus cost before insurance: $170,100 + $174,520 = $344,620
- Estimated recovery: $300,000 minus $25,000 = $275,000
- Net estimated hiatus cost: $344,620 minus $275,000 = $69,620

The claim won't pay during the hiatus, so the production still needs cash to cover $344,620 until it's settled. Show both the gross and the net, and label the recovery as an estimate.

### The abandonment comparison

On Day 12, suppose the cost report shows $2,900,000 spent and $600,000 in pay-or-play and other commitments. Wind-down (striking the set, returning rentals, loss and damage, a week of wrap for a small crew, final payroll) comes to $140,000. Abandonment costs $3,640,000 and produces no film. Unless the insurance or bond covers abandonment, the three-week hiatus is obviously cheaper. The comparison is closer when the film is early in prep or when the problem might not resolve.

## Presenting the number

Decision makers want one page. A good shutdown memo has:

1. What happened and the options being compared (hiatus of X weeks, abandonment, workaround).
2. For each option: total gross cost, estimated insurance recovery, net cost, and cash needed before recovery.
3. The assumptions: return date, which contracts were read, what's unconfirmed.
4. Risks that aren't priced, like the lead's return date slipping or a location owner refusing new dates.
5. Who needs to decide by when, including any notice deadlines (the 5 PM call cancellation cutoff is often the first).

Keep the backup in the accountant's workbook, account by account. The bond company, if there is one, will want it. [Completion bonds explained](https://storiara.com/blog/completion-bonds-explained) covers how the guarantor gets involved when a shutdown threatens delivery.

## Mistakes that make shutdown costs wrong

Forgetting the committed bucket is the big one: a hiatus looks cheap if the memo only shows weekly holding. Missing cast stop dates is next, since a short hiatus that forces a recast can cost more than a long one. Assuming insurance pays for everything, or pays quickly, puts pressure on cash that isn't there. And letting the decision drift past the next day's call cancellation cutoff adds a full day of crew pay for nothing.

## Before you ever need it

Set up the five-bucket template during prep, with contract notes on each vendor and deal. Keep the list of pay-or-play deals and stop dates current. Know your insurance broker's after-hours number and your policy's deductibles. The [UPM](https://storiara.com/roles/unit-production-manager) and [production accountant](https://storiara.com/roles/production-accountant) should agree on who runs the numbers when something happens. For more on the coverage side, see [production insurance](https://storiara.com/glossary/production-insurance), and for the running budget view, [how to read a film cost report](https://storiara.com/blog/how-to-read-a-film-cost-report).

Storiara doesn't track actuals or commitments, so a shutdown cost is built from your accounting system's cost report. What Storiara can give you quickly is the remaining shooting schedule and the cast day out of days, which show which actors and locations a pause affects.

## Frequently asked questions

### What triggers a shutdown cost?

Anything that might stop principal photography: a lead actor's illness or injury, a lost stage or location, a financing problem, severe weather or a natural disaster, a strike, or an order from a government or the bond company. The accountant usually runs the numbers the same day the problem appears.

### What is the difference between a hiatus and an abandonment?

A hiatus pauses production for a set period and restarts, so the cost is weekly holding plus restart. An abandonment stops the film permanently, so the cost is what's been spent, plus wind-down, plus any guaranteed payments still owed.

### Does insurance pay for a production shutdown?

Only for covered causes under the policy, such as a covered cast member's illness or injury under cast insurance, and only above the deductible and up to the limits. Many causes, like a financing gap, aren't insurable. Talk to the production's insurance broker before the numbers go to the financier.

### Do you have to pay crew during a shutdown?

It depends on their deals and the union agreement. The IATSE Low Budget Theatrical Agreement, for example, says there are no guarantees of employment beyond one day for daily employees and one week for weekly employees, so layoff cost is limited to the remaining guarantee. Individual deal memos and other agreements can say more.

## Sources

- [IATSE 2023-2025 Low Budget Theatrical Agreement (posted by IATSE Local 44)](https://local44.org/sites/default/files/2024-11/2023-2025%20Low%20Budget%20Theatrical%20Agreement%20(FINAL).pdf)
- [IATSE 2024 Low Budget Theatrical Agreement Terms and Conditions at a Glance (IATSE Local 44)](https://local44.org/sites/default/files/2024-11/2024_Low_Budget_Theatrical_IATSE_Agreement_TC.pdf)