A budget is the amount of money you have to spend on a Project. It’s a snapshot of the amount of time you estimate you will spend on the project before you even get started or a set amount Management defines you have to spend on that project. So basically, it’s a baseline amount and it remains unchanged throughout the entire life cycle of the project.

A Forecast on the other hand, is the estimated amount you project you will spend on the project at a given point in time. Generally, Forecasts are updated on a monthly basis and they vary every month. But they don’t have to, they can remain the same if you consider the projection to remain accurate. The Forecast can be above or below your Budget or it can even be the same amount, although it rarely is, as things will start to fluctuate over time.

Typically, the Forecast equals the Budget amount at the beginning of the project, but it tends to vary over time. As a PM, you will always strive to keep your Forecast as close as you can to the Budget.