A budget is the financial representation of a planning process, usually annual as in the University. It is finalised before the beginning of a financial year and actual income and expenditure are measured against it as a means of reviewing performance and controlling expenditure.
The University's planning process considers not only the following year's budget but projections for the 3 years beyond it. By planning this far ahead and revising those estimates every year we ensure the medium-term sustainability of our activities.
Forecasting is a shorter-term activity, usually performed at regular intervals e.g. quarterly and limited to updating our view of the current year. It takes into account actual income or levels of expenditure and projects these forward to the end of the financial year.
It provides useful information about expected current year out-turn so that corrective actions may be taken where appropriate.
In addition, because forecasts are updated regularly, they often provide a more accurate guide to expenditure levels etc than a budget set before the financial year began. In turn, this may mean that a revised current year forecast is more appropriate than the original budget as a basis for future expenditure etc when setting the following year's budget.