Forecast

A Forecast is the continuously updated expectation of how costs or other steering variables will develop until the end of a period. It combines actual values already incurred with the foreseeable changes of the remaining period.

It is based on accumulated actual costs as well as known effects such as planned projects, contract changes or price adjustments. Methodologically, the spectrum ranges from simple extrapolation and driver-based models to the rolling forecast, which continuously looks 12 to 18 months ahead regardless of the fiscal year. An example: after six months, €600,000 of actual costs have been posted and €680,000 are expected for the remaining period; the annual forecast is therefore €1.28 million. In IT, the forecast is an integral part of IT Budget Planning and Forecasting.

The forecast must be distinguished from the IT Budget: the budget is the binding framework approved once, the forecast is the best current estimate at any given time. The difference between the two shows early where corrective action is needed.