budgeting-and-forecasting

# Budgeting and forecasting ## The budget is a commitment, the forecast is a belief Keep them separate. A budget re-cut every month is not a commitment; a forecast held to the original budget is not a belief. Both failures make the numbers useless for different reasons. ## Running the cycle 1. **Set the frame first** — targets, headcount envelope, and the assumptions everyone builds on (pricing, attrition, timing). Distributed teams building on different assumptions produces a consolidation that cannot be reconciled. 2. **Collect in a fixed template.** Free-form submissions cost more to normalize than to build. 3. **Challenge the inputs**, specifically: what is the volume driver, what is this per unit, what happens if it comes in at half. Budget submissions are negotiating positions and should be treated as such without hostility. 4. **Consolidate and find the gap** between bottom-up and top-down. There always is one. Close it explicitly by cutting something named, not by proportional trimming — proportional cuts damage the highest-return line as much as the lowest. 5. **Publish what was not funded** and why. This prevents the same request arriving three times. ## Rolling forecast Re-forecast on a fixed cadence over a constant horizon. Update only what has changed and say what changed and why. A re-forecast with no narrative is a new set of numbers with no information in it. ## Variance analysis Variance is only useful decomposed. For each material v...