What is the difference between projections and predictions

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Popular Posts All Posts 2 minute read. Read More. Reporting 3 minute read. Consolidation 3 minute read. Forecasting 2 minute read. Related Posts. Continuous Planning 4 Steps to Reducing the Pain of Planning and Forecasting [Webinar Recap] Learn 4 steps to reduce the pain of the planning and forecasting of your budgeting process in this webinar recap. It is not a forecast; rather, each scenario is one alternative image of how the future can unfold. A projection may serve as the raw material for a scenario, but scenarios often require additional information e.

A set of scenarios is often adopted to reflect, as well as possible, the range of uncertainty in projections. Other terms that have been used as synonyms for scenario are "characterisation", "storyline" and "construction". One or more scenarios that have the same demographic, politico-societal, economic and technological storyline. A narrative description of a scenario or a family of scenarios , highlighting the main scenario characteristics and dynamics, and the relationships between key driving forces.

By definition then, forecasts provide a more likely scenario of occurrence when compared to projections, which depending on the assumptions used, may deviate from a likely result.

Although the terms forecast and projection are often used interchangeably, one should be cognizant on whether to name their financial model as a projection or a forecast as some users of the financial model may place undue reliance on the work.

If actual results are significantly different than what was forecasted or projected, the user of the model may have different reactions depending on if the financial model was originally presented as a forecast or as a projection.