Project Budgeting & Forecasting: Explaining Cost Changes
CEFR: B2
Read/Listen first
During our weekly project review, Marta opened the budget dashboard and frowned. Last quarter we spent more than we had planned on travel and freelance developers, so the client has asked us to explain the variance. We have already used almost seventy percent of the training budget, and we still need to cover testing and deployment. If we keep the current pace, total costs will exceed the initial forecast by fifteen percent. To avoid a cost overrun, we should reduce non-essential workshops and negotiate better rates with suppliers. Marta would also like to add a small contingency fund, because unexpected bugs often appear before launch. By comparing last year’s figures with this year’s estimates, the team is able to adjust the cash flow plan and present a realistic forecast for the next three sprints. Everyone agrees that a clear budget, shared early, makes decisions faster and prevents stressful conversations at the end.⚡ Learning goals
- Can explain why a project budget is over or under the original forecast.
- Can describe past spending and its impact on the current project phase.
- Can suggest actions to reduce future costs and protect cash flow.
✨ Key language
- explain the variance “We need to explain the variance to the client.”
- cost overrun “A cost overrun will damage our profit margin.”
- realistic forecast “Let’s present a realistic forecast for the next quarter.”
⚙️ Rules & Grammar — 4 Structures
1️⃣ Past simple for completed costs
Rule: Use the past simple to describe finished spending and actions in a completed period (for example, last quarter).Examples: Last quarter we spent more than we had planned on travel.; The client asked us to explain the budget variance.; The team reviewed the figures on Friday.
Common pitfall + fix: Learners often say “Last quarter we have spent too much.” — Use past simple with finished time words: “Last quarter we spent too much.”.
Choose the best option: Last quarter we _____ thirty percent more on travel than expected.
Tip: Use past simple with finished time expressions like “last quarter”.
Fill with the best answer: Last quarter we ______ more than planned on freelance developers.
Tip: Use the past form “spent” to talk about completed costs.
2️⃣ Present perfect for results up to now
Rule: Use the present perfect to show how past spending affects the current situation, without saying exactly when it happened.Examples: We have already used almost seventy percent of the training budget.; The client has asked us for an updated forecast.; Our costs have increased faster than our initial assumptions.
Common pitfall + fix: Learners sometimes use past simple with “already” and no time phrase. — Use present perfect: “We have already used most of the budget.”.
Choose the best option: We _____ already used most of the travel budget this year.
Tip: With “we”, use “have” to form the present perfect.
Fill with the best answer: We ______ already used seventy percent of the training budget.
Tip: Use “have” + past participle to connect past spending to now.
3️⃣ First conditional for financial consequences
Rule: Useif + present simple and will + base verb to predict what will happen to the budget.Examples: If we keep the current pace, total costs will exceed the initial forecast.; If the client cuts the budget, we will reduce non-essential travel.; If we plan a contingency fund, we will handle surprises more easily.
Common pitfall + fix: Learners sometimes use “will” in both parts. — Use “If we keep the current pace, costs will increase.”, not “If we will keep…”.
Choose the best option: If we _____ the current pace, costs will increase.
Tip: After “if”, use present simple, not “will”.
Fill with the best answer: If we keep the current pace, total costs ______ the initial forecast.
Tip: Use “will” plus base verb to describe the future result.
4️⃣ Modals of obligation and recommendation
Rule: Use “should”, “need to”, and “have to” to talk about necessary or recommended actions in the budget.Examples: We should reduce non-essential workshops.; We still need to cover testing and deployment.; The team has to explain every major variance to the client.
Common pitfall + fix: Learners often mix “must” and “should”. — “Must” is very strong; use “should” for recommendations about the budget.
Choose the best option: To avoid a cost overrun, we _____ reduce non-essential workshops.
Tip: Use “should” for strong but polite recommendations.
Fill with the best answer: We still ______ cover testing and deployment in this budget.
Tip: Use “need to” to show something is necessary but still possible.
✍️ Vocabulary
budget dashboard
Meaning: a digital view of key budget numbers and trends for a project.Synonyms: budget overview, financial dashboard, spending panel.
Chunk/Idiom: open the budget dashboard.
Example: Before the meeting, I opened the budget dashboard to check current costs.
Morphology: noun phrase; singular compound noun.
Self-practice: Describe what you see on your own budget dashboard in one sentence.
variance
Meaning: the difference between planned numbers and actual results in a budget.Synonyms: difference, deviation, gap, discrepancy.
Chunk/Idiom: explain the variance.
Example: The finance team must explain the variance to the client clearly.
Morphology: noun; countable, often used in finance reports.
Self-practice: Write one sentence about a variance in time or money from your last project.
forecast
Meaning: an estimate of future results, based on current data and assumptions.Synonyms: projection, estimate, prediction, outlook.
Chunk/Idiom: present a realistic forecast.
Example: We will present a realistic forecast for the next three sprints.
Morphology: noun or verb; here mainly a countable noun.
Self-practice: Say what you forecast for your next month of work or study.
contingency fund
Meaning: extra money in the budget to cover unexpected costs or risks.Synonyms: reserve, buffer, safety margin, emergency fund.
Chunk/Idiom: add a contingency fund.
Example: Marta wants to add a contingency fund for potential bugs before launch.
Morphology: noun phrase; singular, often used with “a”.
Self-practice: Decide how big your ideal contingency fund should be and explain why.
cost overrun
Meaning: when actual costs are higher than the planned budget amount.Synonyms: overspending, budget overrun, extra costs.
Chunk/Idiom: avoid a cost overrun.
Example: To avoid a cost overrun, we reduced non-essential workshops and travel.
Morphology: noun phrase; often used with “have” or “avoid”.
Self-practice: Think of a time you had a cost overrun and write one example sentence.
cash flow
Meaning: the movement of money into and out of a project or business.Synonyms: money movement, liquidity, cash movement, financial flow.
Chunk/Idiom: adjust the cash flow plan.
Example: The team adjusted the cash flow plan after reviewing last year’s figures.
Morphology: noun phrase; uncountable, used with verbs like manage or improve.
Self-practice: Describe one action that could improve cash flow in your context.
☁️ Examples (+ audio)
We have already used most of the design budget this sprint.
If we keep this pace, our costs will exceed the forecast.
We should add a contingency fund for unexpected bugs.
The client asked us to explain the variance in travel costs.
✏️ Exercises
Grammar
Choose the correct option: We ______ most of the training budget this month.
Tip: Put “already” between “have” and the past participle.
Choose the correct option: If we keep this pace, costs ______ the initial forecast.
Tip: Use “will” plus base verb for the future result.
Fill with the best answer:
Last quarter we ______ too much on freelance developers.Tip: Use the past form “spent” for finished periods.
Fill with the best answer:
We still ______ cover testing and deployment this month.Tip: Use “need to” to show something is necessary.
Vocabulary & Comprehension
Which phrase means extra money kept for unexpected costs?
Tip: Think about which phrase you would use for emergency spending.
Which phrase describes when actual spending is higher than the budget?
Tip: Look for the word that suggests spending is too high.
Fill with the best answer:
The client asked us to explain the budget ______ clearly.Tip: Use the finance word for the gap between plan and reality.
Fill with the best answer:
We compared last year’s figures with this year’s ______.Tip: Use the word for our estimate of future results.
✅ Guided practice
Mini-dialogue:
A: Marta, our costs have already used most of the training budget.B: I know. If we keep this pace, the costs will exceed the forecast.
A: Should we cut some non-essential workshops and add a contingency fund?
B: Yes, that would help us avoid a cost overrun.
Why this matters:
Clear budgeting helps your team make faster decisions and avoid last-minute crises. It also builds trust with your client. When you can explain every variance, stakeholders feel more confident in your forecast.Verb & Adjective Pack:
forecast — We forecast higher travel costs for the next sprint.overspend — We overspend when we ignore the budget limits.
realistic — A realistic budget includes a small contingency fund.
Try & compare:
Fill with the best answer: If we keep the current pace, our costs ______ the original budget.
Tip: Use the first conditional to show the future result.
Self-correction: Fix the sentence: We already used most of the training budget.
Tip: Use present perfect to connect past spending with the current situation.
Practice aloud: Listen, repeat, then type the sentence.
To avoid a cost overrun, we should reduce non-essential workshops.
Tip: Notice how “should” makes the recommendation polite but still strong.