What is the difference between a bid, an estimate and a budget?

These terms are often used interchangeably, but there are significant differences. We believe a budget is an idea of what a project could cost. This might be used prior to any plans or specifications being developed.  Typically, an estimate is a cost developed using historical figures from previous projects. A bid is a formalized version of the estimate where the labor, specific materials and subcontractors are queried and a bottom-line number is determined.