The first step of pre-production is creating a budget and schedule for the production and post-production. While the budget and schedule will change constantly throughout prep, into production, even up to delivery, you have to start somewhere. The initial budget and schedule will be source of much discussion and compromise, but it gives all the department a common ground from which to plan. It also informs the studios or other interested parties (bond company, investors, etc.) what is the plan.
A production budget covers not just the production portion (when film is exposed, videotape recorded, or other storage media used). It must cover pre-production and post-production as well. Often, at least some of the costs of development and/or distribution and marketing are also in there.
Whereas the budget will cover from pre-production through post, the schedule will only cover the period of production, images are put to film, video, or other media. There will be another schedule drawn up to cover post-production, but that is often done later and is considered part of the post-production process.