I agree with the above and believe the budget cuts will indefinitely have some marginal affect on cost estimation. It really is up to the project manager, and the project team on how the project can still be carried out and turn out to be a success with a new budget they’re working with. Cost estimations will be skewed with the newly reduced amount that is being invested into the project, so the scope will have to be re-evaluated as well as other design control documents such as the DDP if necessary. The DDP especially will probably need some reevaluating since that document states how exactly the project will be done. Since their is a new cost estimation the project manager will have to inform stakeholders how exactly the project will be developed by being hit with a budget cut.

I agree that working under budget will definitely helps in the situation later on if a budget cut were to occur. Since you’re working under budget from the start, and if a budget cut occurs and the project is fortunately still within the newly reduced cost estimation, then there will not be as much reevaluation needed for the overall project development.