One the biggest problems that can arise from an overestimated budget is of course layoffs. Not only will you lose employees who have been contributing to the project, the potential demoralizing effects on the rest of your employees will make the situation even worse. Luckily I’ve never worked in a project where this ever became an issue before project completion, but my mother has told me of multiple times where this has happened where she worked, where people who have been working there for decades get laid off. It’s certainly a scary outcome and should have one of the highest priorities to prevent it.