There are several severe negative results that can occur within a company that results from an underestimation of cost of a project or a unforeseen budget cut. As mentioned above, layoffs, wasted time and resources, and overall employee moral are some of the biggest casualties as an event like this unfolds. Relationships with clients and suppliers also begin to deteriorate if project is not made, shipped, or delivered on time.
Luckily, in my experience, I have not run into such a situation. In my case, the project was actually overestimated (both funds and amount of time required) which allowed for more time and effort to be put into the solution. This allowed a more precise, clean, and stable method to be realized which purified the target monoclonal antibodies better than was expected in the initial project plan. In addition, the workplace employees had much higher spirits due to successful completion of the project.
While talking to other employees in my project, I have heard horror stories of entire projects folding at rival smaller pharmaceutical companies due to the drastic unanticipated project cuts. Many members of their staff (including them) were laid off which put more pressure on those remaining resulting in a more stressful, less productive work environment.