While working on General Dynamics Electric Boat, I managed new, experimental projects. These were ideas that's the navy had and the research laboratories and other companies helped move forward. I was the lead who brought everyone together. I was the one who brought all the companies, the ideas from the research laboratory, and the government together. I managed the budget, schedule, verification testing and made sure everyone was communicating. I reported to the government how much was spent each quarter and fiscal year and how much was needed for the next fiscal year (for each quarter). I also outlined all the work that would be done by all parties involved with said outlined money.

When I first started, I was given a budget and a name of a project. No one in my company knew what it was. The only person who knew what it was a PhD who came up with the idea in a national research laboratory. I found this person. He explained the idea. I had to tell him what regulations and testing had to be met to get this technology on a submarine and actually plan out the project from the ground up including development.

The initial budget given did not meet the need for the first year. It was just a random number that the PhD told the government and that is what was given. Management asked me why more was not being done on the project and I explained that I did not have the money to move forward yet but would have it when the next fiscal year started (that's the earliest the gov could get it to me). The project was placed on hold until then.

Not knowing the budget or asking for a budget without even attempting to relate it to a schedule or actions needed, wastes time. The project could have been a lot further and finished a lot faster.

Not knowing your budget can limit your team members. For example, when you hire people for a project they work at a specific rate. So if you do not know your budget it can be problematic in getting the team members you want. So if you know the budget, you can timeline your project much better and hire the team members according to your budget. In addition, if the project manager knows the budget, he can manage your progress of the project and compare how much money has been spent vs what the budget is. This will allow the project manager to avoid any of the issues such as stopping a project, putting more responsibility on team members, and avoid any confusion or "set" budget issues in the middle of a project.

In every company the project is planned based on the resources available. If the budget is bigger, more people can be roped in to finish the project more quickly and deliver more. Therefore, no project planning is complete until you come up with a budget. It doesn't matter whether the project is big or small, or how many resources are available or the number of activities involved in it, the most important part is the process of figuring out the budget. First, the detailed estimates for all the project costs must be made. Once it's done, it can be used to estimate the costs for planning the budget. Initially the budget plan can be ballpark but as the time goes by, it can be refined further.

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.

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.

Working for a small company results in an environment in which failure to plan or forecast budget demands can become catastrophic. Unexpected costs can result in project cancellation midway, resulting in wasted resources and no return.

I have been fortunate to not have any of the projects that I have been directly involved with cancelled. However, I can share the experience of my coworker who did go through this problem. My coworker was tasked with projecting the costs for sterilizing and testing a specific prototype/special order. The prototype was meant to be a means of acquiring a contract from a very large corporation that needed the product but did not have the means of producing it themselves. After determining the costs for sterilization and the appropriate biocompatibility and microbiology test, the project was underway. After the prototype was developed by R&D, it was sent out for sterilization and the other tests it needed. Once the reports came back, it was sent to the customer for final approval. Upon review of the results, the customer noted that a "small" change in the products intended usage instructions resulted in the need for additional biocompatibility testing. The additional testing ended up costing a significant amount that our company had to absorb. The results of the additional testing was not favorable when reported to the customer. This basically pushed the project back several steps into the R&D phase. Upon review of the project's standing, it was determined that it was no longer feasible to proceed and it was cancelled.