What does failure to account for contingencies in estimates typically lead to?

Failure to account for contingencies in estimates typically leads to increased project costs. Contingencies are necessary to cover unexpected events or unforeseen circumstances that may arise during a project. These could include design changes, material price fluctuations, or delays due to weather conditions. When these factors are not accounted for in the initial estimates, the project can go over the budget.

Without adequate contingency planning, cost overruns may occur, which causes financial strain on the project. This can also impact cash flow, lead to potential project delays as funds must be reallocated, and ultimately affect the overall viability of the project. Properly including contingencies ensures that there is a buffer to manage uncertainties, protecting the financial integrity of the project.

The other options do not directly address the primary consequence of neglecting contingencies. Overly optimistic project timelines, while a concern, do not specifically result from the absence of contingency funding, and clear stakeholder communication and efficient resource management are outcomes that stem from good practices rather than a direct result of omitting contingencies in budgeting.