What causes software project planning cost overruns?

Most of the time, unrealistic estimation causes project cost overrun as team is unable to account for the complexity, integration requirements during the intial stage. Also, most of the time, the testing need of the software product is underrated. Due to this, lot of post production defects cropped up which requires huge maintenance cost. A post production defect fixing is 10 times costlier than defect fixing during development stage. Hence, every aspect of estimation ( technical complexity, unit testing need integration need, testing effort, should be well accounted for.

Software project planning cost overruns can stem from various factors. Inaccurate initial estimates, unforeseen technical challenges, and evolving project requirements often contribute. Poor communication among team members and stakeholders can lead to misunderstandings, impacting timelines and budgets. Additionally, external factors like market changes may disrupt planning. Successful mitigation involves thorough risk assessment, agile planning, and proactive communication to adapt to the dynamic nature of software development projects.

In addition to executing good requirements or mission engineering practices and using analogous projects, actual cost and schedule performance, and SME opinions one should also consider including leveraging MBSE parametric modeling or simulations given the advancements with AI/ML tools and techniques to come up with more realistic cost, schedule and resource projects.

Scope creep is in the nature of project lifecycles. But we can talk about the minimizing scope creeps. Knowledge and experience of senior/expert teams can minimize the effect of creeps. I always follow the way of getting every words from key users (necessary or unnecessary); if needed, use the tools such as teams, zoom recordings; eliminate the dispensible requirements; categorizing the OOTB, Development, Integration requirements; agree on the scope with key users and project management team (If needed, document can be signed by counterparts).

This problem often arises due to factors such as inadequate requirements analysis, absence of historical data, optimism bias, or external pressure from stakeholders. Unrealistic estimates contribute to the underestimation of project complexity, scope, and risks, while simultaneously overestimating team productivity, availability, and skills. The recommended approach to mitigate this challenge involves the use of reliable estimation techniques, including function point analysis, COCOMO, or agile methods. Additionally, these estimates should be validated through historical data, expert opinions, and the incorporation of contingency factors.

Scope creep is inevitable when you haven't defined your Minimum Viable Product (MVP). If you can get agreement and commitment to that minimum, everything else becomes a change request and needs to be funded, resourced and scheduled. This does, need a strong PM clearly communicating with stakeholders and sponsors to reinforce that the commitment to the MVP satisfies the business case and deviations put that at risk.

Scope creep is a major cause of software project planning cost overruns. It stems from unclear requirements, evolving business needs, and poor communication. Ineffective change control and inadequate risk management amplify the problem. Insufficient resource planning and optimistic scheduling contribute to delays and increased expenses. Successful mitigation requires thorough initial planning, clear communication, rigorous change control, proactive risk management, and realistic resource allocation.

No level of documentation will result in zero scope creep. It cannot be eradicated but it can be incorporated into existing timescales if the correct resources are identified and can be made available when required. The entry into UAT should be against the go-live target configuration with any new requirements being reviewed to determine go or no go. Any left overs will become fix forward candidates

Scope creep is the most common action which happens during implementation . It can be avoided by adding additional effort for analysis and documentation all the what-ifs and buts and aligning them to future phase development. Always staying within the predefined and agreed scope keeps the product balanced and allows users time to adjust to the solution and technology before enhancing it. It also helps tracking the actual effort vs addditional enhancement effort:

Scope Creep is one of the major contributors of project cost overrun if not handled properly. Major contributors leading to scope creep are unclear and high level business requirements which are not signed-off and baselined. Its very common to get new requests from business during project execution even after requirements are baselined. Project Manager should handle with care by keeping both business and project interests in mind. While analyzing the new request, suggesting workarounds and alternate solutions help satisfying business interests without putting project scope and cost into risk. Must have new business requests can be discussed and bargained with existing nice to have requirements.

Risk management is the most important aspect of project management and planning . We have to document all the risks irrespective of how small they might be. The risk has to be definitive and quantifiable. Risk should be assigned to a specific or multiple phases of SDLC/STLC. This allows to create a mitigation plan for it before the product is moving into the phase and also clearly communicate to stakeholders on the progress of the project and set right expectations on delivery timelines and allows the stakeholders to plan their plan of utilizing the product with right approach.

Communication can be a defining factor in the success of any software development project. A poor communication might not only lead to a project failure but it might also result in loss of time & resources. Having a proper communication plan & defining who will communicate with whom can help in rectifying the errors. Using efficient project management & communication tools can help you smoothen the communication flow.

O ideal é que a transparência na comunica??o seja constante em todas entregas do projeto, em minhas experiências profissionais pude perceber que grande parte dos problemas estava relacionado a uma falha na comunica??o quanto aos aceites dos requisitos. Isso acarretava em bug’s, aumento na hora de desenvolvimento, atrasos em entregas e poderia ser resolvido com algumas reuni?es cujo viés fosse o aumento de entendimento da solu??o apresentada para a necessidade e se de fato atenderia naquele formato de implementa??o proposto.

This should not be a problem if the program or project has a lengthy timescale. Most issues can be ironed out without a recordable cost.

It’s called the software development lifecycle and the software testing lifecycle. Technical debt would be a result of very poor program management and poor organisational delivery standards. I wouldn’t want to work in such a place.

1. Resource turnaround. If programmers and testers are constantly moving out of the project, they may have to be replaced by personnel who come at a higher price. 2. Account for inflation. Keep in mind the employee's salary due for a hike, travel costs that keep going up, etc. 3. Let's say the project spans over 8 months and the cost was under-run in the first 3 months. Once again, due to poor estimations. Need to consider how to use this cushion amount.

Budget may overrun due to multiple factors: 1. Details in the requirements missing which involves to and fro in implementation phase 2. Estimations were done basis some assumptions and during course of implementation those assumptions are not the assumptions anymore 3. Changing the team structure frequently 4. Experience of the team members who are delivering the project 5. Gold plating 6. Poor Risk Management 7. Communication and 8. Vision misaligned 9. Scope creep, Unclear and changing requirements 10. Scope acceptance at a very later stage of the project

In addition to addressing unrealistic estimates, focus on thorough risk analysis and mitigation planning. Identify potential risks early in the project, assess their impact on cost, and develop contingency plans. Regularly update and communicate the project status to stakeholders, ensuring transparency about potential challenges. Also, prioritize effective communication and collaboration among team members to avoid misunderstandings and delays. Lastly, continuously learn from past projects, adapting and improving estimation processes based on historical data and feedback.

All of the above could impact cost through time and resources. You need to be aware of them as risks from day 1 and even add them to the Risk and Issues Log as low priority items. They only getting upgraded once they become an issue that needs to be managed, assigned, remediated and closed or deferred.

Complexity of the solution and external dependencies will drive overruns as increase complexity will allow for increase of unexpected efforts to address issues that are found at the last minute. External dependencies such as needing results for another system or data feed may cause scheduling delays or added effort to validate or process results before ingesting it into the solution. Also prioritizing of resources or projects can result in shortfalls and/or need to additional resources on a consultant basis which will add more cost in the effort to deliver.