Requirements gathering is the top reason for overruns.
Software project overruns can be a major issue for businesses and organisations. This is when a software project takes longer to complete and/or costs more than originally planned. There are several reasons why this can happen, and understanding these reasons can help prevent overruns in future projects.
However the top reason for software development overruns has been flagged as the poor or incomplete requirements.
Poor or incomplete requirements
The development team may need to spend more time and effort trying to comprehend the requirements if they are not properly specified. 70% of projects that fail do so because of requirements gathering issues. Therefore, it is highly likely that delays and cost overruns may result from this. Making sure requirements are thorough can be challenging so using requirements gathering software or a template can help developers ensure they don’t miss any details.
Moreover, this can become increasingly complex if stakeholders are unclear on their requirements over the course of the requirements gathering phase. The use of a requirements gathering software tool can help you to ensure all areas of requirements, functional and non-functional have been addressed. Additionally, by providing stakeholders with wireframes or prototypes a better visual representation of the system can be explored which may reduce requirements changes.
Read more on ‘The Benefits of Using Wireframes in Software Requirements Gathering,’ in a previous blog post.
Schedule delays or cost overruns could result from scope changes. As a result, the requirements gathering phase can produce the project scope which often includes the creation of all project plans, estimations, schedules, quality standards, and baselines.
The improper initial description of the project’s requirements , inherent risk and uncertainty, a change in the project’s funding, can all lead to scope changes. A change in the project’s scope midway through its execution necessitates the revision of the entire initial project plan, which affects the budget, schedule, quality, and potentially the entire project team. As a result, additional time and resources will be required in comparison to the initial estimation.
Errors in design are also a significant factor in project cost overruns. The fundamental part of every project is the design. The project design serves as the foundation for both the accurate representation of the client’s requirements and the blueprint for gaining good technical input, both of which are necessary for project execution. Design errors in this context refer to an inaccurate or insufficient representation of the project outcomes.
The project’s plans and strategies will be applied incorrectly if the design is flawed. Later, during the project’s execution phase, these design flaws start to surface, leading to more work, change orders, etc., which ultimately cause schedule delays or, in the worst case scenario, cost overruns.
Unfeasible cost estimate
Another frequent cause of project cost overruns is an unrealistic cost estimate. A project’s cost estimation is an essential component that follows the project design stage. The project will likely have cost overruns if the cost is estimated based on a hunch without taking detailed requirements and contingencies into account. Early on, this might go undetected, but as time goes on, it becomes more obvious.
Our blog post ‘Requirements Gathering and the Cone of Uncertainty’ goes into more detail.
Poor communication among the project team can also lead to overruns. If team members aren’t communicating effectively, it can be difficult for them to stay on the same page and ensure that the project stays on track. This can result in scope creep as team members may make assumptions about what needs to be done, leading to additional work and delays.
Project cost overruns and schedule delays frequently come from project complexity, which is a contributing factor. Large projects frequently run the danger of going over budget since there are more potential problems during execution the bigger the project is. As a project’s implementation period extends, it may be impacted by variables including inflation, shifting material costs, and fluctuating exchange rates, all of which will raise the need for more funding to augment the project’s initial budget.
In addition, it becomes increasingly important to execute plans precisely as the project’s complexity rises. If this is neglected, it may result in a series of delays that drastically alter the project’s timetable.
Lack of resource planning
Failure to plan the available resources efficiently is another frequent cause of budget overruns and timetable delays. Under- or over-allocating resources to a task could result from failing to estimate the resources that would be utilised during the project. If the project team doesn’t have the resources they need to complete the project on time and on budget, it’s likely that scope creep will occur.
In conclusion, project overruns are a major issue in software development. By understanding the top reasons for an overrun and taking steps to prevent it, businesses and organisations can ensure that their software projects are completed on time and on budget. The key to reducing overruns is to ensure at the start of the project you have in-depth requirements gathered.
Read our ‘Complete Guide to Requirements Gathering in 2023‘ for more!