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Development of web projects and applications: the problem of insufficient budget for work

Dmitry Drigo
CEO of SDH Digital Solutions, LLC
For a new idea to become a working project, it is necessary to carefully work out many nuances and correctly calculate all the costs. More details later in the article.

Development of web projects and applications: the problem of insufficient budget for work

Whatever the plan for creating a site, application, program, or other IT development, it still needs to be able to be implemented. It is not only a great idea, but also the well-thought-out costs of it.

Almost every company has a budget, beyond which it cannot go under any circumstances.

Under the established amounts, a contractor is searched for work, development, testing and further implementation are carried out.

But different things happen: financial and economic crises, force majeure circumstances and other difficulties with the customer often lead to the fact that the implementation of even the best idea costs much more than previously planned in the budget.

As a result, the company does not have enough money to complete its project and, naturally, it does not go out, relations between the customer and the contractor deteriorate. The situation is extremely unpleasant, but it could be avoided if a little more time was given to planning.
Software development begins with a very important step - the need to evaluate future material costs, as well as time and finances for the successful completion of the project. Why is it important?

Many organizations are one way or another focused on projects. The activity and existence of business is due to the creation and implementation of these new projects. They may be different, but too much depends on them.

Each successful project is a big stone in the foundation of success, from which the future of the entire company is predicted.

Each company has its own new project, be it building construction, a unique product, increasing production capacity or introducing a program or application.

And all this costs money. It is impossible to start something worthwhile without an initial investment.

Of course, there are cases and success stories when the company was able to create a unique product and launch a new project with minimal funds or with the help of investors. However, this is an exception to the rule. Money is everything, it affects the speed of work and their quality.

Lack of budget for design or development has its consequences. Therefore, experienced businessmen are of the opinion that timely planning and project management is a necessity for effective work.

A well-formed budget, with risks inherent in it, ensures that all necessary measures are taken in a timely and quick manner, and with absolutely complete understanding of any consequences.

It is important to be able to achieve your goals, being within the established limited framework. Optimal use of financial, material, human, temporary and other resources. This is the art of project management.

Where are the risks and why is everything not as “smooth" as planned in the first stages?

Analyst companies from around the world provide disappointing statistics. According to Gartner research, about 66% of all large projects do not reach the completion stage. The problem is that they are not a daily routine, but are implemented purposefully. Their budgets are also targeted and extremely limited.

So, it is not possible to fulfill the declared commercial plans and projects, or they are being completed with a significant delay. There are still options with a significantly overspended budget, which not every company, even a large one, can afford.

Tracking the successes and failures of IT projects is done by the Standish group. They find and identify all failed startups. Then they are sorted into those that are thrown in the middle or at a stage close to completion.

So, according to the group’s assessment, only 15% of all planned target ideas reach the middle.

Almost 51% of “abandoned” IT projects with a serious overspending of the planned budget, with a serious deadline or with negative results at the development stage.

"Standish" gave a definition when it is already noticeable that with the idea it will not be possible to achieve the final result.

A project is unsuccessful if:
● an unrealistic plan has been developed (time, terms, specialization and specifics, budget and costs);
● the initial project plan is not revised or changed if necessary;
● vague terms for the implementation of the development and completion of the project;
● the developer is poorly aware of project management;
● the project is managed as usual;
● The development team or contractor is not qualified to complete the assignment;
● there are no specific deliverables and scope of the project;
● resources are allocated poorly or not according to plan;
● all risks, including financial and budget, have not been calculated.

The main cause of problems during the work is the inability of the developer and the customer to work together, solving all the nuances with the problems that arise, and thereby reducing risks.

Another main reason for failures in defining a project from the very initial stage is its approval. Not every project can and should be implemented, therefore, even at the approval stage, one should properly weigh all the pros and cons, or look for other ways to solve the problem.

There are such reasons for the failure of software development outsourcing projects:

1. Customer requirements. The contractor or developer must clearly understand what they want from him. If the requirements are ambiguous, unclear, without priorities or with contradictions, then of course the terms will be vague and the money for the project will go nowhere.

2. Budget and resources. Lack of money, conflicts over them, improper planning and everything related to a limited budget, badly affect the successful completion of the project. If there is not enough money, it should be understood that the project will not succeed.

3. Deadlines. Customers often set very limited time frames. Sometimes too optimistic or vice versa compressed. It is difficult to manage to do something quickly and efficiently, especially in IT and with a tight budget.

4. Incorrect planning. Unaccounted details and facts, calculations with errors, outdated data on financial statements - can cause the stoppage of any project.

5. Calculation of risks. Both force majeure and financial risks happen. For reasons beyond the control of the customer or developer, an event may occur that “slows down” the project or requires additional cash “injections”. You need to prepare for this in advance and lay at least 1.5 times more in the plan for risks in time and in finance.

How to make the project successful and not “abandoned”?

Factors of a successful project experts call:
● experienced and qualified employees;
● involvement of third-party specialists;
● flexible project planning and budget for it;
● responsible attitude of developers and contractor;
● fulfillment of all obligations under the contract;
● Increasing resources as needed, reallocating costs and finances.

We summarize: the lack of money for the implementation or completion of the project is a serious problem. An insufficient budget to carry out work can lead to the fact that at the final stage the customer does not have enough finances to complete the project and pay the contractor.

As a result, there remains an unfinished task, the customer and the contractor dissatisfied with each other, and the money spent on the “semi-finished product”.
The conclusion - to lay at least one and a half times more money into the budget for the project for all possible risks.
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