7 Reasons Digital Apps Go Over Budget

One of the problems experienced by both mobile app developers and app product owners is project cost overruns. Nobody likes them or plans for them out of the gate, but, they do happen, and the reasons can be summed up pretty clearly.

First, a bit of perspective: If digital apps were like products on a supermarket shelf, they wouldn’t all be priced the same, because the cost to produce them would vary from manufacturer to manufacturer. Beginning with the expertise, detail, and control of the production process, they all combine to result in the overall quality and cost of the product itself.

A lot of digital product owners have tried offshore development to save money. They soon discover the timezone/real-time-communication problem, translation problem, and quality/bug issues related to cultural differences. I’m not going to list this as one of the seven problems because it has become so widely known as an issue, that it won’t come as a surprise to anyone, nor will it help with their selection of a strategic technology partner.

Listed here are the seven most common causes of overruns that most product owners don’t think about until they have experienced them.

1. Inaccurate Project Estimating
Getting estimates for production of your digital product is a pivotal part of your decision-making process when it comes to choosing a strategic technology partner to guide you through your digital transformation. As important as it is to understand that estimates can and do vary for many reasons, it is important to know that some companies have non-developer sales reps create the estimates, and they often intentionally underestimate to win the business. Estimates are not promises, so they feel this is a fair way to conduct business and run the risk of ruining their relationship with the product owner along the way.

2. Failure or Refusal of the Discovery Session
Clearly understanding the scope of the product is essential for a development partner to be able to give you a fair and accurate estimate and deliver on budget. The Discovery Session is where you pay developers for their expertise to sit down with you, study your proposed product, and help you understand how many hours each feature will take to create and plug into the overall product. Investing in a Discovery Session can save you a lot in the long run.

3. Faulty or Incomplete User Stories
User Stories describe the detail involved in the development of each feature of a product. It breaks down into the number of minutes or hours required to create the feature and then weave it into the final product. If the User Stories are inaccurate or incomplete, the quote is going to be short, and the product goes over budget. We have had developer-customers come to us with already fleshed out User Stories that turn out to be pointed incorrectly, and then have to stop production while they seek more funds. Here’s a way to put this in perspective: If you had a 5% overage variance in twenty User Stories, your product would go over budget by 100%!

4. Failure to Control Scope Creep
Scope Creep means making changes to features during the development process after the User Stories have been pointed. Scope creep adds to the workload and amount of time required to get the product developed. Adding a small amount as a buffer for scope creep is a common practice among developers because as the development proceeds, enhancements to one or more features may become available, and the product owner may want to modify the scope. Buffering can result in cost overruns. Rather than buffering, some developers institute a Change Control Process and handle each change, modification or revision as an additional feature at extra cost.

5. Poor Communication with the Developer
Often developers use what is called the Waterfall Method of development, where they meet with the client to determine what the product, and then disappears during the development process, only to emerge when the product is ready to be unveiled. This causes a lot of misfires. We use lean and agile processes and have tried a variety of project management tools in combination with communication/messaging software to put together a properly functioning system to make sure our customers can see our process and progress. This helps them know exactly where their product is in the development cycle.

6. Working With the Wrong People
Developers often take on a project that requires a level of expertise beyond what they have available on staff, thinking that the work will be a good way to train up a junior developer. Sometimes they have some code they think they can adapt and reuse. Both these approaches usually wind up in some degree of failure. Research your potential development partners and check out their testimonials and references. Find out whether they have the chops to deliver what you need. And, remember, a good salesperson doesn’t mean the company they represent can do the job you need.

7. Marketing Budget
Today there are over a million apps in the App Store alone, and the battle for the top positions is heating up. A targeted approach to marketing the app through digital and offline channels is required to get your potential clients’ attention. Search Engine Optimization is a growing extension of social media marketing, and increasingly important in getting a buzz. It takes time. It takes money. All too often, product owners don’t include marketing costs in their planning, and therefore, fail to incorporate it into their product development budget. That can leave you in the lurch with a product ready for market, but no buzz to help get the word out to a wide audience.

Knowing a little about these problem areas can help you make a better decision about which development agency you want to work with and be able to recognize a developer who doesn’t have the process or skills to provide you with essential quality and support after production is complete. Get your development partner correct the first time out.

While we’ve shared a few parameters that can cause project failure, you might have experienced more! Do drop a line in the comments with some of your own!

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