Why are software projects never under budget?


As a customer, you love to see the software projects delivered under budget. So then, why is it so that the projects are seldom completed under the set budget?

Think from the software vendor’s perspective!

When the project budget is $1M, the vendors forecast $1M+ revenue. The vendor’s goal is not to optimise the cost and give you the best possible value. Instead, it is that the projected forecast manifests to actual numbers. That is when the managers receive their bonus and appreciation. So look, the system is designed to consume the budget set for the project.

software projects never under budget

As a sponsor, make sure that you get value for every dollar you spend. The vendor’s commercial set-up encourages to consume the entire budget approved in the SoW. The consultant’s incentive is based on the number of hours they are billing and not the value they are adding.

No wonder why are software projects never under budget!