10 Warning Signs of Project Delays and Cost Overruns in IT Projects

Cost overruns and delays in IT projects can keep teams and their supervisors up at night. When misestimated tasks, expanding the project’s scope, constant changes in requirements, or a high turnover of specialists come into play, the project can get out of control at some point. Fortunately, there are warning signs so you can react in time. Learn about the ten “red flags” and ways to deal with them.

In this article:

• What do project delays and cost overruns mean in IT projects?
• Sign 1: Inaccurate project estimates and scope creep
• Sign 2: Overly ambitious sprint planning
• Sign 3: Lack of precise project requirements
• Sign 4: Unrealistic deadlines set with the client
• Sign 5: Insufficient communication with the client
• Sign 6: Lack of a complete and competent team
• Sign 7: High turnover of team members
• Sign 8: Lack of effective progress monitoring and increasing blockages
• Sign 9: Poor architectural decisions and resistance to new technologies
• Sign 10: The problem with testing - manual vs. automatic

What do project delays and cost overruns mean in IT projects?

A cost overrun in an IT project is a situation when the actual cost of implementation exceeds the previously assumed project budget. This can result from underestimating work, sudden changes in the project's scope, increases in the price of resources, or unforeseen events. In the IT context, this often involves an extended project progress schedule and the need to engage additional specialists.

On the other hand, a project delay occurs when finalization arises later than the date planned in the project assumptions. The reason for the delay may be both internal (e.g., low efficiency of the team, project management errors) and external (e.g., changes on the client's side or random surprises). In the IT industry, delay not infrequently involves additional costs and the need to reschedule tasks for the team. 

Below are ten warning signs that will allow you to notice that you may be facing project delays and cost overruns. Noticing them in time will help you to take effective action to counteract the above situations.

Sign 1: Inaccurate project estimates and scope creep

The first signal of delays is simply a poor estimation of the work. Sometimes, when planning, the development team can be too optimistic in estimating tasks and assume too little time to complete the whole thing, not anticipating complications that may arise at the implementation or testing stage.

In addition, many IT projects suffer from scope creep, which is the uncontrolled expansion of the project’s scope. During implementation, new requirements emerge that weren’t included in the original plan—these may contain additional features or modifications to existing modules.

More lead time translates into additional working hours. This automatically means higher costs and sometimes the need to reinforce the team with external specialists.

How to prevent the problem?

• Accurate project estimates - use historical data from similar past projects to better estimate the time required for similar tasks.
• Time buffer - include an additional margin in the project timeline, for example, for overtime tasks.
• Regular plan reviews - verify the feasibility of assumptions after each sprint or project cycle, making adjustments to the plan.

Sign 2: Overly ambitious sprint planning

In agile IT project management methodologies (such as Agile or SCRUM), sprints are short iterations during which the team completes a specific pool of tasks. However, if the team sets more work than it can realistically accomplish with each sprint planning, project delays will only increase.

When unfinished tasks are moved from one sprint to the next, this situation creates a snowball effect. The collection of assignments grows, blocking new functionality, and the team spends more and more time catching up instead of developing the project. As a result, subsequent sprints become increasingly difficult to schedule.

The relentless pursuit of an unrealistic scope of work leads to overtime work and uncontrollable cost overruns (e.g., the need to hire extra hands to work or fix later in the IT project).

How to prevent the problem?

• Work speed analysis - verify the team's actual work speed based on data from previous sprints rather than assuming an optimistic pace.
• Prioritize tasks - focus on the most critical tasks and avoid "throwing everything" into a sprint without clear priorities.
• SCRUM/Agile training - make sure the team understands the principles of agile methodology and knows how to properly define the sprint's scope.

Sign 3: Lack of precise project requirements

Another "red flag" is the lack of precise requirements already at the pricing and project planning stage. If the client has only a general idea of the product (e.g., "it's supposed to be a simple CMS solution for managing a website") but can't specify key functions or user groups, it's difficult to predict the final result.

The lack of detailed requirements is most often due to:

• Lack of business analysis at the quotation stage - without a prior understanding of business processes and project objectives, actual requirements may differ significantly from initial assumptions.
• Insufficient knowledge of the client's processes - if the client doesn't know the whole business logic, much less the IT team, leading to wrong design decisions and a misunderstanding of the product the developers are working on.

This situation causes the team to operate in the dark. Each modification requires additional testing and revisions, involving more specialists and increasing the workload. The team wastes time adjusting the system to new expectations instead of implementing the following steps, resulting in delays and uncontrolled budget increases.

How to prevent the problem?

• Discovery workshops - hold meetings with the client at the beginning of the project to clarify expectations and understand the business logic of the project.
• Requirements documentation - prepare precise specifications and process diagrams to avoid misunderstandings.
• Work closely with stakeholders - instead of assuming that the client will "fine-tune" their needs later, it makes sense to involve key people as early as the planning and development stages.

Sign 4: Unrealistic deadlines set with the client

Sometimes, the deadline for completing a project seems unrealistic from the beginning, but was imposed at the sales stage - without consulting the technical team and taking into account the real implementation challenges. This may be due to market pressures, investor requirements, or the need to get ahead of the competition. In such cases, the schedule is tailored to business expectations rather than to the real possibility of performing the work.

The problem deepens when major changes are made in already closed phases of the project that affect key elements of the system. The team then has to go back to earlier stages, causing additional delays and costly errors. When the deadline proves insufficient, the project begins to drag on, and each additional phase means the need for further maintenance of the team, servers, or technical support.

How to prevent the problem?

• Realistic assessment of the time needed for implementation - before a deadline is set with the client, consult with the technical team, and consider experience from previous projects.
• Clear communication between the developers and the client - it’s worthwhile to provide a solid analysis of the risks before setting a deadline and explaining why a reasonable schedule is in the interest of both parties.
• Phased implementation (phased delivery) - if the deadline is rigid, consider implementing key features in stages.

Sign 5: Insufficient communication with the client

One of the key factors affecting the timeliness and original project budget is the quality and speed of communication between the web development team and the client. If information exchange is ineffective, delays in decision-making occur, and developers are forced to act on their interpretations, which can lead to errors and the need for later revisions.

A common problem is the long waiting time for feedback - when the client delays approving specifications or finished features, the implementation process gets longer. Communication between teams is equally important, especially when there are separate teams of designers, marketers, or analysts on the client side. Lack of synchronization can cause design changes to be implemented with slippage.

Another challenge is that there are too many decision-makers on the client side. Different opinions, conflicting expectations and the lack of a clear leader make the decision-making process on functionality or design delayed. Lack of efficient communication makes it impossible for the development team to work optimally, and each day of delay generates additional project costs.

How to prevent the problem?

• Designate a Project Owner - it’s worthwhile for the client to identify one person who has a decisive voice and ensures consistency in the project's vision.
• Involvement of good project managers - project managers should ensure that information is consistent and adequately communicated to the team and the client and that there are no conflicting guidelines.
• Constant status meetings - regular calls with the client enable to solve problems faster and avoid misunderstandings.
• Centralize communication - instead of multiple channels and scattered opinions, it is advisable to use one project management software for tasks (e.g., Jira, Confluence, Asana) where all decisions and findings are documented.

Example of a project management board in Jira from Atlassian

Sign 6: Lack of a complete and competent team

Another sign that heralds problems is launching without an entire staff or a team lacking competence. The absence of key specialists depending on the project specifications - such as a systems architect, automated tester, or UX designer - leads to downtime. In this situation, the team must fill in the gaps with its own resources or wait to hire the right expert.

An IT project can also develop in the wrong direction if the team isn’t correctly matched in terms of technology or industry-specific knowledge. Making decisions without fully understanding the system or its users can lead to architectural errors or poor code quality. A lack of specialists can also overload current team members, who have to perform tasks beyond their competence, which reduces work efficiency.

Staff shortages slow down the work and force additional adjustments, which generates unforeseen expenses. If, during implementation, it turns out that new experts need to be hired, the actual cost of acquiring them is often much higher than building the right team in advance.

How to prevent the problem?

• Completing the team before the start of the project - instead of filling in the gaps, it’s worth ensuring that the team is fully staffed before the work starts.
• Select the team by technology and industry - experience in a particular technology or sector specifics (e.g., higher education, e-commerce) dramatically reduces the risk of errors and delays.
• Planning for recruitment in the long term - instead of acting ad hoc, it’s worthwhile to anticipate the need for specialists and hire them in advance.

Sign 7: High turnover of team members

The same lineup of people rarely handles multi-month projects from start to finish. However, when team turnover becomes too high, development work slows significantly, and the entire project organization loses stability. Each departing specialist takes knowledge of the system, business logic, and technical decisions with them, and it takes time and commitment from the remaining team members to implement a new person.

The problem is particularly acute when key team members, such as the lead developer or tech lead, leave. A lack of continuity in the team leads to a situation where certain decisions have to be made from scratch, and the history of previous solutions and their rationale may be lost. This increases the risk of inconsistencies in code and changes in priorities.

High turnover means not only downtime but also unexpected costs associated with introducing new team members. New employees need time to learn the code or understand the business logic. This means reduced productivity in their first few weeks on the job and the need for existing developers to spend time implementing new people instead of developing functionality.

How to prevent the problem?

• Project documentation - it's a good idea to keep thorough documentation of code, architectural decisions and business logic so that new team members can quickly get up to speed.
• Onboarding of new employees - a well-planned implementation process, such as access to training materials, significantly reduces the time required for complete onboarding.
• Standardization of coding and processes - consistent programming rules, code review, and project style guides help maintain a uniform standard, regardless of changes in team composition.

Sign 8: Lack of effective progress monitoring and increasing blockages

In every IT project, some tasks require product decisions, client confirmation, or collaboration with other teams - for example, in terms of API integration or key functional requirements. If such issues aren’t resolved on an ongoing basis but put off until later, they begin to accumulate. This leads to a sudden backlog piling up in the final phase of the project.

Lack of progress monitoring exacerbates the problem. In agile methods, regular review meetings (sprint reviews), daily stand-ups, and retrospectives are designed to identify roadblocks and discrepancies early on before they become a serious threat to the schedule. However, if these mechanisms are treated as a formality or not consistently implemented, key discrepancies only come to light when they are most costly and time-consuming to resolve.

Teams often fail to prioritize blocking tasks and put them off in the backlog instead of effectively eliminating them. Without clear rules for managing such issues, the team can get bogged down in technical issues instead of continuing to develop functionality.

How to prevent the problem?

• Regular sprint reviews and retrospectives - sprint reviews should be a viable opportunity to assess progress and respond immediately to non-conformities.
• Clear rules for blockchain management - define who is responsible for resolving each blockchain and set a maximum action time.
• Established acceptance criteria for tasks - each functionality should have certain conditions to be met before approval to avoid unnecessary revisions.

Sign 9: Poor architectural decisions and resistance to new technologies

There is also a warning signal when a team fails to balance using off-the-shelf modules and creating its solutions. On the one hand, trying to customize existing components "by force" can result in performance problems and limitations on future expansion. On the other hand, an excessive tendency to write custom code where proven solutions are available, such as modules in Drupal, unnecessarily increases deployment time and leads to more errors and cost overruns.

An additional risk factor is resistance to new technologies. Some developers avoid tools they are unfamiliar with and instead opt for proven but suboptimal approaches, which aren’t always best suited to the project's needs. While the stability of the operating environment is essential, innovative methods could streamline implementation and reduce system maintenance costs.

Poor architectural decisions can lead to a decline in system performance and difficulty in scaling, forcing costly fixes. If the data structure or selected components are not properly selected, there may be a need for extensive refactoring during the project, which generates additional expenses.

How to prevent the problem?

• Training and development of the team - regular expansion of knowledge of modern tools avoids a situation in which developers stick to established methods simply because they do not know the alternatives.
• Analyze the available options before starting the project - instead of assuming the use of certain technologies in advance, it’s worth conducting an analysis of the most effective approach.

Sign 10: The problem with testing - manual vs. automatic

Testing plays a key role in an IT project, but a lack of a testing strategy can lead to costly problems. Many teams choose manual testing to save time preparing automated tests, but in the long run, this means more repetitive work and rising cost overruns. Postponing testing, on the other hand, results in bugs being discovered only in the final stages when they’re much more expensive and time-consuming to fix.

Lack of test automation and late detection of bugs lead to unexpected costs associated with patches, refactoring, and extended project schedules. Manual testing of each iteration consumes more resources, and if tests are skipped or performed irregularly, the risk of bugs in the product increases significantly. As a result, final fixes may require intensive work, additional testing, and increased team involvement, which generates additional expenses and delays.

How to prevent the problem?

• Testing from the first stages of the project - the earlier errors are detected, the lower the cost of fixing them.
• Monitoring and optimization of testing strategy - regular analysis of testing effectiveness and adjustment of testing strategy to project specifics allows better control of cost overruns.
• A balanced approach to manual and automated testing - manual testing works well for exploring new features, but automation should cover key processes to reduce repetitive work.

Signs of project delay and cost overruns - summary

In every IT project, warning signs point to the risk of project delays and cost overruns. Underestimation of work, scope creep, communication problems, or poor project management are some of them. It’s worth monitoring these symptoms continuously to avoid problems accumulating and leading to costly fixes. What is important is realistic planning, effective cooperation between the team and the client, and a flexible approach to scope and technology management.

At Droptica, we pay great attention to these aspects, using accurate estimations and regular sprint reviews. We take care of clear communication and well-matched project teams to avoid roadblocks and unnecessary delays. Conscious project management and quick response to potential risks allow us to stick to the schedule and maintain the high quality of the projects implemented by our Drupal agency.