Iterative Development is a development methodology that is based on building a project quickly, in a series of short development cycles that allow for frequent feedback between the developer and the purchaser/end user/testers of the system.
Iterative development can reduce development time as it allows the changes that the user requests to be implemented sooner in the development process, reducing the amount of work that has to be done or undone.
There is a fairly comprehensive article on iterative development
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