How should I behave as a developer in a project that's headed for failure?

Communicate your concerns in the most concise and non-confrontational way possible up the management ladder. Summarize the risks, but do not impose your conclusion on them.

Management must always have the choice of what to do, but it is your job to assess and communicate the situation. Use email, so as to leave a paper trail when things go south.

Having done that, keep working on the project in good faith.

Keep in mind, you may not know everything there is to know about the project, its backers, and financial decisions behind it. Management decisions that seem stupid to you might actually be based on smart reasoning that isn't visible to you.

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