What do you mean by gold plating in project management? Does it always have a negative affect on overall project? Is it a practice to be avoided?

Gold plating in PM context is delivering more deliverables than the customer/sponsor has agreed to receive, trying to exceed expectations. And yes, it should be avoided, as it'll open new breaches to the project which can't be closed later on.

Gold-Plating in Project Management is the act of giving the customer more than what he originally asked for. It is common in software projects, and is usually done by team members either on an individual or a collaborative basis, most of the times without the knowledge of the Project Manager.

On the short run, (almost) everybody. On the long run, nobody.

Avoiding gold plating is easier than what some might think, all the Project Manager has to do is to enforce a policy not to add any functionality (no matter how small or big it is) that is outside the original scope of the project without consulting with him first (and then formalizing the request). The Project Manager should be firm and he should punish gold-platers instead of rewarding them. Setting a harsh example with one of the team members might be a bit overkill, but will deter other team members from doing the same. Finally, the Project Manager should never give his team members complete autonomy, while not falling into the trap of micro-management.

Of course, if the Project Manager is the person who’s behind the gold plating, then all of the recommendations above are practically worthless. In this case, the stakeholders should interfere if this practice is jeopardizing the project.