To implement encapsulation effectively in a software project, developers should avoid common pitfalls such as over-encapsulation, over-reliance on getter and setter methods, ignoring access modifiers, incomplete encapsulation and violating the Single Responsibility Principle. Key practices to follow include striking a balance between data protection and simplicity, using access modifiers appropriately, ensuring complete encapsulation of all relevant data and maintaining a single, well-defined purpose for each class.