When it comes to Ruby on Rails development, following best practices can significantly enhance productivity and maintainability. One of the top practices is to adhere to the convention over configuration philosophy. By leveraging the built-in conventions of Rails, developers can streamline their workflow and reduce the amount of configuration needed. Additionally, utilizing the Rails generators will help create standard components quickly and efficiently, which is crucial for meeting tight deadlines.

Moreover, implementing test-driven development (TDD) is essential for creating robust applications. Writing tests before the actual code ensures that your application behaves as expected and protects against future regressions. Furthermore, organizing your code by following the RESTful design principles will make your application more intuitive and flexible. By structuring your app around resources, you promote clearer paths and cleaner code, which ultimately leads to more efficient development.

Building scalable applications with Ruby on Rails requires a deep understanding of both the framework and the principles of scalability. One of the first steps is to ensure that your application is designed with scalability in mind from the outset. This includes planning your database schema wisely, using indexes effectively, and choosing the right data types. Additionally, employing services like caching, such as Memcached or Redis, can significantly improve performance by reducing database load, allowing your application to handle more simultaneous users.

Another crucial element of scalability is the architectural design of your application. Adopting a microservices architecture enables you to break down your application into smaller, manageable services, each focused on a specific functionality. This separation allows teams to work on different services independently and scale them based on demand. Furthermore, utilizing background jobs with Active Job and job processing libraries like Sidekiq or Resque can help in managing heavy tasks without blocking the main thread, ensuring a smooth user experience even as your application scales.

Ruby on Rails development offers an array of powerful features, but it comes with its own set of common challenges. One significant issue developers face is performance optimization, especially as applications grow. When dealing with a large dataset or high traffic loads, Rails can become sluggish. To tackle this, developers should focus on database optimization, such as indexing proper fields, using background jobs for heavy tasks, and caching frequently requested data. Additionally, utilizing tools like Bullet can help identify N+1 query problems that may arise during development.

Another prevalent challenge in Ruby on Rails development is managing gems and dependencies. With a plethora of gems available, developers often face compatibility issues and potential security vulnerabilities. It's vital to stay updated on gem versions and regularly audit dependencies. Using tools like Bundler can assist in managing these dependencies effectively. Furthermore, conducting regular audits with bundler-audit helps identify any vulnerabilities in the gems used. By being diligent in dependency management, developers can ensure a more stable and secure application lifecycle.