Terraform Best Practices

Terraform Best Practices Skill

Comprehensive community best practices for Terraform infrastructure as code, based on Anton Babenko's widely-adopted guide at terraform-best-practices.com.

When to Use This Skill

Activate this skill when:

• Designing project structure - Choosing how to organize Terraform code for small, medium, or large infrastructure
• Implementing IaC patterns - Following community best practices for modules, compositions, and state management
• Scaling infrastructure - Growing from simple setups to complex multi-environment deployments
• Evaluating tools - Deciding between vanilla Terraform vs Terragrunt orchestration
• Establishing standards - Creating team conventions for naming, styling, and code organization
• Troubleshooting common issues - Resolving frequent Terraform problems (dependency hell, state management, etc.)

Key Concepts

Infrastructure Sizes & Patterns

Small Infrastructure (< 20 resources)

• Single Terraform directory
• Minimal module structure
• Direct resource definitions
• Simple state management

Medium Infrastructure (20-100 resources)

• Multiple environment directories
• Reusable modules
• Remote state backend
• Workspaces or directory-based environments

Large Infrastructure (100+ resources)

• Module composition approach
• Terragrunt for orchestration
• Hierarchical state structure
• Infrastructure vs resource modules

Module Types

Resource Modules

• Create individual AWS/Azure/GCP resources
• Highly reusable across projects
• Published to registries
• Examples: terraform-aws-modules/vpc/aws

Infrastructure Modules

• Combine resource modules
• Environment-specific configurations
• Less portable, more opinionated
• Example: Company VPC + security groups + bastion

Compositions

• Top-level infrastructure assembly
• Orchestrate multiple modules
• Environment-specific values
• No reusable logic, only wiring

Code Structure Patterns

# Small Infrastructure
terraform/
  main.tf
  variables.tf
  outputs.tf
  terraform.tfvars

# Medium Infrastructure
terraform/
  modules/
    vpc/
    compute/
  environments/
    dev/
    prod/

# Large Infrastructure (Terragrunt)
infrastructure/
  _global/
  dev/
    vpc/
      terragrunt.hcl
    compute/
      terragrunt.hcl
  prod/
    vpc/
    compute/

Naming Conventions

Resource Naming

# Pattern: {project}-{environment}-{resource-type}-{name}
resource "aws_s3_bucket" "main" {
  bucket = "myapp-prod-data-customer-uploads"
}

# Pattern: this for single resource of type
resource "aws_security_group" "this" {
  name = "${var.project}-${var.environment}-app"
}

Variable Naming

• Use snake_case: instance_type, vpc_cidr_block
• Boolean prefix with enable_ or create_: enable_monitoring, create_vpc
• Plural for lists: subnet_ids, availability_zones

File Organization

• main.tf - Primary resource definitions
• variables.tf - Input variables
• outputs.tf - Output values
• versions.tf - Provider and Terraform version constraints
• data.tf - Data sources (optional)
• locals.tf - Local values (optional)

Code Styling Best Practices

Formatting

# Use terraform fmt
# Group related settings
resource "aws_instance" "web" {
  ami           = data.aws_ami.ubuntu.id
  instance_type = var.instance_type

  tags = {
    Name        = "${var.project}-web"
    Environment = var.environment
    ManagedBy   = "Terraform"
  }
}

# Align equals signs in blocks
variable "instance_config" {
  type = object({
    instance_type = string
    volume_size   = number
    volume_type   = string
  })
}

Module Structure

# versions.tf - Pin versions
terraform {
  required_version = ">= 1.0"

  required_providers {
    aws = {
      source  = "hashicorp/aws"
      version = "~> 5.0"
    }
  }
}

# variables.tf - Document everything
variable "vpc_cidr" {
  description = "CIDR block for VPC"
  type        = string
  default     = "10.0.0.0/16"

  validation {
    condition     = can(cidrhost(var.vpc_cidr, 0))
    error_message = "Must be valid IPv4 CIDR."
  }
}

State Management

Backend Configuration

# Use remote state for team collaboration
terraform {
  backend "s3" {
    bucket         = "myapp-terraform-state"
    key            = "prod/vpc/terraform.tfstate"
    region         = "us-east-1"
    encrypt        = true
    dynamodb_table = "terraform-state-lock"
  }
}

State Best Practices

• Never commit .tfstate files to version control (contains plaintext secrets)
• Use remote backend (S3, Azure Storage, GCS) with locking
• CRITICAL: State files contain sensitive data (passwords, keys, IPs)
  • Enable versioning on backend storage for rollback capability
  • Restrict access via IAM policies (least privilege principle)
  • Consider using sensitive = true for sensitive outputs
• Separate state files by environment and component
• Use state file encryption at rest (AES-256)
• Implement state file backups and disaster recovery procedures
• Use terraform_remote_state data source for cross-stack references

Terraform vs Terragrunt

When to Use Vanilla Terraform

✅ Small to medium infrastructure (< 50 resources) ✅ Single cloud provider ✅ Few environments (dev/prod) ✅ Team comfortable with DRY through modules

When to Use Terragrunt

✅ Large infrastructure (100+ resources) ✅ Many environments (dev/staging/prod/dr) ✅ Deep directory hierarchies ✅ Need for inheritance and composition ✅ Complex dependency orchestration

Terragrunt Benefits

• DRY backend configuration
• Dependency orchestration
• Variable inheritance
• Before/after hooks
• Auto-init and auto-retry

Recommended Tools

Essential

• terraform - Core IaC tool
• terraform fmt - Code formatter (built-in)
• terraform validate - Syntax validator (built-in)

Quality & Linting

• tflint - Terraform linter with provider-specific rules
• tfsec - Security scanner for Terraform code
• checkov - Policy-as-code scanner
• terraform-docs - Auto-generate documentation

Version Management

• tfenv - Terraform version manager (like nvm for Node)
• tgenv - Terragrunt version manager

Workflow Automation

• pre-commit-terraform - Git hooks for quality gates
• Atlantis - Pull request automation for Terraform
• Infracost - Cost estimation in PRs

Orchestration

• Terragrunt - DRY orchestration wrapper
• Terramate - Stack orchestration and code generation

Common Patterns

Multi-Environment Setup

# environments/dev/main.tf
module "infrastructure" {
  source = "../../modules/infrastructure"

  environment    = "dev"
  instance_type  = "t3.micro"
  instance_count = 1
}

# environments/prod/main.tf
module "infrastructure" {
  source = "../../modules/infrastructure"

  environment    = "prod"
  instance_type  = "t3.large"
  instance_count = 3
}

Module Composition

# modules/infrastructure/main.tf
module "vpc" {
  source  = "terraform-aws-modules/vpc/aws"
  version = "~> 5.0"

  name = "${var.project}-${var.environment}"
  cidr = var.vpc_cidr
}

module "security_group" {
  source  = "terraform-aws-modules/security-group/aws"
  version = "~> 5.0"

  name   = "${var.project}-${var.environment}-app"
  vpc_id = module.vpc.vpc_id
}

Conditional Resources

resource "aws_instance" "bastion" {
  count = var.create_bastion ? 1 : 0

  ami           = data.aws_ami.ubuntu.id
  instance_type = "t3.micro"
}

# Access with: aws_instance.bastion[0]

Frequent Terraform Problems (FTP)

Dependency Hell

Problem: Circular dependencies between modules, version conflicts Solution:

• Pin provider and module versions explicitly
• Use Dependabot for automated updates
• Implement testing for version upgrades
• Avoid cross-module dependencies; use data sources instead

State Lock Issues

Problem: "Error acquiring state lock" Solution:

• Implement DynamoDB table for S3 backend locking
• Use terraform force-unlock cautiously
• Never delete .terraform.lock.hcl

Resource Drift

Problem: Manual changes outside Terraform Solution:

• Run terraform plan regularly in CI
• Use terraform refresh to detect drift
• Implement policy-as-code (OPA, Sentinel)
• Restrict manual changes via IAM policies

Count vs For_Each

Problem: Changing count causes resource recreation Solution:

• Prefer for_each with maps for stable resources
• Use count only for simple on/off toggles

# Bad - index changes cause recreation
resource "aws_subnet" "example" {
  count      = length(var.azs)
  cidr_block = cidrsubnet(var.vpc_cidr, 8, count.index)
}

# Good - stable keys prevent recreation with explicit mapping
locals {
  az_cidrs = {
    "us-east-1a" = cidrsubnet(var.vpc_cidr, 8, 0)
    "us-east-1b" = cidrsubnet(var.vpc_cidr, 8, 1)
    "us-east-1c" = cidrsubnet(var.vpc_cidr, 8, 2)
  }
}

resource "aws_subnet" "example" {
  for_each          = local.az_cidrs
  availability_zone = each.key
  cidr_block        = each.value
}

Working with This Skill

For Beginners

1. Start with the Small Infrastructure pattern
2. Read references/terraform.md for code structure examples
3. Review naming conventions before writing code
4. Use terraform fmt and tflint from day one

For Scaling Up

1. Review Medium Infrastructure patterns when hitting 20+ resources
2. Evaluate Terragrunt when managing 3+ environments
3. Implement module composition for reusability
4. Set up remote state and locking

For Production Readiness

1. Pin all provider and module versions
2. Implement pre-commit hooks for quality gates
3. Use Atlantis or similar for PR-based workflows
4. Add security scanning (tfsec, checkov) to CI/CD
5. Set up cost estimation (Infracost)

Reference Files

references/terraform.md

Complete documentation extracted from terraform-best-practices.com covering:

• Code structure patterns for all infrastructure sizes
• Module types and composition strategies
• Real-world examples from small to large setups
• Tool recommendations and integration guides

references/examples.md

Practical examples demonstrating:

• Small/medium/large infrastructure implementations
• Terraform vs Terragrunt comparisons
• Module composition patterns
• Environment-specific configurations

references/llms.md

Multilingual index of all content (20+ languages available on source website)

Quick Reference Commands

# Initialize and validate
terraform init
terraform validate
terraform fmt -recursive

# Plan and apply
terraform plan -out=tfplan
terraform apply tfplan

# State management
terraform state list
terraform state show aws_instance.web
terraform state mv aws_instance.old aws_instance.new

# Workspace management
terraform workspace list
terraform workspace select dev
terraform workspace new staging

# Import existing resources
terraform import aws_instance.web i-1234567890abcdef0

# Debugging
TF_LOG=DEBUG terraform apply
terraform console  # Interactive evaluation

Additional Resources

• Source: terraform-best-practices.com (Anton Babenko)
• Workshop: GitHub Workshop
• Community Modules: Terraform AWS Modules
• Official Docs: developer.hashicorp.com/terraform

Notes

• This skill represents community best practices (Anton Babenko), not official HashiCorp documentation
• Content is based on Terraform 1.0+ patterns and recommendations
• Focuses on AWS examples but principles apply to all providers
• Reference files extracted from multilingual source (English content emphasized)

Updating This Skill

To refresh with latest best practices:

skill-seekers scrape https://www.terraform-best-practices.com/ \
  --name terraform-best-practices \
  --max-pages 50