Mr. Macintosh:

I’ve been trying to get a handle on this issue for over a month now. The first signs that this is becoming a larger issue came after the macOS Big Sur 11.2 update was made available. People would say that their Big Sur Upgrade failed and found no way to recover.

And:

If you installed the macOS Big Sur Upgrade and you are now stuck in boot loop ending with the error – An error occurred preparing the software update – you are affected by this issue.

Bottom line, make sure you have a good amount of free space on your Mac before you start the install. Personally, I’d make sure I had at least 50GB free. But follow the headline link and scroll to the section titled, How can I prevent this from happening to me?