Return on Investment

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I am right in the middle of deploying project management software and training throughout our organization. We have purchased our software, have our new server up and running and have started the capturing of our current project processes.  Obviously, one of the areas I needed to look at was the ROI for this program. Here is an example of the formula I used:

ROI = Net Program Benefits / Program Costs x 100

As an example, let’s assume that the benefits of a project management program, isolated from other factors occurring within the organization, are $350,000. Let’s also assume that the total cost of the program is $125,000. The net program benefits are $350,000 – $125,000 = $225,000.

ROI Calc = $225,000/$125,000 x 100

ROI = 180%; thus for every $1.00 invested, $1.80 is returned after the costs of the project management training program are recovered.

Quantifiable Improvements

  • Capture more billable time
  • Improved allocation of resources
  • Increased budget accuracy
  • Reduction on cost overruns
  • Reduction in project failure rate
  • Reduction in project delivery time

Possible Benefits

  • Increased chance of winning bids
  • Decreased time required to create reports
  • Decreased time spent updating statuses
  • Improved handling of change requests
  • Increased accuracy in expense reporting
  • Increased accountability
  • More-accurate expense reporting

(From PMBOK)

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