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Return on Investment: Determining and Communicating the Project Value

Project managers often don’t know how to identify, calculate or communicate a project’s Return on Investment (ROI). Traditional ROI calculations are increasingly being criticized for telling only part of the necessary story – afflicting all types of projects, but often causing the greatest difficulty in areas like IT, where benefits may seem intangible and frequent overruns impact the credibility of estimates.

Uncover 22 pitfalls that render common ROI determinations meaningless, and learn instead how to calculate a project’s real value.

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Robin  Goldsmith, JD

Robin Goldsmith, JD

Robin F. Goldsmith is the owner of a consulting firm, working with business and systems professionals in requirements analysis, quality and testing, software acquisition, project management and leadership, metrics, and process improvement. Previously he was a developer, systems programmer/DBA/QA, and ... read more

Who Should Attend

  • Project managers
  • Business and systems analysts
  • Business managers and product owners
  • Engineering and systems managers and professionals
  • Quality/testing professionals and auditors

Benefits and Learning Outcomes

  • Identify full-story key effects on revenue and expense variables
  • Quantify tangible and intangible costs and benefits and convincingly communicate the business value of project investments
  • Practice applying practical techniques to a real case
  • Understand ROI and related calculations, strengths, weaknesses and common pitfalls
  • Objectively account for quantified risk, flexibility and timing impacts on realized revenue
  • Present and report business value measurements so people pay attention

Course Outline/Topics

What Does Money Have to Do With It?
• Project Manager’s role with regard to ROI
• Situations demanding ROI, their issues
• Difficulty of making convincing arguments
• Linking ROI to the business case
• ROI Value Modeling Relationship Diagram
• Investment versus expense
• Justification versus objective analysis
• Meanings of ‘it costs too much’
• Total Cost of Ownership (TCO)
• Factors other than cost to be considered
• Costs and benefits, revenues versus expenses
• ROI calculations
• Net present value, discounted cash flow
• Payback period, annualized return
• Internal rate of return (IRR), hurdle rate
• Issues with typical ROI usage
• Economic Value Added (EVA)
• Scenario approach to showing benefits
• ‘Telling the story’ behind ROI calculations
• Mistakenly thinking ROI does not apply

Determining Meaningful Benefits
• Why it’s important to find the benefits first
• Treacy’s model of revenue categories
• ‘Problem Pyramid’ to find requirements
• Decision variable clarification chain
• Putting a dollar value on intangibles
• Opportunity, innovation and flexibility

Estimating Credible Costs
• ‘Problem Pyramid’ ties costs to value
• Basing costs on implementation of design
• Business case framework
• Basic formula for estimating costs
• Main causes of poor estimates
• Top-down versus bottom-up techniques
• Risks that afflict ROI calculations
• Three measurable ways to address risks
• Best-, worst-, most-likely-case scenarios
• Defining a reasonable scenario for success
• Getting reliable cost and revenue amounts

Reporting and Monitoring
• Single versus multiple scenario presentation
• Scenario assumptions and parameters
• No change versus proposed scenarios’ ROIs
• Measuring intangibles’ monetary effects
• Continual, step-wise, and one-time changes
• Presenting with spreadsheets
• ROI ‘Value Dashboard’ modeling tool
• Using value modeling to improve decisions
• Dashboard and scorecard-type notification
• Capturing, calibrating with project actuals
• Adjusting appropriately during project


"The instructor was very knowledgeable and well organized and I learned specific approaches and skills to apply to my job."  —  Loretta Giuliani, class participant

"What I liked most was understanding the importance of quantifying the ‘intangibles’ and if you cannot quantify, then don’t use them! Thanks Robin!"  —  Joe Cedzo, Hatco Corporation

Dates and locations to be announced.