Ch 11 - An Introduction to Return on Investment

Levels of Data

• Level 0: input
• Level 1: reaction and perceived value
• Level 2: learning and confidence
• Level 3: Application and Implementation 
• Level 4: Impact and Consequences
• Level 5: Return on Investment - ROI: shows the benefits of the impact measures compared to project cost.Usually in terms of benefit-cost ratio (BCR), ROI as percentage, or payback period

ROI Process Model

Data collection:

during project implementation: surveys, questionnaires, tests, observations

after project implementation: surveys, questionnaires, observations, interviews, focus groups, action plans, performance contracts, business performance monitoring

Data Analysis:

isolation of project effects: control groups, trend line analysis, forecasting models, participant estimates, manager estimates, senior management estimates, expert input, customer input

data conversion: use of standard values, output data, cost of quality, time savings converted to wage and employee benefits, analysis of historical costs, use of internal and external experts, search of external databases, use of participant estimates, soft measures mathematically linked to hard measures

project costs: initial analysis costs, cost - to design and develop,

-of all project materials, -for the project team, - of the facilities for the project, travel, lodging, and meal costs, participant salaries, admin and overhead costs, evaluation costs

return on investment calculation: Benefit-cost ratio BCR = project benefits / project costs

ROI = net project benefits/ project costs * 100