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Project planning is not about money, but about finding ways to help you achieve your goals through careful and thoughtful planning and execution.
In terms of project management, ROI (Return on Investment) is a quantitative measure that tells senior management of a project what amount of financial (funds) and/or non-financial (technology, knowledge, materials) resources they get back from doing the project for what they invest in the project.
Project ROI is calculated and analyzed before the project gets started. It is a mechanism of making decision on whether invest resources in the project initiative. When an investor (sponsor) evaluates a project, he/she calculates ROI to do the following:
- Justify the project
- Rationalize expenditure
- Pursue to take a specific course of action
ROI is an indicator that can be calculated. Here’re the key inputs for making ROI calculations:
- Cost. An amount of money required for maintaining and operating the project
- Benefits. An amount of financial effect the investor gains from the project.
- Annual Cash Flow. A difference between the project cost and financial benefits.
- Non-monetary benefits, including quality, timeliness, quantity etc.