Factors To Considered When Performing a Return-On-Investment Analysis

What factors should be considered when performing a return-on-investment analysis on training dollars for project management?

Return-on –investment analysis on training dollars for project management is a popular financial metric for evaluating the financial consequences of individual investments and actions. It is the calculation basis for all informed decisions in investments, and though the calculations remain constant, the variables are different. ROI helps executives to see the monetary value that project management training programs bring to their organizations, they are not only concerned about the enjoyment and the training lessons gained but also the positive impact the training has on their organization (Ibbs&Kwak, 2000). It is monetary measurement that is used to evaluate the effectiveness and efficiency of an investment made by an organization. There is a general formula for calculation of return-on-investment:

ROI= (Gains- Cost)/ Cost.

Return –on- investment = Gain of the investment – Cost of the investment divided by total cost of the investment.

There are many factors can influence ROI, including changes in price, volume, or expenses, as well as the purchase of assets or the borrowing of money(Ibbs&Kwak, 2000). The most important aspect in the analysis is determining how beneficial the project will be, therefore in carrying out a cost-benefit analysis it helps the organization to predict if the project will bring benefits to the organization this involves looking into the future based on various assumptions made. The costs to be considered are looked at for all phases of the project. They may be recurring for example changes in personnel and materials maintenance or non-recurring such as capital investment. All these factors put into consideration will help in decision making for the investors because of proper information which may save them money by avoiding wrong decisions by choosing the highly paying option in a case where they have to make a choice between two or more projects.

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