What is ROI analysis for projects?

Question

Accepted Answer

**ROI** — Return on Investment calculation.

**Formula:**
ROI = (Net Benefits / Total Costs) × 100

**Components:**
- **Benefits** — revenue, savings, productivity.
- **Costs** — development, training, maintenance.
- **Timeframe** — when benefits realized.

**Example:**
```
Project: CRM Implementation
Costs:
- Software: $50,000
- Implementation: $30,000
- Training: $10,000
  Total: $90,000

Benefits (Year 1):
- Revenue increase: $100,000
- Cost savings: $50,000
  Total: $150,000

ROI = ($150,000 - $90,000) / $90,000 × 100
ROI = 66.7%
Payback period: 7.2 months
```

**Tips:**
- Include all costs.
- Be conservative with benefits.
- Consider intangibles.

Business Analyst: What is ROI analysis for projects?