How do you compare project ROI?

?? You should also consider the broader context and implications of your criteria beyond standard financial metrics. ?? Holistic Impact Assessment Evaluate social, environmental, and governance impacts alongside finances for a complete understanding of project effects. ?? Dynamic Criteria Selection Tailor criteria to project goals; avoid one-size-fits-all for accurate ROI comparisons. ?? Iterative Review Process Regularly refine criteria to stay relevant amid changing dynamics and priorities. ?? Concluding, it's crucial to adopt a comprehensive and flexible approach to criteria definition, ensuring that ROI comparisons are robust, relevant, and reflective of all project dimensions.

When we are talking about IRR, it is important to understand and ensure that the projects that are prioritized meet the MARR defined within your organization. It is important to emphasize that each company will have a rate based on the organization's risk appetite and even so this value can and will probably change from country to country.

To compare project ROI effectively, assess both financial metrics (like NPV, IRR, and payback period) and strategic benefits using frameworks like the Balanced Scorecard, Cost-Benefit Analysis (CBA), and Multi-Criteria Decision Analysis (MCDA). Employ scoring models for qualitative benefits and risk-adjusted ROI to factor in uncertainties, using tools like Excel or Monte Carlo simulations. Regular post-project reviews with variance analysis help refine ROI comparisons and improve estimation accuracy over time, ensuring that projects align with organizational goals and deliver maximum value.

Very simple & quick to do it is; - Projected impact outcome of a project - Estimated total person weeks required for a project - Identify if it is a strategic/compliance/Important (tangible/intangible project) - Get some data for past projects w.r.t above inputs to define the trending ROI - Define a ROI value for upcoming projects & compare similarly for all the projects

To compare project ROI effectively, consider both financial metrics and qualitative factors. First, define your comparison criteria, including ROI, NPV, IRR, strategic fit, intangible benefits, and risk assessment. Standardize project data for fair comparison. Use visualizations to highlight key findings and consider the context and stakeholders involved. Avoid focusing solely on financial metrics, overlooking risk, or comparing projects unfairly. Remember, comparing ROI is a multi-faceted process, so use a comprehensive approach to gain valuable insights and make informed decisions.

In steering our project portfolio, I encountered the challenge of comparing diverse project ROIs. Adopting a balanced scorecard framework proved instrumental. It facilitated a comprehensive analysis, considering not only financial gains but also strategic alignment, risk factors, and resource implications. The structured approach ensured fair and transparent evaluations, enabling us to make informed decisions about project prioritization. This experience emphasized the practicality of leveraging standardized frameworks in Project Portfolio Management. It not only streamlined our decision-making process but also fostered a more strategic and holistic perspective, aligning project selection with organizational goals and long-term success.

When looking at building a standard framework ensure the appropriate stakeholders are engaged, in this case, particularly the Finance team and Performance/Data team. In addition to the criteria already covered there is also any efficiency or effectiveness gains and whether these are 'bankable' or not (i.e. cash vs opportunity creation).

In steering a diverse project portfolio, comparing ROI required a nuanced approach. Recognizing varying timeframes and cash flows across projects, I implemented a discount rate strategy. Tailoring the discount rate to project specifics, I factored in both opportunity cost and risk. A tech innovation project with longer timelines received a slightly different rate than a quick-turnaround efficiency initiative. This approach not only provided a standardized metric for comparison but also acknowledged the unique aspects of each project's financial landscape. The success of this methodology was evident as it facilitated informed decision-making, aligning projects with strategic objectives and maximizing overall portfolio value.

Keeping the discount rate simple (for NPV calculation) : ideally you will be able to use the same value used elsewhere in the company for this (which will be the 'cost of capital'). This will make comparisons easier and it is an already agreed value so you wont need to spend time discussing the vagaries of the 'discount rate'

One project, seemingly high in potential returns, carried substantial inherent risks. Utilizing risk-adjustment techniques became imperative. Employing scenario analysis, we mapped out potential outcomes considering various risk factors. This foresight allowed us to assign realistic probabilities to different ROI scenarios, aiding decision-making. In one instance, this approach prompted a reconsideration of project priorities, preventing potential setbacks. This real-world experience underscored the importance of not just calculating ROI but ensuring it reflects the nuanced landscape of risks, ultimately steering the portfolio towards more informed and resilient choices.

In overseeing a diverse project portfolio, I learned the essence of continuous ROI review. We initiated a robust PPM strategy, diligently tracking project metrics. As the market evolved, so did our projects. Regular reviews became paramount. During one evaluation, we identified a project surpassing ROI expectations, while another lagged due to unforeseen challenges. This led us to refine our estimation models and pivot project priorities. The dynamic nature of business demands a constant pulse on ROI. This experience emphasized the significance of ongoing assessment, ensuring agility in adapting to changing landscapes and optimizing the portfolio for sustained success.

When preparing the aforementioned analyses, it is important to keep in mind and try to be as precise as possible, thus ensuring a quality business case with more accurate information. Another point, which was not mentioned, but is extremely important, we need that as soon as it is delivered, it is important that the responsible team monitors the evolution during the operation, ensuring and validating that the metrics defined in the business case have been met.