Projects are efforts that organizations take on to effect positive change –create new products, services, or improvements. They require resources and support from several stakeholders throughout their lifecycle to progress and succeed. So as project managers, it’s vital to measure the impact of your projects, especially in comparison to their cost.
Your project ROI can determine potential improvements for the future, justification for resource investment, and more. Let’s dive into how to compute it and maximize its benefits.
What is ROI in Project Management
ROI stands for return on investment. In project management, it’s how well a project’s returns compare to its costs. ROI targets will vary depending on project type and industry, but all projects should aim for a positive ROI, which is where the benefits outweigh the costs.
Benefits of Computing Project ROI
Computing your project’s ROI gives you a quantifiable metric for its impact. This can be used to justify support, improve risk mitigation, and facilitate current and future decisions.
Facilitates Project Approval
Quantifying your project’s ROI is a good way to gain management’s buy-in. When leadership sees how the outcomes can benefit the business, allocating company resources for the project will be easier to justify.
Project Planning and Optimization
Evaluating your project’s ROI can clarify factors that affect it. This can help you prioritize crucial tasks and risks. This clarity can also grant your team the right focus so you can pay attention to metrics that actually reflect relevant results.
Business Planning and Portfolio Management
Costing products and services created through projects is crucial for businesses to profit. The project ROI serves as a critical metric that not only shapes profit targets but also informs broader business strategies. The project ROIs can be a good pricing foundation when pricing goods and services, balancing market demand and profit.
Anticipated vs Actual ROI
Anticipated ROI is the estimated ROI computed before a project begins. This metric typically involves projecting costs and forecasting potential revenue, and is used to determine a project’s feasibility and viability.
Actual ROI is computed after the project is completed –the “real” and conclusive performance metric. There are natural deviations between anticipated ROI and actual ROI, and their accepted threshold values vary by industry, client requirements, and organizational standards.
How to Calculate the ROI of a Project
Calculating your project ROI can give your stakeholders a clear metric to evaluate your project’s financial efficiency and compare it against other potential investments or predetermined benchmarks.
- Positive ROI: When a project’s returns are higher than its costs. After using the ROI formula, a positive ROI would have a positive value.
- Negative ROI: When a project’s costs are higher than its returns. The ROI formula generates a negative number (less than zero) for this outcome.
- Zero ROI: This means that the cost is equal to the returns, also called a breakeven. The ROI formula would generate a zero here.
Example 1: Social Media Advertising Campaign
- Investment: $5,000 on a Facebook ad campaign to promote a product line
- Sales generated: $15,000 over one month
- Net profit: $15,000 - $5,000 = $10,000
ROI = ($10,000/$5,000) × 100% = 200%
The social media campaign delivered a 200% ROI. This means the company earned $2 for every $1 spent on the campaign. This is a positive ROI.
Example 2: Trade Show Exhibit Campaign
- Investment in a major industry trade show: $45,000
- Inclusions: Booth rental, custom design and construction, product demos and samples, travel and accommodation for staff, marketing materials, and giveaways
- Revenue Generated: $32,000
- Net Profit: $32,000 - $45,000 = -$13,000
ROI = (-$13,000/$45,000) × 100% = -28.9%
This means that the trade show resulted in a negative ROI. The company lost nearly 29 cents for every dollar invested in the event.
Best Practices for Computing and Reporting Project ROI
Ensure Data Quality and Integrity
The quality of your input data directly affects the accuracy of your ROI calculations. Rigorously verify all the figures you use, ensuring they’re accurate, current, and derived from reliable sources.
Standardization and Consistency
Organizations differ in which elements they include and exclude in ROI calculations. Establish clear cost inclusion criteria. Determine and document which costs the organization deems significant for the investment calculation, and adjust your ROI calculations based on that.
Leverage Tools and Technology
While spreadsheets and ROI calculators can improve efficiency, inaccurate data may still cause values to be faulty. Use a tool that’s deeply integrated into your project management system to avoid human error and transcription mistakes, such as Workamajig, the only project management tool built for creative teams.
Workamajig has robust project management and communication features, along with built-in features to help analyze project ROI, such as accounting and financial tracking, budgeting and monitoring, time tracking and productivity analysis, revenue forecasting, and more.
Strategic Process Integration
Incorporate ROI analysis throughout your project lifecycle rather than treating it like an afterthought. Conduct periodic reviews and establish checkpoints for ROI evaluations to maximize its benefits in risk mitigation and project execution.
Reporting and Communication
When sharing figures with stakeholders, always provide relevant context, underlying assumptions, and appropriate disclaimers. Maintain alignment through transparent communication to build trust and manage expectations.
Wrapping Up
Projects inherently involve risk. As project managers, it’s our responsibility to diligently demonstrate the value we provide for our stakeholders in lieu of their investment. By applying these ROI principles thoughtfully, you can empower your team, satisfy your stakeholders, and optimize the way you plan, execute, and conclude projects.
Originally published November 10, 2025.