ROI and Selecting Projects
Why should an organization not rely only on ROI to select projects? Return on Investment (ROI) is important when considering a project because it indicates the benefit for the company overall (Haddad, 2013). And while ROI is often used as a primary criterion for selecting projects, there are several reasons why organizations should not rely solely on this metric. First, ROI calculations can be complex and time-consuming, and may require the use of specialized software. Second, ROI results can be sensitive to assumptions and estimates, making it difficult to compare different projects. Finally, ROI does not take into account other important factors such as the strategic fit of a project or its alignment with organizational goals (Villanova University, 2022). As a result, relying exclusively on ROI to select projects can lead to sub-optimal decision making. Organizations would be better served by using a multi-criteria approach that includes both financial and non-financial factors.
When choosing a project, organizations should base their decision on a variety of factors. The first step is to identify the organizations goals and objectives and the organizational strategy (Villanova University, 2022). Once these have been established, the next step is to assess the potential impact of the project. Will it help the organization to achieve its goals? Does it align with the organizational...
…availability of skilled personnel. While it is not possible to eliminate all risk, effective risk management can help to minimize the potential for problems and maximize the chances of success (Plaky, 2022).In summation, ROI is an important consideration in selecting a projectbut it is never the only consideration that has to be made. Project managers need to look at organizational strategy, risk management, organizational fit, costs of doing the project (whether resources are available, etc.), and whether the project is even feasible in the long-run. A lot of times a project can sound great on paper and promise a big ROI, but practical considerations and risks must always be viewed…
References
De Bock, E. (2019). Project management in the transformative age. Retrieved from https://www.bworldonline.com/economy/2019/08/11/247538/project-management-in-the-transformative-age/
Haddad, R. S. (2013). Are your projects supporting your vision statement?: prove it!Paper presented at PMI® Global Congress 2013—North America, New Orleans, LA. Newtown Square, PA: Project Management Institute.
Plaky. (2022). Project management statistics. Retrieved from https://plaky.com/learn/project-management/project-management-statistics/
Shyamal. (2019). Future proof your business with project management. Retrieved from https://www.poptin.com/blog/future-proof-business-project-management/
Villanova University. (2022). Organizational Project Management: Aligning ProjectManagement with Organizational Strategy. Retrieved from https://www.villanovau.com/resources/project-management/organizational-project-management/
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