Finding a Project's Intangible ROI

From the Voices on Project Management Blog
by , , , , , , , , , , ,
Voices on Project Management offers insights, tips, advice and personal stories from project managers in different regions and industries. The goal is to get you thinking, and spark a discussion. So, if you read something that you agree with - or even disagree with - leave a comment.

About this Blog

RSS

Recent Posts

Fair's Fair

Give Your Project a Home

A Hollywood-Style Move From PM to Scrum Master

To Have and To Hold

Leading With Integrity

Email Notifications off: Turn on


If you're new to project management, you might be surprised to learn that some projects -- maybe some of yours -- do not generate any actual profits.

That can make it difficult to demonstrate how talented you are as project manager and how great your project delivery team is. So, how can you show you've created value if you cannot show revenue or profits as a direct result of your project?

Look at ROI in a different light. Instead of using profits as a benchmark, consider intangible benefits, such as cost-savings that will result from the project, or a positive swing in public relations or team dynamics

My team and I were working on a project that involved automating a conference room. A user could walk into the room, push a single button and the automation would do the rest. The project didn't generate any profit, but the feedback from stakeholders was 100 percent positive: My team had created an environment that worked as advertised and made users' work lives easier and less frustrating. And that translated to a huge upswing in stakeholder influence.

When we needed buy-in on the next project, the stakeholders were more than happy to offer support. They even understood if the project would affect them negatively (i.e. space being unavailable for use during project, or a feature being disabled for a short time). It may be hard to say that stakeholders' good graces (for example) increased by exactly 42 percent, but it's very obvious when your ability to influence them has increased. Things seem to just run more smoothly.

Have your projects generated intangible ROI? How have your project teams benefited from it?

Posted by Taralyn Frasqueri-Molina on: May 31, 2011 10:54 AM | Permalink

Comments

Brenda P
Several projects are suggested through portfolio management that don't have a tangible ROI, not even definable cost savings. Even though people agree that the projects are important, they don't survive prioritization because of the inability to tell the ROI story.

Do you have ways to define the ROI for these intangibles, other than, "it makes life better?"

Nick
How would one communicate these intangible ROI benchmarks with key stakeholders? When I run these scenarios though my head, they sound like self promotion.



Project Portfolio Management
Not all projects are delivered successfully, there are many reasons starting from setting priorities, uneven resource distribution, unexpected time taken for a deliverable and so on. Knowing a project's intangible ROI is difficult, I do not find any specific benefit to add.

Taralyn Frasqueri-Molina
@Brenda P @ Nick - thanks for visiting my post. Your comments are great and quite thought provoking. I need a bit to think about it.

Keep the questions coming!

-TL

Ann M
I have a project now that is costly and the only 2 ROI's are 'makes life better for the consumer' and 'keep us competitive in the marketplace.' I guess I could say there is a negative ROI, meaning if we DIDN'T do this project we could possibly see customer base shrinkage.

Himanshu Bansal
I do not agree that a project has just intangible ROI. Every project has same tangible ROI and it is matter of how we measure it.

Even for your project, ROI can be calculated by how much time users would spend without the implementation of the project and how much time did they spend afterward.

Extrapolating these calculations, saving can be measured from average billing rate/salary.

I agree with Nick that without tangible benefits it is hard to convince yourself and stakeholders to start a project.

Michael Gentle
Though most project business cases are predicated on a tangible, financial ROI, the reality is that said ROI is extremely difficult, if not impossible, to quantify. The ROI in most business cases serve mainly to get a project launched, after which the business case is shelved.

Rare are the cases where there is benefit monitoring to show that the original ROI was really realized. To paraphrase the small writing etched onto car wing mirrors in North America, "ROI in mirror is smaller than it appears."

Instead of going into detail here, I've written an article on the subject called "ROI - RIP?" (you can Google it and it should show up on a site called NCC (National Computing Centre).

Regards
Michael Gentle


Rosemary Wycherley
Justifying investment in a project on the strength of intangible benefits alongside the more readily quantifiable tangibles is a challenge but not impossible.

In government projects this is particularly difficult but is overcome by following a few simple steps.

First of all, everything should be done to dig out tangibles - for example, customer satisfaction on the face of it is not easily quantifiable, but look at the cost of dealing with customer complaints, the value of customer referrals etc. Dollars can be attached with a little imagination.

If the digging finds no value label, then weight the intangibles in order of significance against the tangibles. Decisions makers will happily consider a valid argument if it can't always be supported in financial terms.




Bruce Fieggen
Every project has 'measures.' These are tangible ways of determining if the project is a success. If it didn't have measures, why pay for the project.

If the project doesn't generate increased sales or improved yields, the project may be regulatory mandated or customer requested. No matter what, there must be some kind of indication of success. And you need to figure out a way to measure this with a number.

In the example given above, one could have sent out a quick survey, asking for customer satisfaction on a scale of 1 - 5. Then a follow-up survey after the project was complete (or even during beta testing) would indicate whether or not the project succeeded.

I recommend all project managers determine their project's 'measures' along with their scope early on in the planning session. Measures indicate the quality of the project's deliverables and predict whether or not the customers will accept the project as being a success.

Please Login/Register to leave a comment.

ADVERTISEMENTS

"Who are you going to believe, me or your own eyes?"

- Groucho Marx

ADVERTISEMENT

Sponsors

>