The idea of Return on Investment, or ROI, gets a bad rap sometimes. Critics claim that the value (return) on any investment of time, money, or resources, is just too difficult to measure and, therefore, shouldn’t be bothered with. Others view ROI as a specialized financial concern that takes expertise beyond a Project Manager’s capabilities. After over 20 years of doing and teaching Project Management, we here at Cheetah Learning have found that PMs are not only capable of doing ROI analysis — but that doing so is essential to elevating their careers.
In this month’s Know How Network, we’ll talk about some key ways Project Managers can think about ROI in ways that make them more valuable to the organizations they work for and, ultimately, boost their careers. These are:
• rethinking the idea of investment,
• choosing projects wisely, and
• adopting a future-oriented perspective.
The first thing PMs should consider when thinking about ROI is how they understand the term investment. For many of us, investment is only about money — or financial capital.
5 Forms of Capital
In reality, however, financial capital is only 1 of 5 distinct forms of capital we can invest. The other 4 types of capital are:
• social,
• knowledge,
• brand, and
• infrastructure.
When you invest in who you know (social capital), what you know (knowledge capital), your credentials and prestige (brand capital), and the resources that allow you to do your best work (infrastructure capital), you set yourself up to create value (returns) in new and innovative ways.
With this expanded view of what counts as capital and investment, PMs are in a good position to think strategically about gaining more ROI from their projects. This is our second point about thinking about ROI as a PM: choosing projects wisely. Over the years, we at Cheetah Learning have found not only that financial capital is just one form of capital, but that actually it’s the most illusory form of capital. By illusory, we of course don’t mean that money isn’t real — what we mean is that it is over-valued, and is much less stable and reliable than the other 4 types of capital.
Over-valuing financial capital can lead to investing too much of it into our projects. Projects that require too much investment of money are the riskiest, most likely to experience scope creep, and generally will yield the lowest ROI. Project Managers would do well to gain skills in pro forma and payback analysis, which help predict the ROI of projects that require a significant investment of financial capital. Even better, PMs should focus on projects that leverage their other four types of capital.
This brings us to our last point: when thinking about ROI, PMs should take on a future-oriented perspective. One way to do this successfully is to concentrate on building your own and your organization’s infrastructure capital. Infrastructure capital includes all the equipment, facilities, and stuff you need to do your projects. Prioritizing projects that build infrastructure capital allows PMs to set themselves up to best create future value.
Rethinking ROI and applying it to your Project Management approach is crucial to advancing in your career as a PM. Taking ROI seriously doesn’t require an MBA or a specialized degree; PMs of all experience levels can learn a few essential tools like pro forma and payback analysis to greatly increase their value to their employer. Learn more about improving your ROI as a Project Manager in our free one-hour webinar. Visit https://cheetahlearning.easywebinar.live/registration-18?utm_source=ActiveCampaign&utm_medium=email&utm_content=%F0%9F%91%8D+FIRSTNAME+++-+Improve+Your+ROI+as+a+Project+Manager+-+Free+Webinar&utm_campaign=Free+ROI+Webinar+recorded.
