Step 1: Business Alignment & Project Objectives
Project objectives are developed based on needs. The needs assessment begins with a review of the opportunity to be realized if the proposed project is implemented.
Next, the business needs are identified.
Finally, preference needs focus on how the stakeholders, including the participants, should perceive the project in terms of value and need.
The project is developed to achieve the objectives at each level. The project can be evaluated at each level, based on the objectives. The V Model illustrates this process as it presents the relationship between needs assessment, objectives, and evaluation.
Developing the Alignment of your program, project or initiative to the business is critical for a success.
Evaluation begins with the objectives of the program, project or solution. The objectives must go beyond typical learning objectives and include up to five levels of data.
Step 2: Plan for Evaluation
Planning begins as soon as it is decided that an impact/ROI study should be conducted and typically involves key stakeholders. All important decisions for the study are made early through evaluation planning. This step involves completing three documents: data collection plan, ROI analysis plan, and evaluation project plan.
Step 3: Two types of data are collected during a project’s implementation (1) Reaction and (2) Learning
Methods to collect Reaction & Learning Data
Step 4: Two types of data are collected after a project is implemented (3) Application and (4) Impact
Methods to collect Application and Impact Data
Improving response rates is a critical issue for post-project collection. When used consistently, the techniques can achieve 70-80% response rate for questionnaires, surveys, or action plans.
Step 5: Isolate the effects of your program
One of the most critical steps in the process is to isolate the effects of the project or program.
Techniques used to Isolate the Effects of Programs:
While isolating the effects of the project with other influences is sometimes difficult, it is necessary for credibility of the study. Without this step, there is no proof that the project is connected to a business measure.
Step 6: Convert data to monetary values
To calculate the ROI, improvement in business measures must be converted to money.
This step develops a monetary benefit for one or more impact measures linked to the project. It usually follows the step to isolate the impact of the project.
Methods to convert data to money:
Step 7: Intangibles
Intangible benefits are project benefits that we choose not to convert to money. They are measures that cannot be converted to money credibly with minimal resources. Intangible data should be collected for all projects.
Step 8: Tabulate the Costs
When impact studies are conducted, the total costs of the project are needed for the ROI calculation. The costs must be fully loaded, i.e., must include all direct and indirect costs.
Step 9: Calculate ROI
Return on Investment (ROI) is a financial metric, representing the ultimate measure of project success. ROI is calculated using the project benefits and costs.
Sample ROI Calculation
Benefits (isolated) = $400,000
Cost of Program (fully loaded) = $220,000
(Net Benefits ÷ Cost) x 100 = ROI
([$400,000 – $220,000] ÷ $220,000) x 100 = 82%
Step 10: Reporting the results to key stakeholders
Reporting the results of the study is an important final step in the ROI Methodology. Properly identifying the audience and providing appropriate information is essential.
By default, four audiences are always essential:
A variety of media can be used to communicate the project’s success, for example:
What is included in an ROI Study: Impact Study Outline: