Project ROI and Related Financial Metrics

This section focuses on one of the two types of ROI, called Simple ROI. There are three lectures in this section. When you master the material in this lecture , you will understand simple ROI and know when and how to calculate it. 

This is lecture 2 of Simple ROI. When you master the material in this lecture will be able to identify tangible and intangible costs and benefits and you will be able to calculate Simple ROI.

This is third and last lecture of Simple ROI. When you master the material in this lecture. you will be able to describe reasons why ROI is so valuable and popular, why there is a risk of ROI manipulation, and when and how to calculate Simple ROI. 

This is lecture one of three lectures on project costs. When you master the material in this lecture, you will be able to describe why it is important to understand cost categories. You will also be able to describe the difference between fixed costs and variable costs, direct and indirect costs, and tangible and intangible costs. You will also be able describe sunk costs. 

This is lecture two of three lectures on project costs. When you master the material in this lecture, you will understand the role of the system life cycle in identifying project costs and benefits, recognize common project costs, recognize the significance of operations and maintenance (O&M) costs, and why certain critical elements of software maintenance costs are a major part of total O&M cost. You will be able to describe what an overhead cost is, how such costs are allocated to projects, and how costs incurred by other parts of the organization because of a project affect the project financially.

This is the third and last lecture on Project Costs. When you master the material in this section, you will be able to describe examples of common acquisition costs incurred by projects and identify powerful aids to identifying project costs. 

This is the first of two lectures on project benefits. When you master the material in this lecture, you will know how project benefit is defined and valued, be able to distinguish between tangible and intangible benefits, and understand why there is management resistance to quantifying intangibles in dollars for inclusion in project financial metrics.  In a practice exercise, you will be able to distinguish between tangible and intangible benefits.

This is the second of the two lectures on project benefits. When you master the material in this lecture, you will be able to recognize common project benefits, know when during the system life cycle the benefits are produced, understand why more weight is given to tangible benefits than intangible benefits, and recognize the long-term value of reducing operations and maintenance costs. You will also know what incidental benefits are, how they are quantified in dollars, and be able to name aids for identifying project benefits. 

This is the first of two lectures on "changes from the reference system." When you master the material in this lecture, you will understand the meaning of changes from the reference system, why they define the financial information for ROIs and other financial metrics, and you will be able to calculate them in a practice exercise. You will also know how changes from the reference system calculations are used to compare projects.

This is the second of two lectures on changes from the baseline. The emphasis in this lecture is giving you practice in calculating the ROI for each of two projects based on changes from their baselines. When you master the material in this lecture, you will be able to successfully make the calculations based on changes from the baseline and compare your results with the actual results that occurred with the projects.

This is the first of two lectures on project ROI and cash flow. When you master the material in this lecture, you will understand the meaning of project cash flows, including inflows, outflows, net cash flows, and net cash flow projections. You will also be able to compare cash flow with ROI and be able to describe how an organization is affected by project cash flows and why some executives confuse cash flow with ROI.

This is the second of two lectures on ROI and cash flow. When you master the material in this lecture, you will know the significance of project cash flow to the organization and the project, the need for cash flow monitoring, the likely impact of faulty cash flow estimates, the criticality of net positive cash flows, and why future-year cash flows are discounted.

This is the first of three lectures on intangible costs and benefits. When you master the material in this lecture, you will be able to describe the meaning of "intangible," the role of probabilities when forecasting the results of quantifying the effects of intangibles, how organization policies and practices affect how projects address intangibles, and why quantifying the effects of intangible costs and benefits in dollars is necessary to include them in financial metrics.

This is the second of the three lectures on intangible costs and benefits. When you master the material in this lecture, you will be able to describe the meaning of "quantifiable" in relation to intangibles, why there should be a formal project task for identifying intangible costs and benefits, why a cross-functional team should be used to perform the task, how to forecast the probable effects of a selected intangible when quantifying its effects in dollars, and why creating repeatable procedures is valuable to projects.

This is the third of the three lectures on intangibles.  When you master the material in this lecture, you will be able to calculate the expected ROI for a project that includes a quantified intangible benefit from a new system. You also will be able to describe different approaches that organizations are taking in addressing project intangible costs and benefits, the advantages of quantifying in dollars the effects of selected intangibles produced by projects, and reasons for creating an intangibles management plan.

There is one lecture on future value. When you master the material in this lecture, you will be able to describe the time value of money and its role in calculating the future value of project costs and benefits.  You will also understand future value's role in project planning and management. And you will be able to calculate the future value of a cost or benefit using compound interest. The lecture includes two practice exercises.

This is lecture one of two lectures on present value. When you master the material in this lecture, you will be able to describe what present value is, how it is defined. how present value calculations reflect the time value of money concept, the effect of discount rates on present value calculations, and the sources of discount rates.

This is the second of two lectures on present value. When you master the material in this lecture, you will be able to describe the present value formula and the difference between present value and future value. You also will be able to make present value calculations, including the use the present value formula on the positive and negative cash flows of a multl-year project to determine the worth of the project. You will recognize the value of present value calculations to organizations and why present value is called "one of the most important fundamentals in all of finance."

This is the first of three lectures on net present value. When you master the material in this lecture, you will be able to define net present value (NPV), describe what NPV produces and the NPV calculation process, and calculate NPV for a five-year project. 

The is the second of the three lectures on net present value (NPV). When you master the material in this lecture, you will be able to describe the effects of discount rates on NPV, how NPV is used to compare projects, and the relative importance of NPV in relation to other project financial metrics. And you will be able to evaluate proposed projects that have different results on project financial metrics.

This is the third of the three lectures on net present value (NPV).  When you master the material in this lecture, you will be able to describe how NPV is used to determine the financial worth of a project, the questions that NPV can answer, and why NPV should be used with a combination of financial metrics when evaluating a proposed or existing project.