Return on Investment (ROI)
Return on Investment, or ROI, shows how much profit a project earns compared to how much money you put into it, expressed as a percentage. It's one of the most common ways to describe whether an investment was 'worth it.'
To calculate it, you take the net profit (the money you gained *after* subtracting all the costs) and divide it by the investment (the money you spent). Then you multiply by 100 to turn that decimal into a percentage that's easy to talk about.
Reading the result is straightforward: a higher ROI percentage means a better return for the money invested. A positive ROI means you made a profit, while a negative ROI means you lost money. Project managers and decision-makers use ROI to compare projects side by side — when choosing between options, the one with the higher ROI usually offers more value per dollar.
Think of it like a savings account interest rate: if you put in money and it grows by a certain percentage, that percentage tells you how hard your money worked for you. ROI is that same idea applied to a whole project.
Imagine you invest $50,000 in a project, and after it's finished you've earned a net profit of $10,000 (that's the money left over after covering all costs). You divide the net profit by the investment: $10,000 ÷ $50,000 = 0.2. Multiply by 100 to get 20%. An ROI of 20% means that for every dollar invested, you earned an extra 20 cents in profit.
Every PMP formula explained free — plus worked examples and practice in PMP Math, and full timed mocks in the simulator.