Question

If I were evaluating a project I would use ROI as a part of the evaluation process. Could we do something like this for a a foreign entity?

Answer 1

We can do the same for evaluating the ROI using the following approach:-

Return on Investment (ROI) is a monetary measurement that is used to evaluate the efficiency and effectiveness of an investment made by an organisation. Investments take many forms – financial, human capital, equipment, and training programs – to name just a few. This paper will focus on the use of ROI to measure the effectiveness of project management training programs in particular. In the 1970’s, Jack Phillips of the ROI Institute, Inc. developed a Level 5 ROI evaluation, as a follow on to the Kirkpatrick Levels 1 – 4 Evaluation Model (Kirkpatrick and Kirkpatrick, 2005) for the measurement of training programs. Phillips’ Level 5 takes the measurement of the effectiveness of training program to a higher level – converting the benefits of the training to a monetary value, thereby demonstrating its value to the bottom line. The 5 levels of evaluation (Donald Kirkpatrick, 1959 Levels 1 – 4; Jack Phillips, 1970 Level 5) include:

• Level 1: Reactions (the “smiley” sheet)
  • Did participants like the training they received?
• Level 2: Learning
  • Are participants confident that they have learned something from the training program?
• Level 3: Behavior/Application
  • Are participants able to apply what they learned in the training program back on the job?
• Level 4: Results/Business Impact
  • Did the training show improvement in efficiencies, productivity, profits, costs, reduced turnover?
• Level 5: ROI
  • Did the training program show a positive ROI?

According to Training Magazine (February 2006), aligning the training department, and therefore the training programs offered within an organisation, with business goals was a top priority for 2006. This alignment is becoming more of a priority for increasing numbers of organisations each year.

Using the ROI Methodology™ to Evaluate Project Management Training Programs

The focus of this section is to provide a general overview of the use of the ROI Methodology™ specifically around the evaluation of a project management training program. The following assumptions are made for the purposes of this example:

• This is a new project management training program – one which is not already in place within the organisation – which, if successful, will be rolled out to the rest of the organisation
• There will be a pilot group for the initial project management training program of no more than 20 individuals
• The reason for project management training is to improve the project management technical skills within the organisation in order to ensure that projects are on time, within budget and formal processes are followed throughout the organisation.

This example follows the Phillips ROI Methodology™ shown above in Exhibit 1. It is provided from a high level overview and does not get into all the details.