Chapter 14Tabulating Project Costs and Calculating ROI

When the monetary benefits from Chapter 13 are combined with consulting project costs, the ROI can be developed. This chapter outlines the specific costs that should be captured and economical ways in which they can be developed. One of the important challenges addressed in this chapter is deciding which costs should be tabulated and which should be estimated. In consulting, some costs are hidden and never counted. The conservative philosophy presented here is to account for all costs, direct and indirect. Several checklists and guidelines are also included in the chapter. The different ways to calculate ROI are presented with examples and interpretation.

The Importance of Costs and ROI

Monitoring the consulting costs is an essential step in developing the ROI calculation since it represents the denominator in the ROI formula. It is just as important to focus on costs as benefits. In practice, however, costs are often more easily captured than benefits. Costs should be monitored in an ongoing effort to control expenditures and keep the project within budget. Monitoring cost activities not only reveals the status of expenditures, but also gives visibility to expenditures and influences the entire project team to spend wisely. And of course, monitoring consulting project costs in an ongoing fashion is much easier, more accurate, and more efficient than trying to reconstruct events to capture costs retrospectively.

As discussed ...

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