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Project Management Institute - Northeast Florida
July 2008
Volume 14 Issue 4
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CALENDAR OF EVENTS
7/28 Knowledge Management in Projects - 1:00 PM - Registration Deadline: 7/25!
7/28 Chapter Dinner Meeting - 5:30 PM - Registration Deadline: 7/23!
8/18 Special Dinner Meeting - 5:30 PM
9/22 Chapter Dinner Meeting - 5:30 PM
11/17 Chapter Dinner Meeting - 5:30 PM
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 Is Return On Investment (ROI) Overrated?
Dr. James T. Brown PMP PE CSP
Return on Investment (ROI) is probably the most popular business case measure for assessing projects and initiatives. However, it is fraught with pitfalls and is the most overrated project selection method. I am using ROI here to represent a variety of financial measures that can be determined by financial analysis. Regardless of the final measure, whether it is Net Present Value (NPV), Internal Rate of Return (IRR), Economic Value Added (EVA), or ROI, the basis of the calculations is the same. You're looking for a forecast of revenue and costs.
I am not the only one to make negative remarks about financial measures.
"These methods are extremely popular project selection approaches. But don't be fooled: The businesses with the poorest performing portfolios rely almost exclusively on financial selection approaches, according to our research."
Winning at New Products: Accelerating Ideas from Idea to Launch,
Robert G. Cooper
Your ROI decisions are only as good as your ability to forecast!
ROI is computed using a forecast of costs and a forecast of revenue or cost savings. Thus, ROI is dependent upon the accuracy of the forecasts for the costs and revenue projections. The question that the program manager needs to ask is: "How accurate are, and what degree of confidence do you have in these forecast estimates?" This question should be followed by a review of all the ROI estimates for the past three to five years to assess the demonstrated history of individual and organizational forecasting ability.
History is proof of performance!
If the organization has a history of accurate costs and revenue forecasting, then have confidence in the ROI numbers. However, if the history of the organization's forecast of cost and revenue numbers is poor, the program manager should discount or ignore the ROI calculations. Still, have the organization calculate the ROI so you can judge their forecasting ability in the future, but you should not include ROI as a determining factor in your analysis to identify the best projects and initiatives.
As always, judgment is a determining factor, and if there is overwhelming and compelling evidence leading you to consider ROI, despite the poor forecast history, then go ahead. The good part about going back and looking at previous ROI projections is that it will tell you the forecast accuracy of those projections. Even with good forecasting ability today's environment is so dynamic with accelerating technology change and globalization forecasting is problematic.
Then there is just plain old uncertainty. I suspect there are lots of ROI analyses out there now that are useless since oil was recently more than at $130 per barrel. Who forecasted that? If we use ROI we must constantly evaluate our ability to forecast and weigh the level of uncertainty associated with what we are forecasting. If uncertainty is low and forecasting ability is good (a history of demonstrated good forecasts) ROI and financial measures may be a leading tools.
Using history drives accountability!
I am sure that no one at your great company or organization tweaks or massages their ROI numbers to "bump them up" a little or a lot with hopes of getting a project or initiative selected, but it does happen in other companies. If your organization never goes back to critique ROI estimates and then hold the estimator accountable for those estimates, expect a lot of massaging of ROI data by those trying to increase the odds of their project gaining approval. The program manager has to assure that the project selection process uses valid data and/or understands the deficiency of the data.
When this discussion comes up in my training of program and project managers, most of them say that their organization never looks back at previous ROI estimates. Invariably a program manager will make the comment that "Circumstances have changed. There is no point in going back because the circumstances are different now." This is not a valid excuse for not going back and analyzing. It is simply another reason not to give too much credence to the use of ROI and financial measures in a dynamic environment.
Adapted from The Handbook of Program Management
Dr. James T. Brown is president of SEBA Solutions Inc., www.SebaSolutions.com a Registered Education Provider with the Project Management Institute and is the author of The Handbook of Program Management, www.ProgramManagementBook.com published by McGraw-Hill. He provides project management training and keynote speeches worldwide and may be reached at jtbrown@sebasolutions.com.
Copyright 2008 SEBA Solutions Inc.
Dr. James T. Brown PMP http://sebasolutions.com/aboutdrjames.html is president of SEBAŽ Solutions Inc http://sebasolutions.com, a Registered Education Provider with the Project Management Institute and is the author of The Handbook of Program Management published by McGraw-Hill. He provides project management training and keynote speeches worldwide and may be reached at jtbrown@sebasolutions.com.
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Getting with the Program
Stephen Martin, PMP, VP Programs/Internet
Mark your calendars now for the rest of the year! Check out the outstanding events your chapter has planned for you thru November! Don't miss a one!
July 28th we will feature Alfonso Bucero, DEA, PMP, internationally known speaker, consultant and author, returning by popular demand. The topics of interest include Knowledge Management in Projects (1/2 day workshop) and Building the Project Manager's credibility (dinner meeting). With gas prices still rising, the price for PDUs are going down in July.
August 18th we have a special dinner meeting scheduled, featuring Steve Hegele from the Hegele Academy. His topic "Burn your Canoe" promises to be an entertaining and thought provoking presentation on commitment and decision making.
The September 22nd dinner meeting will feature Rick Morris. Rick is a recently published author with two books, President and owner of Highmark Technology Company, and the current President of the Birmingham Chapter. He is a frequent speaker at PMI chapters across the country and is a presenter at PMI Global. The topic for this meeting is "Making Emotional conversations, un-emotional".
Don't forget about October! Yes, it is that time again, our annual Conference at TPC Sawgrass is October 27th and 28th. We have an exciting lineup planned, so be sure not to miss it. Lunch and learns will return in October and a PMP prep class is also scheduled for October 3rd & 4th.
Our November 17th dinner meeting will feature Kent Crawford, who is a PMI fellow and past president of PMI Global. Kent is President and CEO of PM Soutions and will host an engaging conversation on "The State of the PMO: Priorities for Advancing PMO Maturity".
Be sure to visit our chapter website for more information on all these events. |
PMI NATIONAL CHANGING PMP CREDENTIALING CYCLE
Leigh Gardner, PMP, VP Communications
The PMI-NEFL chapter is passing along important information that we have received from PMI about changes to the PMP renewal process and schedule.
For those who have already gone through at least 1 PMP renewal, first of all, "Congratulations!" Second - you may be aware that currently there are large backlogs each year-end because everyone renews on an annual cycle, on December 31st.
To address this issue, PMI will change all PMP credential holders' expiration dates so that they do not occur on a single day each year. The goal of this change is to vastly improve PMI's customer-facing services and operational readiness to process PMP renewals.
PMP credential holders will be assigned new PMP expiration dates that correspond with the anniversary date of the bestowal of their credential. The result is a simplification of the PMP certification cycle.
The transition to the new system will begin taking place in late August 2008. Current PMP credential holders will have months added to their renewal cycle based on the anniversary of earning their credential; no one will have time taken away. Communications from PMI to all credential holders began in June.
PMI has provided great information that you should read at the following location:
Frequently Asked Questions (FAQs) on PMI.org
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Membership Corner
Donna Casey, PMP, VP Membership
The Project Management Institute's Data Exchange Program (DEP) indicates that our chapter has 565 members. The DEP is a comprehensive set of products and services provided by PMI to the Component Leadership for the purpose of tracking membership, financials, as well as prospects on an ongoing basis. The DEP is released to board members the 12th of each month for the previous month's data.
We would like to welcome our new members for the year:
Mr. Jules E Walker Victor Mitchell, PMP
Mr. Alvaro Fabio Latorre, Jr. Mr. Richard Edward Valentine, Jr.
Mr. Markus D. Hardy, PMP Patricia L Hill
Miss Andrea M Champlin, PMP Mr. Christopher Cherry
Mr. Eyo E Effiong Mr. Alan M. Hornstein, PMP
Mr. Robert T Morgan, PMP Ms. Susan A Maurek
Ms. Nancy Shray Mr. Steven R. Wyman
Mrs. Sharon F. Bridges Ms. Candace Toff-Ulecki
Mr. Richard M. Whitney, Jr. Mr. Alan D. Barnes
Mr. Jack Regan Ms. Jorina L. Jolly, PMP
Dr. James Harold Barnard Mr. Patrick J. Baehl de Lescure
Mr. Joseph M Snowberger Valerie Hatzes
Mrs. Carrie Suzanne Woods Mr. Randall I. Hulette, PMP
Mrs. Cynthia A Bracktt Karen M Rankin
Mr. John R Levchuk Mr. Timothy A Pettus
Mr. Jeffery Dwayne Couch, PMP Mark H Brody, PMP
Mrs. Elizabeth Kepley McClain Mrs. Natalie G Lloyd, PMP
Mrs. Maureen Siess Matthew G Cassie, PMP
Robin L Scott Ms. Joyce Young
Mr. Ronald Yon Mr. Tom Dell
Mr. John William Glover, II Mr. John Rego, Jr.
Mr. Christopher B Broadwater Mr. Eric Stevens, PMP
Ms. Erin Vickory Mr. Nicholas Trautman
Mr. Jose F Zouain Jana Miller
Mrs. Jean Keeley Rissman Mr. Todd Dorsett, CAPM
Mrs. Valerie M Isaac Ms. Rita E. Harris, PMP
Ms. Tracy Matthews, PMP Ms. Gloria D. Tumminello
Mr. George G Nimick, Jr., PMP Lidia Klemetsrud, PMP
Mrs. Melissa B. Dearing Mr. Thomas L Gable
Mrs. Sharol Pausal Noblejas Ms. Michelle Marie Merrell
Mr. James Albert Brewer Mr. Jason D Stringfellow, PMP
Ms. Amy Michelle Evors, PMP Mrs. Diana Carol Forrester, PMP
Mr. Michael Louis Storms Ms. Merdice Sherice Evans
Mr. Vincent Sterling Stubbs Mr. Claude A. Fiori, Jr., PMP
Ms. Jane Gavan Mrs. Brynn L Ammon
Ms. Lorraine S Miller Mrs. Jennifer Young
Archible W Sherman, III Mr. Jonathan L Courson
Ms. Karen E Young Ms. Lynne M Dale
Jennifer M Roberson, PMP, CAPM Mr. William T Halstead, PMP
Mr. Sartaj K Baban Mr. John Allen Brown, PMP
Mr. Kevin Warren Johns Mr. Jared Michael Drager, PMP
On behalf of the chapter, the board members would like to congratulate our new Project Management Professionals (PMP). Listed below are the new PMPs for the months of January through May 2008:
Mr. Scott Hudmon, PMP
Mr. Mark D Vance, PMP
Ms. Elizabeth Snow, PMP
Mr. Sridhar Raman, PMP, CAPM
Victor Mitchell, PMP
Mr. Jeffery Dwayne Couch, PMP
Mr. Wayne Miller, PMP
Mr. George S. Johnstone, PMP
Mrs. Patricia L Mansuy, PMP
Lidia Klemetsrud, PMP
Mr. Dean M DiLuccio, PMP
Mr. Richard Covert, PMP
Mrs. Diana Carol Forrester, PMP
Jennifer M Roberson, PMP, CAPM
Mrs. LaKisha A Pittman, PMP
Mr. Marc Duffy, PMP
Mrs. Leah M Strommer, PMP
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Sponsorship and Volunteer Opportunities
We are in the process of finalizing our chapter sponsorship opportunities. We are looking for Dinner meeting and Conference sponsors. For more information, please contact John Watson or Stephen Martin.
For volunteer opportunities contact membership@pmi-nefl.org. |
| Thank you to our Sponsors (click image to link to sponsor website):
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 Contact Us!
Our chapter provides numerous opportunities to inform our members on what's happening in our chapter and PMI Headquarters via our website and newsletters. If you have anything to say, we welcome your input! Contact our Vice President of Communication & Publicity.
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