Procurement - Measure
ROI
(Return on Investment)
A measure comparing the benefit gained from an investment with what it cost
What's it for?
Helps judge whether an investment is worthwhile by comparing the benefit gained with the money spent.
For example…
A company spends £80,000 automating invoice checks and expects to save more than that within 14 months, giving the project a positive return on investment
A £200,000 automation project saves £100,000 a year, so its expected return can be compared with the investment when deciding whether to fund it
Think of it like…
Asking whether a loft insulation job saves more on heating bills than it cost to install