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Technology ROI – Understand Key Metrics & Assess the Risks (Featured in CFMA Building Profits Magazine)

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Megan Ng

Alt text: A smiling Asian woman with long hair, donning round glasses and a floral top, situated in a circular frame against a plain background. She represents the persona of a user of Jonas Construction Software.

Megan is the Content & SEO Manager at Jonas Construction Software. She is fascinated with ConTech and is dedicated to providing educational content and stories to support the challenges and needs of construction and service businesses.

Last Updated on July 4, 2024

Jan 04, 2018

Investing in and implementing information technology (IT) can enhance efficiency and increase profitability, however, many companies struggle to quantify the actual return on investment (ROI) of such technology. Since ROI analysis is essential to the successful implementation of any technology project, the first step is to examine the key metrics of IT ROI, and then look at how to assess the risks and costs associated with investing in IT projects.

The three key metrics surrounding a projects’ ROI that IT decision-makers must focus on are:

  • Payback Period – The amount of time required for the benefits to pay back the cost of the project.
  • Net Present Value (NPV) – The value of future benefits in terms of dollars today.
  • Internal Rate of Return (IRR) – The benefits of the IT project as an interest rate.

It is also imperative that the risks associated with an IT investment are fully considered. The types of risks that should be considered are: business risk, resource risk, scheduling risk, and technology risk. It is important to beware of scope creep, which can lead to project management issues if not properly managed from the outset. A complete cost analysis should also be conducted to ensure the IT investment is feasible.

This article provides specific examples, pitfalls to watch out for, and solutions that are directly impacting the construction industry today when it comes to investing in IT. In reading this article, your business will be more prepared when implementing an IT solution, while also experiencing greater benefits such as increased efficiency, productivity, and profitability.

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