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Changes cost less when made earlier in the development life cycle. Twenty changes in a project, at 32 hours per change and [a minimal] hourly rate of $35, would cost $22,400. Reducing this to 8 hours per change would reduce the cost to $5,600. Savings = $16,800. - Human Factors International
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Formulas for Calculating Return on Investment (ROI)
| Formula 1: Increased Productivity |
| # Users x # Uses per day x Days per year x Loaded salary x Increase in efficiency = Annual ROI |
| Example: Increase efficiency by 5 seconds for a given page |
| Number of users: | 100 |
| Page access per day: | 75 |
| Increase in efficiency: | 5 seconds (.0014 hours) |
| Annual ROI = 100 x 75 x 230* x 40,000/1840* x .0014 = $52,500 per year |
| * Work year = 230 work days per year; 8 hour work days = 1840 hours/year |
| Formula 2: Reduced Call Center Costs |
| { # Calls to call center each year x Call volume } x { Average length of call* } x { Average call desk salary / Hours per year } = Annual ROI |
| Example: Reduce support calls by 50% |
| Calls per year: | 300,000 |
| Average call: | 6 minutes (.1 hours) |
| Loaded salary: | $40,000 |
| Annual ROI = {300,000 x .5} x {.1} x 40,000/1840 = $326,086 per year |
| Formula 3: Reduced Training Costs |
| Training: {{# of target users x Loaded hourly wages for trainee x Duration of training} + {# of classes x loaded hourly wages for trainer x Duration of training}} x Projected % reduction in training needs = Annual ROI |
| Learning Curve: # of target users x Loaded hours wages for trainee x Change in time taken to learn* = Annual ROI |
| * for a one week learning curve, reduction in the time taken to learn is 8 hours |
| Example: Reduce training requirements by 50% and initial learning curve reduced by 25% |
| Number of users: | 5000 |
| Duration of training: | 16 hours |
| Loaded salary (trainee): | $40,000 |
| Loaded salary (trainer): | $50,000 |
| Number of classes: | 50 |
| ROI for training = {{5000 x 40,000/1840 x 16} + {50 x 50,000/1840 x 16}} x .5 = $880,430 per year |
| ROI on learning curve = 5000 x 40,000/1840 x 8 = $869,565 per year |
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