What is ROI and how is it calculated in project management?

Return on Investment (ROI) is a widely used measure of investment value in project management. It's calculated as the ratio of net income to total cost—specifically, (total income minus total cost) divided by total cost. This is typically expressed as a percentage by multiplying the fraction by 100. An ROI greater than 100% represents a positive return, indicating you get more out than you put in, while an ROI less than 100% represents a loss. Despite its popularity across business, public, and non-profit sectors, ROI has a key limitation: it doesn't account for the timing of costs and profits, which is especially important for long-term projects.