Return on Investment Metrics: An Army Perspective
Cost analysts have several Return on Investment (ROI) metrics (e.g., Benefit to Investment Ratio (BIR), Net Present Value (NPV, and Break Even) in their tool box when conducting an economic or comparison of benefit analysis. All of these metrics have their utility, however one metric may be more appropriate than another depending on who the decision maker is and the type of project. For example, a capital investor may use NPV to ensure that he or she is getting the most financial bang for their investment while a combat developer may be only concerned with how much more capability can be delivered with each additional dollar spent. This paper will explore these concepts by first defining the primary ROI metrics and additionally giving a Department of the Army perspective on the most useful metrics.
Noel D. Bishop Jr.
Deputy Assistant Secretary of the Army for Cost and Economics
Noel Bishop has over 14 years of experience in cost estimating and analysis. He is currently working for the Cost Review Board Office under the Deputy Assistant Secretary of the Army for Cost and Economics. Noel has a degree in Economics from Old Dominion University and is a Certified Cost Estimator/Analyst.