ROI answers a specific question: what net value does the project create relative to its cost over a defined period? A number without a period, baseline and assumptions is not comparable. Separate observed savings, estimated avoided costs and recovered production capacity. Do not add these categories without examining overlap.
Set the baseline and period
Choose a representative period and explain changes in production, prices, scope and loading. Compare cost per operating hour or unit when activity varies. Identify expenditure that would have occurred without the project. For avoided costs, document the comparison scenario and uncertainty; a possible risk does not automatically become a realized saving.
Include full implementation cost
- Fees, internal mobilization, workshops and preparation time.
- Equipment, parts, integration, training and technical validation.
- Downtime required for implementation and recommissioning costs.
- Recurring costs: monitoring, relevant licences, upkeep and competency maintenance.
A transparent calculation in Canadian dollars
Fictional twelve-month example: CAD 80,000 initial investment; estimated maintenance savings of CAD 60,000; estimated production benefit of CAD 70,000; additional recurring cost of CAD 10,000. Annual net benefit before investment is CAD 120,000. Simple first-year ROI is (120,000 − 80,000) ÷ 80,000 × 100 = 50%. Simple payback is 80,000 ÷ 120,000 = 0.67 years, about 8 months, only if benefits accrue evenly from the start.
| Gross-benefit assumption | Annual net benefit | Simple first-year ROI |
|---|---|---|
| 70% of estimated benefits | CAD 81,000 | 1.25% |
| 100% of estimated benefits | CAD 120,000 | 50% |
| 120% of estimated benefits | CAD 146,000 | 82.5% |
In this table, baseline gross benefits are CAD 130,000; recurring cost stays at CAD 10,000 and investment at CAD 80,000. This is not a forecast for Vizory or its clients. Over multiple years, simple ROI does not replace discounted cash-flow analysis with ramp-up, renewals and an approved discount rate.
Avoid double counting
Do not value a removed downtime hour both as recovered production and as downtime cost that already includes that production. Value incremental output at the relevant contribution margin, not automatically at revenue. If demand or another bottleneck prevents extra sales, recovered capacity is not a realized sales benefit. Have finance validate these assumptions.
Measure benefits after the project
Assign an owner to each benefit and retain its sources: spending, hours, volumes and events. Report realized value, estimates and released capacity separately. Vizory’s Rio Tinto Fer & Titane reliability case reports $2.3 million in recurring maintenance-cost savings; that result belongs to that engagement and does not determine your project’s ROI. The strongest investment case is one your team can recalculate and verify.