Return on investment (ROI) is a financial measure that expresses a project’s net benefit as a percentage of its cost over a defined period, used in Lean Six Sigma to assess the economic value of process improvements.
The calculation is ROI = (financial benefits – project costs) ÷ project costs × 100%. For example, a hypothetical DMAIC project with total first-year costs of $40,000 and verified first-year expenditure reductions of $60,000 produces a first-year ROI of 50%. Costs include implementation expenses and any additional operating costs within that period. The calculation needs a stated time horizon because implementation spending and recurring savings occur at different times.
Benefit classification matters. Saving 500 staff hours releases capacity, but a cash-saving claim needs evidence of reduced expenditure, such as lower overtime payments. A portfolio entry should identify who validated the calculation and distinguish forecast benefits from realised results. Finance review helps prevent the same saving from being credited to two projects.
ROI supports project selection and the business case within a project charter. During DMAIC Control, monitoring records establish whether the operational improvement underlying the financial claim persists. For projects with benefits extending across several years, net present value complements ROI by accounting for the timing of cash flows.
