CAD Manager's Newsletter (#373)25 Oct, 2016 By: Robert Green
Quantify your value as a CAD manager by calculating your own personal ROI.
Editor's note: Until Robert Green returns, we'll be revisiting a few classic CAD Manager columns and their timeless advice. This column was originally published November 17, 2010.
In this edition of the CAD Manager's Newsletter, I'll explain how to emphasize your true value to your company by using return on investment (ROI) concepts. I know of no better way for a CAD manager to prove how much he or she is worth. Here goes.
Return on Investment
How many of you know what your return on investment (ROI) is? For that matter, how many of you know that your ROI is essentially a measure of your economic value to your company? I've been asking this question for years when I speak to groups of CAD managers, and I can only recall about 10 hands going up out of thousands of attendees. On the other hand, almost all department-level managers can give you a pretty good idea of their financial performance and ROI levels when asked.
So why would CAD managers want to compute their own ROI? The answer lies in the following questions: "What does a CAD manager do?" "Why do we need one?" Ever heard these questions? Ever had trouble answering them?
Wouldn't it be great to respond like this: "Last year I spent 50% of my time working on a variety of tasks including standards implementation, CAD software automation, and targeted training programs that reduced project costs, and I handled several major projects in-house instead of using outside resources. These tasks generated $135,000 in savings which, based on 50% of my salary, generated a 270% ROI for the company."
The ROI Glossary
So how did the CAD manager in the scenario above come by those numbers? How can you compute your own ROI? First, you need to understand the following terms:
Annualized savings. The total of all the man-hours saved due to a corrective action you've taken. For example, if you lead the effort to implement a plotting routine that saves each of your 40 CAD users (who earn $30/hour) two hours per month, you'll realize $28,800 in labor savings over the next year. (To find that total, multiply 40 users X 2 hours per month X $30 per hour X 12 months.) Remember that credit for this savings belongs to you, because if you hadn't done the work the savings would never be realized.
Total savings. The total of all annualized savings over the past year.
Overhead cost. The amount of time (and therefore money) that you spend performing CAD management tasks that are not billable to a project. An easy way to compute this is multiply the percentage of time you spend on overhead tasks by your annual salary. Make sure to adjust your salary figure to include insurance, taxes, and benefits (I usually add 25%) to reflect your real cost. Read more »
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