Calculation
Efficiency is a financial metric based on the value of inputs and outputs:program efficiency = (output / input) x 100Example
A program of modernizing a family of software products has generated revenue of $40 million and has cost $12 million:program efficiency = (40/12) x 100 = 333.3%In this context, a program efficiency ratio over 100% indicates a program that is currently adding value.Usage
Efficiency is best applied to highly optimized processes that produce a regular steam of outputs such as a production line. Revenue from programs may take a long time to materialize and may be bumpy. As such, program efficiency isn't necessarily useful as compared to return on investment or net present value. If your program has non-financial benefits such as improving quality of life, cost effectiveness is typically a more appropriate metric.| Overview: Program Efficiency | ||
Type | ||
Definition | The ratio of program output to input. | |
Related Concepts | ||
