Return on Modeling Effort (ROME)

Return on Modeling Effort (ROME) is a metric used in project management and financial modeling to evaluate the effectiveness and efficiency of the effort invested in building financial models or simulations. ROME assesses whether the insights gained from the model justify the time and resources spent on developing it. This metric is particularly important in complex modeling environments, where the value of the model’s results must outweigh the costs associated with its creation.

Example

A finance team spends several weeks developing a cash flow model that provides crucial insights for a major business decision. If the insights lead to significant cost savings or increased profitability, the ROME is considered high.