Daily writing prompt
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Return on Investment (ROI) is a financial performance measure used to evaluate the profitability of an investment relative to its cost.
It answers the fundamental question:
“How much profit is generated from the money invested?”
ROI is widely used in:
Real estate development
Urban infrastructure projects
Sustainable building design
PPP (Public–Private Partnership) projects
Redevelopment schemes
ROI(%)=Net ProfitInitial Investment×100ROI (\%) = \frac{Net\ Profit}{Initial\ Investment} \times 100ROI(%)=Initial InvestmentNet Profit×100
Where:Net Profit=Total Return−Initial InvestmentNet\ Profit = Total\ Return – Initial\ InvestmentNet Profit=Total Return−Initial Investment
ROI > 0 → Project generates profit
Higher ROI → Better investment
ROI = 20% → ₹20 profit for every ₹100 invested
ROI < 0 → Project incurs loss
ROI is expressed as a percentage, making it easy to compare different projects.
ROI connects design decisions with financial feasibility. It helps:
Developers assess project viability
Planners compare alternative land-use options
Investors evaluate profitability
Government agencies justify investments
Architects propose cost-effective design solutions
🔹 1. Real Estate Development
Residential apartments
Commercial complexes
Mixed-use developments
🔹 2. Infrastructure Projects
Parking structures
Bus terminals
Metro station commercial spaces
🔹 3. Sustainable Design Decisions
Solar panels
Green roofing
Energy-efficient façades
🔹 4. Urban Redevelopment
Brownfield redevelopment
Transit-oriented development
Smart city projects
✅ Example 1: Residential Project
Initial Investment:
Land = ₹40,00,000
Construction = ₹50,00,000
Other expenses = ₹10,00,000
Total Investment = ₹1,00,00,000
Total Sales Revenue = ₹1,25,00,000
Step 1: Calculate Net Profit
Net Profit=1,25,00,000−1,00,00,000Net\ Profit = 1,25,00,000 – 1,00,00,000Net Profit=1,25,00,000−1,00,00,000 =₹25,00,000= ₹25,00,000=₹25,00,000
Step 2: Calculate ROI
ROI=25,00,0001,00,00,000×100ROI = \frac{25,00,000}{1,00,00,000} \times 100ROI=1,00,00,00025,00,000×100 ROI=25%ROI = 25\%ROI=25%
👉 Interpretation: The project earns 25% return on invested capital.
✅ Example 2: Solar Panel Installation
Installation Cost = ₹5,00,000
Total Savings over 5 years = ₹6,20,000
Net Profit:6,20,000−5,00,000=₹1,20,0006,20,000 – 5,00,000 = ₹1,20,0006,20,000−5,00,000=₹1,20,000 ROI=1,20,0005,00,000×100ROI = \frac{1,20,000}{5,00,000} \times 100ROI=5,00,0001,20,000×100 ROI=24%ROI = 24\%ROI=24%
👉 Sustainable investment is financially viable.
✅ Example 3: Urban Parking Facility
Investment = ₹2,50,00,000
Total Revenue over 5 years = ₹2,75,00,000
Net Profit:2,75,00,000−2,50,00,000=₹25,00,0002,75,00,000 – 2,50,00,000 = ₹25,00,0002,75,00,000−2,50,00,000=₹25,00,000 ROI=25,00,0002,50,00,000×100ROI = \frac{25,00,000}{2,50,00,000} \times 100ROI=2,50,00,00025,00,000×100 ROI=10%ROI = 10\%ROI=10%
👉 Moderate return; compare with alternative land use.
✔ Simple to calculate✔ Easy to understand✔ Useful for comparing alternatives✔ Helpful in early-stage feasibility studies✔ Widely accepted by investors
❌ Ignores time value of money❌ Does not consider risk❌ Not suitable alone for long-term public projects❌ Does not include social and environmental benefits
Therefore, ROI is often combined with:
Net Present Value (NPV)
Internal Rate of Return (IRR)
Cost–Benefit Analysis (CBA)
In architecture and urban planning, ROI helps in:
Evaluating density options
Comparing building materials
Assessing TOD commercial potential
Estimating feasibility of PPP projects
Supporting Detailed Project Reports (DPR)
Return on Investment (ROI) is a fundamental financial tool that links architectural design and urban planning decisions with economic feasibility. It provides a clear, percentage-based measure of profitability, helping planners and architects ensure that projects are not only technically sound but also financially sustainable.
