Analyzing Line Items That Affect Training Costs
There are seven quantifiable line items that make up the total cost of training.
The following explains costs associated with each line item in greater detail and outlines advantages for clients who use ACT Center services.
Travel and Per Diem Costs
When trainees are required to travel to a training program, they will incur transportation (air and ground), tips, lodging, and meal costs. These costs are generally associated with traditional training programs offered in centralized locations.
ACT Center Advantages: Since our programs can be delivered locally, the delivery of an ACT Center product will usually decrease or eliminate the costs associated with this line item.
Materials Costs
Most training programs require support materials, such as instructor manuals, trainee manuals, videotapes, overheads, slides, and handouts. Normally, these materials are purchased, leased, or developed. There also may be replication costs. You need to find out all the materials costs associated with a program.
ACT Center Advantages: Often, if the training solution includes videotapes or printed products, the materials costs may be more expensive than the ACT Center solution, and unlike ACT Center programs, the training program will likely not be tailored to the individual's needs.
Equipment Costs
There is a variety of possible equipment costs associated with training. For example, a flip chart, an overhead projector, a slide projector, a videotape player, a computer projector, and/or a computer may be required to facilitate a training program. Costs increase when more equipment is used.
ACT Center Advantages: If a company has existing PCs and a high-speed Internet connection and uses the ACT Center training programs, this cost is eliminated.
Facilities Costs
Traditional training programs require a company to use its own facilities or rent outside space, usually in a hotel or conference center. Even space within a company has costs associated with its use. In addition to space costs, the company may need to supply trainees with break refreshments and lunch. It is costly to lease space and provide refreshments, yet these items do not improve the learning process.
ACT Center Advantages: Programs can be taken at an ACT Center with minimal facilities costs or at the desktop when web delivered and appropriate technology and connectivity are available. ACT Center products and services normally decrease or eliminate facilities costs.
Personnel Costs
When employees attend training programs, their salary and fringe benefits must be charged against training. If training time can be decreased, this cost will decrease. Normally, the salary and fringe benefit costs associated with training are more than the materials cost of the program. And as noted below, the time an employee is in training has an additional cost when lost opportunity is considered.
ACT Center Advantages: Because ACT Center courses are developed in an individualized/self-paced format, employees are able to move more quickly through their training, saving time and money. They also have the option to complete programs during non-working hours or at times that will have the least impact on their job productivity. Major studies by leading associations, universities, and the U.S. Army with IBM have shown that individualized, technology-based, criterion-referenced training can be delivered in significantly less time than traditional seminars and workshops.
Administrative Costs
There are administrative costs associated with the planning and implementation of most training programs. When trainers are part of a company, their salary and fringe benefits should be charged against the training program. In addition, program logistics such as coordinating facilities use, obtaining and setting up equipment, and copying materials generate administrative costs.
ACT Center Advantages: These expenses are largely eliminated when a company uses the ACT Center for training, or if they use ACT Center products at their site.
Lost Opportunity Costs
When employees are away from the job, it costs the company money. Lost opportunity is the cost of losing the productivity of employees when they are in training. This is a major training cost. When an employee’s job does not have quantifiable expectations, it can be difficult to measure the lost opportunity cost. For example, if a public relations staff member attends a training program, it costs the company money because the person is not doing job tasks while in training. Even though these costs need to be charged to training, the employee’s tasks are not closely related to specific production or sales goals, and it is difficult to quantify how much this lost opportunity costs the company. On the other hand, consider an employee from the production line who is in training for three days and usually produces five widgets a day that each generate $2,000 in profit. When this person is away from the line, the lost opportunity associated with the training is $30,000 (3 days training x 5 widgets per day x $2,000 = $30,000). This amount should be considered as the lost opportunity cost of training for that individual.
ACT Center Advantages: ACT Center programs can decrease lost opportunity costs in three ways. First, an employee can take an on-site program when it will have the least impact on production. Second, an employee can take a program before or after production hours. Third, training time can be reduced because of the ACT Center’s technology-driven, criterion-referenced, individualized courseware delivery system. This benefit improves the bottom line for both personnel and lost opportunity expenses. By decreasing training time, you decrease the lost opportunity cost of training programs.
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