While a wide range of definitions and interpretations exist around learning and training interventions, one key distinction in respect of costing is whether provision is external or internal.
External provision
This is relatively easy to cost as there will be a charge per person plus any associated travel, accommodation and subsistence costs. Similarly, when digital content is created or provided externally, the costs are calculated per project or per licence/user. External consultants costs are easily identified by their fee. However, sometimes internal teams of learning professionals and specialist managers design the programmes and in these cases development costs should be fully recorded by noting all the time spent on design.
Internal provision
Costing tends to be rather more complex in the case of internal provisions, with a number of factors to be considered. These could be one-off costs that include:
- Designing the best methods and materials to meet learning objectives.
- Curating content, including hosting costs.
- Preparing evaluation tools.
The internal route is often assumed to be the low-cost option, although a clear cost analysis is needed as consultants may in certain circumstances be more cost-effective because of their experience in development work, their existing portfolios, speed of production, availability and contacts.
For formal learning programmes, the cost of a pilot course may be considered as a development cost, although if it's successful, the organisation has the benefit of one group of trained delegates.
Delivery costs
The costs of delivering a developed course are compiled per programme, and include (for a blended learning example):
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Costs of facilitator(s) - these may be consultant fees or the costs of using internal training staff.
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Hosting costs for a platform for online content, forums or community, plus costs and time to facilitate an online learning community.
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Venue costs - charges from a hotel or training centre, or the costs for using internal facilities:
- rooms
- equipment
- accommodation, if relevant
- catering.
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Printing costs of all learning materials, plus any takeaways such as USB memory sticks.
- Administrative costs involved with making the arrangements for the programme and the delegates.
Informal learning interventions
Providing informal learning also incurs cost. For example, running an in-house coaching programme with line managers can incur significant costs including:
- Initial coaching programmes for managers to learn how to coach.
- Managers' time in going to sessions.
- Providing supervision to the manager coaches.
Technology-based learning
E-learning is often introduced for cost-saving purposes, although it can be a false economy if the learning is not effective or relevant. It’s also necessary to calculate the initial cost of buying or designing any technology-based learning, plus the cost of maintaining content and facilities.
It’s essential to measure the take up of such provision to ensure that the costs are being spread over actual learners rather than the predicted take up. Our Learning and skills at work report discusses the impact of technology on learning and shows improved organisational performance where there’s technology-enabled learning. See more in our digital learning factsheet.
Costs of learners’ time
Regardless of the type on learning intervention, there are costs associated with delegates' time away from work. It may be straightforward to identify the costs if temporary staff are brought in or if overtime payments are made. While it's less easy to calculate the cost of losing employees’ time on day-to-day work duties, these costs are usually estimated as:
Cost/day = (salary ÷ number of working days) + overheads. (In the UK, the number of working days is often taken as 228 per year.)
Overheads are often calculated as between 30% and 50% of salary costs. In some organisations a loss of profit is included, making the calculation complex.
The cost of delegates' time away from work will not usually be part of calculations comparing different types of training intervention (unless the options are of different durations), but they need to form part of any assessment of the overall cost. The increased productivity for that employee as a result of taking time out for learning could also be factored into overall cost/benefit analysis, as could employee engagement ‘feel good’ factors resulting from feeling more equipped and competent.
As L&D evolves and supports increased knowledge sharing, informal and regular short learning interventions such as podcasts or ’lunch & learns‘, any calculations need to reflect this. Bite size learning, which an employee can undertake when needed, meaning workflow is not interrupted and their productivity remains, thus removing the need to factor in the learner’s time. See more on evolving L&D practice.
