Cost Justification for E-Learning
and Computer Based Training

Is it worth the effort?

Since the late 1960s studies have been conducted as to the effectiveness of CBT
(and more recently, Multimedia, Web-Based Training and e-Learning).

The results are consistent and irrefutable: CBT reduces training time by anywhere from 30-50%.

Since the cost of “cheeks in seats” is the largest portion of today’s training dollar, this should be sufficient cost justification in itself.

Below we provide a few different ways to recognize your cost savings and some direction for calculating your eLearning ROI.

Put Dollars Into Perspective

If you can train 2,000 persons in only 7 hours (14,000 student hours) using eLearning

VERSUS 10 hours (20,000 student hours) of instructor classroom training,

YOU SAVE 6,000 student hours

If the loaded hourly rate is $30/hour, YOU SAVE $180,000.00!

(Not to mention savings in instructors, travel, training hardware and facilities.)

There are several reasons for the reduction in training time:

  • The content has been written down, reviewed and edited to make it clear and concise.
  • The training doesn't go off on tangents.
  • Pretesting can be incorporated to find out what the learner knows before training begins. Based on the results of the pretest, only the materials not yet mastered are presented.
  • Since feedback is immediate, if the learner misunderstands a point, he or she is quickly brought back "on track" before further misunderstanding occurs.
  • Learners can take the training when they're in the right frame of mind.
  • Responses can be monitored to identify areas where the training is too detailed or is causing confusion. By fine-tuning an existing course, over time, its duration can typically be reduced even further.

"E-learning will save you time, save your company money and provide a workforce of more highly trained people better able to meet today's challenges."

-Brandon Hall, e-Learning magazine, May-June 2000

SERIOUSLY Consider This

For your next project, ask your client how long it would take to train the same content in the classroom.

Let's assume they tell you it would be a two day class. To be generous, call this 12 hours of instructor-led training.

Then have them provide the following information as well:

  1. Typical hourly wage for attendees: _______
  2. Typical travel costs for each attendee: _______
  3. Food and lodging costs for each attendee: _______
  4. Typical hourly cost for instructor: _______
  5. Typical travel costs for instructor: _______
  6. Food and lodging costs for instructor: _______
  7. Daily cost for facility and supplies: _______
  8. Number of attendees in each class: _______

Now when the custom CBT has been implemented, track the number of completions each month and the average student completion time.

You now have all of the data necessary to provide a monthly report to management which fills in these blanks:

"As a result of ____ students taking this training via CBT, instead of traditional methods, $______ was saved".

By creating a computer program and having the variables for each course reside in a computer table, such a report can be automatically produced each month which will prove to management that CBT or WBT is a true time (and money) saver when it comes to training — Now that’s cost justification!

CBT Cuts Training Time by One-Half

I have personally been involved in custom CBT development (custom E-Learning Development) since 1974, much of it involving the conversion of existing classroom instruction (instructor-led training or ILT) to CBT.

The best example of consistently reducing the duration of classroom training was a project we did in 1998-1999 converting a library of cassette tape recordings of classes that were all six hours in length. The classes were all on subjects related to IBM’s AS/400 Computer. Subjects included TCP/IP, Network Security, Making AS/400 Applications Available via the Web and Accessing AS/400 Data from the PC.

There was a total of ten courses. Each class was taught in a hotel by a traveling trainer who was an expert on the subject.

This SME would travel from city to city as classes were scheduled to be delivered.

When each of these six hour classes was converted to online format it was four hours long -- three of those four hours were from the content of the tapes and the fourth hour was due to the time needed for interactions with simulations of the software (which the classroom didn't provide as it was straight "lecture"). The simulations were added to the online courses since attendees of the lectures complained of not really knowing how to "do" the tasks they had been "told about" and "shown" (via screenshots in a PowerPoint) during the lecture.

To create each course we first transcribed everything that was on the six hours of tapes. We then edited the content (removing the comments about the late start, the coffee breaks, the opening jokes, the irrelevant questions from participants, the after lunch recap of the morning's session, etc.). At this point, we had reduced the content by perhaps 20 percent.

We then began "tightening up" the verbose, circular explanations to "net them down" to just what needed to be said to convey the point the speaker was trying to make. Often re-sequencing the content would eliminate unnecessary repetition.

At this point we had a large Word document into which we would imbed color-coded questions for the SME about things that were confusing to us or that were in the class outline that were never addressed on the tape. We would then send that file to the SME to review our work and to answer our questions. Often they would provide additional information that they didn't include in the class because they ran out of time that day due to so many questions, etc. They were very good about clarifying items that caused us confusion and would often comment about how difficult it must have been for the persons in the class.

The Bottom Line:

Each of the ten six hour classes was reduced to three hours of online training plus an additional hour of “hands-on” opportunity that was not part of the classroom course.

I have prepared hundreds of proposals for the development of custom CBT/E-Learning projects. I also developed our Project Estimator which helps us quote custom CBT/E-Learning projects. The third item in the Project Estimator asks for course duration and states "if currently ILT, use 1/2 of estimated classroom time".

We have even created custom "savings/ROI calculations" programs for clients that capture actual online training durations and compare them with "previous" classroom duration times. Using typical student and instructor wage data as well as travel, facility, lodging and food costs, some very impressive cost savings can be shown.

Travis Piper
Former President (1983 - 2010)
Creative Approaches, Inc.

Creative Approaches can build your custom courses and handle your learning management needs.

Call us today 800-934-6299 or local 585-657-6379.

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