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What Training Costs Part 2: Building ILT and V-ILT Courses

Webinars should not take any more time or money to create than face-to-face instructor-led training (ILT). There, I said it. Call me a heretic, but anyone who thinks that designing and developing virtual instructor-led training (V-ILT) is more akin to developing asynchronous online learning (WBTs) is either confused, misinformed, or outside of their comfort zone. The effort to produce synchronous learning is the same, whether it is for a face-to-face delivery, or a web-based delivery.

There’s a huge push right now to transform ILT courses to V-ILT courses, for obvious cost saving reasons. And there is a pretty common misconception that it is harder, costs more, or takes more time to create webinars. This is largely due, I believe, to the (relative) newness of the constraints webinars present for designing interactivity. I would suggest that these constraints are not any more challenging than designing interactivity for large events, with 200+ participants. Do you have to get creative? Yes. Does it take more effort or a different skill set than creating activities for small classes? Not really. Just different design parameters to work within. (Let me know if you’re interested in tips on designing interactivity for either large events or for webinars; I’d be happy to do a post on either of those as well.) Of course, there are some caveats to consider, which I discuss below, but first, let’s gown down to the numbers.

The Formula

Length of course in hours x development ratio x (blended) cost of resources.

Or, for an 8 hour course being produced by a team with a blended rate of $80/hour:

8 × 36 x $80 = $23,040 (costs of materials would be extra)

How it's Derived

  • Level of effort (LOE) for design and development: A lot of the literature estimates that it takes 40 hours of effort to produce 1 hour of ILT, or a production ratio of 40:1. Research from late 2007 from the Chapman Alliance puts that number at 36:1, which I believe is more realistic. While there are definitely economies of scale to be gained that could lower that ratio (and if you have a strong ID who is also very familiar with the content, that ratio could be significantly lowered) this is a solid number for estimating and budgeting costs for ground-up development.
  • Cost of resources: Whether you’re using internal or external resources, they all come with a cost that you can distill down to an hourly rate. A vendor will just tell you what they’ll charge you per hour, or will give you a total bid for the project (which may or may not be fixed). But they’ll get to that number by figuring out their own costs and adding their markup to get to their billable rates (they are for-profit businesses, after all) and then multiplying it against the estimated LOE just like I’m doing here. To do the same thing for internal resources, you need to consider their “fully-burdened” rate, that is, the costs for all of their benefits and employment taxes, etc. in addition to their direct salary. This number can vary, but salary + 25% is a safe estimate, so the fully burdened annual costs of a person grossing $60,000/year would be $60,000 + ($60,000 × 25%), or $75,000/year. Divide that by 2080, the standard number of work hours in a year, and you get a fully burdened hourly rate of $36/hour.
  • “Blended” rate: For the most accurate determination of costs, figure out the different types of resources that will be working on the project, their unique costs, and the percentage of the effort that they will be responsible for. (If you’re looking for guidelines for % of effort for design, development, etc. see the Chapman Alliance report that I referenced above.) For a fast estimate, use a “blended” rate which averages the costs of different resources. $80/hour is a reasonable blended rate, even for outsourced development.

So what are the caveats? Here’s a short list to consider, there are likely more:

  • Multi--media: Any multi-media components needed should be calculated separately. For instance, if you want to produce a video to show in a classroom, or during a webinar, there’s a separate LOE required.
  • Technical Architecture: If you don’t already have it in place, you’ll need to find and configure your technology for webinars, and will also want to think through what integration, if any, you’ll want with your LMS.
  • Large, multi-track events: Just like live face-to-face events, if you’re planning to do a completely virtual event (which can and has been done), then there will be a purely logistical component to scheduling and administration.
  • Train-the-trainer: Budget more time for this than usual. While the design and development effort for webinars is essentially the same, the delivery is rather different. Especially for trainers not accustomed to facilitating webinars. Give them extra time and practice to get used to the medium.
  • Delivery: Plan for an extra person to assist in the delivery of a virtual event. There’s a lot going on in the technology, between running polls, monitoring chats, troubleshooting any technical glitches, etc. that you will really want someone dedicated to handling all of that. It will be much smoother to have that extra person on hand and will let the facilitator focus on the content and the participants, as they should.

What else can you think of?

~ posted by Beth Chmielowski on 5 Aug 09
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One Response so far. Add Your Own.

Hi,

Thanks for that write-up on estimating the price for creating virtual synchronous training. It was very useful.

You mentioned that you can provide tips on designing interactivity for webinars. Could you plese do so? I plan to design one for the first time; while I have designed classroom training before, any tips on webinars will be quite useful.

Thanks


posted by Murali
April 12th, 2010
 

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