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Formulas for Quantifying the Value of a Training-Technology Investment

By Staff Report

Dec. 11, 2001

Here are four formulas for calculating the return-on-investment intechnology-based training (TBT):


Cost Savings


instructor-ledcosts – technology training costs=TotalCost Savings

Break-Even Analysis for TBT


Step 1:


TBTdelivery costs
# students		=Per-StudentDelivery Cost of TBT

Step 2:


instructor-ledtraining delivery [ILT]  costs
# students		=Per-StudentDelivery Cost of ILT

Step 3:


(TBTdesign / development costs – ILT design / development costs)
(step 1 – step 2)		=Break-EvenPoint

Cost-Benefit Analysis 


financialbenefits
cost of training		=Cost/BenefitRatio

ROI Calculation


(totalbenefits – total costs) * 100
(total costs )		=ROI (%)

Excerpted from “What Smart Trainers Know,” by Lorraine L. Ukens, Copyright 2001 by John Wiley & Sons, Inc. This material is used by permission of Jossey-Bass, Inc., a subsidiary of John Wiley & Sons, Inc.


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