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Formulas for Quantifying the Value of a Training-Technology Investment

December 11, 2001
Related Topics: Training Technology, Featured Article
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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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