Initial Analysis and Assessment

One of the most underestimated items is the cost of conducting the initial analysis and assessment. In a comprehensive program, this involves data collection, problem solving, assessment, and analysis. In some programs, this cost is near zero because the program is conducted without an appropriate assessment. However, as more program sponsors place increased attention on needs assessment and analysis, this item will become a significant cost in the future. All costs associated with the analysis and assessment should be captured to the fullest extent possible. These costs include time, direct expenses, and internal services and supplies used in the analysis. The total costs are usually allocated over the life of the program.

Development of Solutions

One of the more significant items is the cost of designing and developing the learning program. These costs include time in both the design and development and the purchase of supplies, technology, and other materials directly related to the solution. As with needs assessment costs, design and development costs are usually fully charged to the program. However, in some situations, the major expenditures may be prorated over several programs, if the solution can be used in other programs.

Acquisition Costs

In lieu of development costs, some executives purchase solutions from other sources to use directly or in a modified format. The acquisition costs for these solutions include the purchase price, support materials, and licensing agreements. Some programs have both acquisition costs and solution-development costs. Acquisition costs can be prorated if the acquired solutions can be used in other programs.

Application and Implementation Costs

Usually, the largest cost segment in a program is associated with implementation and delivery. Eight major categories are reviewed below:

O salaries and benefits for learning team time

O salaries and benefits for coordinators and organizers

O participants' salaries and benefits O program materials, if applicable O hardware/software

O travel, lodging, and meals, if blended

O facilities (even in-house meetings), if blended

O capital expenditures, if appropriate.


Maintenance and Monitoring

Maintenance and monitoring involves routine expenses to maintain and operate the program. These represent ongoing expenses that allow the new program solution to continue. These may involve staff members and additional expenses, and could be significant for some programs.

Support and Overhead

Another charge is the cost of support and overhead, the additional costs of the program not directly related to a particular program. The overhead category represents any program cost not considered in the above calculations. Typical items include the cost of administrative/clerical support, telecommunication expenses, office expenses, salaries of client managers, and other fixed costs. This is usually an estimate allocated in some convenient way based on the number of learning hours, then estimating the overhead and support needed each hour. This becomes a standard value to use in calculations.

Evaluation and Reporting

The total evaluation cost should be included in the program costs to complete the fully loaded cost. Evaluation costs include the cost of developing the evaluation strategy, designing instruments, collecting data, analyzing data, preparing a report, and communicating the results. Cost categories include time, materials, purchased instruments, surveys, and any consulting fees.

 
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