Preparing a Training Budget
One of the questions that has to be answered when a training plan is being put together is: 'How much will the training cost?' It is interesting to note that we are nearly always asked how much training will cost rather than what is the size of our training investment. A better question might be: 'How much would it cost us if we don't do this training?'
Whatever question is asked, and no matter what we call it, working out the figures may not be quite as simple as it first appears. This is because of the difficulty of deciding what should be included in the costs. For example, should you include the trainers' salaries, the students' salaries and the loss of production during training? You may end up doing a very detailed cost analysis or you may decide only to count what is normally deducted from your budget.
Whatever you include or exclude from your budget, the golden rule is to be consistent and to make your assumptions very clear. With all these parameters sorted out you will then be in a position to prepare a training budget.
The size of the budget is one of the main limiting factors when it comes to determining how much of the training demand will be delivered. There are many ways of preparing a budget and the way you choose will depend on your company's accounting systems. What you include or exclude from the budget depends on these practices.
You may also have to decide whether your training department should be run as a profit centre. A profit centre means that you will sell your courses and training expertise in order to defray the expense of running your own training operation. This will involve you in preparing estimates and working agreements.
Identifying your budget items
The following is a list of items that can find their way into a training budget:
- cost of external courses,
- purchase and hire of equipment, books and videos,
- production of training materials,
- training staff wages/salaries,
- training staff overheads,
- hire of training venues,
- student accommodation costs,
- student travel costs,
- student wages/salaries/overheads.
Rule of thumb: Include everything that will be charged to the training department's budget during the financial year.Next >