***URGENT***

Please answer the questions under each chart and provide calculations/formulas (Q.1-5 Retail Manager Training; Q.1-3 Crew Training; Q.1 Investor Cost). Solve for: Total Benefit, Total Cost, Net Benefit (NB), NB Total Cost.

ROI Worksheet:

Transition to Web-based Learning

Introduction

The following worksheet is a real world consulting project of calculating ROI for a transition from instructor-led training (ILT) to e-learning. The company is a well-known and fast growing fast food restaurant chain in the U.S. Lets call it Fast-to-Go, Inc. to hide its real name.

Due to the high turnover rate among employees and managers, the company has to maintain constant training to keep up with the competitions. However, the high cost of ILT and related travel plus additional factors, e.g., September 11, and the nature of franchise system, the company is considering transitioning the learning programs from ILT to e-learning. To assist the decision-making project, the predictive ROI measurement was conducted.

Note that the worksheet only includes the U.S. domestic retail stores.

The analytical framework is to compare the costs of training between the two different delivery modes. And then use the standard ROI formula:

ROI = (Total benefit Total Cost) / Total Cost x 100% = Net Benefit/Total Cost x 100%.

In this case particularly:

Net Benefit = Cost saving due to e-learning compared with ILT

Total Cost = Total cost of e-learning, including learning time and other opportunity cost.

The worksheet should be able to guide you through the variables and factors need to be considered when conducting an ROI measurement project. You may easily reach your own conclusion about the projected ROI given the clearly identified cost and benefit factors.

This sample project also demonstrate the complexity of ROI measurement, although the ROI formula is seemingly easy and straightforward.

Retail Manager Training

	FY 2002	FY 2003	FY 2004
Existing stores	6,000	7,000	8,000
New stores	900	1,000	1,000
Managers per store (average)	3.5	3.5	3.5
New managers due to expansion [B x C]	3,150	3,500	3,850
Training of current managers (backlog) 1	4,000	4,000	4,000
New managers due to turnover [A x C x 30%]	6,300	7,350	8,400
Total managers needing training [D + E + F]	13,450	14,850	15,900
Average daily manager compensation 2	$85	$85	$85
Number of class days per manager 3	11	5	2
Number of travel days per manager4	2.5	1.5	1
Total travel days [G x J]	33,625	37,125	15,900
Travel time cost [K x H]	$2,858,125	$1,893,375	$1,351,500
Time in class per manager	11	5	2
Total time in class [G x M]	147,950	74,250	31,800
Class time cost [N x H]	$12,575,750	$6,311,250	$2,703,000
Self-study time [(11-M) x .75]5	0	4.5	6.75
Self-study cost [P x H]	$0	$5,680,125	$9,122,625
Total learning cost (transition to web-based) [L + O + Q]	$15,433,875	$13,884,750	$13,177,125
Total learning cost (without transition to web-based) [G x 16.5] x H	$15,433,875	$20,827,125	$22,299,750
Savings due to transition to web-based training [S - R]	0	$6,942,375	$9,122,625
Total investment in e-learning	$2,566,000	$1,054,000	$86,000

Q1: Assumes backlog of 12,000 untrained managers

Q2: Based on average salary of $25,000 for manager ($12.50/hr.) and $20,000 for shift leader ($10.00/hr) for 8 hours; no benefits or salary increases included.

Q3: Based on assumption of 11 days in FY2002, 5 days in FY2003, 2 days FY2004.

Q4: Based on assumption of .5 travel days for each class

Q5: Efficiency factor of .75 used as multiplier

Crew Training

	FY 2002	FY 2003	FY 2004
Stores	6,000	7,000	8,000
Total crew members1	125,000	145,000	160,000
Anticipated turnover rate2	100%	90%	80%
Total crew members needing training	250,000	290,000	320,000
Average crew wage: $8 per hour	$8	$8	$8
Training time to proficiency	20	20	20
Cost of turnover before transition [($100 x B) + (B x E x F)]3	$32,500,000	$37,700,000	$41,600,000
Cost of turnover during transition [($100 x B x C) + (B x C x E x F)]	32,500,000	$33,930,000	$33,280,000
Benefit of reduced turnover	0	$3,770,000	$8,320,000

Q1: Based on 10 crew members per Baskin-Robbins; 25 per Dunkin Donuts; 15 per Togos

Q2: Assumed improvement due to more crew member access to learning and better trained managers

Q3: Based on assumption of $100 per new hire acquisition cost and incremental training cost

Instructor Costs

	FY 2002	FY 2003	FY 2004
# of instructors	16	12	8
Average instructor compensation1	$100,000	$100,000	$100,000
Total instructor cost	$1,600,000	$1,200,000	$800,000
Savings due to transition to web-based training	0	$400,000	$800,000

Q1: Estimated fully loaded compensation; no salary increases