What is Cost Benefit Analysis (CBA) and Return on Investment (ROI)?

A Cost Benefit Analysis [CBA] or Return on Investment [ROI]simply asks how much the development will cost and if there will be sufficient return or benefit on the resources and investment made.  Will it be worth it financially, in terms of achieving the learning outcomes, and improved quality of care and performance?

Will it reduce costs?

For non finance elements of a CBA or ROI the results can at best be an estimate.  Whilst the investments can be relatively easy to identify the benefits can often be harder.  Once measures have been identified however, these should be consistently used to show year on year improvement. 

When considering a Cost Benefit Analysis or Return on Investment for e-Learning you should consider including:

• direct Costs i.e. visiting trainers fees, room or equipment hire or purchase, catering costs, development costs
• indirect costs – pay/time of in house trainers, learners time/pay, backfill costs, heating, lighting, security costs, administration, sundry supplies
• a comparison with the alternative option(s)

Improvement in change in behaviour through attitude, expertise, or knowledge ideally identified in some measurable format.  An example may be an increase in the use of e-Learning resources following the introduction of basic computer awareness sessions.

A Cost Benefit Analysis or Return on Investment should accompany any proposal for funding, purchasing or changes and significant adaptations to working practice.

Related Resources

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  National Training Evaluation & Standards Project, National Evaluation Process
  

  Document outlining proposed (in 2007) evaluation process, examples of questionnaire templates and use of the NLMS in evaluation.

  http://www.connectingforhealth.nhs.uk/systemsandservices/etd/standards/Training.pdf?searchterm=training+quality+improvement+project
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  Cost Benefit Analysis - Improvement Network
  

  Page from the East Midlands Improvement Network page providing guidance and advice on the application of a cost benefit analysis.

  http://www.tin.nhs.uk/index.asp?pgid=1286
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  Risks and Benefits of e-Learning Investments
  

  A study by JISC (Joint Information Systems Committee)provides a Cost Benefit Analysis model that allows you to evaluate the cost-benefit relationships of a range of e-learning scenarios.  Aimed at the education sector it provides useful lessons which can be applied in the NHS

  http://www.jiscinfonet.ac.uk/InfoKits/effective-use-of-VLEs/managing-for-sustainability/man-sust-cultural-risksbenefits
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  Beyond Kirkpatrick: Measuring the Financial Returns of e-Learning
  

  Article on the return on investment on training

  http://www.e-learningguru.com/articles/art5_1.htm
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  Costs, Benefits and ROI of e-Learning
  

  Link to a number of articles looking at Costs, Benefits and Return On Investment (ROI) of e-Learning.

  http://www.e-learningcentre.co.uk/eclipse/Resources/costs.htm
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  How do I measure return on investment (ROI) for my learning program?
  

  Response to question on Learnativity.com web site.  Provides explanation of ROI including links to other websites and articles on ROI.

  http://www.learnativity.com/roi-learning.html#nonfin