JOURNAL OF INTERACTIVE INSTRUCTION DEVELOPMENT

LAN Based Training (LBT):

Reducing Training Costs
by R. Lance Hogan, John Legier, and Mark McKnight

Throughout the United States, privateand public sector companies are facing the
problem of a workforce severely lacking in
workplace skills. These skills are becoming increasingly important as companies
face globalization, technological change,
trade liberalization, deregulation, and other
external pressures. For many organizations, one solution to the problem of a grossly unprepared workforce is to utilize workplace education training programs. These
programs are developed to be instrumental in turning skills into profit. An educational training program helps develop employees through technical, job-specific training.
With the rise of training costs, there is a
renewed emphasis on cost effectiveness of
training programs and training transfer.
With the reduction of Internet Technology
costs and the ability to reach mass audiences, Local Area Network (LAN)-Based
Training (LBT) is making a surge in industries where external pressures are growing.
This paper discusses program delivery
using video tele-training equipment with
H.323 compatibility. To provide effective
learning transfer, the equipment and software used during these tests accommodate
real-time video and voice, interface with
any computer to provide digital video, PowerPoint presentations, document camera
(Elmo), VCR presentation, and multiple
site training.
This report compares a Vibration Analysis Training Program that was taught in
the traditional onsite facility to the same
training program delivered using new LANBased Training Technology. The comparison revealed that LAN-Based Training could
provide a true return on investment for
training programs with additional advantages of reducing training costs, increasing

flexibility, and producing high-quality

training transfer.
For the purpose of this comparison, only
costs associated with program delivery and
savings will be discussed in this paper.

A. Overview of the Traditional

Training Program
The purpose of the vibration analysistraining program conducted for XYZ Manufacturing was to upgrade existing maintenance methods from either breakdown
or preventive maintenance to dramatic reductions in plant operating costs and improvements in profits. Maintenance costs
are frequently considered a part of the cost
of doing business, however that is usually
a false assumption. Maintenance costs can
be reduced in most facilities.
The three most commonly used maintenance methods are breakdown, preventive,
and predictive. Vibration analysis, oil analysis, and thermographic imaging are the
most effective tools available for predictive maintenance. Of the three, vibration
analysis is by far the most broadly applicable method. Figure I illustrates the relative
costs of the three maintenance methods.
Depicted in this figure, the data collected
over a ten-year period identifies that if
maintenance practices are upgraded to a
predictive maintenance system, there will
be a 32% reduction in maintenance costs
alone over preventive maintenance methods. This methodology can be applied
across any industrial production environment.

B. Program Delivery
This program training and evaluation is
based on a five-level model designed by
Jack Phillips. The evaluation levels are as
follows: (1) Level 1 Reaction and Planned
Action. The first step in evaluating a train-

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JOURNAL OF INTERACTIVE INSTRUCTION DEVELOPMENT

ing program is to receive feedback from
the participants. The purpose in gathering
this information is to help trainers and
management determine the effectiveness
of training. (2) Level 2 Learning. At this
level we evaluate the participants level of
knowledge prior to and after participating
in the training program. The purpose of
evaluating a participants level of knowledge prior to the training program is to
provide the instructor with data concerning each participants prerequisite level of
knowledge pertaining to the curriculum to
be delivered. (3) Level 3 Job Applications. The evaluation of application in Phillips Model measures the ability to apply
the knowledge gained after participating
in the training program back on the job.
The methods used to evaluate these skills
will include a three and six month followup visit of program participants. (4) Level
4 Business Results. Evaluation of Business Results is performed to determine
whether increased productivity and reduced down time of machinery is directly
contributed to the training program. and
(5) Level 5 Return on Investment. The
final evaluation level of Phillips Model is
return on investment. This quantitative
data, as with the data collected at level 4,
are the supportive answers to HRD and
training and development personnel and
impact on the bottom-line. As discussed
earlier, most evaluations are rarely tabulated beyond learner reaction.
For the purpose of this paper, we will
review the ROI associated with program
delivery costs.

C. Budget
Budget Comparison of Traditional Training and Video Tele-Training
Budget costs are determined through several factors. Each of these factors identifies the expenses required to deliver a quality training and evaluation program that
meets the specific needs of an existing or
potential client.
To effectively provide learning transfer
through video tele-training, minimum
bandwidth connectivity is required to be
384 kbps. Lower bandwidths cause significant framing or cutout of the video feed,
and synchronous learning becomes inef-

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fective. The budget includes the use of a

fractional T-1 line which is the highest incurred cost for bandwidth. Tests at sites
around the country have also included the
use of ISDN and cable access with ISDN
costing an average of $500/month and cable $100/month for 384 kbps access. The
authors conclude that the use of ISDN is
erratic and does not promote good learning transfer.
Tables 1 and 2 outline the overall costs
of one-time delivery costs for the Vibration Analysis I Training from a traditional
classroom environment and through video tele-training.

D. Delivery
The costs associated with the delivery
are based on a one-time class consisting of
one instructor and 12 participants. The
two-week class is delivered at a conference center that is geographically close to
all participants from sister facilities in the
region for the traditional classroom training and via video tele-training from the
consulting firms office and the manufacturing firms facility.

E. Recommendations for Future

Research
The cost comparison shows that the use
of video tele-training equipment saved a
manufacturing firm over $42,000 in program delivery. The upfront cost is minimal compared to the costs associated with
employee travel, productivity loss, and additional incurred expenses associated with
per diem.
Continued data collection and the use
of the Phillips 5 Level Training and Evaluation Model will provide trainers and human resource managers and personnel with
a solid foundation for training budgets and
delivery.
Further research is needed in evaluating the variables associated with:
1. Training transfer (across a variety of
disciplines and training needs)
2. Cost/benefits of training simultaneous sites
3. Effectiveness of instruction
4. Cost Benefit Ratio (CBR) and Return
on Investment (ROI) for companies
5. Effects of learner reaction

JOURNAL OF INTERACTIVE INSTRUCTION DEVELOPMENT

Table 1
Traditional Training Delivery Costs
Days Spent
Salary per
Delivery
Day (1)
Instructor
14
$364
Instructor
Travel
Instructor Per
Diem
Total
14
$130/person
Participants
(12)
Total
Participant
Travel
Participant Per
Diem
Total

Benefits
Factor(2)
$138.32

Total

(3)

,
$8037
,
$1500
, (5)
$2400

$49.40/person

$30144
,

$18000
, (5)
$28800
, (6)

,
$88881

Note:(1)base salary divided by 220 working days per year

(2)
salary per day multiplied by 38% (US Department of Labor benefits factor)
(3)
days spent in training multiplied by (salary per day + benefits factor)
(4)
all participants are paid an equal salary of $28,600/yr
(5)
total travel cost based on roundtrip average flight cost of $1500.00 per participant
(6)
total Per Diem based on average of $150.00/participant/day (Oakwood World
wide-2003 Government Per Diem Rates)

Additional costs associated with delivery include meals, travel, and incidental expenses, program materials and supplies, s, printing and reproduction, equipment rental,
and facilities rental.
Table 2
Video Tele-Training Delivery Costs
Days Spent
Salary per
Delivery
Day(1)
Instructor
14
$364
Total
14
$130/person
Participants
(12)
H.323
Compatible
Video Training
Equipment
Internet
Bandwidth
(recurring mo.)
Total

Benefits
Factor(2)
$138.32
$49.40/person

Total(3)
$8037
,
$30144
,

, (4)
$7000
, (5)
$1500
$46681
,

Note: (1)base salary divided by 220 working days per year

(2)
salary per day multiplied by 38% (US Department of Labor benefits factor)
(3)
days spent in training multiplied by (salary per day + benefits factor)
(4)
Video Tele-Training Equipment based on PolyCom Viewstation
H.323(5)bandwidth access based on Fractional T-1 at 1024 kbps

Savings: $88,881 - $46,681 = $42,200*

* bandwidth recurring costs can be reduced further through the use of cable
access or satellite.
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JOURNAL OF INTERACTIVE INSTRUCTION DEVELOPMENT

Figure I

Maintenance Cost ($ / HP / Yr)

20
15
10
5
0
Breakdown

Preventive

Predictive

Source: Electric Power Research Institute

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Machinery Maintenance Methods

References

Breakdown: No maintenance is performed until the machine breaks down.

Preventive: Maintenance is performed
on a schedule derived from running time,
mean-time-to-fail, calendar time, etc.
Predictive: Maintenance is performed
when quantifiable machine condition
shows need for repairs.
Data collected by the Electric Power Research Institute (EPRI) in Palo Alto, California show that by changing from breakdown to predictive maintenance methods,
maintenance costs can be lowered from an
average of $17 per installed plant horsepower per year to only $9/HP/Yr a savings of 47%. Similarly, if an existing preventive maintenance system is upgraded
to predictive maintenance, there will be a
32% reduction in maintenance costs.

Copeland, Mike. Waco, Texas Business

Offers Videoconferencing Services,
Knight Ridder Tribune Business News, 13
September 2002.
Illinois Online Network, Glossary of Terms,
2001, <http://www.ion.illinois.edu/
IONresources/onlinelearning/
glossary.html> (16 October 2002).
Oakwood Worldwide, Per Diem Rates for
Government and Military Travelers,
2001, <http://www.prediemhousing.
com/perdiemrates.htm> (6 January
2003).
Portland Community College, Online
Learning Orientation: Basic Computer
Terminology, 2002, <http://www.dis
tance.pcc.edu/orientation/mod3/
mod3_terms.cfm> (21 October 2002).
Radvision, White Papers, 2002, <http://
www.radvision.com/c_v2oip/
c_papers.php3> (4 January 2003).
University of Texas Distance Education,
Glossary,2001,<http://
www.utexas.edu/cc/cit/de/deprimer/
glossary.html> (18 October 2002).
University of Washington Educational
Technology Development Group, Catalyst Glossary, 22 September 2002,
<http://catalyst.washington.edu/
glossary.html> (15 October 2002).

JOURNAL OF INTERACTIVE INSTRUCTION DEVELOPMENT

About the Authors

R. Lance Hogan is a Doctoral Research
Assistant in the Department of Workforce
Education and Development at Southern
Illinois University at Carbondale. He holds
a Masters degree in Business Administration and a Bachelor of Science degree in
Business Administration specializing in Production/Operations Management from
Southeast Missouri University.
John Legier is a Doctoral Researcher in
the Department of Workforce Education
and Development at Southern Illinois University at Carbondale, and holds both a
graduate and undergraduate degree from
SIU in this field, with specialties in Education, Training and Development, and Educational Leadership. He is also a Senior
Manager for Return on Training Consulting group. Johns other training includes
completion of the Certified Vibration Specialist program at the Vibration Institute,
as well as the following naval training programs: Nuclear Quality Assurance Office
School, Master Training Specialist Program,
and the Naval Nuclear Power School and
Prototype.
Mark McKnight is a Doctoral Research
Assistant in the Department of Workforce
Education and Development at Southern
Illinois University at Carbondale, and Adjunct Faculty of Composition and Business
Studies at Columbia Southern University.
He holds a graduate degree in Corporate
and Professional Communication from Radford University, and undergraduate degrees
in English and history from Virginia Tech,
where he graduated cum laude in 1997.

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