The Cost of Custom Computer-Based Training: A Directory of Development Houses

Mark Fritz

EMedia Professional, February 1997
Copyright © Online Inc.

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• Introduction
• Allen Communication
• Bailey Interactive, Inc.
• Bernstein and Associates
• Centurion Systems, Inc.
• Computer Teaching Corporation
• Consulting Associates, Inc. (CAI)
• FirstClass Systems
• Graham Wright Interactive, Inc.
• Hassett & Associates (C.B.T.)
• Institute for Advanced Technology (IAT)
• Integrated Applications, Inc. (IAI)
• InterCom
• Iprax Training Solutions
• JAM, Incorporated
• MicroMentor
• NewOrder Media, Inc.
• Pinnacle Multimedia Inc.
• Professional Development Group, Inc. (PDG)
• Street Technologies, Inc.
• Synesis Corporation
• VIS Development Corporation

The survey asked the question few companies ever want to answer quickly: "How much do you charge?"

Nearly as bewildering as the electronic media market's wide-ranging profusion of multimedia consumer and corporate products is the amount and variety of custom development houses. These houses, sometimes calling themselves service bureaus, specialize in different areas of multimedia production, from consumer game development to computer-based training (CBT). Though there are hundreds of multimedia development houses--some as large as Anderson Consulting or as small as two people working out of a garage--few specialize in computer-based training.

For this directory, about 100 companies were contacted and invited to participate in a short fax survey that requested their contact information and posed a number of questions about their expertise, specialties, and staff. Since money is the bottom line in any business, the survey also asked the question few companies ever want to answer quickly: "How much do you charge?"

This question, although frightening to survey participants, meant committing to a particular fee for a specific project. The directory resulted in a list of companies who specialize in computer-based training.

To get an idea of how custom multimedia training developers price their services, the survey presented a hypothetical client and wish list that outlined everything the final multimedia product should offer. The survey also outlined what the client would provide and what the developer would be producing from scratch, and then asked the companies to bid on the project. Recipients of the survey were requested to bid on a project that contained the following:

1. Log-in with password and the ability to handle up to 50 students
2. CMI capability: the ability to track up to 50 students and provide reports on the number of right/wrong answers and the number of attempts, percentage scores, and class rankings
3. Client will provide 60 minutes of lip synch analog video that will need to be edited down to about 35 minutes
4. Client will provide 20 color photographs
5. Client will provide 20 color slides
6. Client will provide a 50-page paper manual
7. Client will provide four AutoCAD drawings
8. One 3D graphic of the company logo to use in the attract loop
9. Client will provide ten minutes of voice audio on quarter-inch reel-to-reel tape
10. 20 minutes of background music
11. 20 different sound effects
12. 20 multiple-choice questions, 10 with multiple right answers
13. ten matching questions
14. ten fill-in-the-blank questions
15. ten true/false questions
16. five exercises where the trainee needs to drag an object and place it next to another object
17. 100 copies of the project on CD-ROM
18. A link from the final CD to the company's Web site

Margo Pearson from InterCom, for example, faxed back ten pages from the company's "Interactive Training Planning Workbook," which provides cost estimating information to prospective clients. InterCom has been in business quite a while and has given the topic of cost estimating a lot of thought. Cost estimating is obviously not something good companies who want to stay in business take lightly, and it's not an easy task.

As Julie Ryan from Integrated Applications pointed out over the phone, bidding a project is an art, and one of the hardest parts of the job. "Your imaginary client scenario presented us with a dilemma," she said. "As any project gets longer," Ryan explained, "so does the time needed to write, create the storyboard, develop, and produce it. Even if all the content were provided, we would still need an estimated final produced duration to bid on this project accurately."

Yet leaving out the imaginary client's desire for a specific length of training didn't faze many respondents. Hassett & Associates, for example, carefully analyzed the list and made an effort to read between the lines. "It is assumed that the course is based on the content of the 50-page paper manual and that this course is divided into five lessons or modules," the company wrote in response. "This is hinted at by the existence of five exercises (one for each lesson), 50 questions (10 per lesson), and 20 slides and photographs (four per lesson)."

Developers, on the whole, don't like to itemize their costs because clients will look at a list and add it all up, expecting the total to equal the sum of the parts. But materials- or media-oriented lists like the one on the survey don't include the most expensive part of a project: the creative time spent by the designers and project managers. As InterCom pointed out in their response, "About 50 percent of CD-ROM development time is spent in gathering, organizing, and writing the content of the course."

This resource directory is not a complete list of every custom training developer in the world, but there are other sources available that you can turn to. One particularly good source of information about training is the American Society for Training and Development (ASTD, 1640 King Street, Alexandria, VA 22313). Of particular interest is their book, ASTD Buyer's Guide and Consultant Directory, which is free to members but $99 for non-members. You can get a good taste of the association's many products and services by visiting its Web site at http://www.astd.org.

Also, the various training-related conferences may provide an opportunity for you to meet personally with representatives of the companies listed here, and other companies doing custom development. Two of the most important conferences for training professionals are Interactive Multimedia and Computer Training & Support. The former is sponsored by the Society for Applied Learning Technology (SALT, 50 Culpeper Street, Warrenton, VA 20186; 540/347-0055; Fax 540/349-3169; info@salt.org) and the latter is sponsored by Softbank Institute (1755 Telstar Drive, Suite 101, Colorado Springs, CO 80920; 719/531-5895; Fax 719/528-4250).

As custom training development--as opposed to off-the-shelf or in-house development--becomes a more popular option for corporations and institutions, the marketplace is going to become extremely competitive as more and more developers bend their backs to the CBT task. Because of this, if you are a new developer who wants to get into the CBT field, it is important to take a look at the competition. Or, if you are responsible for the development of CBT in-house, it is important to know what outside sources will charge for a complete multimedia production or its various parts.

http://www.allencomm.com

Allen Communication's 120 employees--which make it one of the biggest companies in this directory--includes 25 full-time instructional designers, 10 full-time multimedia programmers, and 10 video specialists. Founded in 1981 by Allen brothers Rex and Steve, Allen Communication is also one of the oldest companies in our listing. The company is best known as the vendor of the Quest authoring system, which was a popular DOS tool for CBT development. The latest version for Windows, QuestNet+, reflects the company's new focus on Internet/Intranet-based training. Allen also sells two other software tools, Designer's Edge (a pre-authoring tool) and Manager's Edge. From the beginning, custom development has always been a big part of Allen's business. Consequently, the company now has "hundreds of thousands of hours worth of training" under its belt.

Allen determines price on a project by project basis, considering the variables that affect the price, such as type and depth of analysis, graphics, animations, media, and so forth. According to the company, they are able to offer solutions that meet the needs of every price range while still assuring that the courses they create are going to meet specific training challenges and meet the needs of their clients.

A small-town Pennsylvania company with an international reputation, the company has completed over 50 multimedia CBT projects in fields such as healthcare, vocational education, manufacturing, and professional development. Bailey Interactive has also made some of its human resources projects available as commercial titles--for example, its career transition series of CD-ROMs includes one program for high-level managers, another program for college seniors, and one for blue-collar workers. Bailey Interactive develops on both Macintosh and Windows platforms using Authorware, Director, ToolBook, Quest for Windows, IconAuthor, and Visual Basic. The staff includes seven instructional designers, four programmers, two graphic artists, and two media integration specialists.

Bailey Interactive said they would need more information to provide an accurate quote, and would want to know what the desired authoring language or platform would be, whether the video is original or repurposed, and how many total hours of instruction the final project would have. Bailey Interactive has an interactive pricing system that they use with clients to provide estimates.

http://www.b-and-a.com

Bernstein and Associates is a nine-person consulting, training, and software publishing company founded in 1986. The company publishes a Windows-compatible CBT authoring tool called DESIGN-A-COURSE, and has systems experience in Windows NT, UNIX, OpenVMS, and the Internet. Besides doing customer CBT development, Bernstein and Associates also offers onsite, tailored training and consulting services, including its BUILD-A-COURSE service, which is an onsite companion to the DESIGN-A-COURSE product.

The company answered the pricing question by pointing out that although custom development is an option, the hypothetical client project could be accomplished in-house using DESIGN-A-COURSE, priced at $399.

http://www.centurionsys.com

Along with CBT, Centurion does a little of everything in the multimedia arena, including corporate presentations, kiosks, and Web sites. In the training realm, the company also does stand-up training and seminars and produces non-multimedia courseware. Within the CBT field, Centurion specializes in technical and software training for such vertical markets as retail, banking, and medicine. Founded in 1976, the company currently has 16 employees. Although the company sometimes works in UNIX, Windows is its primary development platform. Authoring tools used include IconAuthor and CBT Express, and Authorware and Director. The company has about 26 interactive projects under its belt.

Centurion Systems submitted a detailed sample estimate for an eight-hour CBT course consisting of 720 "application screens." They estimated a subtotal of 960 hours of development time for design, including instructional system design (720 hours), application design (120 hours), and GUI design (120 hours) at a cost of $86,400. Then the estimated subtotal for 2,448 hours of production time came to $273,600. Production costs included storyboarding (720 hours), authoring (840 hours), graphics (720 hours), and quality assurance (168 hours). The company also charged $18,000 for four hours of audio production and $72,000 for two hours of video production. Add to that $45,990 for 511 hours of project management time and the grand total comes to $405,990. The company values their project managers' and designers' work at $90 per hour and the work of their production staff at $75 per hour.

http://www.tencore.com

Computer Teaching Corporation (CTC) has roots that stretch back to the mainframe-based PLATO CBT system that was developed at the University of Illinois in the early 1960s. A true training pioneer, CTC developed one of the first authoring tools, called TenCORE, an authoring language for the PC. Later the company introduced--and still markets--an easier-to-use tool called TenCORE Producer. CTC now sells a course administration tool called TenCORE Computer Managed Instruction. CTC has been criticized for being stuck in the past--it didn't release a Windows version of its TenCORE language system until August 1996. But the company feels because their tool is a language, it is great for LAN delivery and will be a natural for Internet/Intranet use. During its 15 years the company has produced over 200 CBT projects.

For pricing on the hypothetical project, the company says it would contact the customer for further information, but points out that the overall price would likely be $35,000 to $40,000.

http://www.cactis.com

Founded in 1991, Consulting Associates, Inc. (CAI) is best known for its portable multimedia training system, which it calls CACTIS, an acronym for Computer Assisted Classroom Training Improvement System. CAI recently unveiled another device called the CACTIS MultiPro, which it describes as a "multimedia development and presentation podium." Designed for distance training, the system includes wireless radio-frequency response pads which can be used to measure individual comprehension of presented material and assess audience opinions in real time. This company's staff of 25 works primarily on DOS and Windows 3.11 platforms, using C and C++, Visual Basic, and Authorware. The company has programmers but no instructional designers on staff. It also conducts stand-up training classes/ seminars and develops non-multimedia courseware. CAI says they would need more time with the client to answer extensive pricing questions.

http://www.firstclass.ca

This Canada-based company began in 1987 by supplying mainframe-based CBT courses about information technology to customers in big corporations. Over the years, the company has completed over 100 CBT projects. Still working primarily for Fortune 1000 companies, FirstClass today has a staff of 150. Development tools used by the company include IconAuthor, Multimedia ToolBook, Macromedia Director and Authorware, and C-shell. Their rate for custom development is within the $15,000 to $18,000 range for each finished hour of courseware.

http://www.gwinteract.com

Graham Wright Interactive is a full-service multimedia development company that produces corporate presentations, information systems, kiosks, and electronic performance support systems as well as CBT. Founded in 1994, the company has eight employees and specializes in large-scale multimedia CBT, such as the 6000-screen human resources and payroll software simulation system it finished recently for a large financial company. To accomplish this huge project, the company used Asymetrix ToolBook to create its own template-building tool. Working exclusively in the Windows environment, the company also uses SuperCard, Authorware, and Delphi products for development chores.

Graham Wright Interactive uses asset counts and a detailed project plan as the basis for pricing. Whenever the project size allows, they develop a project-specific, WYSIWYG storyboarding/ reviewing tool that allows designers and reviewers to concentrate on the contents. Using these tools, according to the company, speeds the process by eliminating ambiguity and by allowing onscreen review, commenting, and modification.

Hassett & Associates is so serious about CBT, they've made it part of their name. Nevertheless, the company also develops electronic performance support systems. In addition, it is marketing an internally developed authoring system called HeadMaster. This menu-driven tool designed by "non-technical educationalists" comes with an automatic report facility for course management. The company also sells a CBT title called "Stay Safe, Healthy at Work." Hassett & Associates offers an interesting service called their "CBT Feasibility Study," which helps companies assess the general opportunity and long-term implications of introducing CBT into their organization.

Hassett & Associates offers a range of consultancy and production services with costs very much tailored to each individual project. A price, according to the company, is not usually agreed upon until extensive consultation with the client is carried out. Following this, a detailed project schedule is drawn up and is used to calculate costs based on a standard daily rate. Extras, such as video and audio digitization, are charged at specific rates.

Assuming a two-hour finished course, the company estimated that the first two phases of the project (R&D and Scripting & Storyboards) would take about three weeks for a basic cost of $35,000. Production, programming, testing, and revising would take another four weeks. After all the "extras" like video and audio are added up from an itemized list, Hassett's total cost estimate is $52,025. Among the most interesting projections are the ones for video and for the link to the company Web site. According to the company: "Video logging and digitization would cost in the region of $55 per minute. Additional editing would cost approximately $2000," resulting in a total video cost of $3925. As for the Web link: "Depending on the complexity of the desired link and independent browser licensing issues, this could involve up to three days of additional programming and add about $3000 to the cost of the course."

http://www.iatusa.com

Institute for Advanced Technology (IAT) claims to be primarily an instructional design group that generates training models and applications. IAT works in the Windows environment and with Authorware exclusively. The company has completed 30 projects since its founding in 1993, and has a standard product line of commercial titles that cover computer applications such as Windows and Office 95. Its 25-person staff includes four instructional designers and 15 programmers. Although the company's focus is interactive media, it has in the past developed paper-based courseware as well.

IAT typically prices projects using their concept of a "LearningByte," the key component of their training model and basically equivalent to a training lesson. According to the company, their training methodology provides much of the CMI capability required in the survey as well as a framework to accommodate all of the itemized content and media assets. They price their LearningBytes from $1500 to $3500, depending on their complexity.

http://integrated.iai.net

Integrated Applications, Inc. (IAI) is a 15-person shop that has completed 75 interactive projects in its decade of operation. Now standardized on the Windows platform, the company has recently been concentrating on marketing its proprietary in-house CBT development tool called Iadat CD. This tool allows the company to capture computer screens and screen movement (including mouse and keystrokes) and to synchronize this with an audio track. Thus, they can create a simulation of real-time screen movement and add voice and music to accompany the demonstration. IAI specializes in developing proprietary information systems for training.

The hypothetical client scenario presented the company with a dilemma. They said they have two questions whose answers are critical to determining a price for this project: "Although there are 50 pages of a manual, would this information simply need to be translated into an interactive format or would additional content need to be written?" and "How long would the final CBT be?" Because of the rapid development capabilities of their tool, content development, writing, and storyboarding constitute the bulk of the total project cost. The company says they generally can provide multimedia training at one-third to one-half the cost of traditional CBT because their development time is much shorter than for those using off-the-shelf authoring. On average, the cost for one hour of finished CBT is between $15,000 and $30,000. For the project cited in the survey, assuming that all the content is provided and the finished CBT was one hour, they would charge approximately $22,000.

http://www.intercom-interactive.com

InterCom is a 25-person shop that has been around since 1978 and has completed nearly 600 hours of CBT, including 250 laserdisc sides and 40 CD-ROM projects. The staff includes five instructional designers, six programmers, five graphic artists, a tester, a technical support person, and a video producer/director. They work in the PC environment under Windows using ToolBook, Authorware, TenCORE, and Visual Basic. While training has been the emphasis from the beginning, the company occasionally develops information systems and multimedia presentations. Lately, they have also been getting more and more involved in electronic performance support systems.

The company provides initial estimates to a client using ranges of costs per hour of student contact time. For example, the cost to develop one hour (in a three-hour course) would be $15,000 to $25,000 for non-CD-ROM CBT, $25,000 to $35,000 for CD-ROM with audio, and $35,000 to $45,000 for CD-ROM with video.

http://www.iprax.com

Iprax is a 30-person company that specializes in the conversion of training video programs into interactive multimedia courseware. The company also markets its in-house multimedia training software, Iprax CourseWorks, an object-based Windows-compatible authoring system that enables users to build, deliver, customize, and track interactive training courseware on standalone or networked computers. Iprax also offers professional services, including courseware design, graphics, authoring, rapid development workshops, and digital video compression. The company claims to have completed 200 titles since its founding in 1990.

Iprax's target customers are training program producers who want to convert existing training video libraries into interactive courseware. Iprax has a rapid development methodology specifically designed for cost-effective, high-quality conversions. For conversion of a typical 20-minute training video with 50-60 interactive questions and custom graphics, Iprax would quote $15,000 or less, depending on the complexity of the instructional design for a given title and the quantity of titles to be converted. The hypothetical project, according to the company, involves more media lab work and instructional design/authoring time than a typical training video conversion. While pricing would not be finalized before better understanding the client's training objectives and making necessary revisions in scope, the company estimates a total project cost of $35,000.

JAM, Inc. bills itself as a multimedia communications company. The company has been around since 1977 and claims to have completed 450 interactive projects to date. JAM also conducts seminars and develops non-multimedia courseware. The company primarily works with Authorware. The staff currently numbers 42, including several instructional designers and programmers, and a video director and editor. JAM, Inc. estimates the total cost for the hypothetical project to be $45,000.

http://www.micromentor.com

MicroMentor is a medium-sized training developer that has been working in the interactive training field since 1982 and is known primarily for its business-oriented projects, particularly those in the banking and brokerage industries. MicroMentor was also one of the pioneers of multimedia-based training on CD-ROM. The company has completed over 100 interactive projects to date. The company's primary development platform is the PC and its primary software tools are Authorware and Director. The company's staff of 34 includes nine instructional designers, four programmers, and a video specialist.

MicroMentor typically prices by hour of finished program rather than by "pound" of media. The company estimates the finished program for the hypothetical case to be 2.5 hours long, assuming an all-digital, highly interactive high-end program. The company would price the project at $90,000 to $125,000 per hour for the total package, bringing the price to between $225,000 and $312,000.

http://www.neworder.com

Unlike most CBT developers, NewOrder Media was originally founded (in 1990) as an interactive multimedia company. As such, it has a number of programmers and multimedia developers on its 25-person staff, with experience ranging from high-end programming to graphic design. NewOrder provides "interactive solutions design" and is a "full-service multimedia developer," who, in addition to providing training, develops CD-ROM brochures and annual reports, corporate presentations, Web sites, and kiosks. The company has around 50 projects/titles under its belt. NewOrder is the only company in this directory that listed the Macintosh as its primary development platform. Its primary software tool is Macromedia Director.

NewOrder prices each project individually in order to address the unique opportunities and challenges of each project. To that end, NewOrder also avoids itemized pricing because, according to them, itemized pricing works against the interdependent nature of software development. Instead, their consultants will develop a proposal to address each individual client's needs. A standalone product with the specifications described by the survey could range in price, according to the company, from $75,000 to $90,000.

http://www.courseware.com

Pinnacle estimates the project would cost between $15,000 to $30,000, depending on its complexity. They also point out that the project would take one and a half to two months to produce.

http://www.pdginc.com

PDG is a large consulting firm heavily involved in the Fortune 1000 client/server, information system arena. The company employs 90 instructors in 41 classrooms in 11 sites for hands-on instructor-led computer training. Founded in 1982, PDG employs a total of 150 people, including 10 instructional designers and 10 programmers. The company specializes in application simulation training, which is handled by the firm's custom education services division using proprietary software tools. PDG works primarily on the Windows platform but also uses what it calls a "unique discovery-based training methodology" for training in the use of information systems.

According to the company, they can develop large-scale CBT/multimedia projects in less than ten to 12 weeks at a cost of $35,000 per hour of training. The company also says they can provide modification to the finished system in less than ten weeks at a cost equal to the percent of change in the updated project.

http://www.streetinc.com

Just a year old, this 27-person company claims to have 20 projects underway. The company specializes in Internet-based training and sells several software tools that provide multimedia streaming solutions. Products include StreamMaker (the company's authoring/media integration tool), Street Runner (the company's compression tool), and Street Sound (an audio card). The company also offers a number of commercial training courses called the Street Trainer series, which covers common business applications such as Word, Windows 95, Excel, Access, and Powerpoint. For a fee, Street will customize these courses to a client's specific needs. Street's StreamMaker tool works with popular authoring tools to create stream files that deliver multimedia across corporate Intranets and the Internet. According to Street, even if you don't take advantage of StreamMaker's networkability, the product greatly enhances CD-ROM performance, providing seamless, high-quality, consistent playback regardless of computer type.

Instead of sending information about how the company prices their custom development projects, Street sent a price list of their commercial courses and their software. For consulting services, Street charges about $1500 per day.

http://www.synesiscorp.com

Synesis is a ten-year-old company that specializes in technical training and custom training development. Other services include performance analysis, training needs assessment, testing and evaluation, and performance support development. Synesis also conducts workshops such as "Management of Multimedia Training Development." Its staff of 20 includes six instructional designers, six programmers, and one video producer. To date, the company has completed about 115 interactive projects, including three commercial titles for the railroad industry. Synesis develops on the PC using Authorware, IconAuthor, Quest, Visual Basic, and C++.

Synesis estimates the hypothetical project at $17,198, but says, "Many of these tasks can be developed with varying degrees of quality, production formats, and therefore costs, depending on how they will be used."

http://www.visdev.com

VIS Development has been a pioneer in the integration of full-motion digital video into CBT on the Windows platform. Founded in 1992, the company started out working with DVI but quickly moved to MPEG. While information systems such as employee orientation kiosks are still a large part of the company's business, the company has been doing more and more CD-ROM-based training, particularly software training. The company uses a proprietary Windows-based authoring system called Avenue that was written in a C++ derivative language. The company claims that Avenue performs better within the finicky Windows environment than other popular off-the-shelf authoring tools. They also claim that moving an Avenue-based application to an Intranet is relatively easy.

VIS pricing typically ranges between $45,000 and $65,000 for a CD-ROM course, which usually contains 45 to 60 minutes of audio/video, 150 programmed interactions, and 20 to 30 quiz questions. The tracking and reporting system bundled with each course can handle thousands of students, and can provide detailed and consolidated data.

Mark Fritz, an EMedia Professional contributing editor, is a consultant and freelance writer based in Bloomsburg, Pennsylvania.

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