How do I measure the return on investment of maintenance training?
The return on investment (ROI) of maintenance training is taken by calculating the benefits that the organization attains from maintenance training and comparing it with the total training costs.
The simple equation is:
ROI (%) = [Business benefits / Total training costs]
Business benefits are not always a straightforward dollar amount. The benefits that an organization gets from training can be in the form of increased productivity, improved quality of work, reduced safety hazards, etc. To effectively calculate the ROI, these benefits should be expressed as a cost benefit – i.e. translating the benefits to a dollar value.
Total training costs
Total training costs is simply the sum of all expenses incurred by training activities aimed to develop the skills of maintenance employees. This includes employee wages for the duration of the training, registration fees, instructor fees, travel expenses, etc.
Tools for training such as a Learning Management System (LMS) can help to efficiently track the training programs and courses being assigned to the employees.
Fifteen maintenance technicians attended a two-day training session provided by an equipment vendor for the proper usage of newly acquired sensors.
Total training costs:
Individual employee wage = [($20/hour × 8 hrs/day) × 2 days] = $320
Total employee wage = $320/employee × 15 employees = $4,800
Training materials for 15 employees = $1,000
Registration/Instructor fees = $0 (provided by the equipment vendor)
Total training cost = $4,800 + $1,000 = $5,800
Business benefits are calculated by analyzing metrics before and after the additional skills gained by the maintenance employees. Say for this example that the skills from training on using the sensors properly resulted in the prevention of 12 unplanned breakdown events that would have incurred a total of $10,000 in reactive maintenance costs. Further, the avoided breakdowns would have caused $80,000 in production losses. The total business benefit for this case, was $90,000
Given the total training cost and business benefits, the ROI is calculated as:
ROI (%) = [$90,000 / $5,800] * 100% = 1551%
Importance of maintenance training
It is estimated that 60-70% of downtime are caused by human error. Equipping the workforce with proper training reduces the likelihood of human error, thus becoming a major contributor to increased reliability. ROI as a metric highlights the importance of training and its contribution to the organization’s performance.