Every week people who are considering an RTO initial registration ask me this question. If we look the RTO registration as a project, it is critical to consider the project budget before making a commitment.
If you decide to embark on a RTO registration, the first considerations are the business model and scope of the new RTO. Let me explain, there are some costs associated with the RTO registration process itself (essential costs) that will be the same for all new RTOs, but these “essential” costs generally represent only 15%-30% of the combined costs of all activities required to complete the RTO setup.
The “essential” costs are listed below:
What about the other 70%-85% of the project cost? Well, that will depend on your business model and scope of registration.
Do you need a consultant?
Many organisations use consultants to support them throughout the RTO registration process (prepare the application, submit the application, application audit). Normally, consultants will also work as coaches providing the organisation with formal or informal training about RTO compliance requirements and RTO management.
You need to ask yourself the following questions:
- Are you (or your team) familiar with the regulatory requirements included in the Vocational Education and Training (VET) Quality Framework?
- Can you (or your team) develop suitable systems and processes aligned with the VET Quality Framework?
- Do you (or your team) have the skills, knowledge and time to prepare the evidence that has to be submitted with the application (i.e. compliance systems, industry engagement, Training and Assessment Strategies, learning resources, assessment tools, HR resources, training and assessment equipment and facilities, etc.)?
If you answered YES to all three questions above, you probably don’t need a consultant to prepare and submit the initial RTO application. But you could still benefit from an audit conducted by an external RTO auditor before you submit the application, to mitigate the risk of having your application rejected.
Internal audit costs can vary from $2,500 to $6,500 depending on the skills and experience of the auditor and the scope of registration you are applying for.
If you answered NO to at least one of the questions above, you should use an RTO consultant as an external resource for the initial registration project. Again, the cost of RTO consultants will vary depending on the skills and experience of the auditor, and the scope of registration you are applying for. Estimated costs are: $11,000 to 18,000 (for local RTOs), and $20,000 to $28,000 (for CRICOS RTOs).
Learning and Assessment Resources
The organisation must demonstrate access to suitable learning and assessment resources. These resources must be relevant to each unit of competency included in the initial scope of registration, and meet the needs of the student cohort and delivery mode(s) selected by the organisation.
Depending on your (or your team) skills and knowledge to develop learning and assessment resources, you may decide to develop them in-house from scratch or purchase commercially available resources and customise them to your delivery mode and students’ needs.
Here, the cost will depend not only on your approach, but also on the type of courses you are applying for. The cost of a full package (learning and assessment) for a qualification will vary from $6,500 to $20,000. Business qualifications are more affordable than Community Services or Health qualifications.
If you decide to purchase commercially available resources, you will still need to spend time to customise them. A safe estimate is for a qualified trainer to spend 40 hours (one week) customising the resources for a course based on a qualification.
If you have the skills to design and develop resources in-house (instructional designer), you can estimate an average of 40 hours to develop the resources required per unit of competency.
Let’s look at some numbers to apply for four business qualifications:
- You will require approximately 4 business qualifications x $6,500 = $26,000
- Plus internal cost (your staff) of 40 hours at $60 = $2,400 x (4 qualifications) = $9,600
- The total cost will be $26,000 plus $9,600 = $35,600.
You may be doing the customisation yourself and, therefore, you may not need to pay the $9,600 to somebody else, but this is still a cost for your business that needs to be considered in the budget.
If you want to incorporate four courses from the Community Services or Health Training package, the costs will be very different. An estimate will be $15,000 x 4 courses = $60,000, plus the $9,600, for a total cost of $69,600.
Facilities and Equipment
Costs, associated with facilities and equipment, vary depending on your business model and course requirements. You may want to deliver business training online and operate from a home office. In this case, you will need to consider the cost of equipment required to deliver online training (i.e. delivering live webinars). Computer and video equipment for online classes, including costs for a greenscreen and lighting, start at $3,500 to $7,000.
If you decide to deliver training in a classroom environment, you need to estimate the initial cost of such a contract. A small training facility in the Sydney CBD for a CRICOS RTO costs from $150,000 to $250,000 per year. You need to calculate the deposit required, and at least six months of rent before you can start accepting enrolments.
But if you are going to deliver transport and logistic courses you may need to purchase or hire a forklift, a truck, a training warehouse, and any other equipment and/or tools required for the training activities and assessments.
Renting a small warehouse in western Sydney will cost you from $70,000 to $120,000 per year. You will need to pay at least the deposit to secure the premises prior to starting the RTO operations ($20,000 to $35,000).
RTOs are required to report data using the Australian Vocational Education and Training Management Information Statistical Standard (AVETMISS). Most RTOs have a Student Management System (SMS) that maintains these records, issues certificates, and manages reporting requirements. Several companies provide effective solutions for SMS. Considering the top five providers, there are plans suitable for new RTOs from $3,000 to $10,000 (some companies also allow RTOs to pay the annual fees by monthly instalments).
If you are going to deliver training online, you will need a Learning Management System (LMS). There are several platforms available in the market, and the costs vary from $6,000 to $20,000 for the first year. Normally the first year is the most expensive one because it includes a setup fee and staff training. It is important to select a LMS that can be integrated with the SMS (they can talk to each other and records are updated automatically) to avoid future unnecessary administration costs.
Organisations are not allowed to deliver any Nationally Recognised Training (NRT) until their application is successful and an RTO number is provided. Therefore, the staff cost considered for the registration project is only based on the registration preparation and audit activities.
You, or someone from your team, will lead the project for your organisation. Please note that you need this internal project leader whether you have a consultant or not. The consultant is an external resource that will provide you with access to systems, resources, knowledge, training, and support during the audit; but your organisation is the one that will be audited by ASQA, not the consultant. Someone within your organisation will lead the process to initially create a business case for the RTO (with or without the external consultant), assimilate new RTO systems, resources, tools, and prepare the team to be ready to deliver quality training and manage the RTO and, therefore, pass the audit.
Again, the time required will depend on your (and your team) skills, knowledge and previous RTO experience. We estimate a minimum of five hours per week during six months (130 hours), but we have seen cases where clients spend twice as much due to the staff’s lack of RTO experience (230 hours). If we consider a rate of $50 per hour, we come to a cost of $6,500 to $13,000. Again, you may be doing this work yourself, and, therefore, not paying somebody else this amount, but the cost needs to be considered in the budget.
RTOs must demonstrate access to qualified trainers during the initial application. Even if you are not starting the contract with these trainers, prior to the RTO approval, a pre-agreement is required. The cost of recruiting and preparing evidence to demonstrate compliance of trainers can be estimated at $1,500 per trainer. (This includes time and cost of advertising, interviewing, recruiting and preparing the trainer matrix and supporting evidence.) The number of trainers will depend on the number of courses you are proposing for initial scope, and projected number of students (initial forecast included in the financial viability test).
Other costs not listed above are those required to establish the business (company registration). Again, this may vary depending on the business structure. Costs will start from $750 to $3,000.
You may be thinking of multiple variables now and may feel a bit overwhelmed. Let’s look at some practical scenarios.