3rd Party Contractors – Course Builds and Costs

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3rd party contractors/vendors – Creating a Course 4 U

I am a big fan of having 3rd party contractors creating courses. That said, I am extremely picky on who I select and often will use previous contractors who I know can meet and exceed my expectations, as well as my deadlines/deliverables, etc.

I require all my courses to be built in Flash, to be fully interactive and engaging.  Plus they all must have real world experience and applications incorporated.  Now, this does not mean, I just go and land someone who knows Flash. Nope, they must have “WBT” design/development experience, inc. storyboarding plus Flash.  Additionally, they must have other technical skill sets.

Now, I want to make this very clear. You can find someone who will achieve the above at a nominal cost or variant cost, without destroying budget.  If someone tells you that this will cost you 80K or more, I am telling you they are full of dung.  Sure, they can charge that, but there are lots of talented folks out there who can do it all, and the cost will be lower.  And no, you do not have to go offshore to locate them.

People ask me, what if I want to do this and that, blah blah..I say it can be done by a 3rd party contractor, but the more you want, the more they may charge, so always know what you want ahead of time and cut down your costs ahead of time.  Again, you can create amazing, very interactive courses with audio, engagement at a solid cost.

Caveat: If you want to build a 3D world with real streaming audio and video that does x or y depending on the learner, it will exceed the 100K world.

Now, lets separate some facts concerning a 3rd party contractor who can build your courses, i.e. you hire them to build the courses.

Oh, one note:  My rule is always to find small boutique firms, or 1-3 teams to build my courses.  Personally, I have found flexibility, service and communication to be outstanding.  This is just my personal perspective.

Key Point: Always search around to find the 3rd party vendor that will design, develop to your specific requirements and not to theirs.

There are items/deliverables, etc. that should be included within your contract and should not be listed as an addendum to your contract/agreement for an additional cost.


A.  Steps of the course, before it is fully completed.  You should see the course at 50% built and 75% built.  You can even tell them you want to view the course every step of the way, but I wouldn’t recommend it.  Rather, require weekly meetings with your project manager or the key contact you are working with – and this is included in the cost. Review everything, but again, set an agenda, be clear on what you want to cover.

B. A beta of the course. This is when the course is completed, however before they hand it over to you. You want to look at the final product. Have a couple of other people look at is as well (this is optional of course). Make sure it is exactly what you wanted, includes the content and test everything – You need to be the final Q/A. Read over the text, etc.  Have them give you 5 business days to review it (if they offer more take it).  Many will say 1-2 days, but in the business world that is unrealistic.  THE BETA ANGLE SHOULD BE AT NO ADDITIONAL COST. After all, wouldn’t you want to look over the final product, before signing off?

C.  Scripts/Storyboards in the design stage. This has to be in your contract and again, you want 3-5 business days to review (at the minimum).  Some vendors will charge you extra if you are a day late with the turnaround. My perspective: one day uh no. Multiple days – understandable, especially because they are on a timeline for your deliverable.  Extra days means extra days for the final product. So, it makes sense.

D. Final Product Deliverable:  You want it tested in your LMS before you give them final payment. The integration into your hosted LMS (or your enterprise LMS) and tested to make sure it works, is a requirement and there is no additional cost for this.  Again, if you are looking at a new car, you wouldn’t just walk into the lot and buy it without test driving it, right? So, why do this with your courses?

IF they try to charge you for the testing within the LMS, stand your ground and tell them if they want the deal, they must include it or you will walk.

E.  Any problems with the integration with the LMS, where the vendor has to fix in order to make the course work within the LMS – no additional cost. Again, you are buying a product and have certain expectations. Making sure it works in your system and if there are errors they fix it makes sense.  Why pay for their interoperability issues?

F.  You want all the course files, etc. after the course sign off. That means they send it to you on a CD or multiple CDs.  They do not keep it.  This is not an addendum item nor any additional cost. It is FREE.

G. You want to see what they are charging you for in the contract.  Have specifics listed – they will write it up for you. In other words, what does Design include?  Do you get a project manager? You want line items, so you can see what you are paying for ahead of time. No surprises.  Personally, I hate surprises.   I’d rather want to know ahead of time, that if I decide to add video at a later point, it is going to cost me X and cause the course to be delayed, makes sense.  Finding out later, doesn’t and at the end of the day, you will only have yourself to blame.

Payment structure: NEVER PAY 100% UPFRONT

I follow this approach, 25% up front, 50% at  x point and then the final 25% once it is signed off, and tested in my LMS and my LMS vendor tells me it is working fine.  Don’t let the 3rd party vendor tell you it works fine, ask your LMS vendor to verify that it works before final payment.

Never agree to make final payment immediately upon the verification. Ask for an additional 30 days. In this current economy, they will agree, unless they have cash issues and at that point, why do business with them?

When I worked at Bank of America Corporate, I reviewed contracts of our various Business Units who were having e-learning vendors build their courses. I cannot tell you how often I saw vendors charging beyond the original contract for the following: testing, Q/A of the course, integration into the LMS, beta of the course, calling the vendor – i.e. customer service.  If you pay them 40K and identify what is included in that, they should not add an addendum and tell you that for Q/A it will cost an additional 5K.  Q/A is included at no additional cost.  Customer Service – no additional cost.

Lastly, understand that if you make changes beyond what you agreed with your 3rd party contractor, i.e. you decide to change the content or add more content or you decide that you want that 3D world built, understand that it may result in your deliverable (final product) not meeting your deadline.  The vendor has the right to extend that deadline, but they must tell you how long it will be. Have them give you an estimate of the final product.  And please, you need to be realistic as well.  If you think a vendor can build you a 3D world in 30 days, it is not going to happen.

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  1. I do agree with 95% of what the author has noted in this article; however, I want to take a moment to shed some light on those additional costs associated with LMS courses and testing.

    In my experience, the most challenging issue is with AICC/SCORM compliance tracking, scoring, etc. Typically, the contractor does not have ANY access to the actual LMS during critical testing points in the development cycle. The assumption that all LMS-published courses just magically work in every LMS on every Client’s network and infrastructure is NOT TRUE. Either the manifest file or other information passed to the LMS must be modified and this is part of the testing phase to ensure the course works. Where it gets costly for the contractor is when we are assigned an ‘LMS Admin’ on the Client side who is supposed to help us with any issues, but is not at all knowledgeable about the data passed to and from the LMS, doesn’t know what to look for, and makes it very difficult to pinpoint issues with the course if/when problems arose.

    9 times out of 10, it was customization on the Client side (firewall, software, ports, etc.) that we could not account for in our course design and the LMS contact was either not accessible or knowledgeable about these variables which made it costly during the LMS testing phase. So one word of caution for both Clients and contractors, make sure you have the right people available and talking to each other when it comes to LMS testing. You’ll often need serious ‘back end’ support from both sides – not just the guy who loads up courses in the LMS telling you ‘it doesn’t work’.

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