Trade Training
Centres in
Schools program
Managing a Trade Training
Centre
Published by the
Department of Education and
Training April 2015
©State of Victoria (Department of Education
and Training) 2015
The copyright in this document is owned by the State of Victoria
(Department of Education and Early Childhood Development), or in
the case of some materials, by third parties (third party materials).
No part may be reproduced by any process except in accordance
with the provisions of the Copyright Act 1968, the National
Education Access Licence for Schools (NEALS) (see below) or
with permission.
An educational institution situated in Australia which is not
conducted for profit, or a body responsible for administering such
an institution may copy and communicate the materials, other than
third party materials, for the educational purposes of the institution.
Authorised by the Department of Education
and Training, 2 Treasury Place, East Melbourne, Victoria, 3002.
Contents
1. Overview
3
1.1.
Purpose of this manual
3
1.2.
Background
3
2. Glossary
4
3. Your TTC
5
3.1.
Integrated model
5
3.2.
De-centralised model
5
3.3.
Hub and spoke model
6
3.4.
Centralised model
6
3.5.
Hybrid model
7
4. Key Areas
8
5. Strategy
8
5.1.
Leadership
8
5.2.
Effective governance and management
9
5.3.
Creating a viable business strategy and plan
12
5.4.
Building partnerships with industry
14
5.5.
Keeping cluster schools engaged
17
5.6.
Recruiting and retaining specialist teachers
19
6. Revenue
21
6.1.
Revenue streams and marketing
21
6.2.
Third party use of TTCs
24
7. Costs
30
7.1.
Transporting students around the cluster
30
7.2.
Funding the replacement of TTC equipment
31
7.3.
Getting value for money from an RTO
38
Contents continued
8. Further Information
41
8.1.
Contacting the Department
41
8.2.
Business planning toolkit
42
8.3.
Governance committee charter
42
8.4.
Governance reporting checklist
43
8.5.
Total cost of ownership model
45
8.6.
Third party usage agreements
46
1.
1.1.
Overview
Purpose of this manual
The Department of Education and Training (DET) has produced this manual as part of
a range of initiatives to assist schools in managing Trade Training Centres (TTCs) in
Victoria. The content of the manual has been developed after consultation with Trade
Training Centre (TTC) operators and stakeholders to address the delivery of services
according to the TTC Project Funding Agreement with the Commonwealth Government
over the 20 years of the Designated Use Period.
In October 2013, Protiviti Risk and Business Consulting was engaged to conduct a
detailed review of policies and documentation relating to TTCs. A sample of eight
regional and metropolitan TTCs were selected for analysis and meetings were
conducted with key stakeholders from the eight TTCs to identify common and pressing
challenges. The experiences shared by stakeholders during these meetings were
used to inform the structure and content of the manual.
1.2.
Background
TTC funding includes no recurrent component. Both Commonwealth and State
governments are focussed on helping TTCs to become self-sustaining. This means
TTCs will need the autonomy, skills and tools to manage their own revenue and costs.
Consultation with a range of TTCs showed that people who operate TTCs have very
different views on how their TTC fits into the education landscape within and around
their school. To illustrate, some TTCs do not have a separate identity and serve as
venues for the delivery of Vocational Education and Training (VET) within an existing
Vocational Education and Training in Schools (VETiS) structure. At the other end of
the spectrum, there are standalone TTCs managed independently and built on a
separate site, that provide a full fee-for-service model to their cluster schools and other
clients. There are many variations in between. None of these is the ‘right’ model, but
all of them have positive and negative aspects and different challenges to the
achievement of sustainability.
This manual provides specific advice and assistance on common management tasks
and a way of thinking that works for the corporate world which can be applied to TTCs.
Overview
3
2.
4
Glossary
DET
Department of Education and Training (Victoria)
TTC
Trade Training Centre
VET
Vocational Education and Training
VETiS
Vocational Education and Training in Schools
MoU
Memorandum of Understanding, used to establish a non-binding
agreement between parties. Memoranda of Understanding are
used by TTCs to establish the agreement between a cluster or
consortium of schools and other entities to apply for TTC
funding and operate a TTC
PSS
Project Specific Schedule. This document is attached to the
overarching funding agreement between the Commonwealth
Government and DET. It describes the funding and obligations
of the TTC
SERS
School Equipment Reinstatement Scheme. The self-funded
insurance scheme run by DET and administered by Echelon
Claims Services which covers a range of school equipment.
Also known as School Equipment Insurance Scheme (SEIS)
and School Equipment Coverage Scheme (SECS).
Joint Use
Agreement
A binding agreement between the Minister for Education, the
Lead School Council and Partner School Councils or Third
Parties to construct and operate a TTC. This agreement
outlines the financial and other obligations of the signatories.
SPAG
Schools Policy and Advisory Guide, published by DET
Overarching
Funding
Agreement
The agreement between the Commonwealth Government and
DET which details statewide arrangements for TTCs. Approved
individual TTC proposals become an attachment to this
agreement.
SBAT
School Based Apprenticeships and Traineeships. SBAT offers
students the option of combining part-time employment, school
and training. The program is undertaken under a training
contract with an employer, has a Training Plan signed by the
school and formally registered with the Victorian Registration
and Qualifications Authority (VRQA) and leads to a nationally
recognised qualification.
RTO
Registered Training Organisation. VET courses regardless of
the delivery location must be delivered by RTOs. These
services are often purchased.
Trade Training Centres in Schools program
3.
Your TTC
This section is designed to help you focus on the specific areas of management of
your TTC. It also serves to alert you to the range of TTC models in operation. Most
TTCs can be categorised into one of the five models below.
3.1. Integrated model
Some TTCs are completely integrated into their associated school (or schools, if
there are multiple sites). There is no separate TTC co-ordinator or manager, the bills
are paid in exactly the same way the bills are paid for the rest of the school(s) and it
is both difficult and unnecessary to separate the costs and revenue of the TTC from
the rest of the school(s).
TTC governance is usually dealt with at regular meetings between the cluster
principals which focus on operational issues (e.g. adjusting the formula used to crosscharge fees between schools, encouraging cross-enrolment of students to provide
access to all the VET courses in the cluster, sharing teachers, etc.).
Integrated TTCs don’t have or need a separate strategy. They are integral to the
school’s overall strategy and contribute to, or are subsidised by the school’s other
activities. Often, the only central function is mandatory annual TTC reporting.
The challenges facing these TTCs are the same as those facing the wider VET
program in the school, with the possible addition of:

Funding the replacement of TTC equipment

Transporting students around the cluster

Recruiting and retaining specialist teachers

Getting value for money from RTOs.
3.2. De-centralised model
A cluster may have several facilities with no obvious centre. This model is usually
arranged so that each site can offer courses that are not duplicated within the cluster.
De-centralised TTCs are different to integrated TTCs only when there is a separate
strategy or management approach for the TTC as a whole. For example, the strategy
may be to centrally co-ordinate efforts to seek revenue from outside the cluster.
Additional challenges faced by De-centralised TTCs can be:

Creating a viable business strategy and plan

Identifying additional revenue streams and marketing the TTC to potential clients

Uncertainty around legal / contractual / insurance arrangements when allowing third
parties to use TTC facilities

Building partnerships with industry.
Your TTC
5
3.3. Hub and spoke model
In this model there is one major facility and one or more satellite facilities. Usually
(but not always) the major facility is at the lead school’s site and to some extent the
lead school takes the responsibility for managing the TTC on behalf of the cluster.
The key challenge for this model is that cluster schools may have different
perspectives on the TTC. Decisions may be difficult to make and there may be
disagreement about priorities. The authority of the lead school to act may be unclear.
Keeping cluster schools engaged (particularly if there is no facility on their site) is an
additional challenge faced by hub and spoke TTCs.
3.4. Centralised model
Centralised TTCs are those which have a single large facility. There may have been
minor upgrades or supply of equipment to other cluster schools as part of the original
Funding Agreement, but for all intents and purposes the TTC entity and name is
associated with a single facility. Often, centralised TTCs are on third party sites and
may be managed by a separate entity, such as a University or TAFE Institute (e.g.
Knox Innovation Opportunity and Sustainability Centre TTC on the Swinburne
University Site and the Dandenong Regional Educational Alliance Model TTC on the
Chisholm Institute of TAFE site).
TTCs which have a single major facility have the advantage of a clear identity, which
helps people to form a common perception of the TTC, makes it easier to visualise
strategies for the TTC and market the TTC’s services. Centralised TTCs can also
have the advantage of scale, which might justify having a dedicated manager or coordinator. In this model it is generally easier to get a clear picture of the revenue and
costs associated with the TTC.
Centralised TTCs face most of the challenges already covered above, including:
6

Creating a viable business strategy and plan

Identifying additional revenue streams and marketing the TTC to potential clients

Uncertainty around legal / contractual / insurance arrangements when allowing third
parties to use TTC facilities

Building partnerships with industry

Funding the replacement of TTC equipment

Transporting students around the cluster

Recruiting and retaining specialist teachers

Getting value for money from RTOs

Keeping cluster schools engaged
Trade Training Centres in Schools program
3.5. Hybrid model
A hybrid of two or more of the arrangements above is likely to be the most
challenging model for a TTC. Stakeholders may find it difficult to understand the TTC
model and may have different views of what it is. People working in the TTC may
have different views on priorities.
In Hybrid TTCs there is an imperative to have strong and effective governance and
management.
Your TTC
7
4.
Key Areas
This Manual provides more detail on the following key areas: - Strategy, Revenue
and Costs.
Strategy – a key component in the ultimate success or failure of a TTC.
Revenue - common to many TTCs and revolves around enrolments and marketing.
Costs - common to all TTCs and requires constant vigilance to ensure the TTC is
operating as efficiently as possible. However, cost management should not consume
management attention at the expense of revenue growth.
5.
Strategy
Strategic challenges are often keys to ultimate success or failure. Strategic failings
can limit the chance of success but a good strategy can triumph in the face of
adversity.
5.1. Leadership
An important success factor for any enterprise is leadership.
During the consultation period with TTCs it was clear that principals and TTC
managers have considerable leadership skills.
However, it is common for TTC leaders to feel uncertain about the scope of their
authority and control over the TTC in the context of Commonwealth Government
agreements on funding, the role of DET and the relationship of the TTC to other
legislative and regulatory functions and policies affecting schools.
The level of autonomy encouraged by DET in the management of TTCs is high. TTC
leaders should not doubt the authority they have to make decisions that contribute to
the sustainability and success of their TTC. Changes to Project Specific Schedules
(PSS), cluster members, governance arrangements, strategic plans, marketing
concepts and revenue innovations are all within the power of TTC leaders to
contemplate and execute.
DET will provide support to TTCs in their endeavours wherever possible.
The potential for TTCs to help each other is very high. Many TTCs face the same
challenges in the same timeframes and are in a good position to co-operate to
achieve better outcomes and share costs. For example:
8

TTCs delivering similar courses could share teachers (and teaching costs), creating
full-time roles out of part-time work in separate TTCs. Full-time roles are likely to
attract more and better qualified candidates.

TTCs with similar equipment replacement challenges could work together to
establish equipment standards, increase purchasing power and share the cost of
Trade Training Centres in Schools program
managing a tender to achieve the best value-for-money result (see ‘Getting the
best deal’ in Section 7.2.3 for more details).

Similarly, TTCs could work together to tender for RTO services.

A permanent TTC network could co-ordinate partnership agreements and
sponsorships, run tenders to achieve best value-for-money outcomes for
equipment purchases and RTO services, and manage major suppliers and RTOs
on behalf of TTCs.
5.2. Effective governance and management
Effective governance is separate from effective management. Governing bodies
concern themselves with setting the strategy, goals and principles of an entity, while
management is delegated the task of delivering the strategy and reporting back on
progress.
5.2.1. Governance
During the construction phase of the project many TTCs hold a regular meeting of
cluster school principals using the Memorandum of Understanding (MoU) or a
meeting of the parties to the Joint Use Agreement signed by the cluster school
councils (and third parties if applicable) to guide the scope of responsibilities.
It is easy to let these arrangements continue into the operational life of the TTC.
However, it is worth considering whether or not the governance arrangement is right
for the TTC on an ongoing basis.
TTCs using an Integrated model (see Section 3.1 for description) are unlikely to
benefit from separate governance because existing governance arrangements for the
cluster schools cover the TTC as well.
Some TTCs developed their application for funding by using existing clusters of
schools which already had an operating agreement about delivering VET courses or
had formed an alliance for other purposes. If the cluster was pre-existing then the
governance arrangements which also pre-existed are very likely to be appropriate.
TTCs that do not use an Integrated model will benefit from separate governance
arrangements. The most effective arrangement is to have a governance committee,
which meets specifically to govern the TTC. The central idea of a governance
committee is to gain benefit from the thinking of several different people.
Features of successful governance committees are:

Stakeholder representation
All key stakeholders of the TTC have someone representing their interests on the
governance committee. Depending on the strategy (see below) this might include
an industry representative, student/parent representative, trainer representative,
etc. A balance must be struck to ensure the committee does not get too big
(anything over a dozen people is unusual and can become unproductive).
Strategy
9

Independence
A significant proportion of the membership should be independent of the TTC.
Independent members have no conflicts of interest and bring a different and
broader perspective when people close to the TTC may be too focussed on single
issues.

Diversity
Members should bring different (but relevant) skills and experience to the
committee so that all aspects of the TTC can be governed by informed people.
Each time a member retires or leaves the committee there will be an opportunity to
seek a new member who complements the existing team.

A charter
A charter or terms of reference should be agreed by all members (an example is
available in Attachment 2). The charter spells out the role of the committee, the role
of management and how the committee works. The charter should be formally
reviewed annually and re-submitted to the committee for approval (which also
serves to remind the committee of its contents).

Delegation of Authority
The delegation of authority is a formal document that authorises people with roles in
the TTC to act on behalf of the signatories to the MoU or Joint Use Agreement. It is
a practical way to ensure that day to day activities and decisions do not have to be
referred to school councils on every occasion. Limits on delegated authority protect
people from over committing the TTC or making inappropriate decisions. An
example delegation of authority is included in the charter in Section 8.3. The
delegation of authority should be reviewed annually along with the charter.

Reporting
Management should provide a report at each meeting of the Governance
Committee with objective information regarding the status of the TTC, progress on
the TTC strategy and any issues being encountered. (A checklist of what
management should report to the Governance Committee is in Section 8.4.) Where
committee approved action is required to resolve specific issues, management
should provide the forum with options and a clear recommendation on how to move
forward.

An effective Chairperson
Governance committees with a Chairperson who is
respected and is focussed on the success of the
TTC enjoy a distinct advantage. The Chair should
lead recruitment of committee members and
management personnel and maintain strong
meeting discipline. Whilst the lead school principal
is an obvious candidate for this role, but there are
risks – see sidebar. Governance theory suggests
that an independent Chair can be a very effective
choice.
10
Trade Training Centres in Schools program
Wearing two hats
Where one person (e.g. the lead
school principal) is both the
Chairperson of the governance
committee and the manager of
the TTC, there is a risk that they
have a conflict of interest in
approving the strategy that they
wrote.
Good governance
suggests that the manager should
at most be a member of the
governance committee, not the
Chair.
Our Community is a centre for
excellence for not-for-profits &
schools, providing advice, tools,
resources and training. Go to
http://www.ourcommunity.com.au/ for a source of independent board members as
well as a range of other governance resources.
5.2.2. Management
Of the many management approaches available one of the most widely accepted is
the ‘one employee’ concept, where the governance committee delegates the
management of the TTC to a single person, who is authorised to delegate further with
the governance committee’s approval. In TTCs the ‘one employee’ is often the lead
school principal or a dedicated TTC manager who has been delegated this authority.
The delegation of authority needs to be explicit and exact, to ensure there is no
confusion about who has the power to make decisions and act on behalf of the
governance committee. The example charter in Attachment 2 includes a simple
delegation of authority.
Management Model
An important consideration for the governance committee is that the management
approach matches the model and strategy for the TTC. To illustrate, a Centralised
TTC (see definition in Section 3.4) which has a strategy to grow revenue outside the
cluster of schools will almost certainly need a dedicated manager with business
development experience who reports to a School Council or the Governance
Committee.
In contrast, a Hub and Spoke TTC (see Section 3.3) whose central strategy is to
spread VET courses over the whole week to maximise use of the new facilities may
only need a part-time co-ordinator or senior teacher to manage the TTC.
Managing the Strategy
Management is responsible for submitting a strategy to the governance committee for
approval and delivering the strategy once it is approved. The governance committee
is normally responsible for approving the strategy and the key personnel to deliver it
(i.e. the management team). How to develop strategies and deliver them is covered
in the next section.
There is a ‘chicken and egg’ conundrum with strategy and management – the
governance committee must appoint a manager before the manager submits a
strategy. To resolve this, the Chair of the governance committee should lead a
robust discussion to discover the key things that the committee would accept in both
a strategy and a manager before interviews for a manager are conducted.
Note: The Project Specific Schedule (PSS) which lays out the obligations of the TTC
includes a nominated Project Leader. If this person changes, it is important to notify
DET so that the PSS can be updated.
Strategy
11
5.3. Creating a viable business strategy and plan
It is the manager’s role to develop a strategy for the governance committee’s
approval. The strategy normally covers several years and aims to describe how the
TTC will look and perform at the end of that period.
The long-term strategy is normally accompanied by a business plan, which is
updated annually. The business plan consists of more detailed initiatives and
activities for the year that will progressively achieve the targets in the strategy.
A key factor for a successful strategy is clarity, because clarity increases the
probability that people undertaking the running of the TTC share a common view.
Without a common view, people can pull in different directions, making it nearly
impossible to deliver the strategy.
The more complex a strategy is, the more communication effort is required to ensure
all stakeholders share a common view. It follows that a simple strategy is a good
strategy. Do not be concerned if the TTC strategy ends up being a brief collection of
dot points. The strategy is acceptable as long as it describes how the TTC will look
and perform at the end of the set timeframe, includes specific targets and is agreed
by all the relevant stakeholders.
5.3.1. Strategy Development
The common technique for ensuring all stakeholders understand the strategy is to
involve them in its development. It follows that the process of creating a strategy is
as important as the strategy itself.
There are some principles that should be kept in mind when working on strategy:

Clarity

Simplicity

Stakeholder engagement.
The diagram below illustrates an approach to developing a strategy that respects
these principles.
12
Trade Training Centres in Schools program
Identify
Stakeholders
Creating a strategy
Agree vision and
long term objectives
with stakeholders
Brainstorm and rank
ideas that should
achieve the
objectives
Agree the right
management model
to deliver the best
ideas
Work out the cost of
the management
model
Estimate the
benefits, time & cost
to deliver the ideas
& prioritise
Set targets for
revenue, cost and
performance
Strategy
Document
(The vision for
the TTC and how
to achieve it.)
Annual
Business Plan
(what will be
done this year
and what the
result will be)
Review with
stakeholders
Approve at
governance
committee
5.3.2. Risk Management
Risk management is a range of functions and techniques designed to limit or
eliminate the negative impacts from predictable events or circumstances without
jeopardising the benefits that the TTC is pursuing.
Typical risk management methodologies follow a process:
1.
Risk Assessment
Usually an annual workshop of stakeholders where risks to the success of the
organisation are identified by discussing topics including the current strategy,
competition, legislative/regulatory changes, the business environment, internal
risks (e.g. staff turnover) & etc. Risks are then scored and ranked based on their
likelihood and impact. The focus is then on the higher ranking risks.
2.
Control Assessment
Organisations will already have in place risk mitigation strategies / actions (e.g.
flexible working policies that mitigate against the risk of staff turnover). These
mitigations are referred to as ‘controls’ and are identified and evaluated for their
effectiveness. Where controls are lacking, further mitigations are developed and
their implementation becomes part of the business plan.
Strategy
13
3.
Audit
Annual financial audits are used to check that financial controls operate
effectively. All Victorian government school councils undergo an independent
financial audit at least once every three years.
Many organisations also have an internal audit program, consisting of planned
reviews of the most important controls that are in place to mitigate risks. ‘Internal
Audits’ are used to identify control gaps or where controls are not working and to
make recommendations to management to fix the identified issues. Larger
organisations often outsource this function to specialist firms.
Risk management can pay major dividends
if used effectively. If you are considering
implementing a formal risk management
process at your TTC, evaluate whether it
will help or hinder the organisation by
asking these key questions:

Are we in a situation where risks to our
success are real and significant?

Is risk management and the value that it
brings well understood by both the
Governance Committee and the
management group?

Can we ensure our management
resources are not overwhelmed - do we
have access to a methodology and
experience that will minimise the
administrative burden?
Risky business
Risk management can be risky itself:
 Risk management processes can
be administratively burdensome
and it can be a challenge to
minimise this overhead.
 Very risk averse people can
become preoccupied with risk
management, which leads to a
kind of paralysis, where everything
seems so risky that nothing should
be done.
 Risk management can be open to
abuse, allowing people to invent
risks in order to curtail activities
that they don’t agree with.
5.4. Building partnerships with industry
Key stakeholders for many TTCs will be businesses which provide work placements
for students undertaking programs at the TTC and that may employ TTC students in
the future. These industry partners are a source of information, support, sponsorship
and potentially, revenue. There is also a wider population of business partners who
may be in a position to partner with TTCs to fulfil community aspirations or achieve a
marketing goal of their own.
Building a partnership with another organisation is a significant investment in time
and resources. This investment should not be made lightly. The decision to invest in
a partnership should be driven by the value that is available from that partnership. It
is imperative to understand what the TTC wants from such a partnership before
significant investment is made.
The TTC strategy will include a range of initiatives and activities that deliver a longterm vision. Part of the strategy development should be to consider how industry
partners could assist these initiatives and activities. If it seems realistic that an
industry partner could provide significant assistance that outweighs the effort to
engage them, the investment in developing a partnership is justified.
14
Trade Training Centres in Schools program
Consider the following table which includes ideas on what industry could do for TTCs
and what TTCs could do for industry.
Table 1 - TTC and Industry mutual benefits
What could an industry partner do for a
TTC?
What could a TTC do for an industry
partner?
Placements for students
High quality recruitment process
Provide School Based Apprenticeships and
Traineeship (SBAT) positions1
Provide School Based Apprenticeships and
Traineeship (SBAT) candidates
Student excursions
Customised job preparation
Contribute to teacher development
Refresher / re-training for existing
employees
Attend career days to inform students
Overflow facilities
Guest speakers
Employee development opportunities
Sponsorship in kind (consumables,
materials, equipment, repairs, uniforms)*
Community based marketing presence*
Sponsorship in cash (naming rights,
scholarships, prizes, events)*
Image marketing / branding*
Replacement of equipment
Training on up-to-date equipment
*Note: Government schools will need to comply with the DET policy on sponsorship:
http://www.education.vic.gov.au/school/principals/spag/community/pages/sponsorship.aspx
5.4.1. Creating partnerships
Here is a three-step process which may help you visualise how to engage an industry
partner and estimate the effort involved.
1.
How can an industry partner help?
Consider what is in the TTC strategy and how a partner could contribute. Be as
specific as possible about what partners could contribute and assign a value to
each type of contribution (a $ value is best, but if that is impossible a rating of
high, medium or low will help).
If you would like your partner to pay a fee for a service the TTC provides, they
are no longer a partner, but a customer. Refer to Section 6 on Revenue below.
1
Details about the SBAT program are available here:
http://www.education.vic.gov.au/school/principals/curriculum/Pages/apprentice.aspx
Strategy
15
2.
Identify likely targets
Brainstorm with TTC stakeholders (who will have a range of industry
connections) to identify organisations that would make ideal partners. Be
ambitious – some of the largest corporates in Australia actively look for
community partners to fulfil their ‘good corporate citizen’ obligations and
aspirations. Make a list and rank them in order of best fit with your TTC’s
strategy and the value of their potential contribution. Concentrate your efforts on
the partners who represent the best fit and highest value to the TTC.
3.
Plan the engagement
Planning how to engage a partner will provide an understanding of the effort
required. The table below is an example of how much effort a TTC manager
might need to make to develop and manage a partnership. Modify as you see fit
and assign realistic hours of effort to each activity. It is easy to convert the hours
of effort into a dollar figure by calculating the proportion of the manager’s salary
(and any other staff) that will be required.
Table 2 – Example industry partner engagement plan and effort
Activity
TTC Manager
Effort
Identify likely targets and rank
3hrs
Identify contacts at, for example, 10 target organisations
4hrs
Research 10 target organisations (web search, media search, etc.)
20hrs
Make contact (to ask who to talk to). Follow up with e-mail.
4hrs
Develop material for first meeting. Material should cover; what is the
TTC, what we’re looking for from the target organisation and why, what
benefits are available to the target organisation.
8hrs
First meeting with five target organisations to understand what the targets
want and might consider offering (prep, travel, meet).
10hrs
Detailed proposal for two target organisations. Proposals should be
specific to each target, responding to what they want and being clear on
what the TTC needs.
24hrs
Second meeting with say, two target organisations to understand if a
partnership is possible and what form it should take (prep, travel, meet).
4hrs
Develop partnership agreement for one organisation. For government
schools this will involve working with DET Legal Division to draft an
agreement.
24hrs
Negotiate agreement with target organisation (may require several
meetings). Note that the negotiation process establishes the behaviours
in the relationship. Consider building a tour of the TTC into this process.
8hrs
Approve agreement at governance committee and exchange signatures
with target organisation.
2hrs
Administer partnership (i.e. ensure obligations of the agreement are met
and any issues are raised with the partner and resolved).
24hrs (p.a.)
Maintain partnership (e.g. meet once per month, organise bi-annual
function for partners to meet governance committee members & visit the
TTC).
24hrs (p.a.)
16
Trade Training Centres in Schools program
TTC Manager
Effort
Activity
Total effort in first year
Total proportion of manager’s salary
159 hrs
(approx 21
days)
= 21 x Salary
Paid days
per yr
(Add costs for legal advice, proposal development, catering, etc.)
$xx
Total
$xx
If engaging an industry partner is a pivotal part of your TTC strategy, also consider
using some external advice and expertise to reduce costs and improve your chances
of success. Major consultancies will often do pro-bono work. Consider contacting
the offices of one of the global ‘big 4’ accounting and advisory firms, the local office of
global strategy consultants, or other consultancies and even large corporations which
have marketing expertise and may help.
DET has Regional Market Facilitation Managers (RMFMs) who can help with
understanding the demand for skills in your region and developing partnerships with
industry. Contact details for RMFMs are available at this link:
http://www.education.vic.gov.au/training/employers/industry/Pages/rmfm.aspx
5.5. Keeping cluster schools engaged
Many TTCs find that cluster schools which do not have a TTC facility on their site
become disengaged over time and begin to regard their TTC as a fee for service
entity that is not linked with their own success. While this is understandable, it is not
ideal for the success of the TTC. Losing the engagement of a cluster school has
associated risks of losing their students (and revenue), losing their commitment to
deliver the obligations laid out in the Project Specific Schedule and importantly, losing
access to the skills and experience that they can bring to the management and
governance of the TTC.
There is no single solution for this challenge but, like most problems, the likelihood of
overcoming this challenge increases with the number of techniques brought to bear.
Here are two areas to consider:
5.5.1. Memorandum of Understanding (MoU)
Cluster schools generally sign an MoU or Joint Use Agreement (templates for both of
these documents are available from DET) which sets out how the TTC will operate.
These agreements usually outline how cluster schools will contribute to the
governance and funding of the TTC.
Failure to engage in the TTC’s governance should not be overlooked by the
governance committee. If a cluster school persistently fails to attend governance
committee meetings the Chairperson can move that the governance committee
require an explanation. Even though MoUs are not binding it is appropriate to hold
signatories to account and to act if obligations are not being met.
Strategy
17
The MoU is not a static document and can be modified to build in incentives for
cluster schools to stay engaged. For example, modifications can be made so that:

Chairing the governance committee is rotated through all schools in the cluster.

Each school commits to a base level of funding plus a fee per student (the fee
being less than competing suppliers outside of the cluster).

Cluster schools receive discounts on student fees if they supply teachers or other
resources to the TTC.

Cluster schools receive a proportion of the revenue the TTC achieves from other
sources as a discount on the per student fee.
5.5.2. Maintaining a relationship
It is important to avoid a situation where a particular school perceives that it is not
included or consulted in the TTC’s operations. The manager of the TTC must invest
effort into establishing and maintaining a genuine relationship between the TTC and
its cluster schools to keep them engaged.
It is strongly recommended to host an annual TTC strategy workshop, where TTC
management shares its strategic ideas and seeks input from cluster schools and
other stakeholders.
Ensure all cluster schools are satisfied that they are appropriately represented on the
governance committee and their voice is heard on issues. (Note that this does not
necessarily mean that each cluster school must have a representative on the
governance committee).
If there is no genuine reason for a school to remain in the cluster, the decision should
be made by the governance committee to pursue a replacement school which has a
compelling reason to join. Asking or permitting a school to leave the cluster should
not be seen as an event which carries legal liabilities (noting that MoUs are not
binding and it is extremely unlikely that the Joint Use Agreement would be used to
sue a school council). Instead it should be seen as an acceptance that the school in
question is no longer able to contribute or participate.
Note: The Project Specific Schedule (PSS) which lays out the obligations of the TTC
nominates all the entities in a cluster or consortium. If this changes, it is important to
notify DET so that the PSS can be updated.
18
Trade Training Centres in Schools program
5.6. Recruiting and retaining specialist teachers
Some TTCs report difficulty in recruiting and retaining teachers with the right
expertise and skills. There are several potential causes and a range of ideas to
address them:
5.6.1. Unattractive positions
This is a root cause for many of the challenges in recruiting teachers to VET
programs in general. With students often having to travel to a different location for
specialised VET courses there is a logistics and cost challenge. It has become
standard for many clusters of schools to schedule all VET activity on one or two days
of the week. Consequently, TTC facilities can have one or two peak loading periods
during the week and little other activity. Teachers are therefore engaged on a parttime basis, which is unattractive to industry skilled people who traditionally have
access to full-time work, often with overtime.
Here are some ideas to address the problem:

Spreading TTC courses over a wider period
To make TTC teacher positions full-time and therefore more attractive to job
seekers, TTC activity would need to be spread over the full week. This option may
create a transport challenge, especially if the only transport option is to move all the
students at once (e.g. via chartered bus). Transport challenges are discussed in
Section 7.1.
Spreading TTC (or VET) activity over a wider part of the week also requires an
agreement within the cluster to adjust school timetables to suit. This is a
considerable challenge that will require strong commitment from member schools.
If transport solutions are suitably flexible, timetabling becomes more achievable.
Examples of flexible solutions:
– Yr 11 and 12 students transport themselves via public transport
– VET students who attend more than one facility during the day transit during
lunch time.
An initiative to spread TTC courses over the week is a significant effort. If it is part
of a TTC’s strategy then it should appear in both the TTC strategy and business
plan with details explaining how it will be achieved.

Finding productive work for TTC teachers outside the VET program
If the TTC provides services to people other than cluster students, these services
can be scheduled to extend teacher’s hours. To achieve this requires the
development of revenue streams which leverage the availability of teachers.
Revenue stream development is discussed in the next section.

Moving teachers between schools
If transporting students becomes an insurmountable challenge, it may be an option
to transport the teachers instead. This option requires that the timetable for TTC
(and possibly, VET) courses is staggered across the cluster to achieve full-time
usage of teachers. Specialist teachers may be able to provide the theory
component of their course to students in their own school and reduce the need for
transport to just the practical component. The full-time nature of positions may
Strategy
19
attract teachers with broad enough experience to teach several different trade
courses across the cluster.

Share teachers outside the cluster
It may be possible to negotiate with nearby schools or other TTC / VET clusters to
share teachers, thereby creating a full-time role. A relationship with other schools
and clusters may also provide a source of students for your TTC.
5.6.2. Shortage of suitable teachers
Some TTCs have reported a lack of teachers available in the market, often due to the
salary gap between trade jobs and teachers. Some schools have responded to this
challenge by seeking out injured workers who are looking for ways to return to work.
TTCs may be able to adopt industry techniques such as retention and succession
strategies to mitigate the risk of losing good employees.
Worksafe
Worksafe Victoria’s WISE (WorkSafe Incentive
Scheme For Employers) provides a financial
incentive of up to $26,000 to employers who
offer ongoing employment of at least 15 hours
a week to an injured worker unable to return to
work with their previous employer.
Visit http://www.worksafe.vic.gov.au/return-to-work/worksafe-incentive-scheme-foremployers-wise to understand the details and register. Some support may be
necessary to help the person achieve the qualifications needed to teach.
Retention strategies
Most businesses value their staff and put in place strategies to retain them. The
businesses which are most successful at retention consult with their staff to
understand what would convince them to stay. Some typical outcomes are:

Investments in individual development

A clear career path

Flexible leave policies
In addition, strategies are often put in place to mitigate the loss of staff. Talent
management is a name applied to a suite of human resources approaches that
include identifying people with talent, developing plans to improve their skills and
creating succession plans for key staff so that replacement staff will be ready in the
event of their departure.
20
Trade Training Centres in Schools program
6.
Revenue
Maintaining and increasing revenue is a common concern of many businesses and
revolves around sales and marketing. Appropriate investments in growing revenue
will improve the health and viability of a business. TTCs may often face a gap
between expenditure and revenue. Managing down costs will be discussed in the
following section, but here the focus is on increasing revenue.
The following two revenue challenges were the most common across the TTCs
consulted.
6.1. Revenue streams and marketing
People and resources at TTCs will always be in short supply. It is important to
ensure that the significant investment of effort needed to establish new revenue
streams is always focussed on the outcome which will make the greatest difference
to the TTC. There is little advantage in expending all the available resources on
increasing revenue by $5,000 when the revenue required is $50,000. To determine
the right focus, the first thing to understand is exactly what the revenue gap is.
It follows that TTC operators must understand the costs of running the TTC. While
this seems elementary, it may be difficult to achieve. When a TTC is built the default
position is normally to record the costs associated with the TTC in the same way that
costs are recorded for the lead school. In De-centralised TTCs the costs for each
site might be recorded alongside the costs of the ‘parent’ school. However, this
approach will make it impossible to report out TTC costs separately.
Government schools use the CASES21 system. DET recommends that the ‘Initiative’
code is used to flag TTC costs in CASES21 (the initiative code normally defaults to
000 for all costs). See Section 8.1 for a CASES21 contact at DET who can assist. In
other finance packages it should be possible to set up a separate cost centre for the
TTC. The effort to separate out TTC costs will be significant and should be an
initiative in the TTC business plan if being contemplated. The justification for this
effort is that the revenue being generated by the TTC can be compared with the cost
and the gap quantified.
Once established, the revenue gap should form a target in the TTC strategy along
with a vision of how the TTC will close the gap. Specific initiatives to close the gap
should be nominated in the annual business plan.
6.1.1. Potential revenue streams
Table 3 below lists the revenue generating ideas being used by the TTCs that were
consulted for this exercise (plus one or two extra ideas). If none of these fit your
purposes, a call to some fellow TTC operators is likely to reveal other ideas.
There are three key criteria for deciding which revenue streams to develop. A way to
rank each idea is provided below with some example scores – you will need to
evaluate the scores for your own situation. Ranking will provide a prioritised list of
targets for the investment of your marketing efforts.
Revenue
21
Table 3 - Example revenue streams and ranking
Alignment
to strategy
Potential revenue stream
(1= low, 2=
med, 3= high)
Potential
revenue
Risk
(1 = <20% of (1 = high, 2 =
gap, 2 = 20- med, 3 = low)
50% of gap, 3
= 50-100% of
gap)
Rank
(Add 3
scores)
Securing grants2
1
3
3
7
Attracting students from outside the
cluster
2
1
3
6
Attracting adult students
3
2
1
6
Designing and delivering preapprenticeship training for third
parties (e.g. for AGA)
3
1
2
6
Providing training to industry partner
employees
2
3
1
6
Allowing RTOs to use the facility (or
delivering courses on their behalf)
1
1
3
5
Allowing GTOs to use the facility (or
delivering courses on their behalf)
1
1
3
5
Securing sponsorships
1
1
3
5
Allowing private businesses to use
the facility (e.g. hire or licence
agreement)
1
1
2
4
Hosting one-off or repeat events for
community organisations
1
1
2
4
Selling products produced at the TTC
1
1
1
3
Allowing TAFEs to use the facility (or
delivering courses on their behalf)
1
1
1
3
Allowing CAEs to use the facility (or
delivering courses on their behalf)
1
1
1
3
Note: All scores are examples only
2
Philanthropy Australia is the national peak body for philanthropy and is a non-profit membership
organisation which provides grant-seeking resources. See http://www.philanthropy.org.au/index.html.
Grantslink is a Commonwealth Government grant resource at http://www.business.gov.au/grants-andassistance/grant-finder/Pages/default.aspx
A similar resource is at http://www.business.gov.au/Pages/default.aspx. Grantready is a private
organisation that provides grant writing services and publishes a free listing of community grants at
http://community.grantready.com.au/ . Major corporates also provide grants – contact them via their
corporate websites.
22
Trade Training Centres in Schools program
6.1.2. Developing a marketing strategy to win revenue streams
A revenue target should appear in the TTC strategy along with brief descriptions of
the initiatives that will contribute to achieving the target. Initiatives to achieve the
revenue target may range from increasing enrolments to establishing completely new
revenue streams. All these initiatives will require effort and most of them will require
a marketing effort. Marketing is a key tool when pursuing new revenue and is based
on two central ideas:
Creating a product that the target customer needs or wants
It is imperative to understand who the target customer is. For example, if the
initiative is to find enrolments outside the TTC cluster, then the target customer is
not only students, but their parents, teachers and schools as well. It is always a
good idea to ask customers what they want, rather than guess. Once the target
customer(s) and what they want is known it becomes much easier to design a
product that is likely to succeed. Your product is most marketable if it clearly
matches a need or desire that your customer research has identified and is
different from your competitors’ offerings.
Making the target customer aware of the product and achieving a sale
With a clear idea of the target customer(s) and the product, the next challenge is
to design a way for the customer to become aware of your product and an easy
way to choose to buy it. Marketing aims to understand when the customer is
likely to be contemplating buying a product, what ‘channels’ of information they
normally use to help them make their decision, how to get the message about
your product into those channels and, should the customer choose your product,
how to ensure the buying process is as simple as possible and does not
discourage their decision.
Below is an overview of the marketing process:
Marketing process
Select revenue
stream
Identify customer(s)
Research
customers’ needs,
information
channels, timing,
competitors, etc.
Adjust product,
message and sales
process as
necessary
Design product to
match customer
need
Create message
matching product to
customer need &
insert into
information channels
Monitor sales and
seek feedback from
customers
Design sales
process to minimise
buying effort
Revenue
23
Much like developing an industry partnership, it is no small effort to generate new
revenue and it can take a long time to bear fruit. To help make the effort sustainable
there are several good practices to consider:

TTC stakeholders are a source of information and assistance and can be called
upon to contribute.

Keeping the governance committee informed on the marketing process and
regularly reporting progress will help set expectations and maintain support.

There is no guarantee of success. If sales targets are not being met and
improvement is unlikely, a decision to move the marketing effort to an alternative
revenue stream should be made quickly and clearly.

External advice and expertise may improve your chances of success. Major
consultancies will often do pro-bono work. Consider contacting the offices of one of
the global ‘big 4’ accounting and advisory firms, the local office of global strategy
consultants or other consultancies and even large corporations who have
marketing expertise and may be able to help.
6.2. Third party use of TTCs
Many of the revenue streams being considered by TTCs involve accepting payments
from a third party for the use of the TTC facility. A common issue amongst TTCs
consulted was uncertainty about the legal and insurance implications of allowing a
third party to use the TTC facility.
6.2.1. Legislation
Pursuant to the Education and Training Reform Act 2006 (Vic) a School Council may
allow a third party to use any buildings and grounds located at the School for certain
specified purposes. This includes use of a TTC located on a school site.
The purposes are those specified in section 2.3.11(1) of the Act and are the conduct
of educational, recreational, sporting or cultural activities for students, the local
community or young persons. A School may only permit the TTC to be used for an
activity that falls within one of these purposes. Commercial use is permitted provided
the TTC is also being used for such an activity. Examples might include running
cooking classes for the local community or holding an indoor community market. The
School Council may charge fees for the use of the TTC.
Importantly, the School may only permit third parties to use any buildings or grounds
at the School if they are not required for ordinary School purposes. It is also
important that any use of the TTC by third parties is not inconsistent with its use by
school students. This is linked to the School Council’s obligation to provide a safe
environment for its students.
If a third party wishes to use the TTC outside the times that it is used by school
students on a purely commercial basis, such as a bakery using the commercial
kitchen facilities on a Saturday as part of its business operations, then the school will
need Ministerial approval of this use as it falls outside the school council’s legislative
powers to permit. In such a situation, the school should contact the Department’s
24
Trade Training Centres in Schools program
Infrastructure and Sustainability Division, as there are managers within that Division
with delegated authority to make decisions on behalf of the Minister.
Schools do not need planning permits for their educational activities but a third party
might need a permit for its activities. For overlapping use which occurs during times
that the TTC is also used by school students, schools have obligations under the
Working With Children Act 2005 (Vic) which may be relevant.
Duty of Care
When third parties are permitted to use TTC facilities their employees or clients may
come into contact with students and staff. Principals must assess the risks involved,
apply school and DET policy and put in place mitigation strategies and if necessary
deny or terminate the third party usage.
Schools can consult the Guidelines for assessing requests for community use of
school facilities which provide advice to school councils on assessing the use of
school facilities by the wider community:
http://www.education.vic.gov.au/school/principals/infrastructure/Pages/facilitiesuse.as
px
http://www.education.vic.gov.au/Documents/school/principals/community/guidelh
aredfacil.pdf
Are any activities excluded?
School councils should not permit their facilities to be used for activities that interfere
with student learning or are against the ethos of the school. This includes activities
that:






infringe on the delivery of school programs
might bring the school into disrepute
are likely to cause damage or unmanaged risk to students, school buildings
or property
create excessive noise or pose a nuisance to nearby residents
may involve the use of firearms
are illegal.
In line with their duty of care, school staff should consider:







How the school can control who is accessing the TTC facilities
How the school can control / address the behaviour of the third party’s staff
and clients in the presence of their students
The proximity that the third party’s staff and clients may come in relation to the
students
How the school will prevent the third party’s staff and clients accessing other
parts of the school grounds
Whether the presence of other persons on school grounds may cause
distractions for students and disrupt their learning
Whether there should be consultation with the school community regarding the
proposed arrangement
How the school’s visitor policy would be implemented in relation to the third
party’s staff and clients accessing the TTC
Revenue
25


Whether the measures that the school may need to take to discharge its duty
of care to its students are onerous or unfeasible, such that it would be
inappropriate for the third party use of the TTC to proceed
Whether it would be preferable for the third party to only access the TTC
outside school hours.
6.2.2. Insurance
DET’s insurance program provides property cover for buildings and equipment
located on government school sites, including TTC property. DET also insures
schools for public liability. More information about the insurance provided by
DET can be found here:
https://edugate.eduweb.vic.gov.au/Services/Schools/principaltoolkit/technical/P
ages/Schol-Insurance.aspx
There are three types of insurance coverage that need to be considered in the
context of third party use of TTC facilities:
Property insurance
Property insurance is designed to protect the policy holder from loss or
damage to physical property caused by an insurable event. Coverage
applies to defined property in respect of loss events described in the policy.
It is also common for policies to detail specific exclusions.
Buildings, fixtures and fittings
Buildings (including their fixtures and fittings) located on school sites are
insured under DET’s Industrial Special Risks (property insurance) Policy. If a
third party is using the building at the time of the loss, this insurance will still
apply (although if the third party’s negligence contributed to the loss, the third
party may be held liable for that contribution).
Note: TTC buildings on third party property (e.g. a TAFE) are generally
insured by the third party property owner pursuant to the terms of the Joint
Use Agreement.
Equipment
School equipment is insured by DET under the School Equipment Coverage
Scheme (SECS). This policy only covers specified contents in schools when
damage is caused by:

fire or explosion;

burglary and vandalism;

storm, lightning, flooding and water damage;

electrical power surge; and

other natural disasters.
Importantly, the SECS does not cover plant, machinery and furniture. Major
TTC equipment (eg a CNC Lathe) is likely to be considered ‘machinery’ and
therefore would not be covered. TTCs should consider the status of each
major item of equipment. Items which are installed at the TTC, such as
commercial ovens, are likely to be considered fixtures and therefore covered
26
Trade Training Centres in Schools program
by DET’s property insurance. If a School is in any doubt, the nature of the
equipment and its insurance coverage (or lack thereof) should be clarified
with DET (see contacting the Department in Section 8.1). It should not be
necessary to purchase an insurance policy covering equipment purchased for
use at the TTC with the Commonwealth funding provided in respect of that
TTC. Damage to equipment caused by a third party will either be covered by
the third party’s public liability policy or recoverable from the third party itself.
The SECS also does not cover leased or hired equipment, however the terms of lease
agreements will normally require the equipment to be insured under a separate policy.
Hire agreements usually include insurance. TTC equipment is required to be owned or
leased.
Note: School Councils are not permitted to enter into Hire Purchase arrangements (i.e.
agreements which result in the School Council owning the equipment at the end of the
hiring period.)
Detailed information about the SECS can be found here:
http://www.education.vic.gov.au/school/principals/spag/finance/Pages/equipment.aspx.
Note: The SECS was formerly known as the School Equipment Insurance Scheme
(SEIS) or School Equipment Reinstatement Scheme (SERS).
Public liability insurance
Public liability insurance covers the policy holder’s legal liability for personal
injury or property damage suffered by a third party as a result of the policy
holder’s activities. A school’s public liability insurance will therefore not cover
personal injury or property damage caused by third parties who are using a
TTC. It is therefore vital for third parties to hold their own public liability
insurance of at least $10m. The TTC must request proof (normally a valid
certificate of currency) from the third party before permitting the third party to
commence using the TTC facility.
DET policy allows Schools to grant an exception to this requirement if the third
party is a not-for-profit organisation whose activities do not pose a significant
risk. See the public liability section of the Schools Policy and Advisory Guide 3.
Worker’s compensation insurance
In Victoria, worker’s compensation insurance is compulsory for all employers
and is generally provided by the state insurer, WorkSafe. Claims are managed
by a panel of insurance companies who act as agents for WorkSafe. (CGU is
the WorkSafe agent for DET claims.) Third parties who use TTC facilities are
not covered by DET’s worker’s compensation insurance and must have their
own insurance policy covering their employees.
The DET Schools WorkSafe policy guide is available here:
http://www.education.vic.gov.au/school/principals/management/Pages/worksaf
epolicyguide.aspx.
3
http://www.education.vic.gov.au/school/principals/spag/finance/pages/publicliability.aspx
Revenue
27
6.2.3. Use Agreements
It is important that all use of TTCs by third parties, whether this is on a commercial
basis or for a peppercorn licence fee (such as in the case of a not-for-profit
organisation), is regulated by a written agreement. This is to ensure that there is a
clear understanding of the proposed arrangement between the parties. Working
through such an agreement is also an opportunity to understand how the third party is
likely to behave and to set expectations accordingly.
Note that the lead school council will be the legal entity entering into an agreement for
use of the TTC. The school council may authorise the school principal or the
Chairperson of the TTC governance committee to conduct negotiations with a third
party on its behalf, but the school council must approve the final arrangements and sign
the agreed documentation.
From a legal perspective, it is important to use DET’s pro forma documents when
entering into such arrangements with third parties, be they commercial entities or
community groups. The pro forma documents have been specially designed to
address a School’s legal obligations and the legal framework within which a school-run
TTC operates.
Hire agreement
DET has a pro-forma hire agreement which is designed to be used when a third
party wishes to use the TTC or a part of it on a one-off basis (such as a youth
group hiring a TTC room for its annual presentation night) or a third party wishing
to hire a room within the TTC on an ongoing but limited basis (such as a
community group looking for a room to hold its monthly meetings). The hire
agreement can be used for ad hoc hire or for simple ongoing hire up to a 12 month
period. A copy of the pro-forma hire agreement, which has been designed
specifically for use with a TTC located on a school site, is attached to this manual.
This document should not be amended.
Licence agreement
DET has a pro-forma licence agreement which is used when a third party wishes to
arrange regular and/or substantial use of the TTC or a part of it, on an on-going
basis. For example, a local drama group hiring out the TTC for three 2 hour blocks
during term time for a period of 2 years. There may be certain scenarios in which
either a hire agreement or a licence agreement could be used. The most important
factor is to ensure that the parties use one of these documents. If a third party
wishes to negotiate additional clauses or changes to DET’s pro-forma licence
agreement the lead school should seek advice from DET’s Legal Division. Schools
should not be signing agreements which have been prepared by third parties
unless they have approval to do so from Legal Division, and this is strongly
discouraged. A copy of the pro-forma licence agreement, which has been
designed specifically for use with a TTC located on a school site, is attached to this
manual.
Schools are not permitted to enter into Leases
Under the Education and Training Reform Act 2006 (Vic), school councils are not
permitted, without the approval of the Minister for Education, to enter into leases or
other similar arrangements that provide exclusive use of school or TTC facilities. If a
28
Trade Training Centres in Schools program
school council is contemplating a lease of a TTC, or part of it, then it will need to seek
approval from DET’s Infrastructure Division.
6.2.4. Checklist
It is recommended that any commercial third party use of a TTC facility is presented to
the governance committee of the TTC for approval (or the lead school council, if there
is no governance committee). The presentation should specifically cover the following:

How the use supports the long term strategy for the TTC.

Projected income from the arrangement and any costs that will be incurred.

Information about the third party.

Details on what the third party will do in the TTC facility.

What the TTC’s obligations will be.

The type of agreement being sought with the third party (i.e. the Hire Agreement, or
Licence Agreement), who prepared it and who will sign it.

Risks, for example:
– Duty of care risks and how they will be managed.
– Confirmation that the property and equipment insurance policy(s) will apply (i.e.
there are no excluded events that are likely to occur). If there are any gaps (e.g.
the equipment is not insured) then the agreement with the third party should include
either a ‘user pays’ damage clause, or a fee for the risk faced by the TTC.
– Confirmation that the third party has public liability insurance of $10m or more.
– Confirmation that the third party has an existing WorkSafe policy to protect their
employees on TTC property.
– Any opportunities that will be forgone by letting the third party use the TTC.
Revenue
29
7.
Costs
Cost challenges are common to all businesses and require constant vigilance to ensure
the business is operating as efficiently as possible. However, cost management should
not come at the expense of revenue growth.
The viability of a long term strategy and its accompanying business plan is best
measured by Cost vs Revenue. If the cost is higher than the revenue, then it is hard to
see how the strategy and plan can be viable.
It follows that costs must be understood. A complete picture of the cost of running the
TTC provides a clear idea of how much revenue is required to achieve sustainability.
Bookkeeping
It is highly recommended for TTCs with a separate strategy, that they also have
separate bookkeeping. In most bookkeeping packages this can be achieved by
creating a new master entry representing the TTC and keeping all the other charge
codes the same.
Government schools use the CASES21 system. DET recommends that the ‘Initiative’
code is used to flag TTC costs in CASES21 (which normally defaults to 000). See
Section 8.1 for a CASES21 contact at DET who can assist.
If TTC costs are recorded along with the lead school or the ‘parent’ school on each site,
the initial effort to separate out TTC costs will be significant and should be reflected in
the TTC business plan.
Accurate bookkeeping provides information which can be extrapolated into a forecast.
Forecasts are essential for annual planning. Well designed bookkeeping processes
can provide reports which track the financial status of the TTC and progress towards
financial goals with very little effort. These reports provide objective information to the
governance committee which improves the quality of decision making.
Two potentially significant cost areas for TTCs are transport and equipment
replacement.
7.1. Transporting students around the cluster
TTCs with multiple sites will almost always have to consider transport arrangements.
Many school clusters have been dealing with this for some time, particularly where VET
courses have been shared across a cluster or alliance.
DET has a policy which may assist, here:
http://www.education.vic.gov.au/school/principals/spag/safety/Pages/transporting.aspx.
Note that the Duty of Care applies when transporting students.
30
Trade Training Centres in Schools program
Wherever the TTC has introduced more student movement, or new destinations for
students, the cost of transport should be understood and charged to the TTC where
necessary (even if that means journaling or transferring a proportion of transport costs
to the TTC cost centre in retrospect).
Like most challenges, transport is an issue that is best addressed with multiple
strategies. The relationship between transport and timetable flexibility should not be
underestimated; easier and more convenient transport opens up the possibility of using
more of the TTC’s capacity, but only if timetables are flexible enough to take advantage
of this. Conversely, more flexible timetabling allows synchronisation of student
movements to take advantage of limited transport opportunities.
The following is a summary of the transport strategies in use or being contemplated by
TTCs:
7.1.1. Public transport
Some clusters have had success in lobbying to have public transport routes and
timetables modified to suit movement between TTC facilities, making the adoption of a
‘user travels’ policy much more practical, especially for more senior students. There is
a ‘win-win’ available with cheap transport available to students and much higher usage
of public transport during the day for providers.
7.1.2. Transporting teachers
Most VET courses delivered in TTCs have a theory and a practical component.
Specialist teachers may be able to provide the theory component of their course at the
student’s ‘home’ school and reduce the need to transport the student for only the
practical component. RTOs may be able to assist with this by re-designing their
curriculums around this concept (which may also apply to online learning).
7.1.3. Online learning
Most universities in Australia offer comprehensive online services and several onlineonly universities can deliver entire degree and masters courses with no class contact.
There are TTCs working on online education. Contact details are available in Section
8.1.
7.2. Funding the replacement of TTC equipment
Major equipment in TTCs may have a serviceable life of many years, with maintenance
and repair costs spread unevenly over that lifespan. Replacement costs may be very
high.
Costs
31
At the end of the lifespan of any particular piece of equipment there are essentially only
four options:
1.
2.
3.
4.
Do not replace the equipment.
Seek a donated replacement.
Buy or lease a replacement.
Extend the life of the equipment.
An option must be selected well in advance of the end of the equipment’s life. Some of
the options will require activity (e.g. saving for a replacement, or seeking sponsorship
well before the end of the equipment’s life, so aim to select an option before the
equipment is half way through its lifespan.
Each option will be dealt with in turn but in order to select the right option it is
imperative to have information available to make the right choice. Information will
change over the life of the equipment, so the selected option should be re-visited at
least annually.
7.2.1. Collecting information
Information is needed to understand the total cost of ownership of equipment and the
revenue it generates. Below is a list of appropriate information to collect and how to
collect it.

Replacement cost
Replacement cost will change as technology advances and the preferred equipment
used by employers changes. At worst, assume that replacement cost will equal the
initial price of the equipment, but annually seek industry or partner advice on the
appropriate replacement equipment and a price from suppliers.

Maintenance costs
Other owners and the manufacturer can give you an estimate of maintenance costs,
however better information is available from your own knowledge and experience of
the equipment. Keep a record of maintenance costs (see notes on bookkeeping
earlier in this section) and extrapolate the annual cost from them. It is also wise to
ask the manufacturer or recognised maintenance suppliers whether a fixed price
service contract is available and what the cost would be. A fixed price service
contract makes costs predictable and avoids spikes in maintenance costs.

Cost of consumables
Keep accurate records of the cost of consumables (see notes on bookkeeping
above). These costs are an important contributor to the total cost of ownership and
help to reveal situations where a low purchase price disguises a high overall cost.

Estimated lifespan
The manufacturer will have information about the usual lifespan of their equipment
but other owners may have better information.

Breakdown costs
Again, other owners of the equipment can be asked for their experience of
breakdown costs until you build up your own knowledge and experience. Generally,
breakdown costs will increase as the equipment ages, giving you a way to
extrapolate the best time to dispose of the equipment. If you have a fixed price
service contract you should have no breakdown costs, nor should you incur any
breakdown costs during warranty periods.
32
Trade Training Centres in Schools program

Revenue generated
This is the most difficult piece of information to determine and will require some
judgement to come to a suitable figure. For all the courses that use the equipment
add up the revenue (number of student enrolments x fee) to reach a total revenue
number. Reduce the number by the cost of teaching (use a proportion of the
teacher’s salary if the teacher conducts other classes). Estimate the role the
equipment plays in each course and reduce the total number by an appropriate
proportion. For example if the equipment is used by every student in every class,
then its role is pivotal and there is no need to reduce the total revenue number any
further. If it is impossible to deliver the class without the equipment then its
contribution is pivotal and there is no need to reduce the total revenue number any
further. If the equipment is used for approximately 50% of the time the student is in
class and equipment at say another school, a TAFE or a partner organisation could
be used, its contribution should be reduced by a notional 50%. This will provide a
figure for ‘revenue generated’. For those who prefer a formula:
$Revenue generated = ((enrolments x $fee) – $teaching cost) x %contribution
7.2.2. Total cost of ownership
With the information above the total cost of ownership can be calculated. This is best
done with a table and a chart so that comparisons can be drawn. Below is an example
table and corresponding chart based on a $170,000 Computer Controlled Woodworking
machine which was purchased as part of the original TTC grant and has an estimated
lifespan of 5 years.4
Table 4 - Ownership costs
Year
Description
Cost
0
Purchase (incl 1 yr warranty)
1
Maintenance
$1,590
1
Consumables
$2,442
2
Maintenance
$1,910
2
Consumables
$1,857
2
Breakdown
3
Maintenance
$2,155
3
Consumables
$2,010
3
Breakdown
$2,875
$170,000
$450
Cumulative
Cost (annual)
$170,000
$174,032
$178,249
$185,289
Note: All figures are examples only
4
A copy of the spreadsheet used to create the tables and charts in this section is available in Section 8.
Costs
33
Figure 1 - Total cost of ownership
Equipment costs
Trend
$210 000
$205 000
$200 000
$195 000
$190 000
$185 000
$180 000
$175 000
$170 000
0
1
2
3
4
5
Year
You can see that information available at the end of year 3 can be extrapolated to show
a rising trend in the total cost of ownership over the five year estimated lifespan of the
equipment. This trend was calculated using a function in Microsoft Excel but can just
as easily be calculated using estimated figures. Validate your trend curve by checking
whether the rising prices for consumables, maintenance and breakdowns are
reasonable and rational. Adjust the trend according to your judgement and as any new
information comes to hand.
7.2.3. Selecting an option
Information collected about major pieces of equipment enables objective decision
making regarding the end of the equipment’s life. The four options available should be
assessed in the following order.
Option 1 - Do not replace the equipment
From a purely financial point of view, this is a simple decision to make and should be
the first decision in considering the replacement of equipment.
The revenue generated by the equipment should exceed the total cost of ownership by
the end of the equipment’s estimated lifespan. If it does not, then serious consideration
should be given to forgoing replacement. Calculating the revenue generated and the
total cost of ownership is explained above.
Note that a decision to forego replacement does not necessarily mean withdrawing the
associated course(s). Consider the possibility of using a partner organisation’s
equipment to continue offering the course (partners may include an employer, a TAFE,
another TTC, etc). If going down this track, be sure to calculate the costs of
transporting students to the equipment, any hire costs and any hidden costs (e.g.
consumables) to ensure that the revenue generated exceeds the cost of accessing the
partner’s equipment.
34
Trade Training Centres in Schools program
If foregoing replacement means retiring the associated courses, assess the impact this
might have on the TTC’s enrolments in other courses. There may be a compelling
reason to continue to offer the courses at a loss but accepting such a situation is a
decision that cannot be taken lightly.
Note: The Project Specific Schedule (PSS) which lays out the obligations of the TTC
includes a nominated set of courses. Retiring courses will require a change to the PSS
- contact DET for help with updating the PSS.
If the decision is made to forego replacement, it is advisable to remove the equipment
from your premises by selling, scrapping or otherwise disposing of it. If retired
equipment stays on site it occupies valuable space and introduces a risk that it will be
used, which will incur costs without generating revenue. It may also represent a safety
hazard.
Note: Donating equipment that is at the end of its life is an attractive option for
disposal but can be problematic; potentially exposing the TTC to liability if the
equipment fails or causes injury.
Option 2 - Seek a donated replacement
Seeking a partly or wholly donated replacement for your equipment is a major strategic
challenge and will require considerable lead time. See ‘Building partnerships with
industry’ in Section 5.3.2 above. Keep in mind that donated equipment is never ‘free’.
Ensure that the cost of the marketing effort, maintenance, consumables, breakdowns
and any obligations attached to the donation are understood. Before accepting the
donation, forecast how much revenue will be generated and check that the total cost of
ownership does not exceed the revenue generated.
The outcome of this exercise is not within the TTC’s control, so it is advisable to have a
back-up plan. The back-up plan is one of the other options outlined in this section.
It is possible that donations will only contribute to the cost of the equipment rather than
pay for it outright, effectively reducing the purchase or lease price. If this is the case,
factor the donations into the total cost of ownership model and refer to Option 3 below.
Option 3 - Buy or lease a replacement
After option 1 and 2 have been considered, it may be necessary to determine the most
cost effective replacement strategy. The main decision is whether to buy or lease.5
Note: School Councils are not permitted to enter into Hire Purchase arrangements (i.e.
agreements which result in the School Council owning the equipment at the end of the
hiring period.)
While there are a range of pros and cons to buying and leasing (e.g. leasing reduces
the burden on capital, while buying affords opportunities to manage down costs), the
buy versus lease decision should be based on these two key questions:
For the purposes of this section we are using a broad definition of the word ‘lease’ which includes
formal lease agreements with banks and financial institutions, rental agreements, vendor finance
agreements and any other agreement where there is a regular payment made to possess the
equipment.
5
Costs
35
1.
2.
Can the funds for purchasing a replacement be saved or raised before
the end of the equipment’s life?
If so, can the TTC do anything with those funds that will return more than
the cost of leasing?
If the answer to question one is ‘yes’ and the answer to question two is ‘no’ then the
equipment should be purchased outright.
Otherwise the equipment should be leased. Lease calculators are readily available on
the internet. An example is here: http://www.nab.com.au/business/calculators-andtools/equipment-finance-repayment-calculator. A lease calculator will show the monthly
cashflow that will be required to finance the replacement. A lease will increase the total
cost of ownership, so ensure the increased costs have been considered in the decision
made under Option 1 above.
Note: Leased equipment is not covered by the School Equipment Insurance Scheme.
The finance provider generally requires equipment to be insured as part of the lease
agreement and may provide insurance itself. If the insurance provided by the financier
is too expensive you have the right to shop around for a more cost effective policy.
Remember to include the cost of insurance in your total cost of ownership model.
Getting the best deal
Purchasing or entering into a lease for a major item is an activity that can be optimised
through the use of procurement methods such as tendering. TTCs need to comply with
DET’s procurement policy (see the ‘Purchasing’ chapter of the Finance Manual for
Victorian Government Schools, here:
https://www.eduweb.vic.gov.au/edulibrary/public/schadmin/Management/Finance/Finan
ce_Manual_v5.1.pdf
While public tenders are generally used for larger purchases, it is suggested that TTCs
consider using a tender process for smaller amounts to achieve the best possible
outcome, especially when there are multiple potential suppliers and the purchase is for
both equipment and services (such as maintenance and repair). The approval of the
governance committee should be sought before deciding to run a tender for equipment.
Be aware that other TTCs will be facing the same equipment replacement issues and
may be in the market for new equipment around the same time as you. Combining
purchases from more than one TTC will create more market power and reduce the cost
of managing the tender process by spreading it across several TTCs. It will be
advantageous to keep in contact with other TTCs with similar courses and equipment to
align the timing of purchases.
Tenders will not happen very frequently at a TTC so tender management is a skill that
should not be developed in-house. When a tender is required TTCs should look to
external resources to manage the tender. Consider hiring a consultant with appropriate
experience to manage the tender, seeking the assistance of one of your industry
partners or contacting DET for assistance.
Option 4 - Extend the life of the equipment
It is easy to think that any way to delay the replacement of the equipment is a bonus,
but this may be false economy. Typically, maintenance and breakdown costs escalate
as equipment nears the end of its life. Extending the lifespan can risk a major
breakdown which creates a dilemma around whether to incur significant repair costs or
36
Trade Training Centres in Schools program
scrap the machine and scramble to acquire a replacement at short notice, with the
associated risk of being forced into a poor deal.
A good way to make the decision to extend the life of the equipment is to compare the
total cost of ownership of your current equipment with the planned replacement. An
example table and chart is supplied below, showing a comparison of the current
equipment (at the 3rd year of a 5 year estimated lifespan) against a planned
replacement with a maintenance contract.
Table 5 - Comparison of ownership costs
Current Equipment
Year
Description
Cost
$170,000
Cumulative
Cost (annual)
Cost
Cumulative
cost (annual)
0
Purchase
1
Maintenance
$1,590
1
Consumables
$2,442
2
Maintenance
$1,910
$4 500
2
Consumables
$1,857
$2 400
2
Breakdown
3
Maintenance
$2,155
$4 500
3
Consumables
$2,010
$2 550
3
Breakdown
$2,875
4
Maintenance
$4 500
4
Consumables
$2 375
4
Breakdown
5
Maintenance
$4 500
5
Consumables
$2 500
$450
$170 000
Replacement equipment
$170 000
$170 000
$4 500
$174 032
$178 249
$185 289
$2 250
$0
$0
$0
$176 750
$183 650
$190 700
$197 575
Note: All figures are examples only
Costs
37
Figure 2 - Comparison of total cost of ownership
Current equipment
Replacement equipment
Trend
$210 000
$205 000
$200 000
$195 000
$190 000
$185 000
$180 000
$175 000
$170 000
0
1
2
3
4
5
Year
If the trend line is considered reasonable, it is clear that the total cost of ownership for
the current equipment will exceed the planned replacement after about four years of
operation. Where the lines cross is roughly where you should set the lifespan of the
original equipment and plan to acquire the replacement.6
If the situation were reversed (i.e. the curves crossed later than the 5 year lifespan of
the current equipment) then it is valid to extend the life of the equipment accordingly.
As time goes by, figures in the table can be updated and the resulting changes in the
curves will provide more and more accuracy closer to the end of life for the equipment.
7.3. Getting value for money from an RTO
RTO fees can be significant and poor service can create an administrative burden for
the TTC. Getting value for money from an RTO begins with engaging the right
provider. It makes sense to conduct a competitive tender for RTO services (see
‘Selecting an option’ in Section 7.2.3 above).
The key to successful contract management is creating a working relationship with the
RTO. The relationship must be at more than one level to create a way to escalate
problems. For example, there should be a relationship between the TTC manager and
the RTO account manager as well as a relationship between the School Principal and
the RTO CEO/Managing Director. It should be clear to all parties how these
relationships work. Consider the following diagram:
6
Strictly speaking, the replacement time should be a little later than this because the life and cost of the
new equipment is being brought forward a little. This is offset by the discount effect of inflation on future
costs. In either case existing errors in the trend make this kind of fine tuning academic.
38
Trade Training Centres in Schools program
Figure 3 - TTC / RTO Relationship
TTC
RTO CEO/
Managing Director
TTC Manager
Working
relationship
RTO Account
Manager
Line of
escalation
Working
relationship
Line of
escalation
Lead School
Principal
RTO
The day to day business between the TTC and the RTO is managed at the bottom level
of the diagram. The TTC Manager and RTO Account Manager (or equivalent roles)
need to be able to work together to get things done. This relationship must function
smoothly. If there is an issue that they do not agree on (e.g. the RTO Account
Manager wants the TTC to do all the preparatory work for auspicing, but the TTC
Manager feels that should be the RTO’s role) then they can simply escalate the issue to
their respective bosses to resolve. This technique preserves the working relationship
while dealing with difficult issues.
Where there is frustration with the level of service from an RTO, TTCs should put these
relationships in place by agreeing a simple relationship (like the one above) with the
RTO.
If an exit from the current relationship is possible and warranted, conduct a competitive
tender for RTO services (see ‘Selecting an option’ in Section 7.2.3 above).
Consider banding together with other TTCs to bulk purchase services, as discussed in
Section 5.1 above. As previously mentioned, tender management is a skill which will
be rarely used by a TTC. Securing the services of a tender manager will produce a
better outcome and the cost of doing so can be shared amongst several TTCs if bulk
purchasing is pursued.
Costs
39
When tendering for a new RTO, ensure that:
1.
2.
The conditions for the tender include a requirement that respondents supply
contact details from other customers of the RTO and permission to contact those
customers
The evaluation process includes a formal interview with customers to investigate
the RTO’s quality of service and a score for quality of service based on these
customer interviews.
The contract you sign with the successful RTO tender respondent should include
service delivery clauses, which may include (for example):

Monthly, quarterly or end-of-term reporting on turnaround times and responsiveness

A compulsory monthly service delivery meeting

A process to escalate issues with the RTO’s management for quick resolution

Built in review points, with the opportunity for contract exit or pricing adjustments
based on performance

An agreed set of relationships (see Figure 3 above).
Contract documentation
The following contracts have been developed by DET to support government schools
to negotiate the purchasing and auspicing of quality VETiS programs:




Standard VETiS Purchasing Contract
Standard VETiS Auspicing Contract
School to School VETiS Access Agreement
Purchasing Guidelines for the delivery of VETiS
These contracts are available on the DET website at :
http://www.education.vic.gov.au/school/principals/finance/pages/purchasing.aspx
40
Trade Training Centres in Schools program
8.
Further Information
8.1. Contacting the Department
Below is the DET Contact List for the Trade Training Centres in Schools Program.
When printed this list may become out of date.
Sally-Anne Melke
TTC Project Manager
Careers and Pathways Unit
Secondary Reform, Transitions and Priority Cohorts Division
Ph: (03) 9637 2660
E: melke.sally.a@edumail.vic.gov.au
CASES21 Assistance
Rob Craven
Manager - School Workforce Analysis and Support Unit
Schools Resource Allocation Branch
Financial Services Division
Ph: (03) 9637 3259
E: craven.robert.g@edumail.vic.gov.au
Infrastructure & Sustainability Division
Mathew Jacob
Program Director
Trade Training Centres in Schools Program
Ph: (03) 9651 4638
E: jacob.mathew.m@edumail.vic.gov.au
School Equipment Coverage Scheme (SECS)
Contracts and Procurenet Unit
Infrastructure and Sustainability Division
Department of Education and Training
Ph: 9637 3054
Echelon Claims Services
Ph: 9860 3461
campc@echelonaustralia.com.au
Further Information
41
8.1.1. Online education
West Gippsland TTC is working on online education in TTCs. Further information is
available from:
Rob Juratowich
Principal
Warragul Regional College
Lead School
West Gippsland TTC
Ph: (03) 5623 9900
E: Juratowich.robert.f@edumail.vic.gov.au
8.1.2. Industry Participation
Regional Market Facilitation Managers (RMFMs) can help with understanding the
demand for skills in your region and developing partnerships with industry and other
parts of government.
Contact details for RFMSs are available at
http://www.education.vic.gov.au/training/employers/industry/Pages/rmfm.aspx.
8.2. Business planning toolkit
A companion Business Strategy and Business Plan template has been developed
which aligns with the concepts in this guide. (Attachment 1).
8.3. Governance committee charter
A companion Governance Committee Terms of Reference / Charter has been
developed which aligns with the concepts in this guide. (Attachment 2).
42
Trade Training Centres in Schools program
8.4. Governance reporting checklist
Reporting is a key element of successful governance. In the table below is a checklist
of what TTC management should bring to governance committee meetings.
Table 6 - Governance Committee Reporting
When
Every
meeting
Item
Action
required
Details
Status report
For noting
Must include:
 Progress
Comparing dates for the achievement of initiatives outlined
in the business plan against updated actual and forecast
dates
 Performance
Current performance against all targets set in the business
plan (e.g. student numbers, staff turnover, revenue
generated, etc.). Any shortfalls need an explanation and a
recommendation for addressing the shortfall.
 Budget
Comparing budget in the current business plan with actual
costs to date and an updated forecast of costs to the end of
the current year
 Risks and issues
An update on any risks and issues previously reported and
any new risks and issues discovered or being experienced.
This should include proposed mitigation actions.
 Upcoming events
Ensure there are no ‘surprises’ for the Governance
Committee by forecasting key events (e.g expecting to ask
them to review and approve a new formal agreement next
month, reminding them that the annual strategy review is
coming up, etc.)
 Other items
It is wise for management to report significant events that
are within the delegated authority for management, but are
still of interest to the Governance Committee (e.g. significant
purchases within the TTC Manager’s delegated authority,
employment of new staff, etc.)
Charter
For review
and
approval
 Management’s review of the Governance Committee
Charter/Terms of Reference with any suggested changes
highlighted, including a rationale for the changes.
Delegation of
authority
For review
and
approval
 Management’s review of the Delegation of Authority with
any suggested changes highlighted, including a rationale for
the changes.
Policies
For review
and
approval
 If the TTC has any policies separate from the lead school
(e.g. a Safety Policy, an Access Policy, etc.) these should
be reviewed by management and presented to the
committee with any suggested changes highlighted,
including a rationale for the changes.
Annually
For review
Strategy and
and
business plan
approval
 The culmination of the annual review of the TTC Strategy
(see Section 5.3) will be an updated Strategy and a
business plan for the coming year. Both should be formally
presented to the Governance Committee for approval.
Further Information
43
When
Item
For review
and
approval
For review
Major
and
procurements
approval
 Whenever procurements beyond the TTC Manager’s
delegated authority are necessary, the procurement must be
presented to the Governance Committee, including:
- What the purchased item will be used for and how the
purchase supports the long term strategy for the TTC
- Alternatives considered (see Section 7.2.3)
- How the supplier was selected (if by tender, the
evaluation committee recommendation should be
included)
- How much the purchase will cost (including any ongoing
costs)
- Any risks associated with the purchase and how they will
be managed
For review
and
approval
 Whenever management intends to enter into a new
relationship (using one of the formal agreements in Section
6.2.3) a presentation should be made to the Governance
Committee before signing, covering:
- How the use supports the long term strategy for the TTC.
- Projected income from the arrangement and any costs
that will be incurred
- Information about the third party.
- Details on what the third party will do in the TTC facility.
- What the TTC’s obligations will be.
- The type of agreement being sought with the third party
(i.e. Letter of Agreement or Contract), who prepared it and
who will sign it.
- Risks introduced by the relationship and how they will be
managed
New
relationships
44
Details
 Any significant changes to the business plan (e.g. a new
initiative, changes to the sequence of initiatives, significant
actions to address issues that have arisen or to mitigate new
risks, etc.) should be presented to the Governance
Committee. Presentations should include:
- Reason for change
- Alternatives considered
- Recommended option
- Cost and time implications of change
- Impacts of the change on the business plan and long term
strategy
- Updated business plan incorporating the change (if
necessary)
Changes to
plan
As
required
Action
required
Trade Training Centres in Schools program
8.5. Total cost of ownership model
This tool provides a simple way to compare the total cost of ownership for different
scenarios when replacing, purchasing or committing to a lease for new equipment.
Note that the model below is an embedded Excel spreadsheet which can be opened
from an electronic copy of this document (by right clicking and selecting Worksheet
Object > Open). If you are using a paper copy of this document, please contact DET to
receive an electronic copy.
Figure 4 - Total cost of ownership model
Year
0
1
1
1
2
2
2
2
3
3
3
3
4
4
4
4
5
5
5
5
Current Annual cost
Description
equipment (cumulative)
Purchase (incl 1 yr warranty)
$170,000
$170 000
Lease
Maintenance
$1,590
Consumables
$2,442
$174 032
Lease
Maintenance
$1,910
Consumables
$1,857
Breakdown
$450
$178 249
Lease
Maintenance
$2,155
Consumables
$2,010
Breakdown
$2,875
$185 289
Lease
Maintenance
Consumables
Breakdown
Lease
Maintenance
Consumables
Breakdown
Equipment costs
With maint. Annual cost Leased @ Annual cost
contract
(cumulative)
8.5% (cumulative)
$170 000
$170 000
$0
$0
$41 556
$4 500
$4 500
$2 250
$176 750
$2 250
$48 306
$41 556
$4 500
$4 500
$2 400
$2 400
$0
$183 650
$0
$96 762
$41 556
$4 500
$4 500
$2 550
$2 550
$0
$190 700
$ 0 $145 368
$41 556
$4 500
$4 500
$2 375
$2 375
$0
$197 575
$ 0 $193 799
$41 556
$4 500
$4 500
$2 500
$2 500
$0
$204 575
$ 0 $242 355
Trend
$250 000
With maint. contract
Current equipment
$210 000
Trend
$200 000
$205 000
$210 000
$200 000
$150 000
$205 000
$195 000
With maint. contract
$200 000
$190 000
Leased @ 8.5%
$100 000
$195 000
$185 000
Current equipment
Trend
$190 000
$180 000
$50 000
$185 000
$175 000
$180 000
$170 000
0
1
2
3
4
5
$0
0
$175 000
Year
1
2
3
4
5
Year
$170 000
0
1
2
3
4
5
Year
Further Information
45
8.6. Third party usage agreements
8.6.1
Hire Agreement (Attachment 3)
8.6.2
Licence Agreement (Attachment 4)
46
Trade Training Centres in Schools program