The Essential Ingredients
Hello again. It has been a long time between blogs and I do apologies about that. The end stages of last year were absolutely frantic. I couldn’t say that this year has started any different, but I must continue our story. To all those that have contacted me to tell me how much they have enjoyed the first few instalments to this RTO registration blog series, thank you! It is great to know that the information is helping some people to plan and make better decisions.
This instalment was going to be about the business plan. I have actually almost finished that one , but before we do that, I think it is necessary to first consider the broader requirement before getting down to the detail of registering an RTO. What is required and do I really have the necessary items to make it successful? This is a big question and this blog is intended to provide the answer. In our case study organisation , we have now completed our market analysis and we feel confident that there is a viable market for the service we intent to offer. But what is needed to operate an RTO? I often have people call me who have decided that they want to establish an RTO. I am frequently surprised by the lack of understanding of what is needed to gain registration. I could tell you some real funny stories at this point but I will constrain myself!
As I see it there are ten essential ingredients to registering an RTO. These are:
- A viable business plan
- A viable financial plan
- Fit and proper management
- Management arrangements
- Information management
- Training and assessment strategies
- Training and assessment materials
- Facilities and infrastructure
- Competent staff
- VET Sector knowledge
I am not for a minute saying that this is all you need. These items are essential to acquire before you can consider applying for registration. Now depending on the intended size and scope of your RTO, your industry, some of these items will be more or less significant. You will need to judge this for yourself.
1. A viable Business Plan
The standards for RTOs (initial registration) require the organisation to demonstrate that suitable planning has occurred to support the intended operation. This is usually represented in the form of a business plan that will guide the start-up and operation of the RTO for the initial three years. Obviously most of the detail will relate to the initial 12 months and specifically the registration and start-up phase. One thing I try to encourage is the establishment of this plan early. It is good to see during a registration audit when an RTO has already commenced applying its management arrangements and milestones in the business plan have already started to be completed. A business starts well before registration is obtained. The main thing is, make it real! I am covering the business plan in the next blog but in general, when I review a plan I look for some basic items. These come under the simple concept of Who, What, Where, When, Why and How. Here is my simple business plan structure:
- Company History and Profile
- Organisational Diagram
- Management Profile
- Description of Services
- Operational Area
- Operating Locations
- Key dates and milestones
- Market Analysis
- Competitor Analysis
- SWOT Analysis
- Concept of Service Delivery
- Strategic Objectives and Actions
- Three Year Action Plan
- Staffing Plan
- Facilities Plan
- Physical Resources Plan
- Marketing Plan
- Contingency Plan
- Governance Plan
- Financial Plan
Of course I wouldn’t actually write Who, What, Where, When, Why and How in the business plan. You can just use the sub-headings as the major sections of the business plan document. There are some great business plan templates and guides available at: business.gov.au.
2. A viable Financial Plan
The financial plan is part of the business’s plan. But it is worth special mention as it will come under close scrutiny by the regulator during the application process. Once your application has been received by the regulator, they check it for completeness and then send it for review by a financial auditor. Their job is to audit your financial plan against specific financial standards and against the NVR Financial Viability Requirements. It needs to be a solid plan otherwise your application is dead in the water before it even reaches an audit team. I never submit an application without a report from the client’s accountant certifying that the financial plan is viable. Depending on your circumstances, your viability may need to be supported by demonstrating access to sufficient operating capital during the early stages of operation. One thing to avoid is having a total reliance on access to funding incentives such as User Choice, etc. These funding streams can seriously change overnight. Just ask RTOs in Victoria! These funding programs can only be accessed by organisations who are already RTOs and sometimes they only open for new applications every two years. It’s also not a complete certainty that an RTO will be accepted. You need to demonstrate quality and capacity arrangements in addition to the standard compliance requirements. The qualification that you deliver also needs to be in demand. Qualifications that have less demand will attract less or no funding. It is wise to have a financial plan that is based on revenue coming from a range of sources. Make sure you have read the NVR Financial Viability Requirements available at the following link: Financial Viability Risk Assessment Requirements 2011. Also, get some advice from an accountant.
3. Fit and Proper Management
This sounds fairly obvious but the regulator will be interested to know who the people are that have a financial interest in the organisation and who will be managing the organisation during its day-to-day operations. All of these persons will need to complete, fit and proper person declarations. This essentially declares that these persons have no criminal convictions, have not been bankrupt, have not been previously involved in an RTO that has had its registration cancelled or declined. Make sure you have read the NVR Fit and Proper Person Requirements 2011 available at the following link: Fit and Proper Person Requirements 2011.
4. Management Arrangements
In 2010, the standards for RTOs changed to give focus to the arrangements an organisation has established to manage their proposed RTO at the point of initial registration. At the time, these new standards were released as the Essential Standards for Initial Registration. The language in this standard changed to “The applicant must demonstrate how” and “The organisation has established arrangements to” etc. The 2010 standards migrated straight into the current SNR Standards. The SNR Standards include both the essential standards for initial and continuing registration. So the upshot is: at the initial registration, make sure you have suitable management “arrangements”.
I see “arrangements” as being a combination of things. They are policies that provide a higher guide to the organisations approach (almost philosophical). Policy should embrace the organisations values balanced with aligning it to the specific compliance requirement. Policies may also include guidelines or principles that help staff to make decisions in the range of situations that will present during the course of their duties. Supporting policies are usually procedures. Procedures provide staff a step by step guide to completing their common tasks. Procedures should be relatively detailed and certainly address the critical compliance requirements. Sometimes it is useful to include hyperlinks to important references. Certainly, you will require policies and procedures to address all of the compliance requirements inherent in the SNR standards. You will also require them to support the common administrative functions that occur in an RTO. These includes enrolments, completions, fees handling, staff administration, issuing certificates, etc.
Do not underestimate this requirement. You will rely on these arrangements once you are registered and of course the auditor will take significant interest in your arrangements to ensure that you know them and they support your compliance. Make sure you have read the Standards for NVR Registered Training Organisations 2011 available at the following link: Standards for NVR Registered Training Organisations 2011.
5. Information Management
Of course these great arrangements are not much use without the forms and IT capabilities that enable staff to carry out their duties and manage information. These include forms for enrolment, complaints, assessment validation, credit transfer, etc, etc. Most importantly, this also includes a student management system. Your selection of a student management system is an important decision. Ideally, it should link with your procedures as these two components of the arrangements need to support each other.
Take your time when selecting a student management database. Of course we supply our own RTO Data which is nationally very popular and a proven capability that supports an RTOs compliance and operations (sorry couldn’t leave that out). There literally are about a dozen different platforms to pick from and they all have their own strengths and weaknesses. I won’t name specific platforms but some are outright terrible and I am amazed when I see RTOs struggling with them. Others are so completely over engineered and expensive that they are a miss-fit for about 80% of the RTO market. Some of these systems will cost you upwards of $7,000.00 per year just for a limited number of licenses. Take your time and choose the system that is right for you.
A common mistake I see organisation make is selecting a system that is far beyond their needs. Technology is moving so fast that you should focus on the first three years. Be careful entering into an arrangement with a service provider that has systems that do everything! You will be paying for everything and using about 30% of that system. A great example of this is separating the functions of a student management system from a learning management system. Some of our users of RTO Data deliver lots of online training. They use Moodle for their LMS and RTO Data for their SMS. Also, if you are considering using a web-based platform, be sure to determine how your data is being managed and how you can access it (the raw data) whenever you like. We have had numerous clients who have experienced significant trouble getting their data out of these web-based systems once you decide to move. You have a legal requirement to maintain that activity data for 30 years. Make sure you have read the NVR Data Provision Requirements 2011 available at the following link: Data Provision Requirements 2011.
By the time the audit occurs, it is desirable that whatever system, forms, tools you have choosen or developed that they are ready. You should have already started using some parts of your system to record the actions during the preparation for the audit. These might include management meetings, assessment validation, continuous improvement actions, etc. These records present a very powerful message during the audit that you have not only established the arrangements, but you have commenced applying them. It says “we are genuine in our prepared arrangements”. I always find it a little strange when I am doing an initial registration audit and the applicant has these great arrangements and no evidence of them being applied.
6. Training and Assessment Strategies
Wow! I could seriously talk for days about this subject. I won’t. Just to say that this is a critically important document that tells your trainers everything they need to know to deliver training and assessment for a specific course. So, key questions are who is the target audience? The Trainer. What do they need to know about the course? Everything!
The trick with a training and assessment strategy is to make it genuine. If you are delivering a full qualification then it should be highly detailed. If you are delivering a short course with one or two units then it will be relatively simple. To produce a training and assessment strategy, obviously you need to know the training package requirements and consider these into the design of the course. Yes, I did say design! Develop a course with some thought to the progression of the student through a learning pathway. Look for and integrate opportunities to cluster units together based on their common knowledge and skills or shared work patterns. Design a course that makes sense and stick to the training package requirements. Also, your training and assessment strategy must be developed based on your engagement with industry and your analysis of industries needs. Who is industry? Your potential clients or their employer is your industry. Once you have developed your strategy, take it out for some consultation and get feedback on how it fits into industry requirements. Make adjustments and keep records of this process. The auditor will ask you: “Can you show me any evidence of how you engaged with industry to ensure your training and assessment strategies will meet the needs of industry?” and “Can you identify specific outcomes of this industry engagements?”. I will be covering an entire blog on training and assessment strategies. The four main points are that your training and assessment strategies:
- comply with the requirements of the industry training package
- have been developed in consultation with industry
- are a genuine plan for the delivery of a course. Avoid these Micky Mouse templates and write something that will actually mean something the the trainer.
- are very detailed and would enable a stand-in trainer to understand the structure, function, sequence and quality arrangements of the course.
7. Training and Assessment Materials
This is the elephant in the room! Most people completely underestimate this requirement. I have seriously had a person tell me over the phone that they already had their training and assessment materials. I said, great, where did you get them from? And she said, I downloaded it for free from a website called training.gov.au!!!
Now I know this might have been a strange moment, but even experienced VET practitioners under appreciate the requirement for the materials to support training and assessment. To give you a sense of what is needed, let’s say we take a delivery model that includes training being delivered via a blend of self-paced study complimented by one on one training delivered in the students’ workplace (a traineeship). Here is a snapshot of the training and assessment resources I would suggest a client have:
- The text or commercial learning guide (this provides the learning content)
- A workbook that requires the student to respond to activities. This can be a combination of theoretical and practical activities. (this is collected as evidence)
- A learning session plan (great for contractors to control quality)
- Maybe a PowerPoint presentation or handout to facilitate the learning session.
- Practical assessment activity instructions for the Assessor and the Student.
- Practical observation checklists for each assessment task
- Maybe a supervisor feedback form
- Verbal knowledge assessment form
- Workplace activity record (Training Record Book)
- Assessment Summary Sheet
- Maybe an assessment guide (benchmark) that supports the reliability of the assessment
- Training aids and equipment as required
You will need these resources for each unit or clustered assessment. This is no light requirement and if it is not right (supports training package requirements) it is all over red rover! Do not underestimate this requirement. By the time the auditor arrives, your training and assessment materials need to be ready for all of the items proposed for delivery. Do not assume that commercial assessment materials are compliant, they usualy are not. They often need significant suplimentation and custimisation to get the detail and compliance right and to fit into your delivery model. If they are not supplied in a format that can be amended, forget it, keep looking. My personal approach is to find a top quality text or source of learning content and then design the assessments from scratch. This way you will know them and have confidence in them.
8. Facilities and Infrastructure
This will depend completely on your mode of delivery. If you are proposing to deliver the course using group based face-to-face training (classroom) you will need a suitable venue to support this. Now if you do not own or lease a training facility it is acceptable to propose to use a facility that you will hire on a needs basis. Check out local councils and library’s as these organisation often have training rooms fitted with presenting technology going for a realistic fee. Remember in Victoria training venues need to be certified as meeting a specific building certification (9B). It is not sufficient to simply say that we intend on hiring this facility. The auditor will request some form of evidence that confirms that this arrangement is real. I usually recommend having a letter from the facility owner to you confirming the availability, cost, amenities, booking process, etc. This may be achieved by a letter combined with a brochure. In one circumstance in Sydney, we even supplied the auditor with some photos taken on a phone and printed on A4 paper. It sounds a bit funny but it is these little things that make your arrangements more tangible for the auditor and give them confidence that you are ready.
Now if you are proposing to operate your RTO from home and deliver workplace training, great, I love it! The requirement to evidence your facilities and infrastructure is no less, just a little different. You will need to have a secure office that has secure storage for student files. I strongly recommend that all student files be converted to electronic files. This requires a good scanner and data storage. There is a myth out there that student files must be retained in hard copy format. Total myth! Electronic format is fine. It does place an additional focus on your on-site and off-site backup and storage of data. I recommend in the home office that you have a good quality external hard drive and cloud based backup. We recommend SugarSync. Whether at home or in commercial premises, hard or soft storage, whatever you do, it must ensure that your records are being stored with accuracy and integrity.
Workplace training carries its own unique challenges. It is not sufficient to simply assume that the workplace will have all of the required resources you need to ensure that your training meets the requirements of the training package. You need to establish arrangements to validate that the resources are available in the workplace. You can do this via a walk around with the employer/supervisor at the point of sign-up. You need to know the equipment, resources, policy, procedure, etc. that are required. If they are not available, then sometimes that will influence the choice of electives in a training program. No use including a unit in high reach forklift if they don’t have a forklift (believe me, I have seen it!). Make sure you keep a record of your assessment of the resourses available in the workplace. A simple checklist would be ideal.
The other trap to watch out for is a limited definition of “resources and infrastructure”. When I say infrastructure most people think of buildings and fixed equipment, plant, etc. Do not forget information infrastructure. These are the ubiquitous “organisational policies and procedures” that are littered throughout units of competence. This is part of the context and when incorporated into a workplace learning pathway the competency outcome will be so much more meaningful. The employer will love you for incorporating their workplace arrangements into the learning. But,,,, you need to determine the availability and scope of this information infrastructure at the start. If your assessment activity is dependent on the student having access to policy, this must be available in the workplace or you need to supply it.
9. Competent Staff
When we refer to staff in this context we primarily mean training staff. Of course there are other staff to consider such as admin support, etc, but the training staff have specific compliance requirements and so they will take the main focus. Like all things, your need for competent staff will be dependent on your situation and type of proposed RTO. There are a number of core requirements to consider when selecting staff and preparing evidence of their competence. I call these core requirements the three C’s, Competence, Currency and Capacity.
Competence. You must have access to training staff who are competent. They must be competent in training and assessment (TAA40104 or TAE40110), they must also hold the same qualification / competence in the vocational area that they intend to deliver training and assessment. In vocational competence, they may have a higher qualification but this must be “related” (in exactly the same stream). The interpretation of a higher related qualification is very poorly interpreted by most RTOs. The following are some suitable examples, Certificate IV Business Admin / Diploma of Business Admin or Certificate IV in Children’s Services and a Bachelor of Early Childhood Education. An example of a qualification on the fringes of being suitable is Diploma of Community Services / Bachelor of Nursing or Certificate IV in Frontline Management / Certificate IV in Customer Contact. I have seen these later examples put up as equivalent qualifications at audit only to be rejected. In general terms, the trainer should have the same qualification with the relevant units of competence that is to be delivered. One common mistake that an RTO will make is because the trainer has the same qualification, they think, no problems. The trouble is the standard says they need the vocational competence, not the vocational qualification. If they do not have the same units of competence that they intend to deliver, then they will need to supply significant supporting evidence of equivalent competence to fill the gap.
Currency. It’s one thing to be competent. It is an entirely different matter to demonstrate currency. Currency is defined as the “present or very recent past”. Is the staff member current in the skills and knowledge related to their claimed competence? That is the question. How do you demonstrate that? Through evidence of continued participation in the relevant occupation, through continuous professional development, through formal trade testing or competency assessment. Other less valid ways to demonstrate currency include subscription to an industry magazine or newsletter, or membership of a professional association. Currency is a real issue for many trainers. It is not helped by totally inconsistent interpretation by auditors. Ask five auditors what constitutes valid evidence of currency and you will get five different answers. The take home message from that is, have lots of valid and overwhelming evidence that your trainers are currently competent.
Capacity. Ahhh, capacity! Not often considered because it is not specifically referred to in the standard. SNR 4.4 addresses competency and currency and makes no reference to how many trainers are required or how many students can a trainer manage. Capacity is implied, not stated within SNR 4.3. You will need to demonstrate that you have access to a suitable number of trainers to support your intended operation. If you want to operate in many locations you will need the staff to support that operation. It simply comes down to reality. As an example, if you want to operate a delivery operation in Perth, Brisbane and Sydney, you will need a staff member (or contractor) in each location. You could take an approach of fly-in / fly-out but your approach would need to demonstrate how that would work, not to mention the economic feasibility. Keep in mind that the choke point is almost always assessment. I can deliver training as a class, no problem. Assessment is one-on-one. In your business plan, you will need to demonstrate a plan around staffing. Get the detail right and make it realistic.
The last quick thing to mention about staff arrangements is the need for some type of employment agreement. Regardless if they are an employee or a contractor, you need to have some form of agreement that demonstrates that the person is truly available and committed to provide services within your organisation. The auditor will ask for an agreement. Have it ready. Just out of interest you can get some great employment agreements (preeminent and contractor) from a website called DocDownload. These are generic and are supplied in word. They usually cost about $40.
Wow! That staff section was big!
10. VET Sector Knowledge
Last but not least. Knowledge. Now it might sound a little strange that I have a section devoted to VET Sector knowledge. Believe me it is as important as having compliant assessment materials. I get some enquiries that would just make you fall on the floor laughing your guts out! “Hi, I want to start an RTO. I work in the retail sector and know everything about retail and now I want to share it with a new breed of shop assistants”. That is great! Do you have any experience in the training sector? “No, but I understand that I can get paid by the State Government to deliver my own traineeships. How long will it take for you to get my registration?”
I am serious! It takes every ounce of my patience to calmly explain everything I have explained in this blog. The reason I decided to write this particular blog is because of these types of enquiries. Knowledge and the right motivation are critical. I usually recommend that the person go and do a load more research. Some are really taken back by this, but what they don’t appreciate at the time is that I am really doing them a favour. The regulator does not care that your intentions are good. If you are not compliant, you are not compliant, full stop.
So,,,, back to knowledge. Is the knowledge of the principal persons in the RTO important in terms of compliance? Absolutely. Knowledge relates to capacity (SNR 4.3), management arrangements (SNR 6.1) and ability to govern (SNR 7). During an audit, if the auditor considers that the people in charge of the RTO do not have sufficient competence to comply with the declaration that they have signed then it will have a highly detrimental impact on the audit outcome. That is why I spend two full days with future CEOs taking them through every inch of their responsibilities as an RTO. Before that, I have issued them with prior reading and we would have had a teleconference to start the conversation as early as possible. If you are considering starting an RTO and you have no background in the VET Sector, really do your homework before you launch into it. At a minimum, I suggest the following:
Well,, I know this was a long one, but I know for those of you who are seeking answers, it would have helped. All the best and good training!