Jenny Shackleton, principal of Wirral Metropolitan College, said that colleges must devote considerable time to drafting the bids to have any chance of winning a contract. Ms Shackleton was hand-picked by ministers to advise on the New Deal and further education.
The college is in one of the most deprived areas of Britain and should be a main beneficiary of the new cash. But to have any chance of winning contracts under the complex bidding scheme, she said, she was forced to set up a new management unit.
Five administrators and three managers were deployed to handle New Deal contracts to get the jobless from benefits and back to work, she told The TES after addressing a conference on the Government initiative.
The work is extra to a heavy bureaucratic workload for the Government's Single Regeneration Budgets for inner cities, the European Social Fund bids and the Further Education Funding Council - all with different funding rules.
"Colleges will now have at least three parallel tracking and recording systems. They all have things in common but they are not a common information system."
And she warned other colleges considering embarking on the New Deal without setting up a special unit that "the introduction of New Deal training would have been a complete disaster".
New Deal programmes were introduced in 12 pathfinder areas in January. The scheme offers young people the choice of full-time training, a subsidised job, voluntary work or a place on an environmental taskforce.
It is due to go national in April but many critics in training and industry are now concerned that this could be too early, jeopardising the future success.
Ms Shackleton stressed that FE's involvement as training providers and local employers was crucial to helping 18 to 24-year-olds into meaningful jobs.