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The Costs of e-Learning

Presentation and Workshop

Professor Paul Bacsich

Dipoli, 23 March 2004, Finland

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Problems of different cost perceptions

There is slowly increasing agreement on the methodologies of costing e-learning

So why is there a dilemma where Education see

“No Significant Difference” whereas Training sees

“Return on Investment”?

The challenge is to find a uniform evaluation/planning methodology, including costs, which copes with a “world without borders”

Borders are not only geographic

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Hidden Costs

– the bane of financial planning

Increased telephone call and printing bills for students due to Internet usage

Entertainment expenses “necessarily” incurred by staff at conferences but not reimbursed

Administrator time answering student queries

Support costs of a new Learning Environment

Costs of content -

“created in one’s spare time”

Costs of institutional collaboration

Costs of conformance to standards

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Contents

Activity-Based Costing (CNL2)

Hidden Costs and Stakeholders

(CNL1)

Planning (after HEFCE)

Actual costs

Workshop

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Activity-based

Costing: CNL2

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CNL2 = ABC

Done at Sheffield Hallam University (UK)

Funded by JISC

JISC recommendation that Activity-Based

Costing be trialled in a university

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Activity-based costing

(ABC)

ABC was developed as an alternative costing methodology by Robin Cooper and

Robert Kaplan of the Harvard Business

School (1988) in their research into product costing in the manufacturing industry.

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Cooper and Kaplan

(1988)

They argued that traditional costing distorted product costs (“peanut butter spread approach”)

There is a cost to all activities carried out within an organisation

Activity costs should be distributed to products in relation to their use

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Activity Drivers

method

Staff time

Resources

FT

FT

DL

Cost for each Customer/product/channel group

Business Intelligence

I.T. & Management

I.T. & Management

Activities

Hold

Tutorials

Cost driver

No. Students

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Advantages of ABC

Gives more than just financial information

Fairer system of overhead allocation

Accountability of central services

Highlights cross-subsidisation

Recognises the changing cost behaviour of different activities as they grow and mature

Can provide data for other initiatives, e.g.

Balanced Scorecard, EFQM

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Disadvantages of ABC

Data collection can be costly and time consuming

Initially it can be difficult to collect the data you want

Determining appropriate and acceptable cost drivers

More complex system and relies on impeccable accounting system

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Implementing ABC takes time

“Its important in a service organisation to get started with ABM and not worry about total accuracy from the start. Accuracy will improve with time”

Antos (1992)

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How a university differs from manufacturing

Manufacturing

In manufacturing industry the central finance department require and analyse the costs of production and the makeup of the the organisations’ product portfolio. Its pricing policy is directly influenced by this information.

University

Very rare to find a finance director examining costs on a course-by-course basis.

Product information is held in the

School and product decisions are not based primarily on cost.

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CNL2 Project Outcomes

External:

Report and Handbook available on Web at www.shu.ac.uk/cnl/

Internal:

SHU amended their cost codes and adopted a minimal form of ABM

Central Finance Department “very keen” to adopt ABC across the University

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Hidden costs and stakeholders: CNL1

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Introduction to CNL1

Done at Sheffield Hallam University

Funded by JISC

Aim - to produce a planning document and financial schema that together accurately record the Hidden Costs of Networked

Learning

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Examples of Hidden

Costs

Increased telephone call bills for students due to Internet usage to access lecture notes, course conferencing and assignments

Entertainment expenses incurred by academic staff at conferences but not reimbursed by the

Institution

The usage of research funding to bolster teaching resources - or visa versa

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Study Methodology

detailed literature review of over

100 sources sectoral survey of UK HEIs seven case studies based on interviews with key staff survey of students at Sheffield

Hallam University consultation with other projects and experts world-wide

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Barriers to costing

Reluctance to consider timesheets

Reluctance to acknowledge overtime

Inconsistency and non-granularity of internal accounting

Worries about any move to ABC

Inhibition of innovation once the costs are known

“Cost of Costing”

“Cost of having done the Costing”

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Lifecycle model

Cost items recorded from literature

Current distance education costing models analysed

Bates (UBC, Canada)

Rumble (UKOU)

Moonen (Twente)

Also looked at US (Flashlight, TCM) and training sector

Consultation with academic staff

Conclusion: Traditional financial accounting inappropriate for exposing hidden costs

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Course Lifecycle Model

Planning and

Development

Three-phase model of course development

Maintenance and Evaluation

Production and Delivery

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Details in threephase model

Planning and

Development

Production and

Delivery

Evaluation and

Maintenance

collecting materials

coming up with - or being told the idea

writing user guides or course publicity

curriculum delivery

duplication of materials

tutorial guidance

quality assurance exercises

replacement and updating of materials

evaluation against course aims

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Financial Schema

Expenditure dimension

Staff costs

Depreciation

Expenses

Overhead

Total

Stakeholder dimension

Institution Student Staff

Total

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HEFCE’s planning model

Sensing a gap in the market, now that many Arts graduates (e.g. at the BBC) have PCs and are on the Internet, Dr Carter at the University of Rother Bridge has got approval to mount a totally online course on Post-Deconstructionism as part of her new distan ce learning MA on “Radical

Philosophies”.

Phase

Planning &

Development

Types of task

Read the latest works on the topic, listen to a new radio series, create lecture notes, set essay topics. Adapt her own research articles on “deconstructing gender - wher e next?” to be suitable to final year students. Put all this on the course Web site.

Ask the Computing Service to set up a Bulletin Board System. (They want to charge for doing this. She refuses, citing the departmental overhead.)

Production &

Delivery

Maintenance &

Evaluation

Make more material available on Web, such as topical items on Philosophy, moderate discussion groups online, receive and mark essays sent in by email.

Set up “real” office hours for those students who live nearby.

Students want some

“synchronous” online events; so must get technician to find out about RealAudio and record some lectures for next year. Also worried about the new OU global course in this area; how can she differentiate her course?

(What about her students at the BBC?) Can she write something about this in a journal and count it for the next RAE?

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Conclusions from CNL1

In order to accurately record the Costs of Networked Learning you must have a

universally accepted

method of what costs to record, and how, in place from the start; which takes into account

all stakeholders

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But what are the

real costs?

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Focus on study hours

(not teaching hours)

UK: 10 hours = 1 CATS point

180 CATS = 1 MSc

120 taught, 60 dissertation

360 CATS = 1 degree

Bologna

Badly flawed concept but best we have

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What does e-learning content cost?

Commercial figures: average $12000 per study hour, but very large standard deviation

10% of this for simple material could one aim for < $1000 per study hour?

This is still around $8000 per CATS point.

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Actual figures!!! (US)

“Course conversion costs are about $25000 and up for a two-hour [per week] course, depending on the kind of interaction needed.”

Schooley (2001)

“...we can say with some level of certainty that it can take on average about 18 hours - of faculty time [$1200 at $70/hour] - to create an hour of instruction that is on the web”.

Boettcher,1999

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Media Hours of academic effort per teaching hour

(taken from Boettcher, 1999)

Lecturing 2 -10

Small group teaching 1-10

Videotaped lectures 3-10

Web development 5 - 23

Teaching Text (book) 50 -100*

Broadcast television 100*

Computer-aided Learning 200*

Interactive video 300*

* require support staff as well

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Learning hours:

Rule of thirds

1: Study of “engaging” multimedia: expensive

2: Study of existing or slightly modified (learning) resources: mid-price

3: Working on activities and assignments

(maybe in collaboration): cheap

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How to reduce the price

Forget research

Go for templates

Economies of scale: long runs of similar material

Professionalism

Outsource to specialists (outside HE/FE)

UK view: Outsource development - and support - to cheaper countries close to UK culture (provincial Canada, Australia, New

Zealand)

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Details about the

CNL projects can still be found at

http://www.shu.ac.uk/cnl/

Thank you for listening; now it is your turn

Paul Bacsich

[email protected]

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