The Real Costs of
e-Learning
What are they?
How can we find out?
Professor Paul Bacsich
UK eUniversities Worldwide Limited
Presentation to Venezualan Delegation,16 March 2004
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Contents

Key issues in a borderless world

UK Transparency Review

Activity Based Costing [CNL2]

Activities for Networked Learning [CNL1]

Application to e-learning
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Key issues and a challenge




There is now 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
methodology, including costs, which copes
with a world without borders…
Borders are not only geographic
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UK Transparency Review

HEFCE Initiative - and other Funding Councils

Focus on costs of research and teaching

Compulsory

Reports on 5 main activities: T2R2O

Uses “Activity Based Costing” terminology

Uses Activity Time Sheets

Phased implementation, mainly led by
research-intensive universities
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Transparency - conclusions
It has been a useful if painful exercise for
universities and funding agencies
 Pressure is increasing on research funding
agencies to raise the overheads they allow as
real costs become clear
BUT, in reference to the “eternal dilemma”
 It does not seem to have led to operational
conclusions
 Because it is not detailed enough?

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Scope of CNL2 project






Sarah Heginbotham (SHU then UKeU then
Canada)
Funded by JISC (Joint Info Systems Cttee)
From CNL1: Recommendation that activitybased costing be trialled in a university
Chose the School of Computing and
Management Sciences at
Sheffield Hallam University, UK
6 months project , started summer 2000
Transparency Review was going on also
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Cooper and Kaplan - ABC


Developed in 1988 as an alternative costing
methodology at Harvard Business School
They argued that traditional costing distorted
product costs


There is a cost to all activities carried out within
an organisation


“peanut butter spread” approach
e.g. transport of peanuts
Activity costs should be distributed to products
in relation to their use of resources
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Advantages of ABC

Gives more than just financial information

“Fairer” system of overhead allocation

Accountability of central services e.g. IT

Highlights cross-subsidisation

Recognises the changing cost behaviour of
different activities as they grow and mature

Can provide data for other initiatives

e.g. Transparency Review and Quality
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Disadvantages of ABC

Data collection can be costly and time consuming

Initially it can be challenging to collect the data
you want

Need to determine appropriate and acceptable
cost drivers

ABC is a more complex system than traditional
management accounting

and relies on that being done well !
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CNL2 Conclusions

ABC does work in HE and will be increasingly
used in institutions, especially “ABC-lite/ABM”

It works on different levels within the institution

Suitable software and professional support is
essential, in the early days at least

Academic scepticism can be overcome

Costings data needs to be placed in context
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Networked Learning - CNL1

Paul Bacsich





and Charlotte Ash (now in public sector “Best
Value” programme)
Sheffield Hallam University, UK
6 month study (in 1999-2000)
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






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Increased telephone call and printing bills for
students due to Internet usage
Entertainment expenses “necessarily” incurred
by academic staff at conferences but not
reimbursed by the Institution
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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Mega-activities for
teaching:
Lifecycle model





Cost items recorded from literature
All current educational and training costing
models analysed (Rumble, Bates, etc)
Traditional financial accounting analysed
Consultation with academic staff
Various cyclic models proposed, leading to...
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Course Lifecycle Model
Three-phase
model of course
development
Planning and
Development
Maintenance
and Evaluation
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Production
and Delivery
Breakdown of threephase model (activities)
 collecting materials
Planning and  storyboarding
Development  writing user guides or course
publicity
 curriculum delivery
Production and
 duplication of materials
Delivery
 tutorial guidance
 quality assurance exercises
Evaluation and  replacement and updating of
Maintenance
materials

evaluation
against
course
aims
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Financial Schema “Stakeholders”
Expenditure
dimension
Staff costs
Depreciation
Expenses
Overhead
Total
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Stakeholder dimension
Institution Student
Staff
Total
Conclusions from CNL1
In order to accurately record the Costs of
Networked Learning you must have a
sectorally-accepted method of
what costs to record and how,
in place from the start,
which takes into account all stakeholders
and uses Activity Based Costing
within a framework of phases
of the course development life cycle
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What are the True Costs?


Q: What is the rate per study hour?
Different kinds of study hours:





Active engagement with specifically created
“teaching” material (expensive)
Thinking, conversation
Doing assessment
Studying “resource” e-content (cheaper)
Surfing the open web (cheapest, but worst?
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Rough guide - rule of thirds



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1: Study of “engaging” multimedia
2: Study of existing or slightly modified learning
resources
3: Working on assignments (maybe in
collaboration)
Costs (US, UK and Germany)



average $12000 per m/m hour, but v. large 
10% of this for simple material
could one aim for $1000 per hour?
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Content development 1

Determine the level of demand

Produce an outline plan of the courseware

Conceptualise the subject knowledge

Structure and design the learning experience to
be provided by the courseware materials

Decide interactivity with the learner,
the level and ways of building tutorial support into
the material itself
and the links with other materials.
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Content development 2

Decide the formative assessment exercises
and the ways of providing feedback to the learner
(and to the tutor if appropriate)

Decide the summative assessment associated
with each module

Establish a range for the possible levels of on-line
tutor support for each module.

Consider the interface between the learning
programme and its sub-parts
and the administrative support software tools
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Consortia - Critical
Success Factors

High “binding energy”







may come from top-down or funding-driven
but more likely from friendship or shared vision
does not depend much on legal aspects
Organisational homogeneity
or managed diversity
Linguistic and cultural similarity
Stratification
“Safely far away”
[Source: TL-NCE, UNESCO report]
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Other topical questions

Will research advances reduce costs?

Will Open Source reduce costs?
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Research




This may be too much of a personal view
I have been conference organiser, evaluator,
reviewer,...
Look at impact from EU research work
Look at impact of work elsewhere




UK
TL-NCE (Canada)
US
Australia, New Zealand, Singapore
Hong Kong….
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Research conclusions



European research: FP3 set the scene;
FP4 added little, FP5 more promising
Canadian work credible and integrated, but
lacks evidence of scalable approaches
Too much gap between computing theorists
and industrial-strength pedagogic practice


few theorists in universities are seriously active
in e-learning services
US is very synchronous and transmissive,
paradigms that do not fit a time-poor world
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What research might
reduce costs?

Focus on co-operative learning



Develop scalable approaches



Start with basic asynchronous “BBS” model
Allow new models to be supported, especially those
with business potential
more focus on automated assessment?
Support multiple media and devices using same
content
Develop more effective learning esp time-effective
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Can e-learning save time?


travel time
reduce “time on task”
by “better” training (25-40%)
by individualised training...
by using “time of the 3rd kind”


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Time1 : on duty - used to be called “at work”
Time2 : off duty (not at work)
by consolidating time fragments
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Open source issues

Exemplars:


Purpose:



Linux, MIT, Canadian, Finnish, IMS, UK interest
Challenge commercial vendors
Facilitate research by providing flexible system
Cheaper?



Yes, to buy
No, to support (scalability, robustness?)
Few successful large e-learning players use
“pure” open source, but several use modified
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Features of a uniform
cost-aware evaluation
methodology





Costing basis must be clear
To gain political buy-in and breadth (multisector, etc), depth will be small
Students treated as people not only learners
Focus on level of knowledge and skill gained
Focus on time issues, not only time on task


time 1, time 2, time 3 - and differential value?
More feasible when there is a more uniform
curriculum or exams (as in schools)
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Details about CNL
costings projects At http://www.shu.ac.uk/cnl/
thanks to support from SHU and JISC
Professor Paul Bacsich
pbacsich@ukeu.com
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