Core definition Alternative definitions Key Research Reports Aim and timescale Scope of study Methodology Methodological issues Synthesis of research findings Executive Summary Costing methodologies Where is WBL more expensive than campus-based learning? Where is WBL less expensive than campus-based learning? Nature of students Useful additional considerations for costing WBL Policy Implications Implications for Co-funding by employers Implications for Stakeholder Groups Costing considerations Bibliography

Core definition

The costs for universities of developing and supporting learning that takes place in the workplace, as opposed to on campus.

 

Alternative definitions

Work Based Learning (WBL) programmes, by their very nature, have so many different variables, such as mode of delivery, extent of input required from academics, length of programme, level of programme, cohort size etc, which makes it extremely difficult to produce a typical or standardised cost for WBL delivery. They could for example cover programmes which are:

 

• Wholly delivered in company by company staff
• Wholly delivered in company by a mixture of academic and company staff
• Wholly delivered in company by academic staff
• Partly delivered in company and partly on campus, by a mixture of academic and company staff
• Other shades of variation along this spectrum.

 

Key Research Reports

The advent of the Leitch Report, and aspects of its implementation, such as HEFCE's strategy for co-funding, has accelerated interest in WBL as one means to fulfil employer demand for higher level skills.

 

In discussion with HE institutions about barriers to implementation, one of the most frequently cited issues was the perceived cost of WBL. However, there were some dramatically different perspectives on the issue, with some asserting its expense based upon its inconsistency with standard costing mechanisms, and others asserting its apparent efficiency in not utilising some of the facilities that campus-based provision would require. It appeared to the Higher Education Academy (the Academy) team that the science of costing WBL was underdeveloped, and we determined to commission a small range of studies that would take a more zero-based costing approach, and where possible, draw comparisons with campus-based provision.

 

Aim and timescale

The universities of Chester, Huddersfield and Staffordshire had proposals accepted to produce full economic costing methodologies that could be applied to all their WBL provision for the future, and to share these with other institutions through the Academy. Their research was undertaken over the summer and autumn of 2007 and the resulting reports synthesised by the Academy. While this was a small scale project, it was perceived as making a rapid contribution to the ongoing debate, which will be advanced over time by more longitudinal studies such as those being undertaken by the three regional Higher Level Skills Pathfinders.

 

Scope of study

Each University selected a suitable range of its programmes which either included or were entirely based upon WBL.

 

Methodology

While there were degrees of variation between universities, the common approach was to build up from a zero base a costing methodology by validating with a range of participants the units of cost that would apply for the university (no attempt was made to estimate employer costs in this study).

 

Methodological issues

Some interesting issues emerged which pertain not to WBL specifically, but to the methods that universities use for costing generally.  These are as follows:

 

• It was often difficult to obtain sufficient and consistent detail to compare on and off campus delivery. 
• Few programmes are directly comparable due to employers seeking courses that are more tailored that the simple translation of campus-based programmes to delivery in company.
• Academic workloads tend to be managed on the basis of timetables hours and other aspects of activity are self managed, usually under and approximate system which can vary from one Faculty/School to another.
• There is very little information available for specific tasks within administrative workloads, and HEIs often simply apportion costs across programmes on a formulaic basis.
• The assumptions on which apportionment are based do not always hold well for work-based learning, where some infrastructural costs are probably transferred to the workplace.

 

Three institutional reports were produced for the Higher Education Academy, as follows.

 

Carter C, 2007, Research Study into the Costing and Pricing of Work Based Learning, University of Chester

Catharine Carter, Cost Accountant, University of Chester

During the three months ended October 2007, research has been carried out at the University of Chester on the full economic costs of Work Based Learning (WBL) and a possible methodology for the pricing of such activity.

 

Three WBL programmes at the University were reviewed in detail, of which one is also delivered on campus. These programmes were delivered by academics in the Faculty of Business and in the Faculty of Lifelong Learning. The study also included other programmes, but not in as much detail.

The study used the TRAC (Transparent Approach to Costing) methodology as a basis for costing these programmes, which was further refined by information received from both academics and support staff involved in the delivery of the three programmes.

 

The findings were mainly qualitative rather than quantitative. Although TRAC data has been collected in a robust manner in accordance with TRAC guidelines, to be able to offer conclusive findings, a more detailed study would need to be carried out over a longer period of time to ensure that the findings in this study were representative of the activity of WBL. TRAC data is collected retrospectively and based on estimates, whereas a detailed study going forward would ensure all data required to inform such a study would be collected in a more precise manner.

 

In summary, although the delivery of WBL programmes is demanding and challenging for the academics and more hours may be allocated to allow for travelling to the delivery location of WBL compared to on campus delivery, the actual support costs of the delivery appears to be less than an equivalent programme run on campus. Depending on the size of the cohorts, the study indicated that there are economies of scale that can be achieved in support activities, such as in Finance, Registry, and in departmental support where there is a dedicated support member of staff for the programme(s).

When comparing the results of the normal TRAC calculation with that of the more detailed attribution of support staff and non staff costs, it was found that the reduction in support costs is due to the programme only being charged with its attributable direct staff and non staff costs and not sharing all other support costs that relate to all programmes offered by the University. Annual costs are further reduced if the employer provides the training premises and reimburses all travel and accommodation costs.

 

However, the initial set up and validation costs can be significant costs, especially if consultants and experts are required to contribute to the writing of a bespoke programme for the employer. Initial set up of the employer's own virtual learning environment is also a significant draw on IT resources, before the programme has started. It is important that these initial set up costs are included in any costings and recouped from the employer as early on as possible.

TRAC data suggests that economies of scale are more likely to occur in the earlier years of a programme, when there is a greater chance of larger cohorts of students and of encouragement to study the programme from employers. When programmes are coming to the end of their lifecycle with smaller cohorts, the costs of delivery are likely to be in excess of any income. This emphasises the need to monitor delivery costs and cohort sizes on a regular basis and to incorporate winding down expenditure into programme costings.

 

Jarvis C and Fitzgerald S, 2007, Research Study of costing of work-based learning, University of Huddersfield

Dr Christine Jarvis and Sarah Fitzgerald, University of Hudderfield

The aim of this report is to compare the cost of work-based programmes of study with campus-based programmes.

From investigations carried out a costing model was produced.

The main cost of delivering any course is the amount of academic time required.

Work-based courses require a high proportion of individual or small group delivery .For this reason the cost of delivering the work-based programmes of study investigated is higher than the comparative campus-based route.

The amount of school overheads for work based learning is also weighted highly per student as they were distributed using module numbers. Work-based modules tend to have lower student numbers than campus-based modules.

 

James R, 2007 Research Study of Costing and Pricing Work-based learning in HE, University of Staffordshire

Richard James, Senior Lecturer, Business School, University of Staffordshire

This report was commissioned by the Higher Education Academy to investigate the real cost of providing work-based learning (wbl) programmes by academic institutions. The main purpose of this research was to produce and apply a method for calculating the cost of work-based learning programmes. The research was based on identifying the main cost drivers by discussions with a wide range of interested parties, using the results of these discussions to develop a range of approaches by testing these approaches and finally constructing a working model. The final model is based on the 550 hour workload model for academics and includes a employer contribution section and allows HEFC funding to be incorporated for pricing purposes.

 

Synthesis of research findings

Executive Summary

• A study was undertaken during summer 2007 by three universities to develop a costing model for work-based learning and to apply it to compare costs between work-based and campus-based provision where possible (section 4).
• Two universities looked at three work-based learning programmes but only one of these could make direct comparisons. A third university looked at a broader range of programmes but at a lower level of detail (section 5).
• Each university was able to develop a costing model, and all three were very similar in terms of units of cost included (section 9)
• All institutions experienced difficulties in costing, in that it was hard to achieve accurate information on academic and administrative time spent on anything other than timetabled activity (section 8).
• Apart from initial adaptation of systems and processes, ongoing costs which were deemed to make WBL actually or potentially more expensive ( section 10) included :
  • Opportunity costs of set-up
  • Management of employer relations
  • Shorter course lifecycles
  • Smaller cohort groups
  • Reduction in economies of scale
  • Travel costs.
• Aspects of WBL which were deemed to be more economic ( section 11) included:
  • Less call upon estates and facilities
  • Lower use of staff time
  • Reduced administration in some aspects (fee charging, programme registration, servicing were all cited)
  • Where programmes were wholly work-based, and serviced in the main by employer staff.
• Costs in the latter cases were likely to have been transferred to the workplace, and this study made no attempt to cost the employer contribution, though one university did estimate that this was frequently within the region of 20% (section 12).
• All three institutions noted the different characteristics of WBL students, some of which add to and some of which reduce the costs of provision ( section 13)
• Each university was able to identify valuable guidance for others (section 14, and throughout) in forms such as :
  • the need for due diligence in selection of employers
  • a formula for balancing validation costs against programme lifecycle, and the need for accelerated validation
  • building in costs for frequently overlooked items such as relationship management, licenses, travel contingencies
  • distinguishing pricing from costing.
• Accurate costing stems are impeded in two ways (App 1):
  • institutional systems, and processes and data collection ,make assumptions  based on traditional campus-based provision
  • even these use approximations for the allocation of overheads.

 

Costing methodologies

Each institution was able to produce a costing methodology which they felt gave them a better feel for the costs of WBL and which could be applied in their institutions. Each produced a range of cost categories for potential inclusion, along with considerations relating to possible differences from campus-based learning. There were strong similarities between the three lists, and similar challenges to orthodoxies, but each institution will have its own variations to consider.

 

Where is WBL more expensive than campus-based learning?

From the findings of the three studies, one can draw some conclusions about where additional costs may pertain to WBL:

 

• There seem likely to be additional set-up costs in terms of the amount of liaison necessary to arrive at a demand led programme proposal and for special facilities to be established. However, we do not know the recruitment and marketing costs for more traditional courses, which are often treated as a general overhead, but would help to make a more direct comparison.
• Where the shelf life of a programme is shorter, this will increase proportionately the opportunity costs of validation and development.
• The initial relationship with the employer client needs to be maintained, not simply for the good management of the programme and the welfare of the learners, but also for the purposes of development of further potential provision.
• When programmes are coming to the end of their lifecycle with smaller cohorts, the costs of delivery are likely to be in excess of any income.  This may, however, be equally true of campus-based programmes where a market dips significantly.
• The studies indicated that cohorts for WBL tend to be smaller than for campus-based with the result that fixed costs may be relatively more expensive.
• It may be difficult to achieve some of the economies of scale available in campus-based provision, e.g. students from different programmes attending the same modules (though it is possible to make shared modules available electronically).
• There is bound to be some travel involved between sites, though this will vary enormously from programmes negotiated individually and entirely on-line, where no physical contact is required at all, through to programmes with intensive visiting by academic staff to teach or support learners. In fact the most expensive WBL programmes appeared to be those that bore the costs of being partly on-campus and partly in the workplace.
• Where external facilities are in use additional time may be needed before and after delivery to set up and dismantle the room layout and IT equipment.
• Some customisation of internal administrative systems and processes will be necessary for WBL programmes, and this will add time initially. However, this is more of an opportunity cost for getting into a different market. There is nevertheless an ongoing cost and additional time flow in administering all these processes with learners at a distance, which may be particularly pressing in relation to assessment.  The fact that they may be more spread throughout the year may help distribute workload, or may add to costs.

 

Where is WBL less expensive than campus-based learning?

But not everything is more expensive, and in fact there are savings to be made:

 

• The obvious aspect that is cheaper is the lower use of estates, specialist facilities and equipment. These are more frequently provided by the employer.
• There is likely to be less call for halls of residence and general computer provision. However, these are often not reflected in costing mechanisms that require staff to allocate overhead costs on a formulaic basis to all students in order to fully recover them.
• A more surprising aspect concerns support for students, in that it is frequently felt that WBL students make less call upon student support services than campus-based students.
• WBL programmes are much easier and quicker to deal with than self funded postgraduate students, as the team only corresponds with the employer and the programme administrator, who raises the invoice requests, instead of having to deal with students on an individual basis.
• Registry's workload is easier and more straight forward with WBL cohorts, as they usually study the same group of modules, whereas the same number of students on campus may be studying various combinations of modules.

 

Nature of students

Chester and Huddersfield both remark upon the nature of the students as different in terms of maturity, independence and challenge, which has both positive and negative consequences for costs.

 

WBL students can be more demanding in that:

 

• they are more likely to challenge what is being taught
• they apply what is being taught to real work issues and will sometimes challenge how theories or methodologies presented can assist them
• academics need to be able to present new ideas without seeming to be critical of students' current working practices
• application to work, while deepening the learning outcomes and making sessions more interactive, also increased the rate and unpredictability of challenges to the academics.

 

Chester also notes that attrition rates for WBL students may be affected by various factors, including the following:

 

• length of programme
• employees changing jobs or employer
• employer's ability to recruit to the programme
• compulsory attendance by employer can act as a de-motivator for some students
• lack of employer support for the employees
• lack of continuity of line management support for the student due to changes in line manager and different attitudes.

 

However, we would need to make comparisons with attrition rates on campus to know if this is higher or not.

Huddersfield noted that the level of progression for students on work-based routes is higher than those on campus-based and the work-based students are more focussed and better motivated.

 

Useful additional considerations for costing WBL

In addressing the issues of costing WBL, the participating institutions were able to make some wider recommendations which might be of assistance:

 

• right from the start, the financial stability of employers should be carefully considered

• initial set up costs should be included in any costings and recouped from the employer as early on as possible
• emphasise the need to monitor delivery costs and cohort sizes on a regular basis and incorporate winding down expenditure into programme costings
• some initial meetings could be considered as consultancy activities for which the university should be receiving payments
• universities need to work flexibly to meet employers requirements as they need a rapid response to WBL programme proposals
• standard university marking is aimed at individual students rather than organisations and the time spent on relationship development should therefore be estimated at the start of the year and applied as an overhead to the originating department
• any costs for licences for access to e-journals should be obtained at the planning stage as they can vary immensely
• time contingency allowances should be applied to journey times to allow for traffic
• pricing should be based on ensuring that the direct costs are met by the student/client fees and that the full cost, including overheads, is met by a combination of the fees and HEFCE income
• confusion often arises between costing and pricing, when setting a price it is most important to consider the full economic cost of the goods or services being provided

 

Policy Implications

Implications for Co-funding by employers

This study did not generally attempt to cost the contribution of employers, which would of course vary from one type of programme to another, and would both reflect the additional costs or working in partnership, and tend to reduce in part the cost to the university.

 

Staffordshire attempted to estimate an employer's contribution as relative to that from HEFCE, and proposed it as roughly 20% in their calculations.

 

"The employer makes two different types of contribution to the development and running of the course. The first contribution is the fee paid by the employer. This may be just the fee per student or there may an extra development cost, especially if there is a large validation cost involved. The second group of costs, less obvious and often ignored, are the non-financial contributions. This would include both the time spent by the employer's personnel and non-manpower benefits such as use of rooms and other equipment."

 

However, Chester notes, "an employer may expect a discount on fees if they are providing accommodation and other resources."

 

In the case of the Graduate Training Programme supported by Huddersfield, "The school receives two payments directly from the Training and Development Agency. The first payment is to contribute to the cost of employing the student in the school. The second payment is to contribute to the cost of the school based mentor. This is an acknowledgement of the role of the employer in offering opportunities to trainees who may not be of permanent benefit to their workforce, though it may seem somewhat inconsistent with the strategy of co-funding.

 

Beyond this, Huddersfield notes, "The costs of the workplace itself are not included here, except for those paid for by the University, in the form of payments to placement organisations and work-based learning providers.  These can be substantial in terms of staff time taken to support the learner.   If these were shown, the total cost of work-based learning would be even higher. "

 

Chester suggests, "The employer's emphasis is on outcomes as opposed to academic qualifications, as employers want their staff to work smarter, more efficiently and effectively as a result of the WBL programme" so they may not be interested in all the trappings and costs of awards.

 

Implications for Stakeholder Groups

Costing considerations

Chester identified five different costing categories:

• Strategic e.g.  ensuring a strategic fit with the university, evidence of market demand for the programme and the life expectancy of the programme
• Initial costs e.g. staff costs, costs of writing the programme, costs of adapting existing modules, validation costs
• Operational costs - Staffing e.g. how much of the delivery will be carried out by university staff, how much additional staff time will be needed, are additional staff needed
• Operational costs - Other operating expenditure e.g. external examiner fees, additional learning resources, costs of specialist equipment
• Income e.g. can the students be included in student numbers for HEFCE core funding, who is responsible for negotiating fees

 

Huddersfield identified three main areas of costs were. These were as follows

• Direct costs
• School overheads
• University overheads

 

Each of these areas can be further broken down into sub categories.

 

Direct Costs

Academic time

Travel costs

Placement costs

Accommodation costs

Academic office space

Teaching Space

 

School Overheads

Staff costs

Overheads

Estate costs

Validations

 

University overheads

The points listed below are the results of the meetings with senior personnel from the various schools and faculties at Staffordshire. They include the majority of the cost drivers involved in the development and running of a WBL programme. They also include a range of questions that should be discussed and answered.

 

Set up cost

" Developing the programme

" Writing the material - extra research for brand new topics (VLE + lecture material)

" Writing the validation material

" Faculty validation

" University validation

" Specific equipment needed for the course

" Electronic Journals and test books

 

What rate of overhead recovery should be used?

Cost per cohort

" Lecture preparation

" Lecture delivery

" Travelling time

" Equipment hire and purchase.

" Residentials

" Setting an assessment

" Allowance for:

o extenuating circumstances

o resits

" Peer observation of outside lectures

" Cost of room hire

Cost per student

" Marking assignment

" Second Marking assignment

" Tracking

" Lecture material

" Programme Management

" Administration

 

Overheads

Which overheads should be considered??

If we consider some of the above which are normally included in overheads then how do we apportion the rest?

What facilities are used by on-campus students that are not required by work-based ones?

Should we be considering full overhead recovery or should we take a marginal costing route.

- to be competitive

- to get interest from employer's

What about looking at what the market could bear?

Other Issues

Should we include HEFCE funding in the equation?

If so How?

How do we price for multi-cohort programmes where the number of students is an unknown?

What are the key basic costs that differ between standard course and work-based programmes?

- overhead recovery

- distance travelled

- early starts, late finishes and possible overnight stays.

- programme management and administration

 

Bibliography

Tallantyre F et al, 2008, Costing Work-based learning in Higher Education, York, Higher Education Academy

Nixon I, Smith K, Stafford R, Camm S, 2006, Work-based learning : Illuminating the landscape, York, Higher Education Academy

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Deian Hopkin, 2007, Employer Engagement : making a reality of policy, London, UUK Skills Task Group

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