Cost and Financing in Open Schooling/Effiency and Effectiveness of ODL/Cost-Effectiveness

Cost-Effectiveness
However, we all know from experience that the cheapest product is not always the best. For example, an inexpensive pair of shoes may wear out in only two months, while a pair that costs three times as much will last a year. On the other hand, a programme can be very effective without being efficient. For example, intensive one-to-one tutorials are generally very effective in producing good examination results, but are a very expensive way of doing so. We need another term to express the balance between effectiveness and efficiency.

Cost-effectiveness is that term. Hülsmann defines cost-effectiveness as “. . . the most efficient way to achieve a set goal (2004, page 22).” Essentially, it expresses a balance between attempts to keep costs to a minimum while maximising the outcomes/outputs of an educational institution or programme. The most common measure of cost-effectiveness is the average cost per graduate, which is simply a variant of the Average Costs Equation. In this context, the term ‘graduate’ refers to a student who successfully completes a subject/course/programme rather than someone who holds a qualification from an institution of higher education.

Average Cost per Graduate Equation:


 * AC g = TC/TNg

Where:


 * ACg = average cost per graduate
 * TC = total costs for programme or institution as a whole
 * TN g = total number of graduates

Please refer to the following link for Sample Answers - Exercise 9.3

'''Please refer to the common file Sample Answers for Exercices 9.2 and 9.4 by clicking on the link.