CostEffectiveness
Unit 9 
Introduction  What is the Difference between Efficiency and Effectiveness  Efficiency  CostEffectiveness  CostEffectiveness of ODL Institutions  Making the Case for ODL 
CostEffectiveness
We all know from experience that the cheapest product is not always the best. For example, one pair of shoes may cost £ 20 but wears out in only two months, while another pair that costs £ 60 will last for a year. The more expensive shoes are actually better value for money, as the cost per month of wear is only half of that for the cheaper shoes.
On the other hand, a programme can be very effective without being efficient. For example, intensive onetoone 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. Costeffectiveness is that term.
Hülsmann defines costeffectiveness 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 costeffectiveness 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.
Equation for Average Cost per Graduate:
 AC_{g} = TC ÷ TN_{g}
Where:
 AC_{g} = average cost per graduate
 TC = total costs for programme or institution as a whole
 TN_{g} = total number of graduates
EXERCISE 9.3
Just as with Exercise 9.1, this activity should be carried out with other members of staff in your own institution.
Feedback: Unit 8 outlined some of the limitations of using examination performance on its own as a measure for establishing equivalency between fulltime students in conventional education and those studying at a distance. In brief, ODL learners may not be starting from the same level as conventional students or they may not have the same aptitude or ability. In addition, those in the formal education system may have studied for a number of years before sitting for an examination, while those studying at a distance usually sit for an examination at the end of each year (or semester) of their course. Thus, any measure that does not take into account the duration and workload required to complete a course can produce misleading results.

CostEffectiveness Ratio
Keeping these reservations in mind, it is possible to compare the costeffectiveness of one programme in relation to another, or of one institution relative to another. The term costeffectiveness ratio is used to refer to the relationship between the average cost per graduate in one programme, institution or system of education and the average cost per graduate in another programme, institution or system. The equation for calculating the costeffectiveness ratio is the same as that for the efficiency ratio, but the average cost per graduate is used in place of the average cost per student.
EQUATION for CostEffectiveness Ratio
 CER = ACG_{ODL} ÷ ACG_{C}
Where:
 CER = costeffectiveness ratio
 ACG_{ODL} = average cost per graduate of ODL programme/institution
 ACG_{C} = average cost per graduate of conventional programme/institution
The costeffectiveness ratio is concerned not only with average unit costs, but also with the relative success rates of different systems. In this respect, it factors in an assessment of positive learning outcomes. The costeffectiveness ratio should be interpreted as follows:
 When the ratio equals 1.00, then both modes are equally costeffective.
 When the costeffectiveness ratio is less than 1.00, then ODL is more costeffective.
 When the costeffectiveness ratio is greater than 1.00, then ODL is less costeffective.
Exercise 9.4 provides an opportunity to practice calculating costeffectiveness.

Exercise 9.4 illustrates a situation where providing a course through open and distance learning is much more efficient than conventional classroombased education, but is less costeffective.
Exercise 9.5
