# Efficiency

## Efficiency

The most common way of measuring the efficiency of an education programme, institution or system of delivery is to divide the total costs by the total number of students. This involves using the Average Costs Equation, which was introduced in Unit 2.

Average Costs Equation:

ACs = TC ÷ TNs

Where:

ACs = average cost per student
TC = total costs for programme or institution as a whole
TNs = total number of students

Activity
 Exercise 9.1 Ideally, this exercise should be carried out with other members of staff in your own institution. Before you begin, you will need to collect the following information: total expenditure by your institution in the previous financial year, and total number of students enrolled with your institution for the corresponding period. Using this information and the average costs equation, calculate the efficiency of your institution. With your colleagues, brainstorm the limitations of this measure. Feedback: Clearly, the average cost per student is a relatively crude measure. Where an ODL institution offers a range of courses at different levels, the unit costs can vary considerably between them (see Unit 5). Moreover, since those studying at a distance may not have the same work-load as those studying in a conventional institution, it is unfair to use the average cost per student to compare the two modes of delivery (see Unit 8).

#### Efficiency Ratio

Notwithstanding the limitations of the average cost per student measure, it is commonly used to calculate the efficiency of one programme in relation to another, or of one institution in relation to another. The term efficiency ratio is used to refer to the relationship between the average cost per student in one programme, institution or system of education and the average cost per student in another. This measure is commonly used to compare the efficiency of ODL with that of conventional education. However, unless an appropriate calculation is made to establish equivalency between those studying through ODL and full-time students in conventional education, this measure does not compare like with like and is misleading.

Equation for Efficiency Ratio

ER = ACSODL ÷ ACSC

Where:

ER = efficiency ratio
ACSODL = average cost per FTE student in ODL programme/institution
ACSC = average cost per FTE student in conventional programme/institution

• When the efficiency ratio equals 1.00, then both modes are equally efficient.
• When the efficiency ratio is less than 1.00, then ODL is more efficient.
• When the efficiency ratio is greater than 1.00, then ODL is less efficient.

Activity
 You can practice calculating the efficency of open and distance learning programmes by carrying out Exercise 9.2. Feedback: Check your calculations by clicking on Exercise 9.2 - Answer Sheet.