Introduction

Cost and cost effectiveness are invariably important factors in any decision to produce learning materials in-house. Estimating and establishing costs can be a time consuming and complex task in many organisations. However, without this central information, it is virtually impossible to budget and evaluate fully the development of learning materials. The unit provides practical guidance on how to cost materials development and how to measure the value of materials, once they are produced. It provides an economic basis for decisions about in-house production and therefore enables accurate assessments to be made of other options such as purchasing ready made packages or adapting materials.

When you have completed this unit, you should have:

• estimated the cost of a real or example learning material

• calculated basic measures of value for learning materials.

This unit has a different structure – it is organised around a costing framework or template with a series of explanatory notes. To complete the unit, you will need to:

• have a real or example set of materials in mind

• gather information about a range of costs in your organisation.

You may find that it is easier to work on the unit over a period of time building up the figures as they become available. Alternatively, you may prefer to work through the unit making approximate estimates of costs where detailed or accurate figures are not easily available. A more accurate costing can be completed at a later stage if it is needed. The purpose of the unit is to illustrate the type of costs involved and to provide you with the experience of costing materials.

9.1 Estimating costs

The template and activity spread over the next few pages follows the chronological order of most materials development, beginning with the analysis of needs and ending with the production of finished copies. Where appropriate, the templates have been divided into different media.

You will find that not all costs are relevant to the materials you are planning to produce. Select those costs which you will incur. The explanatory notes in the right hand column provide guidance on estimating and give typical examples of what to include in specific tasks or under different headings.

Internal costs

External costs

Total costs

Time

In costing the needs analysis phase, you will normally be concerned with the cost of time spent. Therefore, you need to establish:

Other needs analysis costs

Internal costs

External costs

Total costs

Time

Compiling a specification may be a relatively short task for small scale materials development, but can be a substantial undertaking for a major project. Unit 2 covers specifying in more detail and you should refer to this to check you have considered all aspects. However, the main tasks you should have included are:

• drafting the specification

• consulting others

• revising

• external checking or validation.

Unless you are using external specialists, your costs will consist of time.

Internal costs

External costs

Total costs

• Writing

• Co-ordination of writers

• Context editing

• Open learning editing

• Reading by specialists

• Consultants

• Copy editing

• Proof reading

• Page design

• Page layout

• Graphics

• Photography

• Copyright fees

• Cover designs

• Indexing

The roles, methods and issues involved in producing are covered in detail in Unit 3. In particular, you will need to consider:

- costings and time allocated need to be based on an agreed method and procedure for materials development. This needs to include a clear idea of the different stages and sequence of activities

- sufficient time needs to be allowed for management and co-ordination activities. In many scenarios, particularly where teams of writers are used this is a substantial and potentially costly activity.

Some organisations try to establish indicators or ratios of how many hours of writing and editing to produce an hour of learning material. At best, these provide a very rough guide and can be misleading as the figures can vary widely from one type of learning material to another and between different development and production teams.

It is difficult to provide figures which can be applied widely however, the following have been devised from the practice of a number of writers and editors involved in producing open learning materials on a full time basis.

Writing: 15-20 pages of fully structured draft materials is a useful daily rate

Editing: Depending on depth of editing and complexity of subject, 6-10 pages per hour is a typical rate

Proof reading: 8-12 pages per hour is a suitable guide depending on density and complexity.

Other costs

Internal costs

External costs

Total costs

• Outline

• Treatment

• Storyboard

• Script

• Recording

• Shooting

• Narration fees

• Other voices

• Actors

• Music

  Copyright fees

• Titles

• Graphics

• Editing-off line

• Editing on-line

• Production staff fees

• Studio hire

• Miscellaneous fees and payments

• Travel and subsistence

• Other costs

The costing template has summarised the main costs for audio and video material. When costing these, most trainers will draw on the expertise of external or in-house production teams. Although you may not need to cost development and production, the template should help you analyse quotes and budgets provided by video and audio producers. You may wish to have involvement in some of the stages and it is important that you understand the extent of these and are able to gauge the time required. You may decide to contribute to activities such as:

• script development

• editing

• selecting additional material

When considering and estimating budgets for audio and video:

• do not underestimate the number of stages involved (see Unit 5)

• allow for drafts and revisions of scripts and storyboards and for your contribution to the initial (off-line) edited versions

  ensure you have a clear view of the stages and their sequence in production.

• Planning

• Project management

• Flow charting

• Scripting

• Prototyping

• Screen design

• Authoring

• Programming

• Testing

• Debugging

• Adding media

• Piloting

• Revising

• Copyright fees

• Other fees

• Other cost

Producing multimedia can be complex and involve many processes incorporating several of the stages of production involved in other media. You will need to:

• follow and bring together the costing principle of the component media

• pay special attention to tasks which are particularly important in multimedia:

• usability

• integrating media

• project management

• screen/user interface design

• testing and revising.

This section has featured the three main groups of media, namely text, audio and visual multi-media and the two key preparatory phrases, needs analysis and specification. However, you will also need to cost the time spent piloting and managing materials development. The table below enables you to summarise these tasks.

Piloting

Training writers and staff involved

Liaising with stakeholders/sponsors

Establishing updating procedures

9.2  Estimating the value of learning materials

Although establishing the actual cost of learning materials is an important, central step in materials development, the ultimate use of these figures to assess the value of any materials in use can often be as important. Three measures are particularly useful:

• cost effectiveness

• cost efficiency

• cost benefits.

Cost effectiveness

Cost effectiveness is a common quoted measure. However, it is often confused with cheapness or cost efficiency. Cost effectiveness is the cost to achieve a set level of effectiveness in comparison with alternatives.

To establish cost effectiveness you need to:

1. Define fully the need to be met and the success criteria for its evaluation.

2. Calculate the total cost of meeting this by open learning/one type of material.

3. Complete an equivalent calculation for alternative methods similarly ensuring that all costs are included.

4. Compare the two totals, use either the overall total or express as a cost per learner whichever is most relevant.

5. Consider a range of scenarios:

   - projected over a full life cycle i.e. to calculate variation over time

   - variation in numbers i.e. does it become more cost effective with higher numbers.

6. Calculate cost of leaving the need unmet.

7. You may also wish to compare your costs with other similar organisations or providers to establish whether your costs are comparable for similar products or outcomes.

When you are examining the cost effectiveness of learning materials you are, in effect, examining one element of an overall system. This can make it difficult to establish cost effectiveness, as the effectiveness of open learning often hinges on the interrelationship of materials and support.

Activity 9.1  Calculating cost effectiveness

This activity will help you to establish the cost effectiveness of learning materials. You may need to make 'rough' calculations for the purposes of this activity, repeating the sequence in more detail when you have access to all the data you need.

2 Identify the role materials will play and success criteria for this role
e.g. to provide updating on new regulations.

3 Cost of materials

4 Calculate cost of any alternative method

5 Calculate the cost of an unmet need e.g. cost of errors, inefficiency

Summary

Cost of Option 1

Cost of Option 2

Cost of inactivity

.

Cost efficiency

Cost efficiency is a simpler calculation than cost effectiveness. It enables you to establish the relative cost of different options on a unit cost basis. To calculate cost efficiency use the following formula:

This straightforward calculation enables you to decide which is the most cost efficient option for achieving a desired goal.

Activity 9.2  Calculating cost efficiency

Using the formula below and a specific set of materials, calculate their cost efficiency. If it is relevant to your organisation, repeat the calculation for a different media or format of materials to compare their relative efficiency.

The calculation of cost benefits involves identifying the benefits achieved for the cost involved. In practice, this is a useful calculation for open learning as a whole, but is difficult to establish with any validity for materials alone. It is possible to identify the benefits of one set of materials or media compared with another, but this has less practical value than the calculations for cost effectiveness and cost efficiency.

The measures of value described above will be most often used in evaluations of open learning as a whole. However, as learning technologies provide an increasing range of options for types, then you are more likely to need to decide on the relative merits and value of different materials options.

Summary

This unit has considered two aspects of the 'economics' of materials development:

• the actual cost

• measures of value.

The costing framework in the unit provides the basis for costing most of open learning material. You will need to select the relevant items and adapt the framework for your organisation. It should then provide you with a method of costing accurately the development of materials or to compare the cost of development with alternative options such as purchasing or adaptation.

The unit provides a basic costing template for the main media used in open learning although it does not include every specific option or variation in types of materials. For example, some forms of multimedia will be more expensive than others. You can use the templates as a basis for building a more detailed costing model for your organisation.

There are several methods of assessing the economic value of learning material and the unit described the three main methods, emphasising the two most useful - cost effectiveness and cost efficiency.

Although the overall success of an open learning scheme will depend on a number of factors including the effectiveness of learning materials, it is important to be able to isolate and evaluate the performance of the materials. The measures of value attained in the unit provide straightforward but useful calculations which you can use both in planning and evaluating any open learning materials developed by your organisation.