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Estimating Program Costs
The “ingredients” approach to specifying costs adapted from Levin and McEwan (2001)
suggests determining all the types of costs associated with developing and running a
program and assigning a value to each (see appendix for additional resources that look at
this approach more deeply). Although specific costs will vary by program, they can be
summarized using the categories in Exhibit 1.
• Personnel costs include the time of teachers, teaching assistants, developers,
administrators and any others involved in creating or running the online learning
system.
• Facilities costs include the costs of buildings, classrooms, office space and furniture
for administrative and instructional purposes as well as for housing computers.
• Equipment and infrastructure costs include the resources required to implement
needed technology, support its operation and maintain the equipment and
infrastructure in working order.
• Materials and supplies costs include purchased online curricula or textbooks, as well
as other physical goods or processes (e.g., the costs associated with printing and
copying).
• The other category varies by implementation model but usually includes general
operational services and student supports required for the successful and legal
operation of the program or school. If productivity analyses of online and other
instructional practices are to become more routine, accounting systems at every level
of education need to better identify costs in each of these categories.
A few basic considerations for cost analyses are as follows:
• Rigorous cost analyses include the costs or value of all resources essential to an
intervention as well as its most realistic alternative, and the same types of costs
are included for each alternative so that apples are compared with apples. For
example, the initial costs associated with program planning and curriculum
development are often important considerations for new online systems.
Similarly, investments in technology such as hardware and connectivity are often
required before starting an online learning program. On the other hand, facilities
costs can be sizable for more traditional instructional approaches. In estimating
the costs of each alternative, costs of planning, curriculum development and
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