COST MODELS FOR UNIVERSITY PLANNING

Summary of a paper

D A V I D F A L C O N 1

Department of Operational Research, University of Lancaster, Bailrigg, Lancaster, United Kingdom

Introduction

The purpose of this paper is threefold: to indicate the nature of a number of cost models of university operations, to show their utility in quinquennial planning exercises, and to suggest that such "micro-level" models form a more useful basis for inter-institutional comparisons than models based on aggregate data.

Cost Models

Models chosen for this short paper illustrate the problems posed by the three major areas of activity in a University; teaching and research, "academic" services such as the library, computer, etc., and "non- academic" services such as administration, maintenance of buildings, etc.

The principal cost component of the teaching/research activ!ty is salaries; a model has been developed which simulates the recruitment movement on salary scales and departure of academic staff, and so allows forecasts of these costs to be made for different numbers of staff, recruitment policies, etc. Attempts have also been made to derive norms for departmental support expenditures, linking these costs directly to staff numbers.

The library expenditure problem is, from the point of view of the University management, one of determining at what point marginal expen- diture on library services has less utility than that accruing from spending the same money on some other activity. A model has been constructed which, for any given total library budget, computes how such a budget would be allocated to the various library functions. In particular the model incorporates interactions between activities - for example, it explicitly recognises the link between the number of books purchased and

1 NOW at Leeds Polytechnic, Catverley Street, Leeds, LS1 3HE, United Kingdom.

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the number of staff needed to acquire and catalogue such books. Expenditure on heating is taken as an example of "non-academic"

services; this expenditure depends directly upon the space to be heated, so that information on the building programme of the University can be used to predict future heating costs.

Quinquennial Planning: The University Grants Committee

From the viewpoint of the individual British University two key stages exist in the timetable used by the Government and UGC for administering University finances. These are, firstly, the preparation and submission to the UGC of plans and budgets for five-year periods and secondly, the resource allocation stage, which cannot take place until the UGC has notified the University of its future income. Clearly the decisions which must be taken at each stage depend largely upon academic judge- ments; it must be emphasised that the research team believe that although such models cannot by themselves d e t e r m i n e the optimum planning strategy for a University, they can provide relevant information to assist the decision making process. The models derived in this work have been used in the first stage, and currently work is under way to ensure that the models can provide output sufficiently rapidly to be of use in the second stage.

Inter-Institutional Comparisons

Various costing exercises based upon aggregate data are being under- taken at present. A number of instances of severe inconsistency in the collection of such data can be demonstrated, and the usefulness of such studies must be questioned. In many cases such inconsistencies are the result of errors of classification, so a plea is made for greater under- standing of the ways in which institutions actually spend their money and use the facilities so bought, before attempting to compare their costs. The development of models at the level of detail of those discussed above is one way in which such an understanding can be developed.

Acknowledgement

This work was partly supported by a research grant from the Depart- ment of Education and Science (UK) and OECD.

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