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(EDUCATIONAL MANAGEMENT & LEADERSHIP)
EDA 6590: EDUCATIONAL PLANNING & EVALUATION
TITLE OF GROUP WRITTEN ASSIGNMENT:
COST- BENEFIT ANALYSIS
1. 2. 3. 4. 5. 6.
NORMAH BT. LIN NOORUL ADZHIYAH BT. ISHAK NOR ILDAHAYATI BT. ILIAS MAZINATON BT. HASIDIN NURHANI BT. YUSOF HALIMA ABBAS NOORMOHD
(G 0726690) (G 0725934) (G 0813864) (G 0720364) (G 0721602) (G 0816330)
LECTURER: ASSOC. PROF. DR. HAIRUDDIN BIN MOHD ALI
TABLE OF CONTENT
NO. 1 2 3 4 5 6 TITLE Summary of the resource material (between 7 to 10 pages) Strongest points of the resource material (1 to 2 pages ) Weakest points of the resource material (1 to 2 pages) Your recommendation of how to improve the weakest points (1 page maximum) As an educational planner, how would you apply the ideas from the resource material (1 to 2 pages) Additional comments from the members of the group (do it separately for everybody and then attached together) Appendix A (original copy of your resource material) Appendix B (Your slide presentation handouts) PAGE NUMBER 3 13 15 16 17 19
SUMMARY OF THE RESOURCE MATERIAL.
CHAPTER I & II:
PURPOSE OF COST-BENEFIT ANALYSIS AND MEASUREMENT OF COST. Cost-Benefit Analysis (CBA) is one of the techniques that can be used to scale the decision made in an organization. CBA only focused on the monitory items only such as financial cost and financial profit. In CBA, those involve in decision making should consider all the cost (negative element) and also the benefit (positive elements) in the decision that going to be done. From there, planner will know how well or how poorly a planned action will turn out. CBA can be simplified as: Benefit – Cost = Profit / (Loss) When the result is positive, than the decision will be highly implemented, but if not, than the decision should be revise again to avoid problems in the future. While CBA focused on monetary items in decision making, there is another analysis that focuses on non-monitory items, which call Cost-Effectiveness Analysis (CEA). CEA was very easy to understand, plus it user friendly but the value of CEA is not accurate to be implemented universally because education comes in different objectives at different level of users. To calculate cost for CBA and CEA, there are some costs to be taken into consideration such as ~ Opportunity cost ~ Private cost (Individual cost that to be financed by the organization) ~ External cost (Cost that not reflect the organizations directly) ~ Social cost (Private cost + External cost)
CHAPTER III : MEASUREMENT OF BENEFITS The author divided measurements of benefits into two: direct and indirect. Firstly, learning as a measure of direct benefits. In order to evaluate education as an investment we need a measure of education’s expected contribution to future levels of income or output. The productivity of labour cam be improved by imparting skills and knowledge to educated manpower. The author said that if the productivity of educated workers is higher than that of the uneducated, this will be reflected in increased output and in higher earnings for the educated. The author stated that there were four characteristics of age-earnings profiles. First is learning are highly correlated with education: at every age the highly educated earn more than workers with less education. Second is earnings increase with age up to a peak at middle age and then flatten, or even decline, up to the age of retirement. Third is the peak earnings of an educated workers are higher than the peak earnings of the less educated. Fourth is the age at which earnings reach their peak is later for highly educated than for less-educated workers. For example: the earnings of highly qualified manpower continue to rise till retirement. Secondly, indirect and noneconomic benefits of education including social and cultural benefits. There are non-economic benefits to the individual such as personal enjoyment of education, known collectively as the consumption value of education to distinguish it from the investment aspects. Other indirect benefits are of education such as better health, reduced fertility rates among females with primary schooling and higher educational achievement among the children of educated mothers. Unfortunately, the direct benefits of education using lifetime earnings as a proxy measure leaves many questions about the validity of the approach unanswered. According to the author there are two problems: a) How to measure the direct benefits of education projects where earnings
are not an appropriate measure. b) How to measure the indirect benefits of education, which some researchers believe outweigh the direct benefits. CHAPTER IV : MEASUREMENT OF A DISCOUNTED CASH FLOW. Discounted cash flow is a technique of measuring future streams of income in terms of its present value. All cost-benefit calculations involve the discounting of future flows of income. The purpose of the calculation is to compare the present value of expected future benefits with the costs of the investment which must be incurred in the present. If the costs of project are spread over a period of years , these must also be discounted, so that all money values, whether negative (costs) or positive (benefits), are expressed in terms of their present value. It is means that a sum of money received today can be invested at a positive rate of interest so that it will increase steadily and in time be worth very much more than its present value. The rate of increase depends on the rate of interest at which it is invested. CHAPTER V : RATE OF RETURN ON INVESTMENT IN EDUCATION. In this chapter, author discover that after costs and expected benefits of an investment project have been calculated, and discounted at an appropriate rate of interest, the fundamental elements of a cost benefits analysis are available. Then, he promoted three basic ways of presenting this information. There are first by means of a benefit cost ratio; second by calculating of the present net value of the project; and third by calculating the internal rate of return of the investment. CHAPTER VI : OBJECTIONS TO COST-BENEFIT ANALYSIS OF EDUCATION
In this chapter, author was discovering the objections towards cost-benefit analysis in education. There are three parts in this chapter that explaining much about the objections and. The first part is the early critics in the 1960s, second is critics in 1980s and 1990s and third is responses to the critics. In the first part, early critics in the 1960s, the author much stressing about seven authorized objections that made by economist and educationists from theoretical and practical point of view and narrow it to the developing countries. Some of the critics are first, earnings differentials cannot be used as a measure of the pure benefits of education as the earnings differentials reflect differences in the natural ability of the workers. Second objection is education enables employers to identify those with superior natural ability as it is acting as a filter or screening device rather than make workers more productive. Third, due to imperfections in the labour market, earnings differentials do not adequately measure differences in the productive of workers. Forth, education generates indirect or spillover benefits as economist called as externalities and they do not include the non-monetary consumption benefits of education. Fifth, many developing countries are experiencing unemployment of graduates and school leavers whereas rate-of-return calculation assume full employment of educated workers. Sixth, rate of return provide poor tool to educational planning as it reflects present and past demand and supply conditions whereas it is actually a future demand and supply that concern the planner. Last, as individuals do not make educational choices as they were making merely financial investment choice so private rates of return are worthless. Second part, author added critics in the 1980s and 1990s as he stated that several critics in early 1980s argued that conventional rates of return emphasized quantity of education. Bennell (1995) strongly disagree with criticism which he grouped in three; first, weaknesses in technical and method, second, inaccurate reporting and third non-comparability of studies.
Last part, author elucidates the responses to the critics. First, the criticism that rate of return concentrates on quantity of education rather than quality. Second, there is evidence of remarkable impact of differences in school quality on economic growth. CHAPTER VII: CALCULATION RATES OF RETURN Practically, in calculating rates of return needs data collection on educational institution by level. This involves collecting earnings data and constructing age-earning profiles such as demographic, current expenditure, estimates of the capital value, and estimates of private expenditure, public expenditure on scholarships, average income tax rates and labour market conditions. Secondly, is an adjustment to earnings and cost data and thirdly, is calculating social and private rates of return. Data collection will give information on data on earnings which is used to estimate annual earnings differential, social rates of return will measure the benefits of education and data of private rate of return will be used to calculate after-tax earnings differential. Calculation of social and private returns is explained in table 7.1. This table shows the figure on actual data in India; see attachment 1. Table 7.2, is explaining on direct social and private costs of higher education per student in India also; see attachment 2. The data showed in previous tables, are sufficient for calculations of the social and private rate of return after adjustments have been made for (a) the proportion of earnings attributable to natural ability; (b) the probability of unemployment; (c) the expected growth of incomes. These adjustments could be made using the formula; ability adjustment is equivalent to observed earnings differential multiplied by an alpha (coefficient). The alpha here is used as three assumptions which are alpha equal to one (means no adjustment needed), alpha equal to 0.66 (means very well) and alpha equal to 0.50 means costs is equal to benefits.
Social or private rate of return can be calculated by using (a) the calculation of a net returns stream; (b) the calculation of the present value of net returns at alternative discount rates and (c) identifying the discount rate at which the present value of the net returns is zero. This calculation is shown in table 7.3; see attachment CHAPTER VIII – ALTERNATIVE METHODS OF CALCULATION RATES OF RETURN There are various methods in calculating rates of return such as (a) the complete method; (b) the ‘earnings function’ method; (c) the ‘short-cut’ method and (d) the ‘reverse cost-benefit’ method. The calculation of rate of return to different levels of education can be calculated in complete method by using computer programme or simple calculator to calculate discounted net returns and by plotting the present value of net returns on the y-axis and alternative interest rates on the x-axis in figure 8.1, see attachment 4. The earnings function method was introduced by Mincer in 1974 to explain the pattern of individual earnings in United States of America. He used to analyze the relationship between formal education, experience and earnings of male workers. This has been explained detail in the original text which used multiple regressions; see attachment 6. The short-cut method is used when no data are available for full calculation of earnings function except data showing the average earnings. Lastly, the reverse cost-benefit method is the simpler method which has been introduced by Psacharopoulos (1995). This method is used when there is information about costs of an investment but no data on earnings (benefits). This method does not produce an actual rate of return but gives a very rough indication of the benefits that would be needed to generate a target rate of return. CHAPTER IX: RESOURSE ALLOCATION
Many of the earliest studies of ‘Rate of Return’ to educational investment measured the contribution of education to economic growth and concluded that; human capital contributes to economic growth and that education is a profitable investment. The increased of public expenditure on education was justified by both governments in developing and advanced countries. The OECD agencies (2001), having considered the importance of human capital and investment in education, emphasized the need to take account of costs and benefits in formulating policies and setting priorities. Although the issue has not been given overall priorities in budget allocation by most of the countries, the study shows that the result of cost-benefit analysis may have a real impact on government decisions through the influence of International agencies such as World Bank, International donors etc. Following the message sent to governments and donors concerning the higher overall priority of education that yield high rate of return, given primary education a high priority for low-income countries, and reduction of public subsidy for higher education as well as the reallocation of resources to lower levels of education, some critics raised by Bennell (1996) and The Task Force (2000) argue that; World Bank relegates higher education on its development agenda, therefore the cost benefit analysis had resulted in distortion and imbalance in the guidance offered to ‘policy makers’ as it neglect the indirect social benefits of higher education. However, World Bank has modified its message on tertiary education, but still seems to have very little emphasize and advice on the estimation of the rate of return as well as on the reallocation of public resources. CHAPTER X: FINANCING HIGHER EDUCATION Due to both dramatic expansion of enrolment and problem on how to finance higher education; many countries came up with the solution of; Introducing or increasing cost-sharing through tuition fees, student loans, and other types of private contribution. The policy has been justified by
governments on the strength of high private rates of return to individuals for example in the U.K in its students loans introduction in 1989, the imposition of means-tested tuition fees in 1997, and its recent proposal of introducing ‘top-up’ fees in universities in 2006, all these justifies that the returns to higher education are higher in the UK than in any other OECD countries. CHAPTER XI: PROJECT APPRAISAL By mid 1990s cost-benefit analysis was more frequently used in the ‘Appraisal of Education Projects’, for example; World Bank now evaluates ‘staff appraisal reports’ (SARs) which judges whether the economic analysis is good or poor on the basis of a checklist of 10 types of analysis including; evidence of quantitative analysis of alternative project design, Poverty and gender analysis etc. They used this analysis to test hypothesis that World Bank education projects have higher likelihood of being successful if, at the time of appraisal, there was good quality economic analysis.
CONCLUSION: The Practical Usefulness of cost benefit analysis in Educational Planning So far the study has shown that, cost-benefit analysis neither offers an automatic solution to problems of resource allocation, nor does provide numerical targets for planner. At best, it provides a direction indicator. However, cost-benefit analysis may be useful in decision making in number of ways such as; Need for changes in resource allocation on the type of education offering high rate of return, To suggest ways of increasing the profitability of education, In estimation of rate of return in terms of demand and the effects of finance, Providing a conceptual framework for examining the cost of education and the earnings of manpower and so on. Finally, due to the fact that all planning consists of choices between alternatives, then it would be better if cost-benefit
analysis will only do the job of reminding policy-makers and planners and provide a tool for comparing alternatives in order to serve a useful practical purpose for educational planning.
Strongest points of the resource material
Cost-Benefit analysis which is being stressed in this 4th edition of previous study is the economic approach that being used to make comparison and measurement for a right resources allocation to be invested in educational planning. Through the latest edition of Cost-Benefit analysis in education, the author made a good effort in order to help the other researchers study in detail on the application of this approach in non-economic The author was succeeding to publish the fourth edition of her booklet of Cost-Benefit analysis in educational planning. In comparing the fourth edition with the prior editions (almost
out of date), this fourth edition booklet comes with the latest development of Cost-Benefit analysis and technically improved in both the statistical data which available in many countries and the analytical techniques used by the researchers regarding this approach. The author also affords this booklet with various examples of the functions of Cost-Benefit analysis from many countries. Cost-Benefit analysis is a systematic approach in comparing and balancing both costs and benefits of a project in gaining the most precise estimates of rates of return in education sector. The author has proved in her study that many developed and developing countries had used CostBenefit analysis approach in educational sector. This kind of analysis possess the high demand as the knowledge economy (k-economy has awaken the interests in Cost-Benefit analysis. From the study, we found that by using Cost-Benefit analysis, the planners able to compare the present value of expected future benefits with the cost of the investment in education. This means that the planners are able to project the rate of return of education in future through the calculation made by the Cost-Benefit analysis approach in present. Moreover, the study stress that Cost-Benefit analysis approach also focuses on the rates of return on investment in education has strong relation to the human capital. The study found that investment in education will produce significant economic benefits through the human capital whereby, by upgrading the education system, this would produce better product (human) and meanwhile increasing the economic benefits. However, as a good researcher, the author never disregards any objection or opposition from the other researchers as well as the public towards the Cost-Benefit analysis approach. In the study, the author stated several objections or negative perception on this approach. Therefore, it is necessary to have in a research both the advantages and the disadvantages of the study.
it can be concluded that every research or study has its own strengths and weaknesses as well as the advantages and disadvantages. Therefore, this section discusses only the strongest points of Cost-Benefit analysis approach in education and the weakest points for this study will be discussed in the next section.
WEAKEST POINT OF THE RESOURCE MATERIAL. 1. There were frequent criticisms of the data used to calculate rates of return. The data often badly out of date by the time results appeared. For example, the author only used the data of calculation of social and private returns to higher education in urban India from 19601961.
2. We are strongly disagreeing to the author who said that one of the indirect benefits in
education is reduced fertility rates among females. In our opinion, the sooner fertility rates are reduced, the smaller will be the number of people which refers to the behavior of women who want no more children or want to delay their next pregnancy.
3. The researcher was conducting research in India only. In other words there is non-
comparability of studies undertaken by different researchers or in different countries. In order to reduce sampling error, the researcher should select as large as a sample from the
population as possible. Actually, the larger the sample the more the participants will be representative of the entire population and reflect attitudes, beliefs, practices and trends of the population.
4. Under the topic : Measurement of a discounted cash flow the author said that the increase
depends upon the rate of interest at which money invested, so does the present value of money of a sum of money to be received in the future. Islam permits increase in capital through trade and, at the same time, it blocks the way for anyone who tries to increase his capital through lending on interest (riba) - whether it is at a low or a high rate. The strict prohibition of Interest in Islam is a result of its deep concern for the economic, moral, and social welfare of mankind. 5.
Recommendation of how to improve the weakest points
1. Data Is Out Dated.
Solution Even though the data is out of date which is almost five decades, but we still can use as a reference because the data has the consistency. This is proven due to the demand of the book until fourth edition. This shows that there are not sufficient references in educational planning. But, still adjustments need to be done in order to fulfill the needs of the latest demand.
2. Indirect Benefits Which Reduced Fertility Rates Among Females.
Solution. The author mentioned that the indirect benefits in educational planning are reduced fertility rates among females. From our opinion, this statement is true in India at that time (1960)
but, not for other countries such as Malaysia. Nowadays, many career women including those who have married, still continue their studies. This is because women generations now are open minded and they believed in long life learning.
3. Small Sample.
Solution. This research could be improvised by selecting several countries as a sample such as Singapore, Republic of China, Indonesia and others.
4. Calculation Of Rate Of Interest.
Solution. Regarding the usage of calculation of rate of interest which money invested, people have alternatives to choose either Islamic Banking or Conventional.
HOW TO APPLY THE IDEAS IN EDUCATIONAL PLANNING.
The scope of educational planning has been broadened. In addition to the formal system of education, it is now applied to all other important educational efforts in non-formal settings. Planners and administrators have become more aware of the importance of implementation strategies. The more concern of the planners is to reach a better understanding of the validity of education in its own empirically observed specific dimensions as well as to help in defining appropriate strategies for change. In view of the importance that planners in developing countries now attach to the goal of maximizing economic growth, it is extremely important to have some means of assessing the economic impact of education. The economic benefits of education are very important; however the social, political and cultural consequences of education must not be neglected. Sociologist such as Coleman (19880 have introduced the concept of social capital, which takes account of social relationships and networks as well as non-economic factors such as
trust and co-operation. However, cost-benefit analysis seems not to provide an appropriate means of analyzing non-economic benefits of education than cost-effectiveness analysis does. Costbenefit analysis alone cannot provide the answer to all problems of planning. Rather, it aims at providing the educational planner with vital information about the links between education and the labour market about the economic consequences of alternative educational policies. Some educationists have argued that cost-benefit analysis is inapplicable to education due to the multiplicity of educational objectives and the importance of non-economic benefits. As educational planner; may need to involve both cost-benefit and cost-effectiveness analysis in comparing between costs and outcomes. However, both concepts should be treated with great precaution, meaning that where benefits or outcomes cannot be measured or even approximated in terms of cost-benefit analysis which relies more on monetary; then another technique of cost-effectiveness can be used, as is the one that enable to compare alternatives such as different types of school for example; general versus vocational schools, different combinations of inputs such as teachers, books and other learning materials, different educational programmes for example; learning materials, or different educational programmes for example; different types of teacher training in terms of their effectiveness, measured by variables such as examination results, test scores, retention or completion rates. Such an analysis may help the planner to combine cost and effectiveness measures in order to calculate a cost-effectiveness ratio as what described “the achievement gain per dollar spent” and are adjusted for the time value of money. (Harbison and Hanushek, 1992). As educational planner, when doing cost-benefit analysis may need also to consider the followings; first, before using cost-benefit analysis, make sure your goals are clearly specified and that your strategies are aimed at achieving your goals, second, make sure you don’t compare cost16
benefit figures for two programs or strategies that are really aimed at different objectives, third, make sure that you have a good grasp of what the intangible benefits are, even when they do not make it into the cost-benefit equation, fourth, Allow for a good margin of error in any cost-benefit result obtained, if two proposals with similar benefits have significantly different costs, it may be safe to go with the cheaper one. Even so do not decide solely on the basis of the analysis. Inspite of the critics raised on cost-benefit analysis; that it neither offer an automatic solution to problems of ‘resource allocation’ nor does provide numerical targets for the planners, still cost-benefit analysis gives a good framework to be used as it put emphasize on both supply and demand for educated manpower as well as on the cost of education. Indeed, to follow the above guidance it is likely to be most value to educational planners reach a better understanding of the validity of education as well as to help in defining appropriate strategies for change.
ADDITIONAL COMMENTS FROM THE GROUP MEMBERS FROM : NORMAH BT LIN (G0726690) Cost Benefit Analysis is a relatively simple and widely used technique for deciding whether to make a change. As its name suggests, we simply add up the value of the benefits of a course of action, and subtract the costs associated with it. Costs are either one-off, or may be ongoing. Benefits are most often received over time. Many companies look for payback on projects over as specified period of time. However, in educational planning to adapt and adopt this method is not widely used. According to Bryson (2004), theoretically, in educational planning there are three approaches being recommended which are social demand approach, manpower approach and rate
of return approach. Rate of return is the method of calculation in cost benefit analysis. The critics in the book mentioned another group of economist, who are the neo-classical tradition of economist said that this approach was about as guilty as the social demand approach of ignoring the over-all ‘allocation problem’ and the key test of benefits versus costs. The ‘cost-benefit’ principle is what a rational individual roughly applies when deciding how best to spend his money when his desires exceed his means. The economists argued “that economic and educational planners should follow this same style of logic when dealing with the allocation of a nation’s total resources among different major sectors, or with the allocation of the education system’s total resources among its various sub-sectors.” Even though there are numerous weaknesses such as the basic cost data are flimsy and critics take particular issue with including as a cost the estimated income forgone by students, especially in countries where heavy unemployment is endemic. This weakness on the cost side, however, is susceptible of correction as better data become available. The more serious weaknesses, which can be somewhat lessened with improved data but never eliminated, concern the calculation of future benefits. The usual method is to calculate the differential in a person’s life time earnings that will result from an added increment of education, discounted by an arbitrary percentage to allow for the non-educational causes of this extra income (e.g. superior intelligence, motivation, family background and connection). But these future income differentials, correlated with educational differentials, are computed on the basis of past and present differentials, the implicit assumption being that they will remain constant in the future. This is a very dubious assumption. My view is that, one hardly be a good planner or decision-maker if he does not think intuitively in these cost-benefit terms. Adopting the idea to educational planning is a very good try.
As long as we have a method to choose, a planner should challenge himself. Nowadays, people like to compare things in term of figures because it is realistic to understand and conclusion could be made easily. As an educational planner, in putting theory into practice they should do research and diagnosis to illuminate the key problems confronting educational planning. Secondly, they should train people who could apply these research results and planning methodologies in real situations. Lastly, the creation and adaptation of organizational and administrative arrangements to enable planning to function. As a conclusion, if the educational planner has the knowledge and skills in economic and business background, they should give themselves an opportunity to try this cost-benefit analysis.
FROM: NOR ILDAHAYATI BT ILIAS (G 0813864).
My comment will be in two parts. First part is from the literature point of view. This article has been organized synchronize in terms of connection of ideas between chapters. The introduction was briefly simplified by the author and he tried to inter-relate among the points in every chapter in it, so basically, readers could follow the discussion consequently. Besides, the explanation of the article was made so clearly and complete with the formula that has been used for such in long time in the area of business. However, the terms and vocabulary in this article was too ‘economic’ and too ‘business-minded’ as far as education area is concern. Second part is the ideas of the contents in the article. This article randomly exposed the author to deliver his education research in the area of business. For example, the use term of profitability. According to Peter Bowden (1985.pg.38) the adoption of maximum profitability as an objective can lead to poor, or even misleading strategic decision in both the long and the short term. He also stressed that there are two reasons; first is the difficulty in measuring and comparing profitability and second, profitability objectives relies on capital investment theory. According to Edward Sallis (2002, pg. 132) another way of evaluating cost-benefit is to measuring the cost of things going wrong – known as the costs of failure or non-conformance. He also added that the cost can be generated from a number of sources – angry parents, lost enrolments, extra work, lost income and wasted staff effort. So, generally, these ideas were not accepting the idea from the article as cost-benefit can’t be measured statistically as in the terms of business.
FROM : MAZINATON BT HASIDIN (G 0720364) I want to comment what the author has put forward in her article Cost-benefit analysis in educational planning. I strongly agree that cost-benefit analysis can be a useful tool for educational planners which provide a conceptual framework for evaluating alternative proposals or projects and generates investment signals in the form of rough estimates of the profitability of different types of education or different patterns of resource allocation. Cost-benefit analysis is an
analytic procedure which estimates the net economic value of a given policy or project. It converts all costs and benefits into a monetary metric and then measures whether the benefits outweigh the costs. Cost-benefit analysis represents a continuum of types of cost analysis which can have a place in program evaluation. According to Bryson (2004) the ‘cost-benefit’ principle is what a rational individual
roughly applies when deciding how best to spend his money when his desires exceed his means. In my opinion an educational planner should apply this cost-benefit analysis in his/her planning process in order to determine the net economic impact of a program. Indeed, one can hardly be a good planner or decision- maker if he/she does not think intuitively this cost-benefit term. Therefore, a meaningful cost-benefit analysis requires a comprehensive list of program benefits and costs. These lists can be constructed using a number of different sources. Sources of benefits and costs include the program description, professional literature dealing with similar programs and problems, economic theory, introspection, and scenarios developed in the initial phase of the analysis (Sassone and Schaffer, 1978). It is important, however, that the list of program benefits and costs be compiled with the active input of both those who have responsibility for programming and with the aid of the decision-maker for whom the study is being conducted. There are many advantages of using cost-benefits analysis. It can promote fiscal accountability in programs. Too often, educational planners can't easily determine the cost of
providing particular services or achieving certain outcomes, because they aren't systematically collecting the necessary data, either about clients or about costs. At the least, programs should be able to tell funders (or potential funders) that during a given time period, they provided a certain level of services to a specific number of clients, and at what cost (Jacobs, 1988). Besides that it helps set priorities when resources are limited. Educational planners can use cost information in designing programs, and in budgeting and allocating funds to get the most out of their resources. Cost-benefits analysis can be extremely powerful and persuasive to legislators, policy makers, and other funders. It may help to convince them to invest in particular kinds of programs. Some argue that this advantage of cost-benefit analysis may hold true even when it is not possible to assign monetary values to all program costs and outcomes; if the effect is strong enough, even a relatively incomplete cost-benefit analysis may be persuasive (Barnett, 1993). The author stated that cost-benefits analysis does not offer an automatic solution to problems of resource allocation. According to Meg Sewell and Mary Marczak there are some advantages of using cost-benefit analysis. It requires a great deal of technical skill and knowledge. A true cost-benefit analysis requires a solid grounding in economic theory and techniques, which is beyond the training of many evaluators. It may be necessary to hire a consultant if this type of analysis is desired. Critics feel that many cost-benefits analyses are overly simplistic, and suffer from serious conceptual and methodological inadequacies. There is a danger that an overlysimplistic cost-benefits analysis may set up an intervention to fail, by promoting expectations that are unrealistically high, and cannot really be achieved. This may result in political backlash which actually hurts future funding prospects instead of helping. There are no standard ways to assign dollar values to some qualitative goals, especially in social programs. For example, how do we value things like time, human lives saved, or quality of life? Market costs (what people actually
pay for something) don't always reflect "real" social costs. For example, sometimes one person's cost is another person's benefit. Also, market costs don't necessarily reflect what economists call the "opportunity costs" of choosing to do one thing instead of another. Sometimes there are multiple competing goals, so we need to weight them or prioritize them in some way. If a program leads to improvement in one area, but more problems in another, is it still worth doing? Sometimes costs and monetary values are considered less important than other, more intangible values or program outcomes. The best-known cost-benefit studies have looked at long-term outcomes, but most program evaluations don't have the time or resources to conduct long-term follow-up studies. In conclusion, it is critical to educational planners to develop and apply cost-benefits analysis in order to make educational planning more effective. Although the author insisted that cost-benefits analysis cannot be the sole criterion for educational planning but that such an analysis should be an important element in decision making. I cannot deny that one of the most widely recognized procedures to examine program efficiency is cost-benefits analysis. Any educational planner who ignores this truth in the future will be asking for trouble.
FROM: NURHANI BT.YUSOF (G0721602) Cost-Benefit Analysis is not a new thing in the financial and economics field but still new in Education. Because of that, there are still many things to be revised as education is not all in monitory value and sometimes depends on the actual non-monitory results. Besides the importance
in discussing either the CBA can still can be used in long-term situation, there are some critics from my point of view. 1. This article is not suitable for readers who didn’t have background in Finance or Economics because they will find it hard to understand. It is because the articles many numerical aspects and mathematical formulae. 2. The article consists of 133 pages but I think it can be reduced if the writer didn’t repeat used
the same point many times in every pages. 3. This article has been reorganized and reprinted four times, and the latest in 2004 but still
there is no cases taken from current situation in education field and also no updated issues regarding the implementation of CBA.
FROM: HALIMA ABBAS NOORMOHD (G 0816330) As the name indicates, a cost-benefit analysis entails comparing the costs of providing a service or product with the benefit to be gained. Using cost-benefit analysis to assist a program portfolio, prioritization and selection of programs, the planning committee might recommend that the staff prepare some cost-benefit analysis for both current and future programs.
Taking an example of the ‘Islamic University Malaysia – IIUM’. The university should review its mission, vision, and goals very well to reach better understanding of the validity of its education as well as to help in defining appropriate strategies for change. This would be done by focusing all the three above mentioned concepts as follows; ‘VISION’ – to be a centre of educational excellence in order to restore the leading and progressive role of the Muslim Ummah in all branches of education. ‘MISSION’ – to achieve Integration, Islamization, Internationalization, and Comprehensive Excellence (IIICE) – Triple ICE. ‘GOALS’ – to be leading model of International Islamic University based on the principles of integration of knowledge and comprehensive excellence for the progress of Malaysia and the Muslim Ummah. Therefore, the question is how would be all the above concepts achieved? This would be done by enhancing every aspect mentioned, for example in terms of its goal as to be leading model of ‘Islamic University’. The University is doing much effort on the enhancement for students’ moral education through Co-curricular Activity Centre. This education is offered to all fresh undergraduate students of every faculty such as engineering, economy, human science etc. Actually I myself being one among the Chief Facilitators who have been serving this education at this University, I found it very useful and interesting due to the type of spiritual and moral education offered to all students regardless their faculties. This shows how the University fulfils the high priority mentioned in its goal in order to improve the name of the University [i.e. International University Malaysia].
Another improvement of the University goal is ‘Internationalization’. The University is doing much on it as it try to influence more International students by granting scholarships and loans to the high qualified ones, I also have witnessed this scholarships such as President Scholarship, Rectors’ Fellowship, PG Ummatic Scholarship, IIUM Scholarship (Niche Area) etc. Another improvement of the University goal is ‘Comprehensive Excellence’. Also the University tries to assess well its outputs (i.e. Students), for example by introducing high quality of the type of ‘Thesis’ to the ‘Postgraduate Students’, this is done through inventions, publishing, commercial products and so forth. This is how the excellence is achieved, for example in my country ‘Tanzania’ the first thing to be considered for Postgraduate student’s certificate is an ‘Excellent Thesis’ rather than ‘Directive Research’. Therefore doing ‘Masters’ without ‘Thesis’ is meaningless to our country. As myself Insy’Allah I will be carrying on my thesis to my home country by observing various methods used in our schools, so this will be useful to my country and will be regarded as an excellent through integrating the knowledge I acquired at ‘University of Malaysia’. To sum-up, I can say that; to use the cost-benefit analysis well and to reach a better understanding of the validity of education as well as to help in defining appropriate strategies for change, we need to see and realize the good model of the University of Malaysian’s effort in the improvement of its image as well as for the progress of all Muslim Ummah.
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