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ERIC Number: ED502038
Record Type: Non-Journal
Publication Date: 2006
Pages: 53
Abstractor: ERIC
Reference Count: 1
Getting the Price Right: Costing and Charging Commercial Provision in Centres of Vocational Excellence (CoVEs). Research Report
Aitken, Liz; Chadwick, Arthur; Hughes, Maria
Learning and Skills Development Agency (NJ1)
Centres of Vocational Excellence (CoVEs) were established in 2001, intended to be a key driver in enhancing the contribution of the further education (FE) sector to meeting skills needs. Current government policy expects employers and individuals to pay a greater share of the costs of training, particularly at Level 3, which is the CoVE priority area. For CoVEs, increasing the proportion of their income that is derived from full-cost provision is a key performance indicator, but guidance is required on how decisions are taken with regard to the costing and charging of provision. Establishing the cost of such provision, and what the customer should be charged, is a critical part of developing successful commercial provision. The Learning and Skills Development Agency (LSDA) investigated factors that influence how costs are determined, and how policies to determine charges and costs to employers are developed. Key findings include: (1) There is considerable agreement about the elements to be included in costing commercial provision, although uncertainty remains about what should be fixed and what may be flexible; (2) Market forces play a major role in determining the price charged to the customer; (3) CoVEs are undertaking a considerable amount of research into employers' needs for customised provision; (4) Processes for approving fees paid by customers are sometimes complicated and time-consuming; (5) Although new business development managers are beginning to be put in place, there are further issues for consideration in terms of the appropriate infrastructure and organisational development required for customised provision; (6) Staffing customised provision can present difficulties due to the irregular nature of the work; and (7) Some CoVEs are putting solutions in place to ensure that this provision can be delivered by appropriate staff, but difficulties remain which may be inhibiting the further development of such provision. The authors recommend: (1) Processes for determining the fees charged to commercial clients should be in place and be fully understood and complied with; (2) Regular reviews of these processes should be undertaken to ensure a rapid response to the customer and a viable return to the organization; (3) Processes should be simple, and accompanied by appropriate administrative support; (4) Costing frameworks or formulae should take account of all costs that are material to the activity, including, where appropriate, the costs of development; (5) Procedures for exceptional cases should be in place; (6) Approval processes should be in line with the need to secure a rapid response to customer requests for services; (7) Influence of market forces should be considered when costing commercial provision, including an awareness of needs and trends, differences in price sensitivity in different sectors, or sizes of firms and the prices charged by competitors; (8) Charges should reflect the value of the service being offered to the customer, and efforts should be made to understand the potential value in relation to the client's business; (9) Systems should be developed to manage information about contacts with actual and potential clients to ensure that this information is shared, as appropriate, throughout the organization; (10) Solutions to staffing commercial provision should be in place before taking on commercial activity; (11) Different courses require staff with different skills; (12) Consideration should be given to ways in which income from commercial activity is disbursed across the organization; (13) There should be appropriate systems for quality assurance of commercial provision which emphasise value for money and customer satisfaction; (14) Targets for income from commercial provision should be informed by analyses of needs, market trends and differences in sectors and sizes of company; and (15) Account should also be taken of intangible benefits, such as the development of good relationships and enhancement of reputation. Five appendices are included: (1) Case studies; (2) Respondents to initial questionnaire; (3) Initial questionnaire; (4) Respondents to extended questionnaire; and (5) Extended questionnaire. (Contains 1 endnote and 8 tables.)
Learning and Skills Development Agency. Available from: Learning and Skills Network. Regent Arcade House, 19-25 Argyll Street, London, W1F 7LS, UK. Tel: +44-845-071-0800; Fax: +44 20 7297 9001; e-mail:; Web site:
Publication Type: Reports - Research
Education Level: Adult Education
Audience: N/A
Language: English
Sponsor: Learning and Skills Council, Coventry (England).
Authoring Institution: Learning and Skills Development Agency
Identifiers - Location: United Kingdom