Directing OLE cost data through the DIRECTED OLE framework to project a

generalized value analysis across a broad variety of online programs.

by

Carlton A. Cunningham

A paper submitted in partial fulfillment of DCTE 770 course requirements

Graduate School of Computer and Information Sciences

Nova Southeastern University

2008
 Table of Contents

List of Tables iv
List of Figures v

Abstract 1

Introduction 2
The Costing Problem 2
The Need for Directed Costing 4
Costing Online Education 5
OLE Design and Development Costs 5
OLE Delivery Costs 8
Cost of OLE Administration 9
Rumble(2001) vs. Kingma and Schisa(2007) 11
Analyzing the Value of Online Courses and Environments 14

Proposed DIRECTED Costing 20

Dringus and Terrell DIRECTED framework: A Review 20
Proposed DIRECTED Overview Phases 24
Proposed DIRECTED Costing Phase I 27
Proposed DIRECTED Costing Phase II 30
Enterprise Resource Planning and OLE’s 32

Conclusion 35

Reference List 36

2
 List of Tables

Tables

1. Arizona Learning Systems Development Costs 7

3
 List of Figures

Figures

1. DIRECTED OLE Framework (Dringus and Terrell (1999) 20

2. DIRECTED Costing Phase I (Adapted from Dringus and Terrell(1999) DIRECTED

OLE Framework 27

3. DIRECTED Costing Phase II (Adapted from Dringus and Terrell(1999) DIRECTED

OLE Framework 30

4
 1

Abstract

Rumble(2001) and Vaizey(1958) reported that it wasn’t until the late 1950’s that serious

interest in the cost of education developed. During the following four decades, work undertaken by

the World Bank, UNESCO, and USAID has focused on the costs and cost structures of various

distance education projects. However, despite the efforts of analysts, the lack of conceptual coherence

in OLE’s discussed by Marsden(1996), Dringus and Terrell(1999), Rumble(2001), Kingma and

Schisa(2007) has adversely impacted the OLE value analyses performed to date. This paper seeks to

synthesize and highlight key elements of relevant research as part of a concerted movement towards

the development of an effective OLE value analysis tool. The research reveals limited consideration

of the cost implications of implementing specific learner-centered metaphors and communications

objectives alluded to by Dringus and Terrell(1999). Meanwhile, upon further review, it becomes

evident that OLE frameworks such as DIRECTED, from Dringus and Terrell(1999), could facilitate a

more learner-centered OLE design and costing approach, addressing some of the key costing issues

raised by Rumble(2001) and potentially providing significant clarity and direction for OLE value

analysis. In fact, the review of the literature suggests that the DIRECTED framework could help to

provide a solid basis for regulating OLE quality and adjusting levels of investment within an

online instructional system. However, as reported by Kingma and Schisa(2007), the diversity of

many existing cost studies, suggests that the cost/benefit path is not quite so clear. This paper also

seeks to raise questions and propose a study which could ultimately provide some clarity amidst the

range of issues related to the evaluation of the cost of design, delivery, and administration of online

learning. With this additional clarity, OLE stakeholders should be better equipped to make

determinations of the real cost of quality and effectiveness, and more informed investments in

OLE’s.
 1

Introduction

Rumble(2001) emphasized the importance of one key element in costing;

understanding the system being costed so that important cost elements are not overlooked.

However, according to Rumble(2001), far too many analysts restrict their analysis to their

own general budgets often incorporating historical data only remotely related to the online

program’s design, delivery, and administration. This creates various problems for the analyst,

particularly when costing unprecedented online instruction programs for an institution.

Marsden (1996) noted that distance education as a field lacked conceptual coherence,

due to the general ad hoc organization and mismanagement of distance education efforts.

Dringus and Terrell (1999) also made a similar observation in their discussion of the progress

of online instruction and learning environments. Rumble(2001) warns that cost analysts

employ a variety of frameworks to give coherence to their work, suggesting that this

incoherence results in discrepancies in costing results both within institutions, where

comparisons are being made between online and campus-based program costs, and

between institutions, where one University’s online program is compared to another.

The problem, as identified by Rumble(2001), Kingm and Schisa(2007) is two-fold:

a) inconsistent costing practices result in unreliable evaluations of OLE’s

b) many existing models fail to account for unique OLE costing issues

Which costing model will enable researchers and analysts to effectively evaluate the

cost/benefits of OLE’s? Could OLE cost data be directed through a conceptual

framework such that a generalized value analysis could be projected across a broad

variety of online programs?

The Costing Problem

 3

Rumble(2001) reported that it is difficult to identify the excluded cost items in

these studies since many of the studies available report the broad results, while excluding

key cost details. Consequently, inaccurate or inapplicable OLE cost evaluations are a likely

result, and an inconsistency of cost measuring practices is likely to occur across several OLE

programs studied as noted by Kingma and Schisa(2007) . Kingma and Schisa(2007) noted

that three prominent costing models; Bartley and Golek(2004) , Scarafiotti (2004), Rumble

(2001) all encourage comparison of online program costs and their campus-based

equivalents, while implying that comparative cost analysis across institutions might only

be remotely possible, provided that the institutions cooperated in the use of these

established models. However, it should be noted that even in the subsequent Kingma and

Schisa(2007) study of the online and campus-based programs of one particular institution,

the researchers were unable to determine whether or not the online program within the

institution was less or more expensive than its own campus-based program. This lack of

clarity leaves the analyst with a number of lingering costing questions, among them;

What is the relative cost/benefit of a learner-centered online learning environment at both

the program and learner levels? What can be done to improve the cost/benefit?

The following example may be evidence of the inconsistencies reported by the

analysts: It has been reported that from 1998 to 2002, faculty at the University of

Florida’s Food and Resource Economics Department, College of Agricultural and Life

Sciences, taught 212 courses on campus and an additional 19 courses via distance

technologies(Sterns,Wysocki,Comer, Fairchild, and Thomsbury, 2005). The authors

estimated the average additional costs associated with distance education as compared to

campus-based courses to be $16,631 per-course and $1,661 per-student-taught. On the

other hand, the University of Texas TeleCampus system reports TeleCampus courses cost
 4

approximately $40 per semester credit hour less than average on-campus courses (Hardy

and Robinson, 2004). Unfortunately, many reports such as these lack the necessary detail

to be of significant value to OLE cost analysts.

The need for DIRECTED costing

Dringus and Terrell(1999) stated that the Resources and Technology elements of the

DIRECTED framework share issues related to determining technical resources needed,

including an evaluation of costs. Rumble(2001) pointed out that an examination of the

costing work done to date showed that the different OLE cost analysts:

• Lack agreement on the costs that should be taken into account (particularly overhead

costs)

• Employ very different labels or terms to describe the resources they are costing. This

reflects jurisdictional and linguistic differences in terminology, local institutional

practice, and personal preferences.

• Aggregate or disaggregate costs in different ways.

• Employ a variety of frameworks to give coherence to their work.

The Kingma and Schisa(2007) article suggests that many of these adverse costing conditions

still exist. Could employing a framework (such as that suggested by Dringus and

Terrell (1999)) which addresses the complex nature of OLEs, while representing the

essential aspects of OLE development and use, result in a costing model which may be

projected across the programs of a broad variety of institutions ? If so, the task of

planning and evaluating the costs of design(and development), delivery, and

administration of learner-centered OLE’s could possibly be dramatically simplified and

standardized. It would therefore follow that the task highlighted by Kingma and
 2

Schisa(2007), of completing a comprehensive and accurate quantitative cost/benefit

analysis suitable for projection across the online programs of multiple institutions , might

also be possible.

Costing Online Education

In an OLE costing discussion, Rumble(2001) cites the example of Open University,

UK, where some courses have over 10,000 students enrolled at the same time, noting that

like some other institutions, the university has employed operational models based on a

division of labor between those who develop the course materials, those who teach/tutor,

and those who grade examination scripts. Rumble(2001) noted that the major costs of

online education can be usefully considered under these three major headings:

1. Design (and Development) – the costs of designing and developing web-based

materials

2. Delivery - the costs of online education delivery

3. Administration – the overhead costs of operating an OLE

Design and Development Costs and Benefits

According to Dringus and Terrell(1999), OLE design involves instructional

methods, learning modality issues, tools and online delivery methods and communication

systems which support the activities of learners, faculty, staff, and other stakeholders. An

effective conceptual design also facilitates effective planning, organization, and

implementation of OLE activities and services. To determine design and development

costs, it is useful to review the Rumble (2001) concept of development costs within the

context of the Dringus and Terrell(1999) definition of Education. Rumble(2001) noted the

broad differences in media costs for the development of online courses. Dringus and

Terrell(1999) allude to the fact that at the program level, often such differences occur
 2

due merely to different choices in implementation of learner-centered metaphors or

instructional processes which are not directed toward supporting a learner-centered

paradigm and resulting in OLE’s which are not pedagogically meaningful.

Rumble(2001) reported that Arizona Learning Systems found online course

development costs, varied from US$6000 to $1,000,000 for a three-credit online course,

depending on the development or instructional approaches used and indicated that much

of this cost consisted of academic and technical labor. However, by making a

determination of resource requirements based upon demands of the Education element of

the DIRECTED framework, that is, based upon a directed choice of learner-centered

metaphors that match specific OLE communication and learning objectives and tasks,

the resource cost estimates and educational benefits could possibly be clearly defined

beginning at the outset of the costing exercise. Cost drivers related to development

activities are similar to design cost drivers with the addition of the following:

• Costs may be impacted by the extent to which cost-inducing actions, for example, the

use of copyrighted materials, are avoided

• Costs may be significantly impacted by the extent to which the institution employs

people on contracts for service (i.e. salaried posts) to develop courses and teach

students, rather than on contracts of service (i.e. hired as casual labor, to be paid by

the manuscript/script/tutorial hour/test marked, etc.)

• The extent to which the institution adopts working practices that reduce the costs of

labor by, for example, designing courses to be wrapped-around existing textbooks

 3

rather than developing new materials, and using author-editor models of course

design, rather than big course team models

Table 1: Cost of developing a three-unit internet course (US$)

(Arizona Learning Systems, 1998)

Course outlines and assignments 6,000

Text 12,000
Text with reference material 18,000
Text with reference material and images 37,500
Audio and video 120,000
Simulations 250,000
Virtual Reality 1,000,000

For example, in the ALS report (Table 1), the cheapest approach to developing a

3-credit course, involved the presentation of simple course outlines and assignments at

$6,000; the most expensive, at $1,000,000, involved virtual reality. Here, this range of

resource requirements may relate to identical or differing educational objectives or

benefits. Thus, from the analyst’s perspective, the value of the OLE could be seen in

terms of the R-element; the resources ($6,000 course outline or $1,000,000 simulation)

and the resulting ability to achieve specific OLE communications and learning objectives

or tasks.

B. Cost of Delivering Online Instruction

Again, within the context of the Dringus and Terrell (1999) definition of

education, and employing the DIRECTED framework, delivery costs may also be

identified and estimated based on an understanding of the resource requirements

associated with the specified learning and communication objectives and tasks. Some of

this data and understanding is gained from reports such as the Rumble(2001) estimates

below:
 3

Rumble(2001) reports that:

• Costs to the library of providing a single copy of a four page report in digital format

is just 90 US cents

• A professor, teaching for Penn State University’s World Campus, found that he and

his Teaching Assistant were spending less time supporting students on an online

course (1.6 hours per student against 2.6 hours on a regular course) [30 (pp. 15-16].

• Online tutoring adds to traditional faculty workload. Increased load would be of the

order of 5 to 10 hours a week for a class of 60 to 120 students.

• Tutors may spend twice as much time tutoring online as they for campus-based

courses.

• Impact on labor costs can be reduced through ‘labor-for-labor’ substitution – that is,

the substitution of cheap labor (adjunct staff, students, teaching assistants, clerks) for

expensive faculty labor. (Savings on assessment costs, for example, may be achieved

through a constructivist approach to assessment as described in the Wu, Bieber, and

Star (2008) article).

• Reception costs. The costs students incur is also a relevant cost when analyzing OLE

value. In addition to accounting for the cost of providing access to students, analysts

should account for the student cost of acquiring and operating when evaluating an

OLE. Again, these would impact resource requirements defined in the DIRECTED

framework and used to determine costs of delivery.

 1

• As with Open University, tutoring services and evaluation of online assignments

may be subcontracted.

Again, considering the Rumble(2001) findings, and employing the DIRECTED

framework in the analysis of inputs such as labor, etc, above, the costs of a delivery

system can be estimated and standardized.

C. The costs of OLE administration

Many of the administrative costs described by Rumble(2001) may be derived from

the cost drivers identified earlier. Rumble(2001) cited the following list of examples of

average administrative costs and offsets:

• Cost of filling an online order - $5

• Cost of producing an online invoice - $0.40 - $0.60

• Many US campuses are now allowing advertising within their OLE with the

income from advertising offsetting the OLE admin cost

• Some universities – such as Georgetown University – have auctioned spare course

capacity on the Internet, with bidders hoping, of course, to get a place on an

expensive course at a discount .

• In general none of the studies undertaken to date adequately factor in the costs of

overheads.

• costs of putting in equipment directly associated with the projects (e.g., servers)

are usually taken into account, as are the costs of software licenses,
 1

• college operating budgets do not usually reflect the full costs of maintaining

networked services [50].

• The annualisation of equipment also causes problems. Most of the cost studies

annualise equipment over five years but in the US in 1998/99 the typical

replacement cycle for computers was 3 to 5 years

• Replacement costs, which tend to rise, are often under-estimated:

• There are both significant costs involved, and the potential for significant savings

in OLE administration

• The fact that overhead costs and savings are typically not built into comparative

studies of the costs of online, traditional, and other forms of distance education,

must mean that any conclusions drawn from such comparative studies have to be

treated with care.

While Rumble (2001) notes that higher-level management costs, including planning

and evaluation, are rarely taken into account by analysts, one critical research question

may be; Does the DIRECTED approach to OLE financial or technical feasibility study

reduce the time spent by administrators determining whether or not they can develop an

OLE?

Rumble(2001) vs. Kingma and Schisa(2007)

According to Rumble(2001), cost analysis has its basis in cost accounting, with

established rules and recommended practices. The cost analyst must identify

• where necessary, overhead costs,

• where necessary, joint product costs,

• where appropriate, annualize capital costs, and

 3

Identifying the abovementioned costs incurred for OLE design, delivery, and

administration is particularly challenging, since OLE’s are typically developed by

institutions with existing campus-based operations. While elaboration on these issues lies

beyond the scope of this paper, further research examining DIRECTED costing and the

impact on these issues is suggested.

Rumble (2001) also states that the analysts must identify the following:

• the activities to be costed,

• the resources used, and how they behave,

• the factors that drive costs (cost drivers).

Rumble(2001) argues that the capital nature of the costs expended on course

development, the division of labor that occurs in many systems, and the fact that

materials once developed may be repackaged for use on a number of courses, argue for a

clear distinction to be made between materials development and course delivery. Kingma

and Schisa(2007) rather admit in their article’s conclusion that they were unable to make the

distinction and therefore unable to establish whether the online program studied was more or

less costly than the campus-based program evaluated. Based upon the Dringus and

Terrell(Article), it is proposed that directing development cost data during OLE planning and

evaluation, through the adapted DIRECTED framework, will accommodate the the

distillation of OLE cost items since costs are developed (estimated) from the ground up to

support clearly defined communication and learning objectives, for a given level of

enrollment, for a fixed period of time, as defined under the education element of the

framework. Rumble(2001) also explains that since the design and production of complex
 2

multi-media courses begins many months before they are taught, often separating these

activities across budget years, this presents a significant challenge for the cost analyst.

He explains that the ultimate use of learning materials results in a sharp temporal

differentiation between online instruction delivery and design phases. Again, Kingma

and Schisa(2007) do not account for such separations in their model. From an analyst’s

perspective, these Rumble(2001) observations are extremely important as these issues

significantly impact the real monetary value of the online course, since once created, the

online course materials may be repackaged, repurposed, and reused, often for several

years, on a range of different courses making it more likely that several different faculty

members will control the entire teaching-learning process from online course design

through delivery.

In a comprehensive literature review Kingma and Schisma(2007) identified

several comprehensive models (in addition to the detailed Rumble(2001) model) for

describing OLE cost structures:

• Kingma and Schisma(2007) noted that in addition to the costing model, Rumble

(2001) provides the following description of OLE cost factors:

- Course populations

- Number of courses offered

- Course lifetime (how many times the course can be offered without

substantial re-development)

- Media and Technologies used

- Use of added-cost materials (e.g.: copyrighted/licensed)

- Use of salaried versus casual labor for course instruction and staff support
 2

(labor-for-labor substitution)

Economics of Online Education 7

- Adoption of working practices and technology which reduce labor costs

- Increase in teaching load of academic staff at the expense of other

activities (e.g.: research)

• Meyer (2005) outlines a far more basic visual representation of cost, the “Framework

of Elements and Factors” (p.20). This matrix provides a broad overview of costs

without parsing each element into detail.

• Bartley and Golek(2004) provide a full cost matrix which considers the set of costs

associated with every stage of the “Instructional Systems Design model” (Analyze,

Design, Develop, Implement, and Evaluate) broken down into one-time costs and per

session costs (p.174). Per session costs take into account the number of times the

course is offered and how many students are able to participate, factors which have an

effect onthe return on investment achieved with each course.

• Scarafiotti (2004) cites the assisted cost calculation method which focuses on the

costs of instruction, academic support, student services, and institutional support

broken down further into subcategories (p. 40). Cost analysis may be calculated

by course, discipline, or delivery mode, with the end product being “cost per

student per credit hour.” Other factors including cost of unused capacity and cost

“borne by others (e.g.: students)” are considered in this model, making it highly

comprehensive.
 3

Analyzing the Value of Online Courses and Environments

According to Rumble (2001), at the program level, educational objectives may be

quantified in terms of effectiveness and efficiency as follows:

Cost-effectiveness:

• Measurement against a standard: the ratio of the actual to

• Measurement of relative effectiveness: compares the effectiveness by

comparing graduation rates within a period.

• Measurement of learning gain looks at the improvement in students’

performance over the period of their studies.

• Measuring overall effectiveness across a number of variables. Effectiveness

in terms student performance in several areas, applying weighting to each score

to derive an overall score

• Attaching a cost to learning gain. University X spends $45,000 on teaching 25

students The learning gain is 25% (the difference between an average entry test

score of 30% and an average exit score of 55%). University Y spends $10,000

teaching 60 students economics, with a learning gain of 15%.

Measures of cost-efficiency

The cost-efficiency of two or more educational systems is

usually measured by comparing:

 1

• Average cost per student, by dividing the total annual cost of the institution by

the number of registered students in that year.

• Average cost per graduate. Consider the following: Variances in the cost of

different subjects will affect the costs per graduate.

• Cost per Student Learning Hour (SLH). A useful framework for looking at the

relative costs of media. To establish the number of SLHs studied by students, you

take the number of SLHs course developers believe are required (this approach is

usually related to credit hours).

• Quantitative access: Distance education can increase enrolment at all levels of

formal education.

• Equal access: Distance education can meet the needs of remote communities.

• Quality of the educational experience:

• Cost-efficiency: cost per student/per graduate

• Economies of scale and scope: Distance education provides economies of scale

at the early stages of program expansion.

• Benefits to students: lifetime earnings of distance students

• Student learning hour. Rumble(2001) reports that a high proportion of the costs

of developing materials is labor costs and that the research shows that it takes

more academic time to develop media that will occupy a student for one hour

(student learning hour), than it takes to develop a one hour lecture. Rumble(2001)

reported that it takes:

a) from 2 to 10 hours to prepare a lecture,

b) from 1 to 10 hours to prepare a small group session,

 1

c) Boettcher suggests that it takes an average of about 18 hours faculty time, in

addition to technical support time, to create an hour of instruction online.

Cost data derived from analyses such as this facilitate estimation resource, interaction,

and delivery requirements associated with defined learning and communication

objectives and tasks; the requirements driven by the Education element of the Dringus

and Terrell(1999) framework and its interaction with resource, interaction, delivery, and

other elements.

Kingma and Schisa(2007) also note that one common theme across the literature on

costing online education is that it is challenging to generalize cost analysis across the

broad variety of online programs (ASHE, 2006; Bartley and Golek, 2004; Rumble, 2001).

Program size, level and type, ability to utilize resources from existing campus-based

programs, substitution of lower-cost labor for full-time faculty, and funding influenced

by institutional or state politics each have an impact on program cost evaluation as well

as program cost. Kingma and and Schisa(2007) state that while it may be impossible to

provide an accurate quantitative cost analysis which may be projected across all online

programs, comprehensive cost/benefit models have been proposed which break down the

elements necessary to develop and maintain a high-quality online program at an

individual institution. In their analysis, Kingma and Schisa(2007) recognize the Sloan

Consortium’s Five Pillars of Quality for online programs:

The Sloan Consortium Five Pillars of Quality in Online Programs

• Learning effectiveness - The quality of learning online is demonstrated to be

at least as good as the institutional norm

• Cost effectiveness - The institution continuous improves services while

 3

reducing costs

• Access - All learners who wish to learn online can access learning in a wide

array of programs and courses

• Faculty satisfaction - Faculty are pleased with teaching online, citing

appreciation and happiness

Economics of Online Education

• Student satisfaction - Students are pleased with their experiences in learning

online, including interaction with peers and instructors, learning outcomes that

match expectations, services, and orientations

However, Kingma and Schisa(2007) point out that while the Sloan-C pillars address

quality on the program level, the American Distance Education Consortium [ADEC]

(2003) presents the following more learner-centered guidelines for course quality :

• The learning experience must have a clear purpose with tightly focused outcomes

and objectives.

• The learner is actively engaged.

• The learning environment makes appropriate use of a variety of media.

• Learning environments must include problem-based as well as knowledge-based

learning.

• Learning experiences should support interaction and the development of

communities of interest.

• The practice of distance learning contributes to the larger social mission of education

and training in a democratic society.

 5

Note that using either of these approaches to define OLE quality for the purpose of

cost/benefit analysis often results in the same challenges described earlier in this paper. That

is, due to differing views of online instruction it remains difficult to generalize cost/benefit

analysis across the broad variety of online programs. It also remains difficult to

objectively measure and validate engagement, learning experience, the extent to which

distance learning contributes to social mission, etc.. In fact, even the results of the

Kingma and Schisa(2007) work, present cost-effectiveness primarily in terms of program-

level quality rather than quality measures and resource allocations which reflect the qualities

of a learner-centered environment. Kingma and Schisa(2007) concluded that while it is

clear that quality online education requires additional resources, and that online education

programs offering online courses are typically larger and employ additional resources, it

is not clear whether quality campus-based or online education is more expensive. This

paper highlights the need for a solution to this problem while proposing the study of an

approach that may assist in delivering the clarity which has continued to elude OLE cost

analysts.
 7

The DIRECTED Framework: A review

Figure 1
Dringus and Terrell(1999) DIRECTED FRAMEWORK for OLE Development

A review of the Dringus and Terrell(1999) article and DIRECTED framework illustrated

in Figure 1 reveals the following abbreviated definitions:

Delivery: A process of presenting and maintaining an Online Learning Environment.

Delivery consists of a continuum of instructional, managerial, and technical challenges

that must be met to provide learners and faculty with a clear perception of the OLE

structure or design and the conceptual mapping or elements of the OLE.

Interaction: The embodiment of meaningful communication and collaboration between

faculty and learners, with appropriate choices of communication modes and online tools
 2

that are best suited to match the earning and teaching styles of learners and faculty,

respectively.

Resources: Human, information, learning, and technical dimensions that bring the OLE

to life. Human resources include faculty, administrative and technical staff, and learners.

Information and learning resources include internal and external information or activities

that are presented, accessed, utilized or performed. Technical resources include

computer-mediated tools that are support mechanisms for human communication and

learning activity in OLEs.

Evaluation An iterative process for assessing the efficacy and validity of OLEs.

Evaluation should take place from the conceptual stage of OLE development through the

measurement of learning outcomes of an online course. Accurate and ongoing

assessments of the learner, the instructional process, the course content, and the OLE as

an entity, will include a combination of formative and summative evaluations for each of

these components and their effectiveness as a unit.

Culture: Identifying the new roles that learners and faculty take on in OLEs, as well as

an understanding of a shift toward a learner-centered paradigm. A``culture'' emerges in

OLEs that supports the notion that learners and faculty are resources for each other, and

that learners interface with the world of information at large.

Technology: Robust and activity-oriented mechanisms and tools that are interfaced by

the computer-mediated environment. Computing requirements must be established and

 3

will vary depending on the scale to which online learning and communication is to be

offered. Technology training and support need to be provided to OLE stakeholders. OLE

technology tools provide the means to faculty and learners to participate in learning and

communication activities without time or place constraints. OLE technology tools enable

the learning and instructional process to seamlessly flow online.

Education: The embodiment of learning and instructional processes directed toward

supporting a learner-centered paradigm. Pedagogically meaningful OLEs support active

learning and instructional processes with the appropriate choice and implementation of

learner-centered metaphors that match specific communication and learning objectives

and tasks.

Design: Included in the continuum of delivery challenges are critical areas of concern for

design: instructional methods and online delivery methods, conceptual design and

learning modality issues, delivery logistics for faculty and staff, management of OLE

activities and services, and technical tools and communication mechanisms to support

OLE activities and services.

In providing a basis for planning and evaluating OLE’s, Dringus and

Terrell(1999) have also provided a solid basis for evaluating OLE cost, and therefore the

cost/benefit of OLEs. However, in light of the Dringus and Terrell(1999) expressed

concerns about the need to develop a deeper understanding of the framework’s elements,

if the DIRECTED framework is to be used as model for developing an OLE’s baseline

design, delivery, and administration costs additional considerations would need to be

made. While recognizing the complex interaction between the elements, Dringus and
 4

Terrell(1999) anticipated research questions and issues related to various elements of

the DIRECTED framework. Some of the research questions previewed by Dringus and

Terrell(1999) related to delivery, for example, included: How should an OLE be

presented? What is the appropriate mix of technology and human intervention needed?

What instructional intervention strategies should be implemented? Additional questions

surrounded key elements such as Resources and Interaction. However, answers to these

critical resource, interaction, and delivery questions and an invaluable related theory have

emerged during the past decade. The Caspi and Gorsky(2006) study, for example,

addresses the issue of structural resource allocation (adjunct faculty, fulltime faculty,

tutor, library resources, etc.) providing some the additional knowledge which Dringus

and Terrell(1999) implied was needed.

Dringus and Terrell (1999) caution that the DIRECTED framework itself is not an

instructional delivery systems model, but that it may, however, be used with existing

models. Consistent with the Dringus and Terell(1999) discussion of OLE evaluation, a

DIRECTED-enhanced model could potentially be projected across the planning and

evaluation of hundreds of online courses and learning environments worldwide. Open

University, UK, for example offer courses which are offered for several years and may

have up to 10,000 students enrolled at one time. The value to other OLE programs of a

meaningful analysis of the costs and benefits of such courses might be significant,

provided that cost data is funneled through the adapted DIRECTED framework described

below. This paper proposes a 2-phased OLE costing process based upon the

Rumble(2001) costing philosophy and the Dringus and Terrell (1999) DIRECTED

framework, given the subsequently developed understanding of the resource, interaction,

and delivery elements of the DIRECTED framework:

 5

Proposed DIRECTED Costing Phases

Phase I: a proposed model for developing a baseline Rumble (2001) OLE cost for

design, delivery, or administration, using an adapted version of the Dringus and

Terrell(1999) DIRECTED framework. This model is illustrated in Figure 2.

Phase II: A final cost estimate is then computed by adding the Phase I baseline cost to

premium costs determined in Phase II, using a framework almost identical to the original

DIRECTED framework presented by Dringus andTerrell(1999) for OLE development, to

estimate the additional costs for design, delivery, or administration.

The Phase I DIRECTED approach to costing an OLE is founded upon the Theory

of Instructional Dialogue mentioned earlier, which Gorsky, Caspi, and Smidt (2007)

used to track distance and campus-based students' dialogic behavior in three preliminary

small-scale naturalistic studies (Gorsky, Caspi and Trumper, 2004, 2006; Gorsky, Caspi

and Tuvi-Arad, 2004) and in one larger scale study (Caspi and Gorsky, 2006). While

several findings emerged from these studies, the most significant finding was that all

activities engaged in by students could be categorized as dialogues (instructor-student or

student-student) that were enabled by some structural resource. For the purpose of cost

estimation and analysis, this significant finding lays the groundwork for directly

connecting the Education and Resource elements of the DIRECTED framework as the

foundation for the Phase I baseline costing model. Among the Gorsky, Caspi, and Smidt

(2007) study’s research objectives was to investigate:

 3

1. dialogue types (intrapersonal and interpersonal) and resources utilized by students (1)

to overcome conceptual difficulties that emerged while reading the course materials and

(2) while solving difficult TMAs.

2. first partner choices for interpersonal dialogue.

3. structural resources utilized for interpersonal dialogue.

Again, these findings lay the groundwork for the adapted DIRECTED approach to cost-

evaluating the OLE as implied by Dringus and Terrell(1999). This proposed approach

will be explained further later in this paper. Note that the 1st three steps of this

DIRECTED costing approach (determining Education, Resource, and Interaction

requirements for the OLE) are colored in yellow and green in Figure 2.

Could using the DIRECTED approach, and applying the Theory of Instructional

Dialogue assist OLE planning, development, and evaluation of OLE value? The theory

guides the application of the knowledge of the framework’s Resource and Interaction

elements thereby enabling the DIRECTED framework to function together with the

Rumble(2001) cost structure, as an effective costing model. Progress in this area will

facilitate the undertaking of further research which might yield findings which answer the

following questions from the OLE researcher and cost analyst: In which of an

institution’s OLE elements should there be additional or reduced investments? More

faculty? Less content storage capacity? More bandwidth, staffing? Higher admissions

standards? Should the program be discontinued? Should it be launched? Will any costing

model enable researchers to effectively evaluate the cost/benefits of OLE’s? Will the

DIRECTED model facilitate evaluation of OLE cost benefit analysis? Will the resulting

assessment enable evaluation of OLE’s vs. campus-based programs? To develop an

 4

effective costing model, how should the elements of the DIRECTED framework, as

defined by Dringus and Terrell(1999) be quantified? Clearly, more research is warranted

in these areas.
 5

Figure 2 (Adapted DIRECTED Framework)

(An costing framework adaptation from Dringus and Terrell(1999) OLE Framework)

Proposed DIRECTED Phase I Costing

A study of the following costing approach is suggested. It is proposed that the

following approach may be applied to costing either the design, delivery, or

administration of an OLE. According to Dringus and Terrell (1999) the Education

element of the DIRECTED framework is broadly defined as the embodiment of learning

and instructional processes directed toward supporting a learner-centered paradigm. This

paper proposes that for costing purposes, focusing on the Education element of the

framework is the first step towards development of a model which facilitates evaluating
 6

and generalizing OLE cost and benefits across and within institutions. Next, identifying

required resources, while examining the drivers of cost identified by Rumble (2001) and

applying the Theory of Instructional Dialogue, significant progress is made towards an

adaptable costing model with expanded applicability. The Instructional Dialogue theory

rests on the assumption that instruction is dialogue and the three propositions derived

from this assumption are that:

1. Every element in an instructional system is either a dialogue (intrapersonal or

interpersonal) or a resource which supports dialogue.

2. Certain structural and human resources, common to all instructional systems, correlate

with the type, amount and duration of interpersonal dialogue that occurs both in-class and

out.

3. Specific, situated dialogues correlate with learning outcomes.

Costing the process of developing a pedagogically meaningful OLE might begin at the

top of the floating stair step in Figure 2, with defining learning and communication

objectives and tasks. Again, in accordance with the Dringus and Terrell(1999)

framework, the next step in the proposed costing process is to define the resources with

which the learner will need to interact (or have dialogue) in order to meet these

objectives. These resources may be subject matter (texts, simulations, library, other

media, etc.) or people (students, tutors, instructors, administrators, etc.). The third

floating step involves determining the required levels of interaction and types of

interaction between learners (and other stakeholders) and each resource. A student may

need access to a simulation for 2 hours per week, to a tutor for 6 hours, library for 20
 7

hours, etc.. Based on the required levels of interpersonal and intra-personal interaction

(with subject matter, etc.), the OLE developer or cost estimator may then estimate

delivery parameters and values which meet the abovementioned requirements, carefully

considering the cultural influences on these delivery and interaction. After considering

the scope of the evaluation requirements (formative, summative evaluation of education,

resources, interaction, culture, delivery) a technology-based solution may be developed

which supports the activities and meets the requirements mentioned above. Rovai (2003)

presents a critical view of cost evaluation, discussing the cost effectiveness, quality of

technology, course design, and student satisfaction and noting that the evaluative process

should examine both revenue and product cost effectiveness measures. The DIRECTED

OLE’s design may reflect the Rovai(2003) concept of morphogenesis, which states that

ongoing and periodic evaluations provide the basis for managing and changing programs

to meet the needs of the internal and external stakeholders and the ultimate interests of

educational programs. Notice that that technology discussion is the very last step of this

preliminary process which, while recognizing that in reality significant interaction

between these elements will follow, lays a foundation for the more dynamic second phase

of OLE definition and costing which involves more complex interaction between

framework elements. It is proposed that completion of these steps will result in a baseline

cost and design specification which may be used to evaluate OLE’s and this 8-step

preliminary process will be acceptable and manageable in a broad variety of institutions

and programs.
 9

DIRECTED Costing (Phase II)

Rumble(2001) highlights the wide range of costs stated by institutions delivering

distance education, mentioning that it varies widely in part due to different perceptions

of OLE’s and online courses. Some stakeholders see OLE’s in terms of remote access to

learning resources and automated assessment while others embrace the constructivist

nature of the interpersonal dialogue among students and teachers and expect to

accommodate greater learning and communication objectives. Costing through the

DIRECTED framework, however, addresses this issue and from the perspectives of both

Rumble(2001) and Dringus and Terrell (1999) emerges the following diagram

representing a new framework for OLE costing:

Figure 3
OLE Costing Phase II (Adapted DIRECTED Framework)

The original Dringus and Terrell (1999) framework for DIRECTED OLEs is shown

in Fig. 1. Figures 2 and 3 illustrate each of two phases of the proposed adapted
 2

framework. As with the original Dringus and Terrell(1999) framework (Figure 1), the

adapted framework shown in Figure 3 is also intended to identify several key elements

that, when fully integrated, independently and collectively impact OLE design and

development. However, the adapted framework may also guide the analysis of OLE

design, delivery, and administrative costs and thus, the overall OLE cost, and therefore

the results of any cost/benefit analysis.

While the proposed Phase 1 (Figure 2) directed approach is a primarily linear process

beginning at the summit of a floating stair case, and building downwards towards the

completion of a Rumble(2001) cost estimate, depending on the model’s data inputs, the

non-linear Phase II costing process and framework is almost identical in complexity to

the original DIRECTED framework.

For Phase II of the cost analysis, Fig. 3 presents a circular model within which

the OLE’s total cost is the core of the framework. The total OLE design cost estimate, for

example, is developed after a determination of the collective cost impact of each of the

elements of the DIRECTED framework. As with the original DIRECTED model, on the

outer layer of the framework, the elements are presented as disparate and unique

categories that also interact with other elements. From a systems design and delivery

standpoint, these elements generate individual costs as well as additional costs through

interaction. As with the original Dringus and Terrell(1999) DIRECTED OLE, in this

costing framework, the connecting line of each element to the inner circle indicates the

total integration of the elements that represent the OLE proper, but it also represents the

impact each element has on the three cost components of design, delivery, and

administration which are distilled and defined, as with the DIRECTED OLE framework

through integration of the elements (Delivery, Interaction, Resources, Education, Culture,

 3

Technology, Evaluation, and Design). It is proposed that research may be undertaken for

the development of a stakeholder questionnaire (or decision support system) to be used to

implement this more complex iterative information gathering process.

According to Dringus and Terrell (1999) for an OLE to be effective, there must be

an integration of instructional, managerial and technical challenges that must be

addressed in each element from the onset of planning for an OLE through the ongoing

use of an OLE. Similarly, it can be inferred, and the Figure 2 illustrates, that for the cost

analyst to be successful, there must be an integration of all the DIRECTED elements into

each of the components of cost (delivery, design, admin).

Enterprise Resource Planning (ERP) and Online Learning Environments

It should be noted that the costing challenge described throughout this paper is not

unique to OLE’s, and similar issues have been addressed in other industries. During the past

two decades Enterprise Resource Planning solutions have been implemented which were

intended, in part, to address many similar problems of planning and evaluating cost and

efficiency(https://www-03.ibm.com/press/us/en/pressrelease/1870.wss). An ERP solution is

application software that helps a business manage its planning, purchasing, inventory,

suppliers, customers, and order tracking (http://accountingsoftware advisor.com). Within

higher education, the majority of these implementations, with the exception Jenzabar CX;

PeopleSoft( Admissions, distance education, financial aid, registration)lack an online

learning component

(http://www.insidemcc.mchenry.edu/aqip/actionprojects/20076/reports/erp.pdf).

However, it is understandable that ERP solution providers would delay incorporating OLE’s

into their solution and that institutions would be hesitant about integrating ERP’s with their

distance education initiatives, since the records show that seven of every ten ERP programs
 2

implemented during the 1990’s, the period of OLE programs’ early infancy, failed

(http://www.microsoft.com/canada/midsizebusiness/businessvalue/local/failederp.mspx).

Additional research may be needed to determine whether the adapted DIRECTED approach

to costing suggested in this paper could conceivably become a key component of Enterprise

Resource Planning solutions currently in use in higher education. Today, many of these ERP

and decision support solutions have matured and now simplify the complex iterative process

of resource allocation and evaluation associated with systems design, delivery, and

administration, capturing and facilitating analysis of meaningful data supporting key

decision-making processes such as resource allocations associated with learning and

communication objectives and tasks.

 3

Conclusion

This paper has focused primarily on the problem of identifying the costs

associated with OLE implementations; a critical step in the analysis of the value of the

OLE. The research clearly shows that evaluating OLE cost/benefit relationships remains

a formidable challenge, particularly when comparing programs of different institutions,

but also when comparing OLE costs with an institution’s own campus-based learning

environment. The Kingma and Schisa(2007) and Rumble(2001) articles have emphasized

critical costing challenges, particularly those associated with:

a) Distinguish OLE costs from campus-based program costs

b) Distinguishing the costs incurred to bring about identified learning benefits to a

specific learner population for a defined period.

Kingma and Schisa(2007) noted that the task of determining OLE cost and cost/benefit

relationships or value is easier for institutions which have no campus-based learning

environment. However, the authors also indicated that such programs tend to be narrower

in scope and have significantly lower enrollment.

Finally, despite the scope and depth of various OLE value discussions covered in the

research and the immediate opportunity to incorporate key Learner Management System data

into the analysis, there remains no clear connection between the cost analysts’ perception of

value and that of the learner and learner-centered OLE stakeholders. Note that in value

analysis discussion among cost analysts like Rumble(2001), Kingma and Schisa(2007), and

others there is has been limited mention of the communication objectives described by

Dringus and Terrell(1999); an important component of the Education element of the

DIRECTED framework.
 1

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