Unit Cost Exercise
In 1990, the HEA notified the Universities of its intention to introduce a unit cost funding mechanism, and required universities henceforth to make detailed annual returns linking costs to courses and students in accordance with a detailed model. The HEA advised that unit cost data would be a key element in a revised funding mechanism and would be used in setting cost-efficient levels of funding for various academic subject groupings and thereby determining institutional budgets. The aim of the unit cost funding system, as communicated by the HEA, is to establish a 'unit' cost per student in particular subject groupings in each of the seven universities, and thereby to derive an average unit cost in each subject grouping across the university sector. This is achieved by applying the HEA unit cost model to the recurrent expenditure in each institution for a financial year.
Based on individual returns from the universities, the HEA conducts an analysis and subsequently advises the universities of the extent to which their unit costs are above or below average costs in a given year The framework is still in a transition phase between allocation of funds to universities using historical baselines and the full introduction of the unit cost funding mechanism.
Information pertaining to the unit cost exercise can be viewed under the following headings: