How to Start Cost Recovery in TVET Institutions

Underfunded academic education often suffers diminished standards.

Underfunded technical and vocational education usually doesn’t work at all!

Students in a secondary school in Cambodia.

Waiting for Government to find all the resources needed has little point or hope. 

Cost recovery in TVET is not an optional activity. Rather it is a precondition for survival as an effective part of economic growth. Basically most governments simply cannot afford the total cost of trade and technician institutions. TVET is VERY expensive. 

To recover costs, your TVET institutions must meet your customers needs. If the main customers are students (for skills leading to jobs), and employers (for upgrading the skills of the present workforce and finding new highly skilled workers) then cost recovery has the added benefit of proving, that you are meeting your central mission.

​By being demand driven and market responsive, not only do you best serve your customers but also recover costs and generate revenue. 

Senior TVET Administrators come from many different backgrounds. Some of you may already understand marketing, continuing education, donations’ management and other cost recovery concepts very well. Others, maybe, never had a chance to learn of these activities or to think about demand driven institutions. ​

6 Steps to starting cost recovery in your institution

Included is a “fast track” short method for cost recovery in your institution. As a reminder, don’t do this alone. Bring in your staff, certainly the Heads of Departments, industry liaison officer, Community and Enterprise Continuing Education marketers and programmers and Board of Governors or Institutional Management Committee members.

This will help build a commitment to the end product (the Plan) as well as a wonderful team builder. This is a basic plan that, as a minimum will get your staff thinking in a new “demand driven “way. It will get you started.

1. Identify a new cost recovery business idea for your institution based on your assessment of what the market may want. Do not start with what your institution can do. That comes later. 

2. Who will buy your service or product? Describe your potential customer (age, education, income, occupation, life style, needs, wants, location, etc.). Look at the specific person in the company who you will deal with if it is a corporate client. If you cannot answer this one, find a different service or product!

3.  List and assess the competition. Who is meeting this need now?

4.  Identify, in detail, three competitive advantages you have over the competition. Why is your service better? 

5. Identify all costs for providing the service or product including raw materials, transportation, marketing, overhead, incentives for staff, equipment replacement over time, and energy costs.

6. Determine the price you must charge for the product or service based on your analysis of costs, your competitors’ prices and at least a 25% excess of revenue over expense. 

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