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Per Child Cost Analysis of OLPC Project in Nepal

August 24th, 2010 By:Rabi Karmacharya · 7 Comments

OLE Nepal prepared a preliminary “per child cost” of the One Laptop Per Child project based on the pilot project carried out in the last academic year (April 2009 – March 2010) in 26 schools in six districts of Nepal. The project was implemented in partnership with Nepal Government’s Department of Education (DoE)’s and funded by the Danish Government’s Local Grant Authority, UN World Food Programme’s Nepal Country Programme. The laptops were donated by the Swift Banking group through the OLPC Foundation.

The following are the key assumptions and considerations taken while computing the cost:

  • The XO laptops’ lifespan is 5 years, as stated by the manufacturers

  • The repair and maintenance cost for equipment is 2.5% of the purchase cost

  • The content development cost for certain subject and grades can also be considered negative cost as they are already prepared during the pilot phase.

Per unit cost to implement the project comes to be Rs. 27,628 (US $ 368)1 during the project/pilot phase considering 26 schools in six districts and around 2100 students and teachers. At present, if the XO laptops are assumed to have life span of five years, and everything else associated with the pilot/project is assumed to remain constant, then per child cost per year for next 5 years (for a child who uses the XO from grade 2 to grade 6) can be calculated as Rs. 5,500 (US $ 77). Per unit cost or per child cost can come down significantly if the number of students are increased as some of the costs associated with the project such as content development remain constant no matter how many students are targeted. Furthermore, the content development cost for certain subject and grades can also be considered negative cost as they are already prepared during the pilot phase and can be used for further expansions. The cost associated with the project is given in detail in the attached sheet.

The costs taken into consideration to derive per child cost based on 26 pilot schools are:

1. Cost of Laptops

2. School infrastructure

3. Teacher Training

4. Deployment cost (at project launch)

5. Running costs during pilot year

6. Content development cost

7. Project development cost

8. Network cost

Laptops: OLPC XO laptops are priced at US $200 and another US$ 25 is factored in as shipping and handling cost. Although the laptops for each child will cost US $ 225 at present day cost (OLPC insists the price will come down by up to 25% as the volume of orders increases), and assuming that the laptops lifespan is 5 years, the child will have the laptop from grade two till grade six. Hence when the current cost of laptop is spread over 5 years, then cost per child cost for the laptops comes to US $ 45 per year. Further, as the overall price of the computers are declining and other computers similar to XO laptops are also emerging fast it will be safe to assume that better and cheaper laptops will be available in the market.

School infrastructure: The initial setup at 26 schools required Rs.4,599,934, which included networking and power equipment installations. Hence, the per school cost comes to Rs.176,000. This amount can be largely taken as one time cost and for a period of over 5 years 2.5% or Rs. 4,400 should be considered as repair and maintenance cost for the equipments installed in each school. Details of type of equipment required at school level are given in attached sheet.

Teacher training: Rs. 2,089,000 were incurred in teacher training from each school. This cost also includes training package preparation, master trainer development from DoE and NCED systems, training for OLPC focal persons from the districts and 113 teachers from 26 schools in six districts. Teacher training costs can also be considered as one time cost with refresher training given to teachers every other year. Cost associated to train a school teacher to be able to integrate ICT based education in daily teaching and learning will be around Rs. 18,500 per teacher.

Deployment cost: Deployment cost at program launch for all 26 schools was Rs. 1,112,975, roughly about Rs. 43,000 per school. The costs factored in are for travel and other related costs associated with deployment plus laptop transport and network setup for each school. This cost can also be considered as one time cost for each school if laptops for grade 2 -6 are deployed at the same time. This cost will also decrease significantly as the number of schools increases per district.

Running costs during pilot year (Rs.958,593): Running costs such as electricity, internet fees and monitoring and supervision costs are associated in this category. Running cost for all 26 schools is estimated to be Rs. 958,600 or Rs. 36,800 per school per year.

Content development cost (Rs. 5,902,000): The cost for content development for grades 2 & 3 (Nepali, English and Mathematics) and 6 (English and Mathematics) was Rs. 5,902,000. This cost is only associated with human resources cost. This can be considered onetime cost and constant for any number of children, with additional budget required to develop additional activities in additional grades and subjects. This also assumes a small budget each year for updating and changes required in the existing activities.

Project development cost (Rs. 4,901,000): Project development cost mentioned here is a one year cost of the project management cost associated with the OLPC project. Besides human resource to manage the cost no other costs are associated with this segment. This cost is strictly associated with implementing partner and may not be necessary if the project is implemented by the government.

Network Cost: Similar to content development and Project Development cost, Network cost also reflects the human resource cost to staff the network team with engineers to develop architecture and install wireless networks for schools.

Budget Summary is given in the table below:

Budget summary

Area

Total cost

% of total

NRs.

US $

1. Laptops

35,523,360

473,645

63

2. School Infrastructure

4,599,934

61,333

8

3. Teacher training

2,089,000

27,853

4

4. Deployment cost

1,112,975

14,840

2

5. Running costs per year

958,593

12,781

2

6. Content Development Cost

5,902,000

78,693

10

7. Project Development Cost

4,901,000

65,347

9

8. Network Cost

1,716,000

22,880

3

Total cost excluding laptops

21,279,502

283,727

Total cost including laptops

56,802,862

757,372

100

Per student cost with XO

27,628

368

Per student cost without XO

10,350

138

Exchange rate (US$ 1 = NRs.)

75

1Exchange Rate: US $ 1 = NRs. 75

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7 responses so far ↓

  • 1 Wayan @ OLPC News // Aug 24, 2010 at 7:56 pm

    Rabi,

    Wouldn’t you need to increase the content development cost if you are to expect the XO laptops to be used in grades 2-6? You still need to develop all content for grades 4 & 5 (Nepali, English and Mathematics) and Nepali for grade 6.

    Also, while the manufacturer might say lifespan is 5 years, what are you seeing in the pilot? And is maintenance really only 2.5%? That would be a record low for any computing technology deployment. Most estimates use 20% of purchase cost as a standard figure.

  • 2 Jon // Aug 24, 2010 at 8:06 pm

    I’d be interested in the breakdown of the “Network Cost” — is that local area network setup, or does it include Internet connectivity? If it includes Internet, what bandwidth would be available per school?

  • 3 Rabi Karmacharya // Aug 24, 2010 at 11:17 pm

    Wayan.

    As I wrote in the narrative, this was based on the direct cost of the one year pilot. You are right that we will need to factor in content development costs for grade 4 & 5 (some of grade 4 content development did take place in the above period). By rough calculations, the additional content development will increase the total cost by about 10%.

    The 2.5% maintenance cost is based on actual figures from the pilot year. It may rise in subsequent years, but we do not have that data yet. As for the life of the laptops, we have laptops working well for over two years now. Most problems are in power adapters and keyboards than on the motherboards or other internal parts.

  • 4 Rabi Karmacharya // Aug 24, 2010 at 11:24 pm

    Jon.

    The network cost includes local area networks in schools as well as connecting the schools to an intranet (using long range wireless radios) that includes other schools and the central server at our office. Schools that are close to affordable Internet connection use the network for access. For example, in one district three schools share one Internet connection subscribed from Nepal Telecom. Each school puts in roughly $5 for a 128K ADSL connection.

  • 5 Dr sandra // Aug 25, 2010 at 2:12 am

    im so happy , it ‘s an intersting program that is asked to be sponsored …because a lot of money will have needed to carry out that project and i thank everyone who is given a dollard to make this one came true . from my heart thank you.

  • 6 Thomas Grotkjaer Nielsen // Sep 5, 2010 at 2:47 am

    Hi OLE Nepal,

    This unit cost analysis is an interesting analysis for education policy makers in Nepal. But unit cost analysis is a difficult business, e.g. what to include and what not to include, what assumptions to make, can the units be considered uniform etc. Hence, there are always issues that people can disagree about in this kind of analysis.

    In your presentation on this blog the analysis does not describe the pilot project in many details. This might help the reader to understand the analysis, the assumptions and the conclusions better.

    Is it possible to estimate the unit cost for different future project proposals based upon this unit cost analysis, for example, if 100 schools in 4 districts with 5000 pupils and 400 teachers would be involved?

    These kinds of estimation of future project models would also be very interesting for education policy makers in Nepal in order to take the current pilot project to a real project implementation.

  • 7 Peter Cheer // Jul 4, 2011 at 1:38 am

    In any accounting exercise decisions need to be made about what to include and what to leave out.

    In this case one worrying omission is the disposal costs. At the end of their useful life will the machines be, thrown away (cheap but deeply irresponsible). recycled (where and at what cost) or depreciated off the balance sheet so making the problem disappear?

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