Before there are cries of “Schools are not businesses!” do take note that if we measure the size of businesses in England by the number of their employees, we find that the spread from one-man-bands to giant corporations is heavily skewed towards smaller firms.

Indeed, over 80 per cent of firms employ fewer than 10 people. Schools, typically employing between 40 and 150 people and with budgets of millions of pounds, are large businesses.

Consequently, their pivotal position in society and their importance as places of work demand the same care, attention and respect afforded to other large firms. So why should we not borrow some of the management techniques and methods of appraisal from commerce?

This article is an attempt to encourage school managers, governors and local authority officials to consider one technique: costeffectiveness.

To apply costeffectiveness analysis to a school is not straightforward. Measures of the basic “granule of product” (marginal change in the understanding and knowledge of a child), which are essential for the effectiveness indicator, are only now being developed.

With the introduction and refinement of value-added tests, we are close to a measure of the base unit of a school’s product. I presume that these measures will be ready and reliable soon.

To assess the balance of cost-effectiveness for a school, we require in addition to accurate measures of product a base unit of production to compare with the effectiveness unit of our product. But how is it to be defined? Is it the teacher’s salary bill, or the total budget of the school?

There are some indicators of cost already in place. For instance, the cost per pupil year is often shown in the annual report, and from the way this changes with time we can get a useful indicator of how the school is marshalling its budgets.

But being pupil-based, this indicator is too close to our product with its varying needs. We need a base unit for the financial and operational factors of “production”.

It seems to me that the key element of production is the availability of a teacher, face-to-face with pupils - the equivalent of the miner at his coal face. Minersare used to discussing “tons per shift” and unions negotiate on these statistics. Teacher contact time would seem to be the base measure of effort or production for a school. It is also the closest we are likely to get to a measurable indicator which is not open to dispute and which is of practical use to the school’s managers.

If we play some arithmetical games with total delegated budget, the number of teaching staff, contact time and the number of days in a teaching year, we come up with a figure for the “cost of a contact hour” (COACH for short), which includes all the overheads, costs of administration, teacher preparation time, management salaries, consumables - indeed all the costs of running the school.

Divide this number by the number of teacher hours in front of pupils and we have a value for our precious and crucially important component of production.

In a school of my acquaintance, COACH works out at pound;42. As an hour often equates to the length of a school lesson or period, COACH is a practical and readily understood concept.

However, COACH is of little use to us as a number in isolation. It assumes value as a management tool if we 1) examine the way this number changes with time and 2) compare it with the effectiveness indicators (the “product” measures above), so that we can discuss not just cost but costeffectiveness.

With the development of realistic new measures of added value, plus COACH, we are able for the first time to build solid comparisons of costeffectiveness for schools.

For example, if my COACH is up but my effectiveness measures of product quality (added value) are down, I have a school with deteriorating costperformance.

If both are slightly down, my costperformance is stable. This may not be a desirable direction in which to move the school as an educational establishment but in a situation where the school managers are forced to cut expenditure they can show that they are continuing to do a good job in spite of the financial constraints.

Office for Standards in Education reports give an opinion on “value for money” but without stating how this is calculated. With costeffectiveness analysis based on COACH and the new added-value measures, the school will be able to tell them.

Bruce Clark is a management consultant.