ACE GROUP OF INSTITUTIONS
Reducing Ace’s Extracurricular Expenditure
Problem and Its solution
Manish Dhungel
12/24/2013
EXECUTIVE SUMMARY
Extracurricular activities costs are too high
ECA cost has not always been a large and growing expense category for Ace. Ace has
consistently increased the amount of money spent on ECA. The cost is increasing at an
increasing rate. The recent figures shows that ECA cost consist of 25% of the total profit.
Transportation and food and beverage are the biggest expenses, followed by
accommodation, materials etc.
The type of educational strategy Ace uses focus on ECA so the expense is justified. The
management has allowed to spending of unlimited resources. Ace spends more than the
industry average.
Need to control costs
Recent decrease in the profit due to competition has challenged management to control
costs so as to decrease the negative impact on the profit margin. Although the number of
events that are held at Ace across all programs is high there are areas where costs can be
controlled. The rising cost of ECA organization has given the program directors little
incentive to economize.
Ace can save Rs. 10 Million per year
REDUCING ACE’S EXTRACURRICULAR EXPENDITURE
INTRODUCTION
ACE Group of Institutions is one of the most reputed education providers in Nepal. Ace
has always believed in practical education rather than theoretical learning. ACE provides
following programs:
1. Pre- Montessori and Montessori
2. Primary and Secondary School
3. Higher Secondary School and A-Level
4. Institute of Management BBA and MBA programs.
The educational pattern at Ace is such that the focus on practical implications starts from
lower level. Students from primary and secondary level are encouraged to show off their
skills in the practical learning environment. The ECA start from primary level. As the level
increases more focus is given on extra curriculum activities. Excursions, Events, Shows,
Sporting Programs, etc are major part of Ace’s curriculum. Seminars, Presentations,
Parties, Picnics, Meetings, Tours are major part of the BBA and Masters Level.
After analyzing the accounts of Ace, with no surprise, the title ECA comes up with big
numbers. Ace is spending a hug sum of money on ECA. More than two million is spend
yearly on ECA. These include the figures from the Montessori level to the Masters level.
During 05-06 Ace was making huge profits. The expenses made on ECA were not as
important. But recent decline in profit has made ECA look like huge expense Ace is
incurring. The profits have decreased but the ECA expenses are on the rise. High
competition is the main reason behind Ace losing its profit yearly. The number of students
is decreasing. The decrease in profit margin is clearly seen on few years of financial
statements. And ECA is eating into profit. Not only the competition but the cost of travel
including airfare, accommodation costs, and the cost of hiring event management
organization has been increasing yearly which has growing impact on the profit of Ace.
The program directors who are supposed to concentrate on academia are wasting their time
on ECA. This shows an intellectual loss due to ECA. The high standard of Ace has to be
maintained and the program directors are doing it so well. ECA is the attraction to students
but academia is more important.
We have to control the cost of ECA. There needs to be a centralized management looking
after ECA that will help program directors to share their work load and concentrate on
academics. The report is based on the study of the impact of ECA on the profit of Ace and
the ways to control ECA costs. The recommended best option will be to employ a ECA
head or manager to control the overall cost of ECA.
THE HIGH COST OF EXTRA CURICULLAR ACTIVITIES
Although many other institutions would not be so concerned about ECA cost but due to
Ace’s history of expenses made on ECA it has become a significant figure in the overall
profit margin. The figures from last 7 years has been analyzed and compared with the
market average. The comparison shows a huge difference in the market average and the
spending of Ace. Every month at least 10 – 12 such activities are held in any of Ace’s
schools. It may be a small parent meeting or guest lecture from abroad. Every cost adds up.
Rs. 20 Million Per Year Spend On Extracurricular Activities
Ace has always encouraged a significant amount of ECA. To help students be more
practical than just book oriented. Every student is given a chance to show hisher talent
other than studies. This is the main reason behind Ace’s stress on ECA. Ace annual budget
for ECA is about 15% of the total revenue. Last year Ace held 200 events, 50 excursions,
120 Picnics, and 5 international tours.
Figure 1 illustrates how ECA budget is spent. The largest categories are transportation and
lodging along with food and beverage. 50% of the expenses is made on these categories.
Figure 1
The profit margin is decreasing but the ECA expenses are rather increasing. This resulted
in the figure above. As profit decrease and ECA expense increase the ratio of ECA on
profit increases.
The figure 2 shows the increase in the ECA expenses in recent years from 5% to 25%.
Figure 2
Ace’s Extra Curricular Activities Expense Exceeds Industry Average
The ECA budget are justified as we conduct so much of extra activities yearly. Two major
factors contribute to Ace’s ECA budget:
• As we focus more on extracurricular activities from the Montessori level as the grade
goes up more extra activities are conducted. Events, programs, tours, are daily activities of
