Universities and higher education colleges may be wasting up to £700 million a year on administration, business analysts have estimated.
The interim findings of a three-year study indicate that this money could be saved if the least efficient institutions learnt vital lessons from the most efficient.
But even the least wasteful institutions could end up spending more on administration if they introduced top-up fees, the study has found.
Aston University Business School management sciences professor Emmanuel Thanassoulis and fellow researchers Stan Brignall, also from Aston, and Barbara Casu from Reading University, analysed spending in 108 institutions in the first two years of the study, commissioned by the Higher Education Funding Council for England.
They found that in 1999-2000, the institutions surveyed spent a total of £3.6 billion on central administration and non-academic staff costs in academic departments.
When compared with 20 institutions that were judged to be operating most efficiently, the analysts concluded that it was possible for other institutions to make an annual saving of £700 million across the sector.
Professor Thanassoulis said it was hoped that institutions would be able to match themselves with similar universities and colleges among the 20 "benchmark" institutions to find ways to save money.
In a summary on his findings, he says: "It is hoped institutions matched in this way can share practices with a view to offering better quality cost-efficient admin services."