Preparing and Managing a Capital Budget
Capital acquisition
NURS FPX 6216 – Assessment 4 Preparing and Managing a Capital Budget
Creating and managing a capital budget by acquiring capital to expand a health care organization and its units or department is critical in positive growth. The process includes acquiring finances, analyzing assets, and creating a strategic plan to acquire resources and assets (Kengatharan, 2018). The purpose of this paper is to create a capital acquisition budget for renovating a nurses’ lounge in a 50-bed, step-down unit to reduce turnover rate and increase nurse satisfaction. The scope of renovation includes better opportunities for health care to retain employees, reduce burnout and stress, increase comfort, aesthetics, capacity, and amenities to increase quality care and patient satisfaction (Salmela et al., 2020).
Look of renovated lounge
It is important to place and expand the lounge near the restroom, clear routing passages, and critical units to increase quick access (San Martin et al., 2020). The lounge will include a cafeteria, game room, aroma and other therapy room, power nap rooms with sound and light control, comfortable sofas and chairs, pleasing to eye wall scenery, television, and food station (Salmela et al., 2020).
Timeline for the project, accuracy and complete description of the renovation
The process will not cross a six months deadline as it includes 3 months for expansion and construction of lounge, one month for interior designing, and one month for acquiring different materials including beds, chairs, and equipment, and 15 days to install, arrange, and redesign the place aesthetics if necessary. The budget will be followed to accurately implement the design including visual, aural, and other positive simulation designs (Nejati et al., 2016). The lounge should look as it is planned where the renovation should not affect the normal operations of other units (Salmela et al., 2020). For time-being different restroom and lounge area was created.
NURS FPX 6216 – Assessment 4 Preparing and Managing a Capital Budget
Assumptions, knowledge gap, and areas of uncertainty
The renovation is based on three assumptions. The first assumption is renovation will not increase health care cost significantly. The second assumption is it will benefit both patients and nurses. The third assumption will not affect the normal operations of health care (Nejati et al., 2018).
Justifying the need for the capital acquisition
The relationship between lounge renovation and organization’s goals and mission
There are six reasons to justify the need for capital acquisition. The first reason is varying and fixed costs of renovation can affect the timely lounge renovation process (Dal Mas et al., 2020). The second reason is failing to acquire capital results in increased turnover rate, lower nurse satisfaction, and increased burnout leading to errors. This will further increase errors leading to increased health care cost (Hardeman & Kahn, 2020). The third reason is capital acquisition helps in better design and renovation, which is critical in the successful allocation of budget to different aspects (Dal Mas et al., 2020). The fourth reason is related to analyzing the benefits of the lounge on an organization’s mission and values to achieve a better outcome. The fifth reason is capital acquisition reduces the burden on health care finances (Hardeman & Kahn, 2020). The sixth reason is capital acquisition highlights the need for improvement and provides cost-benefit analysis for decision-making and innovation (Huang et al., 2020).
| Lounge Renovation Cost in USD | |
| Furniture | |
| Sofas | $12,000 |
| Chairs | $3500 |
| Coffee tables | $5000 |
| Stackable Side Chairs | $2000 |
| Carrels with facilities | $15000 |
| Side Table | $6000 |
| Conference Table | $12000 |
| Task Chair w/ Arms | $9500 |
| Zero Gravity Chairs | $3500 |
| Equipment | |
| Desktop Computers | $10000 |
| TV wall mounted | $3000 |
| Refrigerator, full-size | $1500 |
| Coffeemaker w/ Hot Water | $1000 |
| Microwave | $1000 |
| Charging stations | $300 |
| Food and drink dispenser units (contract companies) | $0 |
| Units | |
| Power-napping rooms with built-in Murphy beds and sound and light control | $45000 |
| Game room | $90000 |
| Therapy room | $45000 |
| Miscellaneous equipment | $26500 |
| Indirect expenses | $5000 |
| Construction cost including labor and equipment | $100,000 |
| Total | $3,96,800 |
NURS FPX 6216 – Assessment 4 Preparing and Managing a Capital Budget
Pros and cons of alternative perspectives
The pros of the lounge renovation process are it creates a sense of protection and care among nurses and health care professionals, which is essential in increasing job satisfaction and productivity (Nejati et al., 2018). Further, the lounge helps reduce stress among nurses as it includes a power nap room, game room, and other relaxing facilities (Nejati et al., 2016). Brief time-off from the work is essential in increasing throughput and reducing work-related burnout (Salmela et al., 2020). Restroom and serenity rooms were found to be beneficial in improving cognitive and psychomotor abilities (San Martin et al., 2020). The cons of the lounge renovation include disturbance during the renovation process (Siddiqui et al., 2015), unnecessary visits to the lounge room, the possibility of increased activities and increased stay in the lounge room (Nejati et al., 2018), and conflict between employees to use the same services (Siddiqui et al., 2015).
NURS FPX 6216 – Assessment 4 Preparing and Managing a Capital Budget
Prepared capital budget
Assumptions, knowledge gap, and areas of uncertainty
The budget has included $50000 to cover contingency and indirect expenses, which makes the total minimum budget of $4,46,800. The plan is based on assumptions that the cost will not vary significantly, there will be no hazards, contingencies and indirect expenses do not cross the limit, and strict adherence to renovation deadline (Dal Mas et al., 2020). Availability of data related to the cost of renovation of nurses’ lounges in other health care facilities, and units would have aided in understanding the better budget analysis and acquisition.
Process for calculating cost, cost control methods, and collaboration to calculate the cost
Cash flow analysis, cash flow budget, and capital budget processes were used to calculate the cost (Dal Mas et al., 2020). The cost included for each budget item was considered as a unit and current market cost was considered. For example, cost 6 chairs were considered as a unit and the total cost was calculated per unit. Cost controlling methods used were supply chain consolidation, purchasing from primary sources by collaborating with them and stakeholders (Ageron et al., 2018), cost and benefit-based decision-making, appraisal of the predetermined target, performance-based wages for construction, project change control, and tracking the outcome (Oyegoke et al., 2021).
NURS FPX 6216 – Assessment 4 Preparing and Managing a Capital Budget
Questionable data and effects of discrepancies on calculations
Two data or information seemed to be questionable. The first information is the effectiveness of wages where construction and design agencies try to complete or drag the work till the deadline to get more credit. The second data is related to the use of therapies by nurses as they might not get enough time for it (Nejati et al., 2018). Further, very small discrepancies in calculation can increase the cost by a significant amount (Huang et al., 2020).
Plan for budget management, collaboration to manage budget and budget variances
For better management, a project team will be created, which includes representatives from different stakeholders including suppliers, nurses, administration, data analyst (Tabari et al., 2019), finance management, nurse leader, and nurse manager (Nejati et al., 2016). A shared decision-making model will be adopted to increase collaboration, communication, project analysis, fiscal success, and process tracking to find any variances and implement strategic plans to mitigate them (Siddiqui et al., 2015). Further, communication between financial and administration staff will be increased by setting up meetings to discuss and manage the project (Nejati et al., 2016).
NURS FPX 6216 – Assessment 4 Preparing and Managing a Capital Budget
Effects of renovation on the financial health of the organization
The nurses’ lounge renovation process will increase the sense of care in nurses as different studies highlight that organization’s that have serenity rooms, nurses’ lounge, and better restrooms (Salmela et al., 2020; San Martin et al., 2020; Siddiqui et al., 2015). Further, game rooms, therapy rooms, and cafeteria help the nurses to regain strength, cognitive abilities, and resilience, which is critical in reducing health care errors, increasing quality care, and managing work-life balance (Nejati et al., 2016). As a result, patient satisfaction also increases. This will result in reduced burnout and turnover rate (Nejati et al., 2018). As the organization considered nurses’ interest, job satisfaction and nurse’s trust in the organization increases (Siddiqui et al., 2015). The effects can be visible in productivity as well and administrators should consider depreciating values of the equipment and facilities to manage the lounge periodically.
NURS FPX 6216 – Assessment 4 Preparing and Managing a Capital Budget
Assumptions, knowledge gap, and areas of uncertainty
Two of the important knowledge gaps that can help in improving the positive effects of the budget, renovation, and management are knowledge related to nurse’s behaviour and sense of responsibility to make use of resources effectively and managing schedule and resources in health care (Nejati et al., 2018).
References
Ageron, B., Benzidia, S., & Bourlakis, M. (2018). Healthcare logistics and supply chain – issues and future challenges. Supply Chain Forum: An International Journal, 19(1), 1-3. https://doi.org/10.1080/16258312.2018.1433353
Dal Mas, F., Piccolo, D., Edvinsson, L., Skrap, M., & D’Auria, S. (2020). Strategy innovation, intellectual capital management, and the future of healthcare: the case of Kiron by Nucleode. Contributions To Management Science, 119-131. https://doi.org/10.1007/978-3-030-40390-4_9
Hardeman, A., & Kahn, M. (2020). Technological innovation in healthcare: disrupting old systems to create more value for African American Patients in Academic medical centers. Journal Of The National Medical Association, 112(3), 289-293. https://doi.org/10.1016/j.jnma.2020.03.003
Huang, H., Leone, D., Caporuscio, A., & Kraus, S. (2020). Managing intellectual capital in healthcare organizations. A conceptual proposal to promote innovation. Journal Of Intellectual Capital, 22(2), 290-310. https://doi.org/10.1108/jic-02-2020-0063
Kengatharan, L. (2018). Capital Budgeting Theory and Practice: A review and agenda for future research. American Journal Of Economics And Business Management, 1(1), 20-53. https://doi.org/10.31150/ajebm.v1i1.5
Nejati, A., Rodiek, S., & Shepley, M. (2018). Using visual simulation to evaluate restorative qualities of access to nature in hospital staff break areas. Landscape And Urban Planning, 148, 132-138. https://doi.org/10.1016/j.landurbplan.2015.12.012
Nejati, A., Shepley, M., Rodiek, S., Lee, C., & Varni, J. (2016). Restorative design features for hospital staff break areas. HERD: Health Environments Research & Design Journal, 9(2), 16-35. https://doi.org/10.1177/1937586715592632
Oyegoke, A., Powell, R., Ajayi, S., Godawatte, G., & Akenroye, T. (2021). Factors affecting the selection of effective cost control techniques in the UK construction industry. Journal Of Financial Management Of Property And Construction, ahead-of-print(ahead-of-print). https://doi.org/10.1108/jfmpc-07-2020-0050
Salmela, L., Woehrle, T., Marleau, E., & Kitch, L. (2020). Implementation of a “serenity room”. Nursing, 50(10), 58-63. https://doi.org/10.1097/01.nurse.0000697160.77297.06
San Martin, L., Walsh, H., Santerre, M., Fortkiewicz, J., & Nicholson, L. (2020). Creation of a “patient” hospital escape room experience to reduce harm and improve quality of care. Journal Of Nursing Care Quality, 36(1), 38-42. https://doi.org/10.1097/ncq.0000000000000485
Siddiqui, Z., Zuccarelli, R., Durkin, N., Wu, A., & Brotman, D. (2015). Changes in patient satisfaction related to hospital renovation: Experience with a new clinical building. Journal Of Hospital Medicine, 10(3), 165-171. https://doi.org/10.1002/jhm.2297
Tabari, M., Memariani, A., & Ebadati E., O. (2019). Developing a decision support system for big data analysis and cost allocation in national healthcare. Healthcare Data Analytics And Management, 89-109. https://doi.org/10.1016/b978-0-12-815368-0.00003-8
NURS FPX 6216 – Assessment 4 Preparing and Managing a Capital Budget