Phases of capital budgeting

Advanced Capital Campaigns A capital campaign is a one-time fundraising initiative over a long time span. Its purpose is to raise significant funds for the specific purpose of building a building, undertaking a major building renovation or expansion, or purchasing a major piece of necessary equipment. Capital Campaigns are the most effective way to raise large amounts of money over a relatively short period of time.

Phases of capital budgeting

The impact of these forces may change from time to time, as does their relative signifi- cance.

Process of Capital Budgeting

In addition, the human factor that interacts with these forces is not constant either, thus submitting an important subject for public debate.

Nevertheless, the sys- tem is being subjected to mounting pressures from the needs to identify its goals, select and define priorities, and to allocate the limited resources. Healthcare organizations have been using a variety of evaluation methodologies to provide alternatives in the deliv- ery of care.

They are driven by medical innovation, prospec- tive reimbursement, and societal expectations. In this environment, evaluation methodologies only work if an orga- nization is truly prepared to cancel a project after the initial investment.

The flaw in the theory is not its complexity, as some have said, but in the fact that it ignores the psychological and political realities of capital investments [6]. It becomes imperative for providers to make good resource allocations decisions at the outset of their capital budgeting process, and often those decisions are biased towards equipment that has a positive impact on reimbursement.

However, the increasing scarcity of available resources within the hospital community on the one hand and the demand for quality healthcare on the other promoted a public debate and awareness of such a paradoxical economic per- spective.

New tools for cost and outcomes management include disease management and patient safety initiatives [9]. It is in such an environment that hospitals have begun to man- age their fixed assets i. As the deployment of medical equipment continuously evolves, its impact on the hospital operations and on the consumption rate of its financial resources increases.

Phases of capital budgeting

The ability to forecast and manage this continual evolution and its subsequent implica- tions has become a major component in all healthcare deci- sions.

In a survey of three large hospitals in Houston, Texas, with a combined licensed bed capacity of about 1, beds, the average number of medical devices being used per licensed bed has increased between and from four devices per bed to over 17 devices per bed [10]. This illus- trates that hospitals are experiencing a continual increase in the number of medical devices used on a per-bed basis.

Phases of capital budgeting

However, we are beginning to understand the relationship between the methods and information that guide the decisions regarding the management of the medical technology that is being deployed in the highly complex environment of the healthcare delivery system, including the variances among users, applications, and cultures from one hospital to another.

The healthcare delivery system presents a very complex environment where strategy, facilities, equipment, drugs, information, and the full range of human interventions are interacting.

It is in this clinical environment that patients in various conditions, staff, temporary skilled labor, and the wide variety of technology converge. Technology means merely the use of tools; that is, the involvement of any agent which assists in the performance of a task [11].

Such tools have been introduced at an increasing rate during the past years and include the use of tech- niques, instruments, materials, systems, and facilities.

Of all the factors and resources that will shape the future of the health of mankind, the one that most often stretches the imagi- nation is medical technology. But yet, it is also blamed for contributing to the escalation of healthcare costs without receiving recognition for improving access to and quality and efficiency of the system.

It is, therefore, expected that the only winners are those who use superior strategy and execution. Generally, a superior strategy is the result of the use of market-based demand fore- casting.

This would define the types and volume of equipment needed to meet demand. Equipment is categorized by its func- tion and owner department requirements in an assets list developed by the user and equipment planner as part of bio- medical engineering validation of meeting appropriate clinical standards and institution integration prior to purchase recom- mendation.

The plan must be layered with present organiza- tional capital asset requirements for replacing and upgrading existing inventory to maximize effective use of the existing capital equipment matrix and for appropriate systemization of medical processes.

At this point, it is the managers who have to link technical capabilities to clinical requirements. Too often planning is the result of a crisis, a situation that does not permit thorough analysis, and usually it is a time when it is too late to begin a plan.

To implement an effective plan, one will be expected to know how the present state of technological deployment should be assessed and to have a good rapport with the research-and-development industry to be able to provide a forecast and review of emerging technological innovations, the impact that they may have on the particular institution, plus have the ability to articulate justifications and provisions for adoption of new technology or of the needs to enhance or replace existing ones.

This process is aided by the existence of both biomedical engineering equip- ment and finance capital equipment databases. The technology management process would include an assessment using a multiyear template of when and if equipment will need upgrad- ing, replacement and when new acquisitions are to be added.

Clinical engineering should then calculate a lifecycle for each asset. Using cost-accounting analysis that includes a review of the impact equipment has on reimbursement methodologies such as cost-based or case-based, and in conjunction with a market-based forecasting model, each prospective piece of equipment should be priced and an overall annual cost of maintaining the organizational inventory assessed as well as new additions supporting the strategic plan.

The past decade has shown a trend of increased legislation that supports more Federal regulations in healthcare. These and other pressures will require that deployment of, and justi- fication for, additional or replacement medical technology is well planned.

If you subscribe to the saying that you cannot manage what you do not measure, and you cannot measure what you do not define, then the need for the development and the maintenance of a systematic and comprehensive planning process for the adoption of medical technology in hospitals is obvious.

A mixture of literature review and experience demonstrates that the rationale for technology adoption is derived from the following reasons:Capital Works Management Framework The Capital Works Management Framework is the Queensland Government’s key policy for managing risks in the planning and delivery of government building projects.


It identifies the major risk areas and sets out the steps that must. Capital Campaigns. A capital campaign is a one-time fundraising initiative over a long time span.

Its purpose is to raise significant funds for the specific purpose of building a building, undertaking a major building renovation or. • Understanding the Budget Phases • Capital Budget Evaluation (NPV, IRR, Payback, Hurdle Rate) • How to Prepare a Forecast • Seven Steps in Forecasting • Understanding the Different Methods in Forecasting • How to Prepare a Strategic Plan • Understanding the Profiles of Strategic Planning.

Capital budgeting is a company’s formal process used for evaluating potential expenditures or investments that are significant in amount.

In layman&#;s words, Capital budgeting, and investment appraisal, is the planning pr. is needed for equipment, these proposals will normally be included in the capital budget. PROCESS OF INVESTMENT DECISIONS:Capital Budgeting is a complex process which may be divided into the following phases.

Capital Budgeting Process Identification of investment proposal.


2. Screening the proposal. 3. Evaluation of various proposals. 4. Capital Project Solutions is a project management / owner representative organization that can manage all phases of construction project activities.

We manage the planning, budgeting and scheduling through design, delivery, construction and close-out .

Identify and briefly describe two phases of the capital, Financial Management