Prepare a 4-5 page capital budget for a major capital acquisition.

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Prepare a 4-5 page capital budget for a major capital acquisition.

Rubric

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

  • Competency 3: Develop a capital budget. 
    • Describe a capital acquisition.
    • Prepare a capital budget.
    • Describe the process for calculating costs.
  • Competency 4: Determine the equipment and services needed to maintain seamless patient or client care. 
    • Justify the need for a capital acquisition.
  • Competency 5: Apply financial principles to a strategic plan for achieving organizational goals and fiscal success. 
    • Present a plan for budget management.
    • Explain how a capital acquisition will affect the financial health of the organization.
  • Competency 6: Communicate effectively with diverse audiences, in an appropriate form and style, consistent with applicable organizational, professional, and scholarly standards. 
    • Present budget data and information clearly and accurately.
    • Integrate relevant and credible sources of evidence to support your budget data and information, correctly formatting citations and references using APA styl

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Preparing and Managing a Capital Budget

Kelly Hise

Capella University

NURS-FPX6216 – Advanced Finance and Operations Management

Dr. Georgena Wiley

August 2, 2022

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Table of Contents

Preparing and Managing a Capital Budget…………………………………………………………………………..3

The Captial Acquisition…………………………………………………………………………………………………….3

Need for the Capital Acquisition………………………………………………………………………………………..4

Capital Budget…………………………………………………………………………………………………………………6

Calculating Capital Cost……………………………………………………………………………………………………6

Plan for Budget Management…………………………………………………………………………………………….7

Financial Health of Renovation for Organization…………………………………………………………………7

References……………………………………………………………………………………………………………………….8

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Preparing and Managing a Capital Budget

Capital budgets are a means of funding allocated for the department and used for

expenditures involving equipment, information technology, furniture, facility improvements or

renovations, and new construction. The nurse manager of a 50-bed step-down unit is preparing

the capital budget and has noticed the staff turnover over the past three years. The manager

decides to gather data from exit interviews and patient surveys to gain better insight into the

department’s culture. The findings show low nurse satisfaction, poor morale, and complaints of

an outdated and unhappy work environment. After research on increasing productivity and staff

enthusiasm to establish a positive work environment, the nurse manager has decided to renovate

the staff lounge as a significant capital purchase.

The Captial Acquisition

The employee staff lounge on the step-down unit is very outdated. A black leather couch

is peeling, and the cushions are worn down. The tables have faded brown Formica tops with

cracked sides that have been sanded down so as not to be sharp. The chairs have cloth bottoms

with stains. The coffee machine takes eight minutes to brew a pot of coffee, the small

Refridgerator struggles to keep staff lunch cold, and the walls are tan in color. The plan for the

renovation will involve staff input on the color scheme, ideas for furniture, more tables, or

keeping a comfortable sitting area such as a couch.

The nurse manager decided to improve the work environment because an office break

room has a strange and powerful push and pull effect on office culture and morale (Kleinman,

2018). Leaders should constantly examine and work to improve a staff break room knowing this

place can set the tone of the work culture. Pros in enhancing the staff lounge will create a space

for interpersonal communication, collaboration with co-workers, and a mental break during a

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high stressful shift. Cons to a staff break room are allowing staff to bring the energy of negativity

and endless complaints. This nurse manager wants an inviting staff lounge filled with healthy

snacks, a coffee bar, and positive affirmations to help the overall well-being and morale of the

employees.

The time lime for the project will take an estimated three to four months, including the

approval from leadership and allocating of funds available. The nurse will ask staff members to

bring in color samples for the walls, and there will be a vote as a team. The nurse manager will

get quotes for a few sets of tables for four people, plastic sturdy chairs for easy cleaning, a coffee

bistro bar with a Keurig coffee maker, and pictures of beaches with some color pop to brighten

the space. There will be a watering station with an ice maker to have cold filtered fresh water.

There will be added Bluetooth speakers for the staff to connect music as a sense of therapy to

relax in the space while taking their break. There will be a wall dedicated to staff

acknowledgments and recognition for the department goals as it aligns with the value and

mission of the unit. The proper break room can offer a place for relaxation, rejuvenation, and

refreshing the employee to tackle the second half of their shift(Kleinman, 2018).

Need for the Capital Acquisition

The renovation of the staff lounge will positively impact the staff culture by giving the

nurses a sense of value. Leadership will present the value in employees’ well-being to provide a

safe place to reconnect with themselves. Staff nurses will be encouraged to take their minds off

the stress of the job and relax on their thirty-minute break. Happy and healthy employees take

pride in their work, reflecting this behavior in the care delivered to the patients. There is a direct

correlation between nurses’ participation in staffing, resource adequacy with emotional

exhaustion, and job satisfaction in the work environment (Alharbi et al., 2020). The nurse’s

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negative perception of the practicing environment is associated with a lack of relationship with

leadership and a small part of the influence in the unit decisions. Its the nurse manager’s goal to

guide the relations between leadership-nurse and nurse-physicians to improve job satisfaction.

While obtaining staff input and participation in hospital affairs to renovate the staff lounge, the

nurse manager can work toward staff retention by creating a positive work environment.

Nursing turnover is costly to a healthcare system. Staffing is the majority expense of an

operating budget. Constantly hiring and training new staff, overtime, and hiring travel nurses are

budgetary constraints. The historical data from the past three years of the unit represents high

turnover and, increasing nurse-patient ratios, a decrease in staff and patient satisfaction. The

provided information demands change and implementation to create a positive work culture and

cultivate a foundation of a healthcare team. For executive leaders to buy into the project, the

capital budget planning needs clear objectives and evidence to support a return on investment

(Stroudt, 2013). The renovation of the staff lounge will result in higher staff satisfaction by

allowing them a space to unwind their emotions and destress while they take a break from their

shift. Nursing care can be highly stressful; the job is physically, emotionally, and mentally

demanding.

Without a space for the staff to feel safe to be themselves and relax from the external

stimulation, their emotional well-being will turn them away from the job, causing a high

turnover. If the nurse manager can help ease some of the job demands by offering a more inviting

lounge, this will result in higher staff satisfaction with their work environment and decrease

turnover rates. The staff nurses will feel like a valued investment to the organization. A positive

work environment and staff satisfaction will be reflected in patient care through rested staff will

deliver excellent patient care and improve patient satisfaction and health outcomes.

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Capital Budget

A contracted company will do the renovation of the lounge. Therefore the direct expense

of the job will be based on estimates received and their overall vision of utilizing the space best.

The contractors will be interior designers to purchase furniture, paint supplies, room decor, and

materials at wholesale pricing. The indirect cost will be the project manager’s salary overseeing

the renovation. There will be a minimum budget of twenty-three thousand; however, the manager

will plan for a ten percent variation to cover incidentals. The variances can be related to increases

in supply cost from supply and demand and additional expenses in materials or labor it may take

to complete the project on schedule. Some unknowns are how many labor hours the job will take

to complete, the wait time for furniture, and the hours of operation the company will be working.

Additionally, the nurse manager must provide a break room space during renovations. Once the

nurse manager gathers the estimates, the nurse manager seeks expert advice from the financial

team to collaborate on a budget plan.

Calculating Capital Cost

The calculated capital costs will be based on the cost management budget. The cost

management budget provides accountability and gives structure to the estimated plan by

controlling and keeping construction supply cost down (Rundio, 2016). Cost management can

maintain transparency with the contractor and the project manager. The project manager can

track progress and provide instant intervention if the project falls behind or needs clarification.

The system will utilize the cost management plan to forecast future projects of the exact nature

with this budget structure.

Table 1

Lounge Renovation

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Service Cost
Labor $9,000
Material and Supplies $6,000
Coffee bistro with maker $700.00
Furniture (table, chairs, lounger) $4,300
Picture & Billboard & Speaker $2,700
Continence (10% of the minimum budget) $2,300
Total $25,000

Plan for Budget Management

The nurse manager will rely on the project manager to control the cost through the cost

management plan. The variances account for ten percent of the cost for extra labor or supply and

demand of products. The financial team will approve the initial cost for the renovation. Suppose

there are any extreme hiccups or delays in the project plan. In that case, the nurse manager will

evaluate the most needed items with the staff members—the nurse manager and inquirer about a

rolling capital approach. The rolling capital approach supports the nurse’s goals of the

improvement efforts to increase staff satisfaction in the unit; the patient satisfaction numbers will

increase with the overall outlook to increase revenue with value-based care. The rolling capital

can adjust the allocated funds based on the unit’s financial health(Jasuta, 2016).

Financial Health of Renovation for Organization

The renovation for the nursing lounge project is relatively small, and the return on

investment will outweigh the cost due to staff retention, employee satisfaction, and the

transference of pleased workers will reflect in the delivery of patient care. The nurse manager is

confident in bringing the staff lounge alive to promote a positive culture and caring work

environment for the step-down unit. The healthcare system will reduce the cost of training new

staff, overtime ratios, and travel nurses by creating a nursing unit that maintains low turnover and

high productivity in providing excellent patient care.

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References

Alharbi, A. A., Dahinten, V., & MacPhee, M. (2020). The relationships between nurses’ work

environments and emotional exhaustion, job satisfaction, and intent to leave among

nurses in saudi arabia. Journal of Advanced Nursing, 76(11), 3026–3038. Retrieved

August 1, 2022, from https://doi.org/10.1111/jan.14512

Jasuta, L. (2016). Rolling capital managing investments in a value-based care world. Healthcare

Financial Management, 70(6), 82–89. Retrieved August 1, 2022, from

https://www.proquest.com/docview/1799215864/fulltextPDF/5D2D7C5382234583PQ/1?

accountid=27965

Kleinman, J. (2018, February 16). 10 ways your office break room can improve your office

culture – corporate essentials. Corporate Essentials. Retrieved August 1, 2022, from

Rundio, A. (2016). Budget development for nurse managers. Reflections on Nursing Leadership,

42(3), 1–8. Retrieved July 31, 2022, from

Stroudt, R. L., Jr. (2013). 12 strategies for managing capital projects. Healthcare Financial

Management, 67(5), 68–71. Retrieved July 31, 2022, from https://www-proquest-

com.library.capella.edu/docview/1419718536?accountid=27965

Tang, J. H.-C., & Hudson, P. (2019). Evidence-based practice guideline: Nurse retention for

nurse managers. Journal of Gerontological Nursing, 45(11), 11–19. Retrieved August 1,

2022, from https://doi.org/10.3928/00989134-20191011-03

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Prepare a 4-5 page capital budget for a major capital acquisition.

Introduction

Note: Complete the assessments in this course in the order in which they are presented.

In today’s health care environment, the focus on major purchases, as part of the capital budget, has emphasized the need for newer and better technology. Although the need to invest in capital equipment and technology has been ongoing, the nursing workforce must also have a safe and pleasant work environment.

This assessment provides an opportunity for you develop a capital budget for a major facility improvement that will benefit patients, nurses, and the organization.

Most nurse leaders work with operating budgets, but will also have input into capital budgets. A capital budget is typically developed separately from the operating budget and is usually developed to purchase items that are often referred to as
big-ticket items that will enhance the capacity or services of an organization. For example, capital budgets may cover land purchase for the future site of a new outpatient surgical center, construction of a new building or build-out for renovation of an already existing building, or replacement of old equipment.

It is important to remember that health care is also a major business. While for health care providers, patient care and safety are priorities, health care institutions must operate from a business model in order to survive financially. As nurse leaders or executives, you often have a role to play in developing a capital budget to improve care at some level. In addition, a rapidly changing health care environment requires nurse leaders who have the financial management and budgeting skills to ensure that large capital expenditures further the mission and goals of the organization.

Note: Complete the assessments in this course in the order in which they are presented.

Preparation

You are the unit manager of a 50-bed, step-down unit, and it is time for you to prepare your annual capital budget. You have seen a significant turnover in your nursing staff in the past three years; a review of exit interviews and patient surveys indicates low nurse satisfaction, poor morale, and complaints of an antiquated and depressing work environment. You have researched the impact of a positive working environment on staff productivity and morale and decided to request a renovation of the nurses’ lounge as the main purchase in your capital budget. You will present your request as a quality improvement investment.

As you prepare to complete this assessment, you may want to think about other related issues to deepen your understanding or broaden your viewpoint. You are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of your professional community. Note that these questions are for your own development and exploration and do not need to be completed or submitted as part of your assessment.

· How would you approach the process of designing a capital budget? For example: 

· What steps would you need to take?

· What resources would you access?

· Will you collaborate with other executives or staff?

· How will you tie the vision for the capital expenditure to the organization’s mission and goals?

· What challenges do you anticipate in justifying a capital budget to administrative leaders in an organization?

· What criteria might a particular health care organization or service provider apply to evaluate the return on a capital investment?

MSN PROGRAM JOURNEY

Please review this guide for your degree program. It can help you stay on track for your practicum experience, so you may wish to bookmark it for later reference.

·
MSN Program Journey.

The following resources are required to complete the assessment.

·
APA Style Paper Tutorial [DOCX]. Use this tutorial for the written portion of your capital budget.

Requirements

Note: The requirements outlined below correspond to the grading criteria in the assessment scoring guide. Be sure that your budget addresses each point, at a minimum. You may also want to read the
Guiding Questions: Preparing and Managing a Capital Budget [DOCX] to better understand how each criterion will be assessed.

Prepare a capital budget for a facility renovation. Assemble your budget figures in a table, using a format of your choice. You may use either Microsoft Word or Excel to create your budget table.

Note: You may use the budget in the Vila Health: Preparing a Capital Budget multimedia exercise as an example of how you might format your table. You may also use a budget format used in your organization or a format you find in any of the course resources or on the Internet.

· Describe the capital acquisition.

· Justify the need for the capital acquisition.

· Prepare the capital budget.

· Describe the process for calculating costs.

· Present a plan for budget management.

· Explain how the capital acquisition will affect the financial health of the organization.

· Present budget data and information clearly and accurately.

· Integrate relevant and credible sources of evidence to support your budget data and information, correctly formatting citations and references using current APA style.

Additional Requirements

If you used Microsoft Excel to create your budget table, submit the Excel file along with your budget narrative. You may also add the Excel file to your Word document as an embedded object.

Format your budget using APA style.

· Use the APA Style Paper Template [DOCX], linked above, to help you in writing and formatting your budget. Be sure to include: 

· An APA-formatted title page and reference page. An abstract is not required.

· A minimum of five properly formatted citations and references.

· Your budget should be 4–5 pages in length, not including the title page and reference page.

Portfolio Prompt: You may choose to save this learning activity to your ePortfolio.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

· Competency 3: Develop a capital budget. 

· Describe a capital acquisition.

· Prepare a capital budget.

· Describe the process for calculating costs.

· Competency 4: Determine the equipment and services needed to maintain seamless patient or client care. 

· Justify the need for a capital acquisition.

· Competency 5: Apply financial principles to a strategic plan for achieving organizational goals and fiscal success. 

· Present a plan for budget management.

· Explain how a capital acquisition will affect the financial health of the organization.

· Competency 6: Communicate effectively with diverse audiences, in an appropriate form and style, consistent with applicable organizational, professional, and scholarly standards. 

· Present budget data and information clearly and accurately.

· Integrate relevant and credible sources of evidence to support your budget data and information, correctly formatting citations and references using APA styl

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