Capital Investment - Thesis Proposal Example

Capital Investment Affiliations April Capital Investment Introduction This paper utilizes the procedures in strategic planning and capital budgeting that is vital in capital investment. The capital investment project selected is expansion and renovation of a diagnostic and imaging department. The project is to expand the department by 15,000 square feet and renovating the current building, which is 5,000 square feet. This expansion will be vital in ensuring that there is enough contemporary space for this emergency department and create a new space that will cater for CT scanner. It would also be a significant investment toward meeting the increasing community growing needs for imaging services. Project description and Funding The capital investment project related to health that is selected for this paper is expansion and renovation of a diagnostic and imaging department. Effective imaging services in an emergency department begin by having enough space to cater for the high number of emergency cases. The imaging departments are known to offer a wide range of services and thus implying that they expect a high number of patients. Their services can be used in the treatment of different diseases, and injuries (Colchester East Hants Health Authority, 2014). The expansion diagnostic imaging department will be vital in creating enough space for emergency imaging services and providing enough room for new CT scanners. The room will be helpful in establishing modern environment in diagnostic imaging and ensure current standards in this emergency department are addressed. Creation of more space will also be helpful in ensuring that the issue of transferring inpatients to other hospitals is reduced. Third, there will be control and prevention of infections. The expansion will also lead to a new work environment, which will help recruit new emergency specialists and physicians. It will encourage a patient centred experience. Furthermore, there will be an opportunity to ensure that the emergency department for imaging responds to the community increasing needs. Last, it will help develop space for an ambulatory clinic. Capital request form The following are the components in of this form: 1. Title of Project: expansion and renovation of a diagnostic and imaging department 2. Request Category: Sensitivity 3. Benefits: respond to the ever increasing community needs and establish space for the new CT scanner. 4. Equipment: Purchased 5. Departments Involved: Emergency and Diagnostic Departments. 6. Assets: New Lease 7. Cost: Land based 8. Expansion and renovation on new land will cost $16,000,000. This request form is presented to the head financial officer who should review it for approval. Sources of Funding for the project In funding capital expenditures, there are multiple sources that can be adopted (Sullivan & Steven, 2005. The source used will depend on the needs of the organization and the existence of other projects. In funding for this project, there can be an advance planning so that its funding can be considered in the coming fiscal year. In this regard, the hospital can decide and set some amount that will cater for the project for a given in time. In addition, the funds from this source can be used to supplement other sources. Also, different health foundations can be approached to help in funding for the project. Approaching foundations can be achieved through well laid campaigns that provide for general fund contribution. Some foundations can give through donations or becoming partners for the project. Employees’ foundations can give through deductions in the payroll. For instance, they can give toward funds for renovation. In addition, they can give for funds meant for expansion. With this foundation, the project owner makes an application for funds. The application should specify the projects name, its objectives, needs, and who will be concerned in implementing it. This is followed by the directors of the foundation analyzing the application. In particular, they seek to ensure that the project is feasible and its benefits can be realized. However, this source of funds has different constraints. First, the available funds in the foundation may not be enough to cater for the need of the projects. Furthermore, the foundation board may accept the project funding but not give it the expected commitment. Another source of income is from corporate and individual owners. Some hospital services are likely to attract individuals and corporate (Ginsburg, 1972). There are some professionals who can be used in the process of raising funds. They are helpful in winning the majority. In hospitals, some departments are likely to receive much attention from individual and corporate donors. In this regard, the emergence department is also likely to attract donors (Ginsburg, 1972). This department is vital in hospitals and, therefore, it has the attention of many. This is because it works with other departments in the provision of results that will ensure complete treatment. It houses patients from different departments and thus it need to be considered. The project is also likely to benefit from the corporate donors. This is because these donors are also attracted to healthcare services that put emphasis on emergency care (Ginsburg, 1972). This aim is made possible by the need to ensure that hospitals make improvements in health of employees. Capitals funds can also be obtained from retained funds. The project can utilize funds retained from operations this source is normally valuable in the long-run. Conversely, in the short-run these funds may not be reliable for investment projects. It can work suitable when supplemented with funds from other sources. However, the use of these funds will be beneficial to the organization because it would help supplement funds from other sources. For instance, it can supplement the funds from donors, which cannot be regular in some instances. Another source for this capital investment is through borrowing. This is also a traditional way in which funds can be raised. In particular it can be done by making borrowing from a commercial source. Principally, the funds can be done by taking loans, mortgages and bonds. The borrowing can be secured by mortgages or revenues. This source has constraints. In particular, this source is not relevant for hospitals because they are non-profit. Also, the funds are also not exempted from tax. However, to exempt from tax, the land can be leased from the local or state government. Another source to finance for this project is through leasing. Leasing is helpful in ensuring that a hospital avoids debts that can be encountered through leasing. The project can be achievable through the leasing of more land. Although leasing can help overcome the challenge of debt that can be incurred when a hospital decides to borrow, the leased assets have the risk of obsolesce (Ginsburg, 1972). This is because it is normally challenging to resale some of the leased assets. In addition, the obligation of leasing is likely to reduce the ability of one to access capital raised through borrowing. This is because leasing can be considered as an existing debt. Ramifications for moving forward with the project When there are enough resources to support a project, it is not a guarantee that the project will be successful. This is because there are some challenges that may come while implementing the project. The constraints can be external or internal. Even though this is a capital project, it will also be distracted by the internal needs, negativism, disinterest, resistance that originates from staff members, and the purchase and implementation of the capital projects. This is because the adoption of capital projects relies on the culture that already exists in the organization. In addition, it requires the abilities and skills of the leadership and management team. Introducing a new project implies that there is need to overcome the resistance from the status quo. Before the new projected is implemented, the organization is used to certain ways. It is vital to ensure that the resistance that arise from the traditional ways of doing things is controlled. The status quo challenge arises for different reasons. For instance, some workers may feel that the new projects may make their current job positions insecure. Also, some members may feel that they may be replaced due to increasing competition. This can be achieved by ensuring that there are strategies that ensure that workers receive rewards that encourage change. There should be a vision that creates the direction for the project. The vision is significant in ensuring that there is input that enhances input consensus. Also, there is need for effective leadership to ensure that the change is successful. The leadership adopted should be transformational. This means that the leaders should have the capability to understand, support, and make explanation that would help the organization move and remain committed to the change. The internal constraint to this project is the already occupied schedules, fear of change, and distracting events. In particular, when the staffs are comfortable with the current schedules, it becomes hard to embrace the expansion and renovation of a diagnostic and imaging department. Educating workers on the benefits of the project on the work environment will be helpful in appreciating the need for expansion and renovation. Communication element is helpful when there is that desire to ensure that the communication process is successful. On implementing the project, it is significant to develop a communication strategy. This approach should be designed up to the individual level. Structure of Funding to meet goals of the organization A new project has to be consistent with organizations goals. The funding for the expansion and renovation of a diagnostic and imaging department was implemented in the organizations developments that ware to take five years. The funds for these projects were from the government grant that seeks to make improvements in hospitals. This was done to ensure that hospitals and other healthcares have reliable emergence departments. This is as a result of the increasing use of these departments. The CT scanner equipments were purchased by the hospital and thus there is need to ensure that there is enough room to maximize the benefits of these new equipments. In the second stage, the land for this project was leased from the local government for a period of a hundred years. In this regard, the local government was used to relieve the healthcare from the burden of paying taxes (Ginsburg, 1972). The last part of the project will be the renovation of the current building that houses the diagnostic imaging department. The purpose of renovation will to install the new CT scanners and determine the life of the existing scanning equipments. Products whose life will be less than one year will be replaced by new equipments. These will be done as a way of embracing new technology. The organization fund will also be helpful in renovation. The employees’ contributions will be vital in enhancing the new technology. These funds will be obtained from the payroll deductions. Furthermore, the grant funds will be used in the purchase of the renovations and replacing imaging equipments whose life is less than a year. In addition, the grants will be vital in ensuring functions are not distracted. Leadership Model It is helpful to use a given leadership model in any project. For the project of expansion and renovation of a diagnostic and imaging department, the selected leadership model is transformational leadership. With this style, a leader begins by ensuring that he creates vision that will shape the project’s direction. For this case, the implementation of the expansion and renovation of a diagnostic and imaging department leads to the creation of a new working environment in this department. The vision of developing a new work environment and catering for the community expanding needs is helpful in ensuring that there is constant reinforcement of the project. The leader energy and commitment will be vital in convincing the other members to participate in the project. For a transformational leader, creating a clear vision that will enhance in developing a convincing direction for the project. For instance, the leader ensures that he communication lines are always available in reaching different stakeholders for the project. These lines are designed toward the goals of the project and thus it helps counter the available failures. Also, this model is significant in the constant motivation of workers. This can be achieved by establishing regular reports that leads to rewards. The reports can be done either weekly or monthly. For expansion and renovation of a diagnostic and imaging department, this can be achieved by rewarding the staff that has shown commitment in contributing toward the project. Also, it can be achieved by ensuring that the workers who work in covering some project details are recognized. This can be by mentioning their individual contribution toward the project. This will make them feel that their efforts are significant for the project. For staff members who make the expansion and renovation of a diagnostic and imaging department project a successes, they are rewarded by a trip, and free lunch in some instances. Resource Allocation Allocating resources in a capital project is vital in ensuring that an organization’s or firm value increases. In the expansion and renovation of a diagnostic and imaging department project, allocation of funds will be made for new employees, constructers, regulatory issues, IT specialists, and community awareness. The project began over six months by calling for constructers willing to bid for the process of expanding department buildings into the new area. There was the selection of constructers with the minimum price and met higher standards in construction. This was followed by the process of ensuring that available imaging equipments life was calculated to determine the ones to be replaced. In particular, equipments whose life was to end in less than a year were replaced with new and advanced equipments. In handling the new equipments, new workers were hired. Also, there was the training of the available workers. The workers were trained to develop new skills in handling the CT Scanners. New workers were recruited to help in the management of the increased equipments and using them. Trainers were specialist in the use of different imaging equipments. The resources allocated for the trainers were the least because these trainers were part of the health system. The community awareness on the project was done through bulletins and advertisements in the local newspapers. The information was about the expectations of the hospital on the project and how it would benefit the community. The community members willing to contribute toward the project were also reached through advertisements and individual approach for those who were using the hospital facility at the moment of renovation and expansion. On implementing the project, patients and other members of the project were allowed to visit the new department to witness the new changes. They were introduced on the different areas and how they would help in enhancing the emergency services. For example, they were shown how the new CT scanners will make the services improve. Also, they were educated on the significance of the outer space in managing children during emergencies. In particular, the space will help control children by providing them with an opportunity to play as they await their patient to undergo diagnosis. Furthermore, signs and posters were used in directing members of public through the new facilities. They directed them to cafeteria, and relaxing place. Resources were also allocated for managing risks that would occur as a result of distraction of services due to expansion and renovation. This was essential in ensuring that the patients did not complain of poor services when the project was being implemented. The hospital partnered with other near hospitals to help in offering the imaging services. Some patients were referred to the partners. Safety officers were also used to ensure that different standards were observed to avoid reduction in the hospital high operating standards. Workers from different units in the department were also trained in using particular equipments. Also, the new recruits were distributed in different units within the department. These recruits were absorbed in areas that were embracing totally new technology that the current workers had never experienced. The new recruits were used to ensure that dynamic in the workplace was created to establish a new experience. Training of the workers will take three weeks after the new CT scanners have been installed. The recruitment will be done prior to the installation of the new devices. This will help ensure that they also participate in the implementation process. It will benefit them because it will be one way of nurturing them with the organization’s culture. They will have an opportunity to work with the old members and learn the organization’s standards. Policies and Processes The policies and procedures that were amended were the general guidelines in expanding a health facility and the introduction of new technology. A reporting matrix was developed to ensure that errors in the new technology were reported. Also, the health ministry standards in the construction and renovation of new hospital buildings were observed. A hospital building should meet certain standards that will ensure that it will cater for a given service effectively (Carr, 2011). The emergency building should have enough number of beds, enough ambulances, and enough equipment for first aid. Another policy thaw was considered was sustainability. Currently, different organizations ensure that their projects are environmental friendly. The new building is designed to ensure that it maximizes the use of natural light. Budget Adjustments For the capital expenditures, adjustments on the budget were done on the training of the current workers, and recruitment. Also, the adjustments were done of the adoption of new equipments. For expansion and renovation of diagnostic and imaging department budget adjustments was done in four years prior to construction and implementation. The first project for implementation was funded by philanthropic funds. The other facilities were funded by funds from hospital foundation, grants, and retained funds. Finally, the increase in budget is also a budget adjustment. New workers to operate the new equipments, covering the increased space and need to work longer calls for more funding. The variance in total budget is five hundred thousand dollars. These variances will be allocated for in the next fiscal year. Alternative Funding The other sources of funds for this project will be from the federal housing administration funds. These funds will be utilized in the construction of the new building for the department. Also, the project owners may decide to borrow from the financial institutions. This long debt can be catered for by the use of funds from the normal operations. Federal and State Regulations Impact The major regulation that will affect this project is the requirement of the Certificate of Need. This law requires that when a healthcare provider wants to replace or add another facility or equipment should be approved by the Health and Human Services department. This law limits the development of certain facilities basing on demographic, economic, and geographic considerations. Therefore, in receiving this approval, there will be need to meet some demands (Division of Health Service Regulation, 2014). Conclusion (S: situation B: background, A: assessment R: recommendation) S: The situation is that there is an increase in the number of community members who need to use the diagnostic and imaging department. This department is utilized by different departments that offer different treatments. To deal with this need, expanding and renovating the imaging department will create enough space suitable for the new needs. B: There has been a regular increase in patients seeking imaging services. In dealing with this scenario, most patients were referred to other centres. Congestion in the facility also led to provision of low quality services. The most important of the expansion and renovation is to reduce referrals and congestion in the department. A: The report came out that the expansion and renovation of the department reduced congestion and referrals during emergencies. Increased space and utilization of new technology in imaging help in dealing with several patients at the same time. R: The recommendation is to promote the expansion and renovation of the diagnostic and imaging department in large hospitals. Enough space and upgraded equipments in imaging departments is viewed as the best way in reducing congestion in emergency departments. This will help in reducing referrals and promoting quality in the department. Therefore, expanding and renovating imaging department is significant in addressing changing community needs in healthcare. References Carr, R.F. (2011). Hospital. Retrieved from http://www.wbdg.org/design/hospital.php Colchester East Hants Health Authority. (2014). Diagnostic Imaging. Retrieved from http://www.cehha.nshealth.ca/services/DiagnosticImaging.htm Division of Health Service Regulation. (2014). NC Division of Health Service Regulation: Certificate of Need. Retrieved from http://www.ncdhhs.gov/dhsr/coneed/ Ginsburg, P.B. (1972). Resource Allocation in the Hospital Industry: The Role of Capital Financing. Social security Bulletin. Retrieved from http://199.173.225.110/policy/docs/ssb/v35n10/v35n10p20.pdf Sullivan, A. & Steven, M.S. (2005). Economics: Principles in Action. Upper Saddle River: Pearson Prentice Hall. Read More