Question

1) bomar imorgan x > Project Management in Practice x + 532 Project Management in_Practice_6th_6bf4.pdf C A SE Friendly Assisted Living Facility Project Budget Development-4 Fred Splient gave his ALF Project Steering Committee 2 months to develop a project plan for their area of respon sibility in the project. Each member was told to include the tasks predecessors and successors, resources needed, responsible person, and an estimated cost. He asked that these be presented to the steering team on August 31. All through July the ALF project team scrambled to identify the steps required to open the facility and to deter mine what it would cost. Each team member met with his or her departmental staff to get help in identifying what was needed. For example, the COO spoke with the Dietary Department head and asked that she develop a plan to meet all requirements to set up the facility to feed the residents. The COO then asked the Facilities Manager to develop an action plan to prepare the building and maintain it. The 000 also met with the Rehab Services Medical Director and his clinical staff to identify the residents' probable med. ical needs based on the projected population, and to develop an action plan to prepare to meet the residents' health needs. The COO asked the therapy manager to prepare a plan to develop social activities for the residents. Everyone on the team called the Chief Financial Officer for help in determining the budgets for their action plans. The CFO also had to validate the estimates of cost and revenue from facility operations, and to project eam ings and return on the investment. Like any good admin- istrator, when the CFO realized he had no expertise in this area, he hired a consultant to help him determine the pro ject costs and budget. Dr. Sara Sharf was chosen as the consultant-she had over 5 years' experience in develop- ing business plans for assisted living facilities. Dr. Sharf recommended that Friendly Medical Center target the middle income geriatric population since there were many up-scale facilities in the area. Dr. Sharf and the market researchers determined what level of rent people in that population could and would pay. They then looked at what needed to be in the facility to meet the needs of their targeted population. After additional site visits of facilities and meetings with the selected construction con- tractor, they finalized the layout of units and common space areas that would be included in the design. The Construction Project Manager requested and received an action plan and cost estimate from the construction con tractor. The contractor had estimated that construction cost would probably run about $70 per square foot with a standard deviation of $3.67. He could not be absolutely sure herause of mennial change anders. He emphasized that the estimates assumed that the project would be com- pleted without further changes in its design concept While the CFO was haggling with the construction contractor about determining a more accurate cost esti- mate, he received a phone call from Dr. Zen Link, the Head of Geriatric Medicine at Friendly Medical Center Dr. Link's secretary had seen men measuring the land behind the parking lot and she wanted to know what was going on; so did Dr. Link. Since Dr. Link was one of the hospital's best referrers, the CFO told him about the poten- tial project. Dr. Link felt that his input was needed up front as he was the only person on staff who would know the health needs of the facility's residents and appropriate equipment needs and staffing models that should be set up. CASE • 141 Initial marketing Project consultant Follow-up market survey Total organizational costs Total 250,000 $2,500/unit 80,000 20,000 375.000 $10,066,300 With Dr. Link's input, the CFO estimated the operating costs to run the facility and projected the occupancy rates needed to cover those costs. The Rehab Services Medical Director, who was a member of the original project team, was quite upset when he saw Dr. Link's budget for the medi- cal equipment that was to be purchased for the facility. The Medical Director felt that Dr. Link wanted to purchase too much expensive equipment, which was not necessary to have on site. The hospital had the majority of the equip ment that was necessary and there was no need to duplicate it, thus inflating that portion of the budget. The CFO did not want to get in the middle of their argument so he left Liabilidad name . Studio Heavy Asst. 5 units $4,160/unit 20 units $5,460/unit Light Asst. 15 units $3,280/unit 60 units $3.780/unit 1 BR/hath Ps W

plz answer the questions at the bottom

Answer 1

(1)

It is important to understand the behavior of various costs those are estimated during budget preparation. Variation in cost may affect the actual cost and performance metrics of project during implementation process.

Revenue and Costs other than cost per square foot which may have uncertain behaviors are listed as below:

• Additional person revenue
• Ancillary revenue
• Contingency cost
• Program development & equipment Costs
• Furniture changes cost
• A& E fees
• Site improvement costs
• Initial marketing cost
• Follow-up market survey cost
• Labor cost increases
• Overhead allocation of budget
• Total organizational cost

To reduce the uncertainty of the above costs, the estimators should:

• define various costs in details and allocate cost at resource level
• clearly define assumptions made during budget preparation
• gain more knowledge of the cost areas through research
• Thoroughly review project plan to determine risk areas those has to be taken care
• To adjust the future changes in cost, develop change order process
• In addition to these activities, estimators should conduct quantitative analysis of cost. This will help to get probabilistic behavior of cost area.

The chapter that we have here focuses on the project budgets and the various ways that a company and project manager may create and enforce one. This problem focuses on the second installment of the St. Dismas Assisted Living Facility. In this chapter, the facility has been approved by the Board of Directors and now the budgeting process is taking shape to begin construction as soon as possible. The text provides a number of details pertaining to the budgeting process and some cost projections applicable to the situation. For this question specifically, costs per square foot for the units wanting to be built as well as a project standard deviation are presented. With regards to cost uncertainties, what are some other areas of costs and revenues that could have varying amounts? Once identified, what are some ways that these could be minimalized or handled properly?

The best way to answer this question is to split it up into two (2) parts. Beginning with the first question, the best recommendation that I would do is to list some of the revenues and costs that come with an assisted living facility. These would be the premise for the second half of the question which would provide a whole answer all things considered. Listed below are some costs and revenue uncertainties that the solutions author came up with when thinking about the problem:

- Revenue Uncertainties

o Reimbursement rates from insurance companies & Medicare / Medicaid

• This can be on a state or federal level and apply to the specifics of construction not once the facility has been built.

o Contingency allowances.

• This would be influenced by the actual project budget and not necessarily the projected budget.

- Cost Uncertainties

o Marketing and promotional costs.

o Personnel replacement costs (due to attrition, injury, retirement, and the like).

o Resource costs.

• These can be a very big unknown depending on the hurdles that the company would have to go through in order to successfully build the facility in the time and budget allotted.

o General services and administration costs (GS&A).

• These can be a very big unknown as well as the costs for permits, equipment, payroll, and the like can change very quickly throughout a project’s timeline.

o Cost adjustments due to acts of nature and improper planning.

• If it is much wetter or colder than normal, this can delay some of the key parts of the project like concrete pours, wall construction, and the like.

• In the event something may need moved or rerouted (i.e. gas or electric pipeline conduits) and was not seen ahead of time, this could also delay the project minimally or quite a bit.

o General costs for furniture and fixtures, and

o Labor costs increasing throughout the project.

Now that one has the details above, this can be used to apply to the next part of the question below.

The second half of the question has to do with what the senior management team and the project manager can do to minimize the uncertainties that may occur here. The best answer to begin with has to do with the estimators for the project and their ability to provide an accurate estimate based on the possibilities mentioned above. They should be very detailed and define all assumptions made in order to provide a through plan of attack in order to identify areas of potential risk.

Next, which is common in healthcare organizations, there should be a change order request form developed and tracked from the time of submission to completion in an electronic file in case things must be changed for one reason or another. When these changes occur, the project manager could use statistical methods like standard deviations for example to see what could happen when a change occurs. Nevertheless, the project manager should work closely with the accounting department to get the best gauge of costs of the project and if the company is danger of overspending.

While this problem is a little bit challenging, one suggestion is to take a few notes prior to answering the questions here so that you can reference key points made in the text. This will not only help you answer this quickly but much more easily as well.

(2)

The chapter that we have here focuses on the project budgets and the various ways that a company and project manager may create and enforce one. This problem focuses on the second installment of the St. Dismas Assisted Living Facility. In this chapter, the facility has been approved by the Board of Directors and now the budgeting process is taking shape to begin construction as soon as possible. The text provides a number of details pertaining to the budgeting process and some cost projections applicable to the situation. For this question, Dr. Link was accused of inflating his portion of the budget because he felt that a lot of expensive equipment would be needed in order to provide top-notch care in the new living facility. Here, what are some suggestions that one could give to the team about his projected inflated equipment costs?

When we are looking at the text, there seems to be a lot of pushback from the CFO with respect to the costs that are in play. When we are looking at the approach to how the budgeting should be made, it should be done using a bottom-up approach. By doing this, this will help the CFO understand some of the reasons why the doctor is proposing the equipment that would be needed for the new facility. Even though it was argued that there was equipment already in the main hospital that could be used in the new facility, this may not always be available in the future due to an aging population. Back to the point, there are two (2) different reasons that using a bottom-up approach would make sense for the budgeting process. First, this ensures that there is equal input from all parties in the organization applicable here. The level of communication and understanding can help diffuse conflicts that may arise when one has to justify costs for others in the project team and senior management. The other reason is that this helps define a much better accurate estimate of the needs for the new facility. Tracking signals can be put in place to ensure that the costs that were identified provided there is sufficient data in place to justify the costs.

(3)

The budget will have to be broken down by project time period and task in the project plan. Later on, we will use this project budget to monitor and control the project.

Alternatively, We must know that project scope, cost and schedule are all three elements which depend on each other. Project scope is basically the element of project planning which mainly deals with the determination and documentation of certain project objectives, deliverables, activities and processes, costs and scheduled time limits. Once the project budget is decided, and if there is any kind of change in the project scope, there will also be the need for changing in the project budget and project deadlines or schedules. This is required mainly due to the reason that the change in project scope changes the other elements and thus there will be a requirement of changing the budget so that the difference can be accommodated.