For this assignment, use the item you selected ?see attachment? for Section 1 of the Capital Project.
• Please include all three sections in one paper to avoid point deductions
• The total word count should minimally be 2250 to 2400 (1050 - 1200 for Section II and 1200 for Executive Summary)
• Please note that this paper is not the same as section 1 of the captital project. Although it is the same capital item, this is a very different assignment, with very different objectives and you should not "dovetail" from your previous assignment.
Section II: Establishing Acceptability
Write a 1,050- to 1,200-word paper in which you include the following:
• Complete and discuss the results of the acceptability of the item for key stakeholders.
• Respond based on research to the purchase and use of the items at other organizations.
• Determine organizational risk and compliance issues related to the purchase and use of the capital item.
• Recommend risk avoidance strategies.
• Explain management roles and risks in accordance to compliance.
Helpful hint for this section: in Section I( see attachment), you discussed the need and economic feasibility. In Section II, you are asked to discuss acceptability. It is important to get feedback from key stakeholders regarding your purchase, for example, do they support it?; are there any concerns?; what do they feel about the item and why?...etc. Then, how do you address or respond to the feedback received. Before purchasing an item, research should be conducted, for example, what other organizations use this item?; is the organization the same size as yours?; how do others who may have this item rate it?; is there any published data on the item?...etc.
The other part of Section II refers to risks and compliance issues and management's role. And importance of risk management in healthcare.
Format your paper consistent with APA guidelines.
Section III: Economic Feasibility
Create a budget that demonstrates the effect of the capital purchase on the service line, including the productivity of the service line.
Helpful hints: Includes a budget demonstrating the financial impact of the capital purchase, using an MicrosoftÂ® ExcelÂ® spreadsheet and presenting results as a summary sheet. Create a budget department budget (service line) budget (can be fictional) that includes your capital item. What's the impact on the budget?
For the financial analysis, you will need to include any financial information relating to your purchase, for example, basic costs for the item, will you have to hire more staffing as a result of this purchase?; is there a cost for maintenance or installation, is there construction needed to accommodate this purchase?; are there any attachments or parts needed?...etc. for at least year 1 when the capital purchase is made. Year 1 information should include revenue, cost of the capital purchase and all of the relative costs related to the capital purchase. The pro forma portion involves future projections. A five year forecast is standard. For example, in year two or beyond, what are the costs to maintaining this item if any?; when will you start to see a return in some aspect?; After reviewing the numbers, you should be able to see how the purchase will impact revenue or the company's economic status. Is it substantial? Is it worth the purchase? What are the risks? Will productivity or volume increase? If this is a revenue generating purchase, how long will it take to make the money back?
To all section III of the Capital Project essentially has 3 parts.
This is a little overwhelming, we can use the example of buying a car to demonstrate a few points.
Part 1 - Budget
Exhibit 12-1 is a Capital Budget Worksheet. Using this worksheet will help you with pulling together the information you should include in your budget. Your week 5 paper was on budget analysis where you included budgeted, actual, and a variance. For this portion of Section III, you only need to list the items that only pertain to your item and list the budgeted amount only.
When buying a car you typically set a budget. For those of you who have seen the stickers on the windows of a car, you know these items can be itemized, ie:
Basic Model - $20,000
Xenon lights - $3,500
Automatic transmission - $7,500
Sports suspension - 5,000
20 in wheels - $400 ea x4 = $1200
...and so on...
Part 2 - Financial Analysis
gather information you need for the financial analysis. In addition to just the purchase alone there are other factors to consider like whether construction is involved, are new supplies needed, do you need to hire staff...etc. Furthermore, with all costs, including the actual item and associated costs, there will be an impact on the expenses as well as revenue for your department.
When buying a car, the costs don't just stop at the vehicle itself. You must have insurance, you must pay registration. Other things you may need for your car include a car cover, plush mats, special cleaner for the interior and exterior. This is far-fetched for most of us (including me but it's just to make a point)...now that you have this new car, maybe you need a driver (staff)...or maybe you need to build or reconstruct the garage so that you can park the car in there.
Now that you have figured out all costs it will take to purchase this car, now you must figure what the impact will be on your household. Let's say although the total cost of the car is $60,000 you will finance it for 60 months. Your current annual income (revenue) is $100,000 and your expenses will now be $75,000 (includes ALL costs for purchase of the car plus your existing household expenses and bills) for the first year that you purchase this car. Your total revenue is 100,000 for the year and your net revenue is ($100,000 - 75,000) = $25,000. Your expenses might be broken down into $25,000 (ALL costs for the car for year 1, which includes interest on the loan and a down payment) + $50,000 (your existing expenses)
Below is an example of what you can include in your spreadsheet. This is essentially a simple spreadsheet with high-level financial information, but this will suffice. Please remember that what you include in your spreadsheet depends on your project.
Payroll $ -
Supplies $ -
Equipment Maintenance $ -
Total Operating Costs $ -
Total Capital Costs $ -
Total Revenue $ -
Part 3 - Pro forma
You have figured out the impact for year one. But what will the expenses and revenue look like for the next 5 years. The costs in years 2 - 5 will be different than in year 1. Your costs may be less as time goes on because you don't have the initial start up costs or one-time fees that your had in year 1, maybe your productivity is increasing because you have become efficient with using your item or maybe you have found a way to decrease your expenses in your department. Overall, in years 2 - 5 your net revenue will now begin to increase.
Now back to the car...you have financed your car for 5 years. In year two, you don't have the down payment and maybe your insurance and registration decreases with each year. Maybe you have started to see better gas mileage or maybe gas is just cheaper or maybe you don't spend as much money on eating out and you are saving in other areas. Overall, just like above, your net revenue will increase.
Use MicrosoftÂ® ExcelÂ® to list costs and financial information. You should be able to copy and past the grid directly into your paper.
Complete a financial analysis of the capital expenditure. Provide responses in a MicrosoftÂ® ExcelÂ® spreadsheet.
Create a summary sheet showing the net revenue and +cost impact of purchasing this item.
Section IV: Final Project Summary
Write a 1,200-word executive summary for the justification and include it at the beginning of the paper. Attach the financial statement (can be fictional or the one obtain from researching).
Helpful hints: Includes an executive summary for the purchase justification, including justification through goals, acceptability, and economic feasibility, with final recommendation.An executive summary is your entire paper (including all 3 sections) with your final recommendations. You can include section IV (the Executive Summary) at the beginning or end of your paper. In my professional experience, I typically put the executive summary at the very beginning of the paper so that is the first thing executives see. If they want more detail, they can continue on in the paper.
Format your paper consistent with APA guidelines.
Hi,I have done it as per your requirements.Feel free