NURS FPX 6216 Assessment 4 Preparing and Managing a Capital Budget

Name

Capella university

NURS-FPX 6216 Advanced Finance and Operations Management

Prof. Name

Date

Preparing and Managing a Capital Budget

In today’s healthcare environment, investing in capital acquisitions is crucial for maintaining and enhancing technology and facilities. This paper focuses on creating a capital budget for a major facility renovation aimed at improving the nurses’ lounge in a 50-bed step-down unit. The goal is to enhance staff satisfaction, morale, and productivity. The capital budget will outline the costs, justification, and impact on the organization’s financial health, showcasing the importance of strategic capital investments in healthcare.

Description of Capital Acquisition

A systematic approach will be followed to design the capital budget for the nurses’ lounge renovation, including needs assessment, feasibility analysis, cost estimation, implementation planning, and management. Studies indicate that an improved work environment significantly enhances staff morale and productivity by reducing stress, increasing job satisfaction, and fostering a sense of well-being among employees (Donley, 2021). Resources such as financial reports, market analysis, and stakeholder feedback (e.g., exit interviews and patient surveys) were accessed. Collaboration with other executives, staff members, finance departments, and external consultants ensured a comprehensive planning process. The renovation aims to modernize the lounge with comfortable seating, updated amenities (e.g., kitchen facilities), new lockers, and high-speed internet access. Aesthetically, the lounge will feature soothing colors, ample natural light, and ergonomic furniture to reduce stress (McCorquodale, 2022). The ergonomic furniture is designed to provide comfort and support, enhancing health and productivity (Mileski et al., 2024). The renovation will also expand the lounge’s capacity to accommodate 10-12 nurses simultaneously. Phased scheduling ensures minimal disruption to the unit’s operations (Pomare et al., 2022).

Justification of the Need for the Capital Acquisition

The nurses’ lounge renovation will benefit the nursing staff by providing a modern, comfortable, and well-equipped space for relaxation and healing. A positive work environment reduces stress and burnout, leading to enhanced job satisfaction and higher staff morale (Monroe et al., 2021). Not renovating the lounge could result in continued low staff morale and increased burnout, which negatively affects nurse retention and productivity. Financially, the costs of recruitment, training, and treating adverse events due to errors could be high. Improved staff well-being contributes to better patient care by increasing nurse productivity and reducing errors, as nurses can take essential breaks and fulfill their nutritional needs (Dias & Dawson, 2020). The renovation aligns with the unit’s mission to provide excellent patient care and retain staff. A lack of investment in the work environment could lead to higher error rates, decreased patient care quality, and compromised patient satisfaction. The response from executive leaders is expected to be positive, recognizing the long-term benefits for staff wellness and patient care.

Preparation of the Capital Budget

The capital budget for the renovation aims to enhance the work environment and support staff well-being in the step-down unit. By investing in a comfortable and functional space, the renovation seeks to improve nurse satisfaction and, consequently, patient care (Michelon et al., 2021). Renovating the nurses’ lounge will cost $75,800, which includes expenses for furniture ($20,000), kitchen amenities ($8,000), décor ($5,000), lighting ($3,000), flooring ($6,000), lockers ($4,000), miscellaneous items ($2,000), labor ($12,000), and a contingency reserve ($5,800) for unexpected expenses. According to surveys, 71% of staff who spend time in refreshing and relaxing rooms report feeling renewed (Mileski et al., 2024).

Table: Capital Budget for Nurses’ Lounge Renovation

Expense Category	Description	Estimated Cost
Furniture	Ergonomic chairs, adjustable desks, comfortable sofas, tables, and storage units	$20,000
Amenities	Kitchen appliances, coffee machine, microwave, refrigerator, and dining area essentials	$8,000
Paint and Décor	Soothing paints, wall art, and decorations	$5,000
Lockers	Personal lockers for nurses with secure storage	$4,000
Lighting	Energy-efficient, adjustable lighting fixtures	$3,000
Flooring	Durable, easy-to-clean flooring	$6,000
Miscellaneous	Curtains, rugs, and other minor items	$2,000
Labor	Costs for contractors, construction workers, and installation services	$12,000
Contingency	Reserved for unexpected expenses (10% of total)	$5,800
Total Estimated Cost		$75,800

Areas of Uncertainty and Knowledge Gaps

The preparation of the budget involves several uncertainties and knowledge gaps that could impact the estimated costs. Material and labor prices may vary, so current quotes and potential price increases must be accounted for (Gold et al., 2022). The quality and timeliness of work from contractors and suppliers also need verification through references and performance reviews. The impact of the renovation on staff productivity and morale should be monitored to assess its effectiveness. A contingency fund (10% of the total budget) has been included to cover unforeseen expenses, ensuring the project stays within budget (Ammar et al., 2023).

Description of the Process for Calculating Costs

Various approaches were used to calculate the costs for the capital budget, including discussions with the finance department head. Market research helped estimate the costs of materials. Vendor quotes and previous renovation project data were key in determining expenses. Consulting with facilities management teams, construction contractors, and procurement specialists ensured accurate cost estimation (Chen et al., 2021). The bottom-up costing method was employed, where individual components of the renovation (e.g., furniture, amenities, labor) were estimated separately, then aggregated to determine the total budget (Špacírová et al., 2020). Contingencies for unexpected costs were added, and estimates were verified against historical data to address discrepancies that could arise from vendor pricing or project complexities (Ammar et al., 2023).

Presentation of Plan for Budget Management

A budget management plan is critical to ensure expenditures are controlled and aligned with financial allocations, preventing cost overruns. The plan includes collaboration with financial analysts, administrative staff, and a budget committee to manage the budget effectively. Regular budget reviews and audits will track expenses and ensure they remain within planned limits. A detailed cost-tracking system will be implemented to monitor expenditures in real-time. Fixed-price contracts with vendors will prevent unexpected cost increases (Musiega et al., 2023). A contingency fund will be established to address unforeseen expenses and maintain financial flexibility. Regular monitoring of budget performance will ensure alignment with the financial plan (Kaplan & Gallani, 2022).

Explanation of Capital Acquisition’s Effect on Financial Health

The nurses’ lounge renovation will positively affect the unit’s financial health by improving staff satisfaction and productivity, which can lead to better patient care and reduced turnover costs. Workplace absenteeism costs the U.S. economy $13-17 billion annually due to a poor work environment (Cohen et al., 2023). The renovation will yield a return on investment through increased staff efficiency and reduced recruitment and training expenses. The cost recovery period for the renovation is projected to be 1-2 years, based on anticipated gains in productivity and reduced turnover costs. Depreciation has been considered, with renovation costs spread over the expected useful life of the improvements (Kuroki, 2021). The return on investment may vary depending on the renovation’s impact on staff performance and patient outcomes.

Conclusion

The renovation of the nurses’ lounge is an investment aimed at improving nursing personnel well-being and productivity, ultimately benefiting patient care and unit effectiveness. The comprehensive capital budget, including a cost breakdown and management plan, supports a sound financial approach to this project. By addressing uncertainties and using a detailed cost calculation method, the renovation is poised to deliver long-term value and support the organization’s mission.

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