Project Management – Week Four HCS 446 Facility Planning Project Management – Week Four

Objectives Week 4 Project Management   Examine budget planning and cost estimates. Identify the steps in an implementation plan.

Examine budget planning and cost estimates – Typical facility investment strategies for Hospitals Reconfigure or update nursing units, or change bed allocations Reconfigure and/or upgrade clinical services Reconfigure outpatient services and physician office space, perhaps moving it offsite Required maintenance and upgrading of the building and its equipment Improve the patient’s experience by Improved way finding Easier or more convenient access to services Adding amenities

Examine budget planning and cost estimates Long-term care Reconfiguring nursing units Eliminating long, double-loaded corridors, and central nurses stations Moving to cluster, neighborhood, or cottage design Refurbish and/or upgrade worn interiors and furnishings Adding new levels of care or wellness facilities to a retirement community campus

Examine budget planning and cost estimates Attending to customer needs Different categories of patients have different needs Patient and visitor perceptions as well as staff attitudes affect patient satisfaction Improving the patient’s experience does not always mean higher costs

Examine budget planning and cost estimates Private donors Can provide substantial financial contributions to fund new facilities and equipment May require diplomacy to assure donor’s wishes fit into organization’s strategic plan; a donor’s pet project might not be a good fit for the organization

Examine budget planning and cost estimates Factors to consider when prioritizing facility planning projects Urgency; level of need, or importance to the organization Feasibility, cost effectiveness, or value to the organization Availability of capital when needed for the project Ability of the organization to handle multiple projects

Examine budget planning and cost estimates Developing preliminary cost estimates Cost estimates made prior to design completion should be used with caution. Process of estimating cost includes a base construction cost, applying a typical cost formula, and adding in cost of any special or expensive features and equipment

Examine budget planning and cost estimates Estimating Cost examples: Minor renovation (minimal demolition of existing walls and utilization of existing utilities): usually 25–35% of the cost for new construction Moderate renovation (some demolition of existing walls but utilizes primary mechanical systems): usually 50–60% of the cost for new construction Major renovation (complete demolition of existing walls and major reworking of mechanical systems): about 75% of the cost of new construction, but could equal or exceed new construction cost

Examine budget planning and cost estimates Estimating Cost examples (con’t): Site work can be estimated at 10% of the project’s total cost Furnishings and equipment may vary from 10% to 40% or more of the project’s budget Fees for consultants, architects and engineers may be 10– 15% of the base construction cost A 10% contingency factor is usually added to a project’s budget to cover change orders or other unforeseen occurrences Other costs to consider Land acquisition fees Testing and inspections Administrative and legal fees Financing costs

Examine budget planning and cost estimates Methods of financing the project Issue common or preferred stock if organization is for- profit Issue taxable bonds or obtain a conventional mortgage Usually the quickest financing method Percentage of total project cost financed may be lower than with some other methods (rarely more than 70%) Loan term likely to be shorter Loan covenants likely to be more restrictive than other methods

Examine budget planning and cost estimates Methods of financing the project: Issue tax-exempt revenue bonds if a not-for-profit organization Generally the most popular form of financing for health care organizations Allow for the highest ratio of financing to project cost of any method (up to 100%) Interest costs usually 1.5–2.5% lower than other financing methods Term of loan is longest—up to 35 years, reducing annual debt service requirements A feasibility study by outside consultant firm is usually required

Examine budget planning and cost estimates Methods of financing the project (con’t): Financing expenses, such as feasibility study, bond counsel, legal fees and printing costs, result in higher financing costs than some other methods A debt service reserve fund, usually equaling one year’s principal and interest payment, is generally required If sold to the public, requires disclosure of the organization’s operating and financial history Prepayment usually cannot be made during first 10 years of the bonds

Examine budget planning and cost estimates Federal Housing Administration Section 242 /Government National Mortgage Association (FHA- 242/GNMA) Program Hospitals can borrow up to 90% of the replacement value of the building Term of loan can be as high as 25 years after construction completion Prepayment of 15% of the original principal amount is allowed without penalty Time for application processing can be lengthy Construction must conform to FHA/HHS requirements Requires front-end inspection and filing fees and annual mortgage insurance premium

Implementation Plan Identify the steps in an implementation plan. Defining operational and space programming A two-step process Documenting the operational (functional) planning assumptions Preparing a detailed space listing (space program

Implementation Plan Operational program A description of the scope of services and operational concepts Includes numbers and categories of people, systems and equipment necessary for the projected workload Operational programs should address Layout considerations Needed and desired proximities Opportunities to achieve operational flexibility and accommodate future growth

The Operational Program Typical components of an operational program The current situation (baseline) Future vision and planning goals Current and projected workloads Planned hours of operation by days of the week and shift Current and future staffing, including work scheduling patterns Equipment, technology, and support systems Functional adjacencies and access Future trends and operational flexibility Any outstanding issues that remain to be resolved

Operational Program Patient intake space The space program should be organized according to major categories Patient intake space Patient care, diagnostic, and treatment space Support space Staff and administration areas

Operational Program Factors that drive space requirements Workload composition, patient mix, and scheduling patterns will affect the type, number, and sizes of procedure rooms, patient prep, and recovery areas Equipment and technology Staffing and scheduling affect sizes of workstation areas and staff support areas Codes and regulations set minimum sizes for patient rooms, toilet and shower areas, and other spaces The organization’s mission and policies and the target market served can impact sizes of areas and equipment planned

The Operational Program Additional planning documents that must be developed Architectural and detailed construction documents (by architects and engineers) Construction schedule (by construction project manager) Equipment and furnishings plan (by the health care manager, interior designer and engineers) Includes a listing of all equipment and furnishings for the building with detailed specifications Specifies time frames for selecting, ordering and receiving all items May be divided into more than one plan Interior designer may develop a plan for interior finishes and furnishings Other types equipment may be listed on separate plans

Operational Program Human resources (HR) plan (by the health care manager and the HR department staff) Includes number and type of staff needed by shift and day of work Details time frames for completion of job descriptions, developing HR policies and procedures, making benefit and pay decisions Includes the recruitment and hiring schedule Outlines time frames for developing and conducting staff orientation and training

Operational Program Occupancy or move-in plan (by the health care manager) Establishes time frames and deadlines for completing all requirements for facility licensure, certification, and accreditation Includes plan for post-construction cleaning of facility, unpacking and installing furnishings, equipment, and supplies Determines need for temporary labor and establishes plan for hiring and supervising them Includes plans for admitting the first patients Determines plans for marketing and holding open house events and tours

Questions? Next week is the LAST WEEK…… Your Environmental Impact Team Presentation is due…