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

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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

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