HCS 446 FACILITY PLANNING 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 careReconfiguring 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


Attending to customer needsDifferent categories of patients have

different needsPatient and visitor perceptions as

well as staff attitudes affect patient satisfaction

Improving the patient’s experience does not always mean higher costs


Private donorsCan 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


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


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


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


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


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


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


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


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 processDocumenting the operational (functional) planning assumptions

Preparing a detailed space listing (space program

Implementation Plan

Operational programA 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 addressLayout considerationsNeeded and desired proximitiesOpportunities 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

The space program should be organized according to major categoriesPatient intake spacePatient care, diagnostic, and treatment spaceSupport spaceStaff and administration areas

Operational Program

Factors that drive space requirementsWorkload 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 areasCodes 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…

Documents

HCS 446 FACILITY PLANNING Project Management – Week Four