“The best-laid plans of mice and men often go awry.” This quote is an adaptation of a line from the Robert Burns poem, “To a Mouse.” It essentially means, no matter how carefully one plans, something may still go wrong.
This can be true when developing a budget for an ASC project. The smallest of oversights can derail budget accuracy. I’ve seen it happen and witnessed the ramifications. Suffice it to say, when the cost of a surgery center project exceeds its budget, management is usually displeased. And justifiably so. Unexpected expenses can place financial strain on owners who may be forced to make up the difference on short notice.
Here are some dos and don’ts that can help you develop a more accurate project budget.
Do use a work breakdown structure (WBS)
A WBS identifies the individual tasks necessary to complete the project. The tool is typically arranged in a hierarchy. It is intended for practical groupings, such as by activities or deliverables.
When assembled correctly, a WBS provides a comprehensive list of tasks needed to complete the project. With this information, you can better determine:
- what personnel you will need to complete each activity,
- what types of vendors/service providers are necessary,
- what materials are necessary,
- what approvals (e.g., city, state, fire, accreditation, Medicare, etc.) are necessary,
- how long completion of each activity is likely to take, and
- potential risks to take into account (more on this later).
You will want to carefully consider these factors when determining the cost of each activity. Your final budget reflects the sum of the costs of all activities.
Without the use of such a planning tool, you are more likely to omit important financial considerations.
Resist the temptation to guess about any element of your ASC project and its budget. Doing so can create a harmful ripple effect.
Let’s say your project requires a service such as painting. If you required painting services last year, you may feel confident about guessing the cost. However, many factors could cause your guess to come in low. The painting company you used last year may no longer be in business or available for your project. You may need a more expensive paint. The ASC space you need to paint this year may be larger than last year’s space.
Perhaps a manager asks how long a project will take and you guess a month. The manager may use this information to make plans for a new project after the month has passed. If your project takes longer than a month, you now have two projects overlapping. If these projects require use of the same space and/or personnel, there may be delays in completion of one or start of the other, potentially resulting in increased expenses.
Take the time to conduct the due diligence necessary to secure accurate estimates. Avoid succumbing to pressure to begin a project or provide on-the-spot answers. Maintain the integrity of the project by refusing to cut corners on research. The potential negative effects of guessing on your ASC project components and its budget likely outweigh any potential positives.
Do budget for risk
No matter how great you are at surgery center project planning, try to budget for the unexpected. Most projects inevitably experience unexpected and uncontrollable hiccups that will increase costs.
For example, if a project involves new construction, you may learn of surprises underground or during visits by inspectors. If a project involves an existing space, there may be pipe or wiring surprises behind the walls. Other causes of unexpected challenges can include weather interruptions, personnel sickness, subcontractor delays, and shipping/supply delays.
As the size, scope, and timeline for an ASC project grows, so do the risk considerations. It’s better to come in under-budget than need to request additional funding once the project is underway.
Don’t overextend personnel
When assembling a team to work on a project, take staff members’ skill sets into careful consideration. An effective manager of a department may not necessarily serve as an equally effective project manager. While some responsibilities may be similar, differences in the roles, including management of an extended timeline, could lead to costly problems and delays. Ensure skill sets align with the tasks you need accomplished.
Take personnel availability into consideration. If a project requires staff to take time out of their normal job schedule, who will fill these open hours? Does it make sense to pay overtime or bring in PRN (as needed) staff to complete a project faster? Should you spread out hours over a longer period of time to avoid extra staffing expenses?
Do the best you can
Surgery center project budgeting is not a perfect science. You can put together what you believe is an accurate budget that accounts for risk and still exceed established parameters. If you encounter obstacles likely to cause you to go over budget or allotted timeframe, be transparent. Inform leadership as soon as possible so they can make plans to account for the change.
What’s most important is to be diligent in your planning. Try to limit surprises and ultimately come as close to your budget as possible. If you accomplish these objectives, consider your project budget planning a success!
Jebby Mathew – Regional Director of Operations