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Assessment 4 Instructions:
Preparing and Managing a
Capital Budget
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Prepare a 4–5-page capital budget for
a major capital acquisition.
Introduction
Note: Complete the assessments in
this course in the order in which they
are presented.
In today’s health care environment,
the focus on major purchases, as part
of the capital budget, has emphasized
the need for newer and better
technology. Although the need to
invest in capital equipment and
technology has been ongoing, the
nursing workforce must also have a
safe and pleasant work environment.
This assessment provides an
opportunity for you develop a capital
budget for a major facility
improvement that will benefit
patients, nurses, and the organization.
Most nurse leaders work with
operating budgets, but will also have
input into capital budgets. A capital
budget is typically developed
separately from the operating budget
and is usually developed to purchase
items that are often referred to as bigticket items that will enhance the
capacity or services of an
organization. For example, capital
budgets may cover land purchase for
the future site of a new outpatient
surgical center, construction of a new
building or build-out for renovation of
an already existing building, or
replacement of old equipment.
It is important to remember that
health care is also a major business.
While for health care providers,
patient care and safety are priorities,
health care institutions must operate
from a business model in order to
survive financially. As nurse leaders or
executives, you often have a role to
play in developing a capital budget to
improve care at some level. In
addition, a rapidly changing health
care environment requires nurse
leaders who have the financial
management and budgeting skills to
ensure that large capital expenditures
further the mission and goals of the
organization.
Note: Complete the assessments in
this course in the order in which they
are presented.
Preparation
You are the unit manager of a 50-bed,
step-down unit, and it is time for you
to prepare your annual capital budget.
You have seen a significant turnover
in your nursing staff in the past three
years; a review of exit interviews and
patient surveys indicates low nurse
satisfaction, poor morale, and
complaints of an antiquated and
depressing work environment. You
have researched the impact of a
positive working environment on staff
productivity and morale and decided
to request a renovation of the nurses’
lounge as the main purchase in your
capital budget. You will present your
request as a quality improvement
investment.
As you prepare to complete this
assessment, you may want to think
about other related issues to deepen
your understanding or broaden your
viewpoint. You are encouraged to
consider the questions below and
discuss them with a fellow learner, a
work associate, an interested friend,
or a member of your professional
community. Note that these questions
are for your own development and
exploration and do not need to be
completed or submitted as part of
your assessment.
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How would you approach the
process of designing a capital
budget? For example:
• What steps would you
need to take?
• What resources would
you access?
• Will you collaborate with
other executives or staff?
• How will you tie the
vision for the capital
expenditure to the
organization’s mission
and goals?
What challenges do you
anticipate in justifying a capital
budget to administrative
leaders in an organization?
What criteria might a particular
health care organization or
service provider apply to
evaluate the return on a capital
investment?
MSN PROGRAM JOURNEY
•
Please review this guide for your
degree program. It can help you stay
on track for your practicum
experience, so you may wish to
bookmark it for later reference.
MSN Program Journey.
The following resources are required
to complete the assessment.
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APA Style Paper Tutorial
[DOCX]. Use this tutorial for the
written portion of your capital
budget.
Requirements
Note: The requirements outlined
below correspond to the grading
criteria in the assessment scoring
guide. Be sure that your budget
addresses each point, at a minimum.
You may also want to read the Guiding
Questions: Preparing and Managing a
Capital Budget [DOCX] to better
understand how each criterion will be
assessed.
Prepare a capital budget for a facility
renovation. Assemble your budget
figures in a table, using a format of
your choice. You may use either
Microsoft Word or Excel to create
your budget table.
Note: You may use the budget in the
Vila Health: Preparing a Capital
Budget multimedia exercise as an
example of how you might format
your table. You may also use a budget
format used in your organization or a
format you find in any of the course
resources or on the Internet.
• Describe the capital acquisition.
• Justify the need for the capital
acquisition.
• Prepare the capital budget.
• Describe the process for
calculating costs.
• Present a plan for budget
management.
• Explain how the capital
acquisition will affect the
financial health of the
organization.
• Present budget data and
information clearly and
accurately.
• Integrate relevant and credible
sources of evidence to support
your budget data and
information, correctly
formatting citations and
references using current APA
style.
Additional
Requirements
If you used Microsoft Excel to create
your budget table, submit the Excel
file along with your budget narrative.
You may also add the Excel file to your
Word document as an embedded
object.
Format your budget using APA style.
Use the APA Style Paper
Template [DOCX], linked
above, to help you in writing
and formatting your budget. Be
sure to include:
• An APA-formatted title
page and reference page.
An abstract is not
required.
• A minimum of five
properly formatted
citations and references.
• Your budget should be 4–5
pages in length, not including
the title page and reference
page.
Portfolio Prompt: You may choose to
save this learning activity to your
ePortfolio.
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Competencies
Measured
By successfully completing this
assessment, you will demonstrate
your proficiency in the following
course competencies and assessment
criteria:
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Competency 3: Develop a
capital budget.
• Describe a capital
acquisition.
• Prepare a capital budget.
• Describe the process for
calculating costs.
Competency 4: Determine the
equipment and services needed
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to maintain seamless patient or
client care.
• Justify the need for a
capital acquisition.
Competency 5: Apply financial
principles to a strategic plan for
achieving organizational goals
and fiscal success.
• Present a plan for budget
management.
• Explain how a capital
acquisition will affect the
financial health of the
organization.
Competency 6: Communicate
effectively with diverse
audiences, in an appropriate
form and style, consistent with
applicable organizational,
professional, and scholarly
standards.
• Present budget data and
information clearly and
accurately.
• Integrate relevant and
credible sources of
evidence to support your
budget data and
information, correctly
formatting citations and
references using APA
style.
Guiding Questions
Preparing and Managing a Capital Budget
This document is designed to give you questions to consider and additional guidance to help you
successfully complete the Preparing and Managing a Capital Budget assessment. You may find it useful
to use this document as a pre-writing exercise, an outlining tool, or as a final check to ensure that you
have sufficiently addressed all the grading criteria for this assessment. This document is a resource to
help you complete the assessment. Do not turn in this document as your assessment submission.
Completing the Budget
Describe the capital acquisition.
What is the scope of the renovation?
What will the renovated lounge look like?
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Consider such factors as comfort, amenities, aesthetics, and capacity.
What is the timeline for the project?
Is your description of the renovation complete and accurate?
Justify the need for the capital acquisition.
In what ways will the renovation benefit the nursing staff?
o
How will those benefits affect patient care?
Examine the mission of your organization or unit.
o
How does the nurse’s lounge renovation support the mission and goals?
How are executive leaders likely to react to your budget?
Prepare the capital budget.
Does your budget have a minimum dollar amount?
Does the renovation include both direct and indirect expenses?
Have you included a budget line item for contingencies?
Describe the process for calculating costs.
What are your primary sources of cost information?
How current and reliable are your cost data?
What teams or individuals would you consult with in order to determine costs?
What are your methods of cost calculation?
Present a plan for budget management.
Who can you collaborate with to manage the budget?
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Examples include financial or administrative staff or budget committees.
What cost control methods would you employ?
How will you manage budget variances?
Explain how the renovation will affect the financial health of the organization.
Will the renovation yield a return on investment?
How long will it take for to recover the cost of the renovation?
Have you considered depreciation value?
Present budget data and information clearly and accurately.
Express your main points succinctly, using correct grammar and mechanics.
Proofread your budget to eliminate errors in your data and information.
Integrate relevant and credible sources of evidence to support your budget data and information,
correctly formatting citations and references using APA style.
Is your supporting evidence clear and explicit?
Integrate relevant evidence from at least five scholarly or professional sources.
Submission Reminders
Do you have a complete and accurate description of the renovation?
Have you provided solid justification for the renovation?
Is your budget complete and accurate?
Have you explained how you determined costs?
Have you presented your plan for managing the budget?
Have you explained how the renovation will affect the financial health of the organization?
Have you presented your budget data and information clearly and accurately?
Are your claims and conclusions well-supported by at least five sources of credible evidence?
Preparing and Managing a Capital Budget Scoring
Guide
CRITERIA
Describe a
capital
acquisition.
NONPERFORMANCE
Does not
describe a
capital
acquisition.
BASIC
PROFICIENT
DISTINGUISHED
Attempts to
describe a
capital
acquisition,
but omits
relevant
details about
the scope or
timeline.
Describes a
capital
acquisition.
Describes a
capital
acquisition, and
identifies
assumptions on
which the plan
is based.
CRITERIA
NONPERFORMANCE
BASIC
PROFICIENT
DISTINGUISHED
Justify the
need for a
capital
acquisition.
Does not justify
the need for a
capital
acquisition.
Attempts to
justify the
need, but
omits benefits
related to
nursing staff,
patient care,
or
organizational
or unit
mission, or
fails to
consider
executive
perspectives.
Justifies the
need for a
capital
acquisition.
Justifies the
need for a
capital
acquisition, and
impartially
explains pros
and cons or
alternative
perspectives on
the proposed
improvements.
Prepare a
capital budget.
Does not
prepare a
capital budget.
Attempts to
prepare a
capital
budget, but
omits the
minimum
dollar
amount,
direct or
indirect
expenses, or a
line item for
contingencies.
Prepares a
capital
budget.
Prepares a
capital budget,
and suggests
areas of
uncertainty,
knowledge gaps,
and/ or
additional
information that
could improve
the plan.
Describe the
process for
calculating
costs.
Does not
describe the
process for
calculating
costs.
Attempts to
describe the
process for
calculating
costs, but
omits
information
about sources,
currency,
reliability, or
methods.
Describes
the process
for
calculating
costs.
Describes the
process for
calculating
costs,
highlighting any
data that are
questionable
and explaining
how
discrepancies
could affect
calculations.
CRITERIA
NONPERFORMANCE
Present a plan
for budget
management.
BASIC
PROFICIENT
DISTINGUISHED
Does not
present a plan
for budget
management.
Attempts to
present a plan
for budget
management,
but fails to
consider
collaborative
partners, cost
control
methods, or
management
of budget
variances.
Presents a
plan for
budget
management.
Presents a plan
for budget
management,
including
assumptions
underlying the
plan.
Explain how a
capital
acquisition
will affect the
financial
health of an
organization.
Does not
explain how a
capital
acquisition will
affect the
financial health
of an
organization.
Attempts to
explain how a
capital
acquisition
will affect the
financial
health of an
organization,
but fails to
consider ROI,
cost recovery,
or
depreciation
value.
Explains a
capital
acquisition
will affect
the financial
health of an
organization.
Explains how a
capital
acquisition will
affect the
financial health
of an
organization,
and identifies
areas of
uncertainty or
knowledge gaps.
Present budget
data and
information
clearly and
accurately.
Does not
present budget
data and
information
clearly and
accurately.
The budget
data and
information
presented is
not
consistently
clear or
includes
errors.
Presents
budget data
and
information
clearly and
accurately.
Presents budget
data and
information
clearly and
accurately.
Expresses main
points
succinctly,
using correct
grammar and
mechanics.
CRITERIA
Integrate
relevant and
credible
sources of
evidence to
support budget
data and
information,
correctly
formatting
citations and
references
using current
APA style.
NONPERFORMANCE
Does not
integrate
relevant and
credible
sources of
evidence to
support budget
data and
information,
correctly
formatting
citations and
references
using current
APA style.
BASIC
PROFICIENT
DISTINGUISHED
Sources lack
relevance or
credibility,
are poorly
integrated, or
are
incorrectly
formatted.
Integrates
relevant and
credible
sources of
evidence to
support
budget data
and
information,
correctly
formatting
citations and
references
using current
APA style.
Integrates
relevant,
credible, and
convincing
sources of
evidence to
support budget
data and
information.
Sources are
current, and
citations and
references are
error-free
Resources: Capital Budgeting
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PRINT
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The resources provided here are
optional. You may use other resources
of your choice to prepare for this
assessment; however, you will need to
ensure that they are appropriate,
credible, and valid. The MSN Program
Library Research Guide can help
direct your research.
The following articles address capital
budgeting and may help you with
preparing your capital budget in this
assessment.
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Jasuta, L. (2016). Rolling capital
managing investments in a
value-based care
world. Healthcare Financial
Management, 70(6), 82-89.

Discusses the use of a
rolling approach to
capital budget planning
in health care, similar to
what is done in other
industries.
Maxwell, J. M., Cho, T., Rudkin,
S., Wong, A., Almassi, N., &
Barton, Erik. (2016). Mobile
COWs (Computer on Wheels):
Hamburger or VEAL? Western
Journal of Emergency Medicine,
17(5), 527-530.
• A comparison study
specific to purchase and
implementation of
Computer On Wheels
(COWs) versus Very
Efficient Agile Laptop
(VEAL). The author
discusses costs and
benefits.
Mukherjee, T., Al Rahahleh, N.,
Lane, W., & Dunn, J. (2016). The
capital budgeting process of
healthcare organizations: A
review of surveys. Journal of
Healthcare Management, 61(1),
58-77.
• Examines different
capital budgeting
practices.
Rundio, A. (2016). Budget
development for nurse
managers. Reflections on
Nursing Leadership, 42(3), 1-8.
• A step-by-step approach
to budget workflow.
Stroudt, R. L. (2013). 12
strategies for managing capital
projects. Healthcare Financial
Management, 67(5), 68-71.
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Suggests strategies for
most successful program
management.
Resources: Capital Budget
Preparation
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PRINT
•
The resources provided here are
optional. You may use other resources
of your choice to prepare for this
assessment; however, you will need to
ensure that they are appropriate,
credible, and valid. The MSN Program
Library Research Guide can help
direct your research.
The following interactive exercise
introduces you to the process of
preparing a capital budget.
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Vila Health: Developing a
Capital Budget.

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