Project on Changes in Earnings of Healthcare Organization - Paper Example

2021-08-25 10:19:47
2 pages
452 words
University/College: 
Harvey Mudd College
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Essay
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Discuss how you will determine the expected value of the project.

The expected value of the projects will be determined numerically and non-numerically. Qualitative determination of the expected project's value involves rating the expected project values regarding very high, high and good. For example, the expected value of the projects is high; one can rate it over 10 to indicate high, and one to indicate that the expected project value would be lower. Numerically, the value of the expected project can be quantified either financially or non-financially (Liberatore, 1981). For example, the healthcare organization can argue that the projects are expected to mean the profit an additional $2milion per year, or serve additional 200 customers per month or improve the hospitals' efficiency by 20%. These are done regarding risks, the cost of the projects, the change in earnings, and change in quality and improvement in safety.

Explain whether your proposed project is easily quantified or whether you will need to use some non-numeric information for calculating the value of the project.

The proposed projects are easily quantified because the changes in earnings can be quantified. For example, if the hospital has been earning $300 million per year but is expected to serve additional 300 patients per month after implementing the technology, then the hospitals can determine/quantify the additional earnings that are attributed to the newly purchased capital equipment (Levin, 2008).

Examine the sources of information that can be used for budgeting.

To budget for the capital equipment, the hospital would have to analyze its financial statement to understand it cash flows and financial strength and determine how much it can allocate to the capital equipment. Other sources of information include market and industry reports on the prices and benefit of the capital equipment (Srithongrung, 2017).

Determine the probability that the information is correct. Would simulation increase the accuracy? Why or why not?

The probability that the information would be correct is high because it would be based on facts from market research, and survey. The simulation would increase the accuracy of the information as the hospital would model a possible scenario or problem and analyze the situation to determine if the projects would be feasible, the return on investment and the net present value is positive.

References

Eilifsen, A., Hamilton, E. &, Messier, W. (2017). The Importance of Quantifying Uncertainty: Examining the Effects of Sensitivity Analysis and Audit Materiality Disclosures on Investors Judgments and Decisions. SSRN Electronic Journal, 21(9).

Levin, G. (2008). Project management accounting: Budgeting, tracking and reporting costs, and profitability. Project Management Journal, 39(1), pp.95-95.

Liberatore, M. (1981). An Incremental Approach to R&D Project Planning and Budgeting. Research Management, 24(2), pp.17-20.

Srithongrung, A. (2017). Capital Budgeting and Management Practices: Smoothing Out Rough Spots in Government Outlays. Public Budgeting & Finance, 11(18).

 

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