Saturday, January 26, 2019
Budget Management Analysis Essay
price sport is a way of exhibiting the pecuniary public presentation of a task. It is the mathematical balance between calculateed cost of work performed, and the actual cost of work performed. two work outing and calculate argon financial projections. Looking at the differences between forecasting and figureing, forecasting is broad in scope and part of strategic think whereas a budget is more specific and detailed, with expenditure heads specifi seey matched to sources of income. Cost variances may be either authoritative or negative figures. contradict figures happen if you spend more on a project than you allowed in your budget.Positive figures resolving if you spend less on a project than the budget announceed. Negative cost variance figures be almost invariably a bad thing for a craft, as companies cannot always warrantee they can come up with the funds to c everyplace the excess cost. However, positive cost variances are not always good for a company, ei ther. For instance, if node service or good quality parts are sacrificed for a positive variance, a business may not sell get clients. Cost variance figures must be examined in the context of the business to determine the true impact those numbers volition have.Managers use budget management analysis as a device to make positive(predicate) that all resources available are being use efficiently. The budgets are driven yearly and are base upon the previous years budget and variances. Benchmarking gathers nurture of the performances and processes from similar geological formations and equalizes the data to help with making utilitys. Cost pas seul in Budget Management Various strategies are used to harbor budgets managers and the chief financial officer of most healthcare organizations have the tools demand to manage the budget.By managing the budget the organization will be amend prepared for the financial forecasts, which are the companys emerging disbursements. about strategies and tools that will assist with managing the budget are zero based, activity based, performance based, cost variances and benchmarking. Zero based budgeting analyzes every expense inside an organization and on the buttonifies the need and cost of each. Activity based costing is the gathering of the practicable(a) cost data, which is assigned to specific activities such as engineering. The performance splashboard uses the metrics of performance and analyzes the root cause of financial problems.Cost variance analysis looks at the differences of the actual cost and expected cost of an expense. motivation the provide and informing them of the budget goals is another strategy that may be used to help the organization succeed (Nayab, 2011). Expense Results The expense reports show the difference between the budget and the actual amount spent and the result is called the variance. Variances may be inside the budget which is favorable, or over the budget which is admonito ry. The variance is used to predict the budget for upcoming years, help with expending during the current year, and help with evaluating the managers and their departments.To determine the cause of variances the managers must investigate and rationalize to upper management why the variance extendred. There are a variety reasons for variances, which must be identified and controlled if possible. While analyzing the nursing expense results from various unit of measurements for a pay period, there were some favorable and unfavorable variances. While reviewing the expense record the paid productive hours variance was within the budget and the paid nonproductive hours variance was 60 hours over the budgeted hours.The unfavorable variance of paid nonproductive hours may have occurred collectible to some staff being on modified duty, sick leave, meeting date, or education measure, which means they are getting paid with no patient role care look atd. The overtime fortune of hours va riance was 7. 5% over the budget and the cash register percentage of hours variance was 8. 0% over the budget, two are unfavorable. The overtime may have been caused by bad time management, late arrival of the next release, or working past shift hours due to not enough staff.The increase in the register hours may have been due to not enough regular staff due to hiring freeze or staff being off for personal or illness reasons. The hours per patient day (HPPD) licensed productive hours was . 13 over budget, the direct product hours was within budget, and the total productive hours was within budget. The hours per patient day over budget may have been caused by the unit being over staffed or also due to the overtime and registry hours. The average day by day census (ADC) per unit varied from being within budget to 7. 50 over the budget.The daily census is very freakish and depends on the time of year, the admissions from ER or the clinic, and transfers from other hospitals or fac ilities. Strategies to bind the results aligned with expectations may be done by performance budgeting, which will analyze key areas such as staffing, cost control, increased productivity, and confirmative and direct patient care. The activities affected by analyzing these performance areas would be daily staffing calculations, reduced cost to the unit, working more efficiently and better time management, patient care planning, and time spent on patient charting. oblation incentives could also be a good way to involve the staff by informing them of the budget goals. Benchmarking Benchmarking helps to identify performance gaps and identify where improvement is needed. Benchmarking is used by large health systems and smaller practices alike as a tool to identify targets and set goals enabling staff to compare the operations service, process, and outcomes with those already attaining best practice goals (Borglum, 2008). There are many benchmarking techniques for the purpose of this p aper three will be discussed, financial, performance, and operational. financial benchmarking is performing a financial analysis and comparing the results in an essay to assess your overall competitiveness and productivity (Cimasi, 2006). Financial benchmarking is among the more effective techniques for extracting information from a health care enterprises historical operating performance and presenting it in a form that facilitates informed judgments that help predict the subject entitys future operating performance and financial condition (Cimasi, 2006). mathematical process benchmarking involves comparing the performance levels of organizations for a specific process, this information can then(prenominal) be used for identifying opportunities for improvement and/or setting performance targets (Business proceeding Improvement Resources, 2011). Performance levels of other organizations are normally called benchmarks and the ideal benchmark is one that originates from an organiza tion recognized as being a draw in the related area (Business Performance Improvement Resources, 2011). Performance benchmarking may involve the comparison of financial measures (such as expenditure, cost of labor, cost of buildings/equipment, cost of energy, love to budget, cash blend, revenue collected) or non-financial measures (such as absenteeism, staff turnover, the percentage of administrative staff to front-line staff, budget processing time, complaints, environmental impact or call center performance) (Business Performance Improvement Resources, 2011).Operational benchmarking embraces everything from staffing and productivity to office flow and analysis of procedures performed, this technique performs a comprehensive assessment considering different aspects of operational and business performance (iCognitive, 2011). Consequently, this model will help companies to improve from decision-making at the strategic level to implementations at the operational level (iCognitive, 2011). These benchmarking choices were made based on the fact that all three techniques together will center on the organization as a whole and not just one area, and might improve budget accuracy in future forecast.Covering finances, operation, and performance will incorporate every aspect of the budgets bear on in the organization and give mangers the appropriate tools needed to justify and countersink variances throughout the year and future years. Conclusion Strategies to manage budgets are used to maintain the actual cost predicted for budgets and to correct variances in cost. Variances may occur at any time, may be internal or external, and in most cases are correctable once investigated by the mangers.Benchmarking is used in strategic management and compares processes and performance to help improve organizations. The use of financial ratios and benchmarking is critical to understanding an entitys overall historical performance and to the forecasting function of valuation analysis (Cimasi, 2006). This paper has discussed specific strategies to manage budgets within forecast, compared five to seven expense results with budget expectations, described possible reasons for variances, gave strategies to stay results aligned with expectations, recommended three benchmarking techniques, and identified what might improve budget accuracy, and warrant the choices made.