Budget estimates in nursing management 1.pptx

MSc nursing 2 nd year Government college of nursing Rajnandgaon Chhattisgarh

1. SEMINAR ON: BUDGET ESTIMATE, REVISED ESTIMATE &PERFORMANCE BUDGET PRESENTED BY: MRS. TIKESHWARI SAHU MSc . NURSING FINAL YEAR

2. INTRODUCTION: Financial planning responsibilities need to be identified before budget preparation begins. The governing board, administrator, budget director, steering committee, and department heads are often involved in the budgetary process. The governing body is responsible for the general planning function. It selects the budget steering committee, determines the budgetary objectives, and reviews and approves the master budget. The administrator is responsible for the formulation and execution of the budget, by correlating the governing boards goals with the guidelines for budget preparation and supervising the budget preparation. The budget director is responsible for the budgeting procedures and reporting.

3. BUDGET ESTIMATE Every year during the union budget, all ministries, departments, sectors and schemes are allocated funds and these numbers are called budget estimates. For example, the government may lay out  Rs . 1000 crore for infrastructure and so  Rs . 1000 crore becomes the budget estimate for infrastructure for that year. Similarly, it lays out estimates for defense, railways, food subsidies, healthcare etc. But here’s the thing. Budget estimates are only the ‘expectation’ part of the ‘expectation v/s reality’ reel. In reality, when the actual work starts, one might need more or less money for the task. And that is when ‘Revised Estimates’ come into play. 

4. DEFINITION A budget estimate is a preliminary assessment either of funds projected to be available to a company or agency, or of funds required to complete a project. These estimates provide valuable information for planning purposes but are not final. OR The budget estimate approximates the time and resources needed to plan and complete a project and develop and implement a viable budget.

5. Need It helps to forecast the expenditure of the ensuing year and thus to enable the necessary arrangements for financing the changes which it will be called upon to meet.

6. PURPOSES

7. CLASSIFICATION OF BUDGET ESTIMATES

8. TYPES OF BUDGET ESTIMATES

9. TECHNIQUES USED IN BUDGET ESTIMATION

10. IMPORTANCE OF BUDGET ESTIMATION Budget estimation allows the organization to meet all its objectives for the project at hand without exceeding available funds. When drawing up a budget estimate, developers have to consider all the project tasks and allocate funds for each one of them. This helps the organization track its progress against these estimates. • It allows the developers to prepare for any risks throughout the project. Risk estimates are part of the budget estimates and these values aid in developing a contingency fund for the project. • It enables developers only to use the available capital and not exceed this amount in the course of the project. This prevents companies from terminating projects halfway or becoming bankrupt.

11. PROFESSIONALS WHO CARRY OUT BUDGET ESTIMATION

12. STEPS IN BUDGET ESTIMATE PREPARATION 1. Preliminaries

13. 2. ESTIMATION OF INCOME The sources of income are:

14. Forecasting income It is a statement of and/ or a quantitative assessment of future conditions about a particular subject ( eg . Income) based on some specific assumptions. One could forecast income for the budget year after adding a percentage to the previous year.

15. Estimating income for the budget year would involve: Assessment of the likely demand from existing and potential customers. Make a conscious effort to optimize use of available resources; and Estimate the income considering the above two factors.

16. The following information is required to be able to make a realistic estimate of future income: Capacity of each department in terms of number of shift per day and number of working days in a year. Current level of activity/capacity utilization for the previous. Any new developments in the catchments area of the hospital, which are likely to have a bearing on demand for hospital services. Steps proposed by the hospital management to augment hospital revenues such as revision in rates, purchase of new equipment and working extra hours. Patient’s profile classifying patients under medical and surgical, linking categories of patients to demands made for various services.

17. 3. BUDGETARY PLAN: The budgetary plan is made based on the operating costs, the funds available and the cash available within the institution. The plan is made based on:

18. BUDGET ESTIMATE FOR COLLEGE OF NURSING Item no Income expenditure Actual last year Current year Budget next year Budget Actual Proposed Approved Rent towards Hostel Salaries Administration Vehicles Library Furniture Affiliation fee Lab. Equipements Hostel maintenance Electricity 750000 4500000 130000 150000 450000 175000 370000 92000 253000 340000 800000 5000000 140000 200000 500000 180000 400000 95000 300000 350000 960000 6000000 150000 220000 670000 250000 425000 100000 350000 400000 900000 7000000 180000 250000 650000 210000 350000 100000 300000 350000 1020000 8000000 220000 300000 675000 300000 450000 100000 400000 450000 960000 7000000 220000 300000 650000 250000 425000 100000 350000 400000 Total 7210000 7965000 9225000 10290000 11915000 10565000

19. ADVANTAGES

20. DISADVANTAGES Disadvantage is that, since it’s an estimate and not the real data, the information may not be accurate. This is an issue if there are unexpected expenses or revenue.

21. REVISED ESTIMATE A mid-year survey after the first 6 months of the financial year takes stock of how much of the allocated funds have been used, how much is left, what all activities have been planned and so on. After this, the initial budget estimates are revised and these numbers are now called revised estimates.  And unlike budget estimates, the parliament doesn’t vote on these revised estimates. However, if the revised estimates demand additional funds, then the parliament approval is required or else a re-appropriate order is needed before the revised estimates can be put to use.

22. DEFINITION A budget revision is a process that allows budget specialists to make changes to a budget in order to increase the company’s financial standing. This can mean making revisions to pull in more income to pay off liabilities or finding methods to satisfy the amount of expenses the business is currently spending.   OR A change in the calculation of the cost of a project. This calculation is made and presented to a buyer, usually while a project in progress, and may be subjected to further changes due to both exogenous factors and endogenous factors.

23. NEED

24. PROCESS OF REVISED BUDGET

25. METHODS FOR FRAMING THE REVISED ESTIMATES ( i ) By adding to the actual of the first six months of the current year those of the last six months of the previous year, or (ii) By taking a proportionate figure so that the revised estimate will be twice the actual for the first six months, or (iii) By assuming that the revised estimate for the current year will bear the same proportion to the actual of the first six months as the actual in the previous year bore to those of the first six months of that year.

26. ADVANTAGE Revised estimate helps to adjust the changing economic circumstances and improve their accuracy.

27. REVISED ESTIMATE FOR COLLEGE OF NURSING S. No Item January’15 Proposed total funds May’15 Proposed total funds Change* 1. 2 3 4 5 6 7 8 Rent towards hostel Salaries Administration Library Furniture Lab. Equipments Hostel Maintenance Electricity 10,20000 8000000 210000 650000 250000 110000 350000 450000 960000 7000000 250000 675000 300000 100000 400000 430000 60,000 1000000 40000 25000 50000 10000 50000 20000

28. PERFORMANCE BUDGET Performance budgeting is generally understood as a system of presentation of public expenditure in terms of functions, programes , performance units, viz. Activities , projects, etc., reflecting primarily, the governmental output and its cost. It is essentially a process which brings out the total governmental operations through a classification by functions, programmes and activities. Through suitable narrative statements and workload data that form an integral part of the presentation, it indicates the work done, proposed to be done and the cost of carrying these out. The main thrust of performance budgeting has been on providing output-oriented budget information within a long range perspective so that resources could be allocated more efficiently and effectively.

29. MEANING It is a system of presentation of expenditure in terms of functions, programs, performance units, reflecting primarily, the output and its cost. It emphasizes accountability, efficiently and economy by emphasizing outcomes and results instead of activities or outputs. Thus the manager would budget as needed to achieve specific outcomes and evaluate budgetary success accordingly.

30. DEFINITION According to J. Burkhead A performance budget is one which presents the purposes and objectives for which funds are required, the costs of the programmes proposed for achieving those objectives and quantitative data measuring the accomplishments and work performed under each programme .   OR   Performance budget is nothing but a method or technique of preparing and presenting budgets in relation to functions, programmes activities for cost and revenues by which physical and financial aspects of individual items are correlated.

31. NEED

32. CHARACTERISTICS:

33. OBJECTIVES Correlate the physical and financial aspects of programmes and activities; Improve budget formulation, review and decision-making at all levels of management in the government machinery; Facilitate better appreciation and review by the legislature; Make possible more effective performance audit; Measure progress towards long-term objectives as envisaged in the plan; and Bring annual budgets and developmental plans together through a common language.

34. COMPONENTS OF PERFORMANCE BUDGET suitable workload factors, productivity and performance ratios that justify financial requirements of each programme .

35. FORMULATION OF PERFORMANCE BUDGET Financial Requirements Table: This Table is the most important part of the performance budget and has three basic elements: a programme and activity classification indicating the range of work of the agency in meaningful categories object-wise classification showing the same amount distributed among the different objects of expenditure such as establishment charges; and sources of financing indicating the budgetary and account heads under which the funds are being provided in the budget.

36. STEPS IN PERFORMANCE BUDGETING:

37. Steps in budgeting for college of nursing

38. The steps of planning budget for nursing unit Submitting to institutional administrator

39. Roles and Responsibilities of the Nurse Administrator/Principal in Budgeting

40. PERFORMANCE BUDGET FOR HOSPITAL S.no Activity Unit of output No. of units Unit cost Total cost 1. 2. 3. Conduct inspection of toxic chemical storage facilities Investigate incidents of spells and leaks Conduct training and licensing of toxins handlers An inspection conducted An investigation completed A license issue 8 8 8 20,000 8000 30000 160000 64000 240000

41. TOOLS USED IN PERFORMANCE BUDGETING Work measurement studies to measure or to identify various work Performance standards and its specific indication to measure the performance Monitoring methods like PERT Other methods like cost analysis

42. ADVANTAGES OF PERFORMANCE BUDGET Performance budgeting invites performance audit in the firms; It helps to attain the objectives of the firm in a scientific manner; This budgeting system motivates to improve performance since input-output relationship is maintained. Correct steps can easily be taken since continuous comparisons can be made between the target and the actual performance; In case of shortage or insufficient funds, proper allocation of funds can be made to various activities as per importance. All the activities of a firm can easily be analysed and the unimportant activities may be eliminated.

43. Continue… Focuses on results and accomplishments. A simple approach once expectations and measurements are defined. Promotes equitable allocation of resources to those institutions that meet performance criteria. It is not only an estimate of future needs but goes beyond that and- includes functions, programmes, activity schemes and time schedules to help effective and economic allocation for the programmes. It lays great stress on the management of organisational structural and overall policy, personnel, financial, etc. from traditional to dynamic one. It is not merely a projection of trends and targets but planning the business from grass root level to top level on rational thinking and forecasting.

44. DISADVANTAGES OF PERFORMANCE BUDGET (a) The success or failure of performance budgeting depends on a well-established accounting system. (b) The workers and employees of an organisation are not interested rather resist it for its introduction as they are to work hard and more. (c) It is not always possible to ascertain appropriate activity in an organisation . (d) It invites lots of money and time and energy since various activities are expressed in physical units.

45. Continue… Does not necessarily provide incentives for institutions to help students for complete degree program. Performance criteria and measurement can be difficult to define. The time between the accomplishments and its measurements and the allocation of funds might be great. Measuring long term outcomes is difficult. It can only be used for such programme where evaluation can be done in precise manner The use of P.B requires the departments of organization well developed.

46. SUMMARY