Question

magine you are the director of Medical Imaging department in Northwest Memorial hospital and are tasked with presenting to the C-Suite about your department's operating budget. You need to describe the department priorities and capital investments priorities. Be sure to include the following in your presentation:

1. Explain how you would prioritize the capital investments.

2. What was your methodology in producing the budget and why?

3. What was your role as the director in producing the budget?

The PowerPoint presentation should consist of 12-15 slides, not including the title slide and reference slide. Images may be included in the presentation but be sure to keep all image file sizes low for this presentation. Save images as small files.

Answer 1

1.

A. Start prioritizing projects based on business value

Begin by looking at each project on your list with one simple question in mind: How will this project impact business? While you certainly want to take the organization’s bottom line into account, you also need to consider how a project will affect people. For example, will it make life easier for our customers or team members?

Keep in mind this step might require conversations with your managers, clients, or other key stakeholders. Don’t be afraid to ask detailed questions to ensure projects that bring the biggest bang rise to the top.

B.  Set priorities by identifying urgent and important projects

Now it’s time to take the prioritization process one step further. With your list of important projects in hand, go back over it with an eye for urgency. It’s easy to confuse importance with urgency, so let’s draw a clear distinction:

• An important project brings value to your business, whether you feel its impact today or years down the road.
• An urgent project requires immediate attention to stay on track or keep business going.

C.  Assess your own bandwidth

So what do you do if you end up with 3 urgent and important projects? If a hard deadline doesn’t declare the winner, then weigh the effort each top-priority project will take.

At TeamGantt, we like tackling bigger projects first. That way, everything feels like a quick win after that. But if clearing simple projects out of the way makes it easier for you to focus on a more complex one, go for it.

Just be aware that stacking heavyweight projects up back-to-back can be a quick drain on project energy. Try alternating big projects with small ones when possible to keep your team fresh and motivated.

D. Learn to say no to projects

Let’s set the record straight: No is not a bad word. In fact, those two little letters can make or break your ability to succeed as a project manager.

As odd as it may sound, saying yes to every single project request is a recipe for risk. Taking on more than you can handle not only runs your team into the ground—it can also leave your client fuming over missed deadlines and subpar results.

While saying no might require you to have a tough conversation, it protects your ability to deliver on the projects that matter most. And rest assured: You can turn a client or stakeholder down without closing the door completely. It might simply mean delegating tasks to another team that has the resources to get the work done on time.

E. Be flexible with the project prioritization process

If you’ve spent any time in project management, you know this: Things change. A project that was once urgent and important might be trumped by an emergency that pops up. A stakeholder may decide a project doesn’t bring business value anymore. A key player could get sick unexpectedly, putting a dent in your team’s bandwidth.

As project manager, you can either bend or you can break. It’s your job to stay alert and constantly reassess project priorities so you can adjust your team’s focus as needed.

2.

A. Incremental budgeting

Incremental budgeting takes last year’s actual figures and adds or subtracts a percentage to obtain the current year’s budget. It is the most common method of budgeting because it is simple and easy to understand. Incremental budgeting is appropriate to use if the primary cost drivers do not change from year to year. However, there are some problems with using the method:

• It is likely to perpetuate inefficiencies. For example, if a manager knows that there is an opportunity to grow his budget by 10% every year, he will simply take that opportunity to attain a bigger budget, while not putting effort into seeking ways to cut costs or economize.
• It is likely to result in budgetary slack. For example, a manager might overstate the size of the budget that the team actually needs so it appears that the team is always under budget.
• It is also likely to ignore external drivers of activity and performance. For example, there is very high inflation in certain input costs. Incremental budgeting ignores any external factors and simply assumes the cost will grow by, for example, 10% this year.

B. Activity-based budgeting

Activity-based budgeting is a top-down budgeting approach that determines the amount of inputs required to support the targets or outputs set by the company. For example, a company sets an output target of $100 million in revenues. The company will need to first determine the activities that need to be undertaken to meet the sales target, and then find out the costs of carrying out these activities.

C.  Value proposition budgeting

In value proposition budgeting, the budgeter considers the following questions:

• Why is this amount included in the budget?
• Does the item create value for customers, staff, or other stakeholders?
• Does the value of the item outweigh its cost? If not, then is there another reason why the cost is justified?

Value proposition budgeting is really a mindset about making sure that everything that is included in the budget delivers value for the business. Value proposition budgeting aims to avoid unnecessary expenditures – although it is not as precisely aimed at that goal as our final budgeting option, zero-based budgeting.

D. Zero-based budgeting

As one of the most commonly used budgeting methods, zero-based budgeting starts with the assumption that all department budgets are zero and must be rebuilt from scratch. Managers must be able to justify every single expense. No expenditures are automatically “okayed”. Zero-based budgeting is very tight, aiming to avoid any and all expenditures that are not considered absolutely essential to the company’s successful (profitable) operation. This kind of bottom-up budgeting can be a highly effective way to “shake things up”.

The zero-based approach is good to use when there is an urgent need for cost containment, for example, in a situation where a company is going through a financial restructuring or a major economic or market downturn that requires it to reduce the budget dramatically.

Zero-based budgeting is best suited for addressing discretionary costs rather than essential operating costs. However, it can be an extremely time-consuming approach, so many companies only use this approach occasionally.

3. Director Duties and Responsibilities

• Direct and monitor all financial activity of the organization
• Manage company cash flow
• Outline and implement company-wide budget plans
• Prepare company financial statements monthly and annually, as needed
• Oversee all accounting work and set up internal and external audits to ensure the accuracy of information
• Use data analysis to strategically forecast financial trends
• Work with and advise the investment team on solid financial decision making to increase profits and minimize losses
• Provide strategic financial planning advice to upper management for long-term growth
• Establish internal work processes for financial department (including accounting and billing) and monitor their progress
• Maintain and manage investor client relationships
• Analyze and interpret financial data and present the information with reports and presentations to the board of directors and executive director
• Manage cash from any outside grants or funding
• Stay abreast of current market trends and patterns and act accordingly
• Asses company spendings and work to reduce costs
• Manage the finance department, training any new employees as necessary
• Have a clear understanding of and adhere to current laws and regulations