Information Technology
Project Management

Activity Cost and Budget

This lecture reviews the allocation of activity cost and time

Objectives

1. Estimate time needed for completing various sub-tasks in an Information Technology project within healthcare
2. Indicate sources for estimates of cost and duration of a project task
3. Describe the field of activity based costing
4. Calculate realistic budgets for completion of a project

Assigned Reading

1. How Much Will That EMR System Really Cost? This spreadsheet helps you compare the long-term costs of electronic medical records systems. Jack Valancy, MBA.  More► 
2. Baron, Richard J. MD; Fabens, Elizabeth L. MD; Schiffman, Melissa MD; Wolf, Erica MD Electronic Health Records: Just around the Corner? Or over the Cliff? Annals of Internal Medicine. 143(3):222-226, August 2, 2005.   Accession Number:  00000605-200508020-00008 Library►

Presentations

1. Lecture on estimating cost of activities  Slides►  Listen►   SWF►  WMV►  You Tube 1► You Tube 2► You Tube 3►  Arabic►  
2. Lecture on calculating present value from future returns   Slides►  Listen►  SWF►  You Tube►  Arabic►

What you know?

Advanced learners like you, often need different ways of understanding a topic. Reading is just one way of understanding. Another way is through writing about what you have read.  The enclosed assessment is designed to get you to think more about the concepts taught in this session. 

1. List three approaches to measuring cost of an activity.
2. What other costs besides purchase cost should be included in budgeting for an electronic health record?
3. In which method does the volume of services affect the estimated cost of an activity?
4. How is rent allocated in activity based costing to different cost centers?

Please send an email to your instructor with your responses to the above questions.    Make sure that the email subject line includes the course number, topic name and your name, otherwise it will not get to the right place.  If you wish to receive a receipt that the instructor has received your email, you may request the receipt from your email program.  Please respond to all of the questions within the same email.  Do not attach any files.  Keep a copy of all your emails to the instructor till the end of the semester.  Email►

Rapid Analysis

1. This is not a group project.  You can ask questions from other students but you should not complete the assignment together.  The material you hand in should be the product of your work.  Did you complete this assignment by yourself and without help from other students in class? 

2. In the rapid analysis assignment for the section titled "Project Initiation and Planning" we had assumed that training cannot start until the systems have been configured.  Suppose that this assumption was not correct and that training could have started before the system was configured or even purchased.   With this revision, by how many days are we able to reduce the total length of the project?  Does the critical path for scheduling this project change from your previous analysis?   To answer this question, please redo the assignment in "Project Initiation and Planning" but this time allow "Training task" to start at any time the higher level task starts.  Make sure that the project starts on 1/1/2009.  Mark-up the critical path in red.  Sort the list of tasks using starting date.  For level 2 and level 3 tasks, list task description, start date, end date, precedents, and whether they are on critical path. 

3. If the cost and benefits of an EHR are indicated as below, then calculate the rate of return on the investment for the electronic health record (assume a 15% opportunity cost for projects within this organization).  You Tube 1►  You Tube 2►
    

   Description	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7
   Initial development costs	($1,676)
   Initial training costs	($109)
   Operation and maintenance costs		($260)	($265)	($270)	($275)	($280)	($285)	($290)
   Ongoing training costs		($155)	($160)	($165)	($170)	($175)	($180)	($185)
   Benefits
   Medical record savings		$50	$70	$100	$120	$130	$140	$150
   Paper savings		$10	$15	$25	$35	$45	$55	$60
   Salary savings		$150	$350	$550	$750	$850	$950	$1,000
   Retrieval savings		$75	$100	$150	$200	$250	$300	$350
   Data are in $1000s.  Data are from Snyder-Halpern, Rita PhD, RN, C, CNAA; Wagner, Mary C. MS, RN Evaluating Return-on-Investment for a Hospital Clinical Information System. Computers in Nursing. 18(5) 213-219, September/October 2000.  Accession Number: 00002771-200009000-00008  Library►