Organizations endeavor to invest in projects and operations that give a return which exceeds the minimum acceptable hurdle rate. Riskier projects should have a higher hurdle rate which at the same time should reflect the utilized resources mix as well as the financial blend. Subsequently, positive and negative side effects of these projects should be evaluated. In carrying out construction expansion project for a hospital calls for sound corporate financing in a bid to come up with resource utilization mix that should not only minimize the hurdle rate but also match the assets being financed. It is vital to evaluate the elements of project resources and requirements structures in a bid to get a clear perspective of how organizations ought to utilize resources in enhancing their operations and projects.
Maximizing the use of resources is also helpful. By ensuring the organization is not attempting to do too much with too little will cushion it against the financial risks and a number of project management issues involved. Maximizing the administrative tasks to enhance the efficiency of what the hospital can control should be emphasized. Policies also need to be formulated in an attempt to enhance employment and staff recruitment development for the project execution (DyReyes, 2008).
Adopting modern changes and viable solutions will ensure the hospital anticipates and package itself for potential changes in the project operating environment. Nonetheless, there occurs a set of project management challenges that may occur as a result of colliding project goals, variance in the inherited process of management and the personnel’s psychological inertia. These challenges are known to cause a decline in the level of efficiency and quality of projects executed. In the view that modern business environment is considerably affected by dissemination of technologies and knowledge, variance in customer’s needs and emergence of aggressive competitors, the organizations that are capable of adapting their operations swiftly subject to the changing environment stand a better chance of survival (DyReyes, 2008).
Health Economics and Resources Planning
The delivery and consumption of healthcare involves an interesting spectrum of multifaceted processes. Healthcare provision encapsulates diagnosis, prevention, treatment, rehabilitation, as well as palliative care. The health care provision occurs within the confines of organizations that range from general practitioner to hospital trust, commercial enterprises such as pharmaceutical companies and government agencies. While the demand for resources instrumental in healthcare provision keep rising subject to competing and new treatments as well as an aging population, the time and financial resources remain to be in short supply. Following the primary nature of demands made upon contemporary healthcare systems it has become paramount that the evaluation and allotment of project resources should be a progressively more scientific process. (Andargie, 2008). Consequently, it becomes necessary to have a clear comprehension of the costs and benefits involved in the resources allocation which are commensurate to best-practices in the provision of healthcare. Health economics is vital in helping healthcare managers make plausible decisions (Khasem, 2012).
Health economics deals with the utilization of scarce resources such as monetary and human to suit all interventions and treatments that are crucial in improving the health of a community. For instance, the amount of funds available is limited by the financial budget while the amount of time a nurse devotes to healthcare provision is limited by the working hours in a day or shift. While more nurses and personnel could be hired, the demand for healthcare will invariably surpass the supply for the resources. Subsequently, this leads to a process of selection in which some interventions and groups of patients are accorded resources while others are not, a process called rationing of healthcare resource utilization. Cost-effectiveness analysis aids in making rationing decisions to projects principally according to the efficiency criteria (Khasem, 2012). The efficiency principle is not only concerned with cost minimization but also on allocating resources in a bid to maximize the benefits. It implies thus that project implementers needs to employ the use of cost-effectiveness assessments in identifying the project portfolios that yield the greatest long term benefits for the available resources (Hughes, 2010).
Resources Allocation and Project Decision Making
Resources allocation and rationing is founded on the principle that requirements in healthcare projects are potentially infinite while the available resources are finite and scarce. Additionally, the funding and financing choices brings about an opportunity cost implying resources spent on one project scheme can hardly be spent on a different healthcare service. The use of sound cost effectiveness analysis in resource allocation provides the instruments that aid in informing the difficult choices as pertains to the equitable and efficient allotment of resources in maximizing healthcare provision to society. The economic considerations are vital in laying out the alternatives in a more explicit manner therefore allowing a more coherent process of decision making whilst at the same time emphasizing on value judgments of the implemented projects (Khasem, 2012). Crucial to its usefulness is the quality of the evidence-base practice upon which health economics is founded. It is paramount, therefore, that a good comprehension of the health economics principals by decision makers, as well as how to utilize them most effectively enhances a good rapport between the patients, the practitioners, the general public, and all the project stakeholders (Hughes, 2010).
With persistent advancements in healthcare technologies including drugs and surgical procedures, there comes an increased level of expectations which renders healthcare resources demand as potentially inestimable. This results to the problem of scarcity of resources and health economics works towards the management of the resources scarcity in a bid to maximize the benefits. Healthcare organizations are tasked with commissioning decisions, well-being and clinical outcomes, health, and the budget. They have ultimate obligation in being accountable for the efficiency, equity, and effectiveness of healthcare services (Hauck et al., 2004). Additionally, decision making in healthcare project management are to ensure that their expenditure do not surpass their desired benefits while at the same time warranting unequivocal considerations of life-extending, palliative care, and innovation as well as facilitation of patients’ access (Andargie, 2008). These seemingly conflicting constraints call for careful and well-thought judgment in the course of formulating project policy decisions on healthcare.
Good project management expertise provide the necessary tools instrumental in informing the intricate choices pertaining equitable and efficient allocation of resources with an aim of maximizing healthcare provision. Founded on the principle of evidence-based practice, in which treatments are employed which there is clear evidence of benefit and there is avoidance of treatments where there is no sufficient verification of benefit or evidence of harm, analyses of health economics enables the available budget to be put into consideration in the course of deciding on the project options. The concept of cost-effectiveness comes into play where the concept of cost is subject to the value that would have been realized in the event that the resources were employed elsewhere. This implies that the resources utilized for a particular project portfolio seizes to be available for use for other project schemes and subsequently the gains that would have been realized from those other schemes are relinquished (Hughes, 2010).
Project Portfolio Diversification and Risk Reduction
Diversification of project portfolios significantly cushions an organization against the risks by compensating the effect of poor performing entities by the gains of better performing entities. It should be noted that comprehensive and effective diversification does not only involve having a wide continuum of resource utilization but also requires the selection of an optimal mix of project assortments that will ensure returns will surpass the minimum hurdle ratio (Amdur, 2009).
Ensuing from the fact that in a given context and set of conditions some projects operate differently from others, highlights the concept that different project schemes bear different correlations. Correlation is considered to be a statistical measure of the extent to which two project plans tend to perform the same in particular conditions. It is in distributing the risk factor through allotting a organization’s resources across a range undertakings that portfolio performance of the organization is enhanced. A well-adjusted project portfolio involves holding differentiated classes of schemes and assortment of project designs (DyReyes, 2008).