North Philadelphia Health System
CAPITAL BUDGET
FISCAL YEAR ENDING JUNE 30, 2008
INSTRUCTIONS AND SAMPLE FORMS
Capital Budget Preparation Instructions
As in prior years, departments must submit a separate budget proposal for capital expenditures. Each capital request must include a completed Capital Budget Request Form and a Capital Budget Cost-Benefit Analysis Form including the complete project description, realistic cost estimate and the proposed funding source. A brief description of these forms along with examples on how to complete the forms are provided. Also, due to the limited availability of capital funds, it is unlikely that all projects will be approved. Requests should therefore be prioritized to facilitate the project review process.
The following are Hospital policies in determining capital expenditures. Please use these as guidelines when budgeting your capital expenses.
1. A capital asset is defined as a single item which has a useful life of three years or more and has a unit cost of $500.00 or more.
OR
2. A system whose components are interdependent, which has a useful life of three years or more and costs $500.00 or more in total is also considered a capital asset.
Example: Personal computer system comprised of:
Computer and keyboard $1,200.00
Monitor 400.00
Printer 300.00
Software 200.00
Total System $2,100.00
OR
3. Similar fixed assets acquired at a unit cost of less than $500.00 but as a group (billed on the same invoice) with a total cost of $1,500.00 or more.
Example: Office chairs:
8 office chairs ordered each having a unit price of $200.00
Total invoice $1,600.00
Capital Budget Request Form
The Capital Budget Request Form is a summary of all capital items being proposed in the budget. Each capital request that appears on this form must also be accompanied by a completed Capital Budget Cost-Benefit Analysis Form. For each capital item, a Capital Budget Cost-Benefit Analysis Form should be completed first and the information then transferred to the Capital Budget Request Form. A brief description of the information found on the Request Form is provided in the following section.
1. Description
In this column provide a brief description of the item being requested.
2. Qty
Enter the quantity or number of units of being requested.
3. New or Replacement
Indicate if this request is for a new item not currently in use, or if it is for an existing item that needs to be replaced.
4. Increase in Revenue
If the approval of this capital request will result in an increase in revenue please provide the projected increase.
5. Increase/(Decrease) Expense
If the approval of this capital request will result in an increase or decrease in expenses please provide the projected amount.
6. Equipment
· Pricing
In this column enter the pricing assumption being used. The allowable values are as follows:
L -- List Price
V -- Vendor quote
E -- Estimate
N -- Negotiated price
6. Equipment (con't)
· Per Unit
Enter the unit price.
· Equipment Subtotal
To arrive at the subtotal multiply the per unit price and the quantity located in the Quanity column.
· Renovation Subtotal
Consider whether any renovations, large or small, will be required to make the equipment functional. Typical items to consider are:
· Electrical (new or relocate)
· Telephone lines
· Room environment
· Space requirements
7. Total
This column will contain the sum of the equipment subtotal and the renovation subtotal.
8. Priority
Due to the limited availability of capital funds, it is unlikely that all projects proposed will be approved. Requests should therefore be prioritized to facilitate the project review process. The allowable values for this column are:
1 - High priority item based upon need, patient service and cost savings.
2 - Item not critical; if funds are limited, can wait a year.
Capital Budget Cost-Benefit Analysis Form
The Capital Budget Cost-Benefit Analysis Form provides additional detail for the items listed on the Capital Budget Request Form. You must complete one form for each item. Much of the information you will be entering in the Capital Budget Request Form will be transferred directly to the Capital Budget Cost-Benefit Analysis Form. The following is a brief description on how to properly complete this form.
1. Total requested dollar amount
This is the total amount requested for this item. The amount entered here is transferred directly to the Total column of the Capital Budget Request Form.
2. Description
Enter a brief description of the capital item. Transfer this to the Description column of the Capital Budget Request Form.
3. Suggested Vendor
Enter the name of the vendor you intend to use.
4. Equip. Class
For Equipment class please check one of the options provided.
5. Function
Please give a detailed explanation of how this equipment will be used.
6. Reason for Request
Give reasons supporting the purchase of the equipment. Please be as explicit as possible.
7. Effect on Department Operations
Please indicate how this purchase will effect your department, providing as much detail as possible.
8. Effect on Other Departments
Explain how this purchase will effect other departments.
9. Annual Fiscal Impact on Revenue
In this section you are asked to project any annual increase in revenue directly resulting from the this purchase. The amount entered here must be transferred to the Increase in Revenue column of the Capital Budget Request Form.
10. Annual Fiscal Impact on Expenses
Explain in detail how this capital expenditure will increase(decrease) expenses. Carry this amount over to the Increase(Decrease) in Expense column of the Capital Budget Request Form.
11. Capital Financing
(a) Capital Requirement: Provide a detailed breakdown of the total cost of the capital request.
(b) Net Capital Requirement: This total is the sum of the components in section (a). Transfer this amount to the Total column of the Capital Budget Request Form.
(c) Sources of Funds: If you are aware of any funds such as grants or Special Purpose Funds which are available for a capital equipment purchase please identify.
Fiscal Year 2006/07 Capital Budget Preparation Instructions Page 6