Budget Estimation

BAREILLY INTERNATIONAL UNIVERSITY
ROHILKHAND COLLEGE OF NURSING

NURSING MANAGEMENT
ASSIGNMENT ON
BUDGET ESTIMATION FOR

COLLEGE OF NURSING
SUBMITTED TO: SUBMITTED BY:

Ms. POOJA BAGHARI SHIVANI DAS
NURSING TUTOR M.SC (N) II YEAR
RCN, BAREILLY RCN, BAREILLY
BUDGETING
INTRODUCTION:
Literally the word ‘Budget’ means a leather bag or sachet to carry official papers in. The
word budget derived from the old English word ‘budgette’ means a sack or pouch, which the
chancellor of the exchequer used to take out his/her paper for laying before the parliament,
the government financial schemes for the year. Budget is a numerical description of the
expected income & planned expenditure for an organization for a specified period of time. It
is a concrete precise picture of the total operation of an enterprise/ organization/ institution in
monetary term, i.e. finance.
DEFINITION:
“Budgeting is an operational plan for a definite period usually a year. Expressed in financial
terms and based on the expected income and expenditure.”
OR
“Budgeting is a concrete precise picture of the total operation of an enterprise in
monetary terms”
By H.M. Donovar
PURPOSE OF BUDGETING
 Mechanism for translating fiscal objectives into projected monthly spending pattern.
 Enhances fiscal planning and decision-making
 Clearly recognizes controllable and uncontrollable cost areas.
 Offers a useful format for communicating fiscal objectives.
 Allow feedback for utilization of capital money
 Helps to identify problem areas and facilities effective solutions
 Provides means for measuring and recording financial success with the objective of
the organization
PREQUISITES OF BUDGETING:
 Organizational Structure- Need a sound organizational structure with clear line of
authority and responsibility
 Non-Monetary statistical data- Such as number of admission, average length of
stay, percentage of occupancy and numbers of patient’s days. Used for planning and
budgeting process.
 Charts of accounts- Revenues expenses are reported by responsibilities areas, thus
providing historical data that are valuable for planning and providing budgetary
control for evaluation as performance can be compared to plans.
 Managerial support- Budgeting is done at the departmental level; it must be
valued by top administration. Managers must be willing to devote their time and
energy to the budgeting process.
 Formal budgeting process and procedure- should be available in manual
budget, in which objectives are clarified and instructions for budget development are
discussed calendar for budgeting activities with the schedule for each stage of
program is presented.
CHARACTERISTICS OF BUDGETING:
 Should be flexible
 Should be synthesis of past, present & future
 Should be product of joint venture & cooperation of executive/ department head
at different level of management
 Should be in the form of statistical standard laid down in the specific numerical
terms.
 Should have support of top management throughout the period of its planning &
supplementation.
IMPORTANCE OF BUDGETING: What you need to know

 Needed for planning future course of action and control over all activities in the
organization
 Facilities coordinating operation of various department and sectors
 Help to weigh values and make decision when necessary.
PRINCIPLES OF BUDGET:
 Should provide financial management by focusing on requirement of the
organization.
 Should focus on the objectives and policies of the organization
 Should ensure the most effective use of financial and non-financial resources.
 Programmed activities should be planned in advance
 Require consistent delegation for framing and executive budget
 Should include coordinating efforts of various department establishing a frame of
reference for managerial & evaluate managerial performance
 Requires an adequate checks & balance against adoption of too high & too low
estimates.
 Must be appropriate to nature of business, services and to the type of budget
 Prepared under the direction and supervision of administrator or financial officer
 To be prepared and interpreted throughout the organization
 Requires review of performance of previous year and adequacy both quantitatively
and qualitatively
 Provision should be made for flexibility
TYPES OF BUDGETING
1. Operating Budget (Revenues and expenses): Provide an overview of
agency function by projecting the planned operation for upcoming year. Deals with
salaries, medical-surgical supplies, office supplies, laundry services, books
periodicals, recreation and contractual services.
2. Capital Expenditure Budget: Related to long range planning. Including
physical changes (replacement and expansion of plant, major equipment’s and
inventories). They are major investment and reduce flexibility in budgeting.
3. Cash Budget: It is prepared by way of projecting the possible cash receipt and
payments over the budget period.
4. Labour or Personnel Budget: Estimate cost of direct labour necessary to meet
agency objectives. Determine the recruitment, hiring, assignment, layoff, discharge of
personnel. Nurse manager has to decide number of aids. Order line required during a
shift months & areas.
5. Flexible Budget: It consists of several financial plans, each for a different
programme activity. It is based on the fact that operating condition rarely confirm to
expectations.
6. Strategic Planning Budget: Long range budget for long range planning.
Projected for 3-5 years. Programme budget is a part of this budget.
7. Incremental Budget: It is based on the estimated changes in the present
operation, plus a percentage increase for inflation all of which is added to the previous
year budget
8. Open Ended budget: A financial plan in which each operating manager presents
a single cost estimate for what is considered optimal
BUDGETING PROCESS:
STEP 1 Establishment of plans and objectives & policies
STEP 2 Departmental goals are made
STEP 3 Formal plan for budget preparation, assignment of responsibilities and timetable
is prepared.
STEP 4 Departmental budget are revised and master budget is prepared
STEP 5 Financial feasibility of master budget is tested and final document is approved
and distributed to all parties involved.
STEP 6 Every head of the office required to prepared budget estimate in respect of
salaries of establishment contingent expenditure and others. Example- Telephone, office
expenses.
ROLE OF NURSE ADMINISTRATOR IN BUDGETING

 Nurse administrator is visionary in identifying or forecasting short and long term unit
needs, thus inspiring proactive rather than reactive fiscal planning.
 It is knowledgeable about political, social and economic factors that shape fiscal
planning in health care today.
 Demonstrates flexibility in fiscal goals setting in a rapidly changing system.
 Anticipate recognizes and creatively problem solves budgetary constraints.
 Ensures students safety is not jeopardized by cost constraints.
 When budget is allotted the administrator should support the budget.
ADVANTAGES OF BUDGETING:
 Fixes accountability, assignments of responsibility & authority.
 Encourage managers to make careful analysis of operation
 Weakness is revealed, corrective measure taken.
 Financial matters can be handled in orderly fashion, activities care balanced.
DISADVANTAGES OF BUDGETING:
 Connects all aspects of organizational performance in monetary values. Only easy
aspects can be considered and equally important fact such as organizational
development may be ignored.
 May become an end in itself instead of means.
 Skills and experiences are required for successful budgetary control
 Time consuming and expensive.
SUMMARY
A using budget is a systematic plan that is an informed best estimate by nurse
administration of revenues & nursing express. The budgeting identifies problem areas &
facilities effective solution.
CONCLUSION
Budget is a plan of government for a definite period. Budgeting provides motivation
for effective planning & standard by which to evaluate the performance of nurse managers.
To enhance fiscal planning & decision making.
BIBLIOGRAPHY
Books
 Baswanthapa BT, Nursing Administration, Jaypee Brothers Publications: 2nd edition
2009, Pp: 306,307…317.
 Vati Joginda, Principles and practice of Nursing management and Administration,
Jaypee Brother Medical Publishers, first edition 2013, Pp: 575,576..589.
 Clement I, Management of Nursing services and education, IInd edition, 2015, Reed
Elsevier India. Pp: 83..89.
 Kaur S., Kaur J., Textbook of Nursing Management and services. First edition, 2013,
Jaypee Brothers Publications. Pp: 50,51,52.
Website
 www.doculink.org/downloads/docsample
 https://www.slideshare.net/mobile/harshrastogi1/budgeting86207411
 www.indiabudget.nic.in/
 https://www.ncbi.hlm.gov.
 https://www.nursingpath.in/2019/02

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BAREILLY INTERNATIONAL UNIVERSITY

ROHILKHAND COLLEGE OF NURSING

BUDGET ESTIMATION FOR

SUBMITTED TO: SUBMITTED BY:

IMPORTANCE OF BUDGETING: What you need to know

ROLE OF NURSE ADMINISTRATOR IN BUDGETING

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