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BUDGET
 DEFINITION: 
Budget is an operational 
plan, for a definite period 
usually a year . Expressed 
in financial terms and 
based on the expected 
income and expenditure.
 DEFINITION: 
Budget is a concrete precise 
picture of the total operation 
of an enterprise in monetary 
terms. 
By: H.M. Donoven
 Machanism for translating fiscal 
objectives into projected monthly 
spending pattern. 
 Enhances fiscal planning and decision 
making. 
 Clearly recognises controllable and 
uncontrollable cost areas. 
 Offers a useful formate for 
communicating fiscal objectives. 
 Allows feedback of utilization of budget.
 Helps to identify problem 
areas and facilitates 
effective solution. 
 Provides means for 
measuring and recording 
financial success with 
objectives of organization.
1. ORGANIZATIONAL 
STRUCTURE: 
- Need a sound 
organizational structure with 
clear line of authority and 
responsibility
2. NONMONETARY 
STATISTICAL DATA:- 
- Such as number of 
admissions ,average length of 
stay, percentage of occupancy 
and number of patient’s days 
–used for planning and 
budgetary process.
3. CHARTS OF ACCOUNTS : 
-Designed to be consistent with the 
organizational plans.Revenues 
and 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.
4. MANAGERIAL SUPPORT: 
-Essential for the budgetary 
programme .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.
5. FORMAL BUDGETING 
PROCESS AND 
PROCEDURES: 
- Should be available in 
budget manual, in which 
objective are clarified and 
instructions for budget 
development are discussed. 
- Calendar of budgeting 
activities with the schedule 
for each stage of programme 
is presented.
1. Should be flexible. 
2. Should be synthesis of past 
,present and future. 
3. Should be product of joint 
venture and cooperation of 
executive/department head 
at different level of 
management.
4. Should be in the form of 
statistical standard laid 
down in the specific 
numerical terms. 
5. Should have support of top 
management throughout 
the period of its planning 
and implementation.
1. Needed for planning 
future course of action and 
control over all activities 
in the organization. 
2. Facilitates coordinating 
operation of various 
departments and sectors. 
3. Helps to weigh values and 
make decision when 
necessary.
1. Should provide sound financial 
management by focussing on requirment 
of the organisation 
2. Should focus on the objectives and 
policies of the organization. 
3. Should ensure the most effective use of 
financial and non financial resources.
4. Programme activities should be planned 
in advance. 
5. Requires consistent delegation for 
framing and executive budget. 
6. Should include coordinating efforts of 
various departments establishing a frame 
of reference for managerial decision and 
evaluate managerial performance.
7. Requires an adequate checks 
and balance against adoption 
of too high and too low 
estimates. 
8. Must be appropriate to nature 
of buisness ,services and to the 
type of budget. 
9. Prepared under the direction 
and supervision of 
administrator or financial 
officer.
10. To be prepared and 
interpreted throughout the 
organization . 
11. Requires review of 
performance of previous year 
and adequacy both 
quantitatively and 
qualitatively. 
12. Provision should be made 
for flexibility.
1. OPERATING BUDGET(Revenues and 
Expenses): 
- Provides an overview of agency function 
by projecting the planned operation for 
upcoming year. Deals with 
salaries,medical-surgical supplies,office 
supplies, laundary services,books 
periodicals,recreation and contractual 
services.
2. CAPITAL EXPENDITURE 
BUDGET: 
- Related to long range 
planning.Includes physical changes 
(replacement and expansion of 
plant,major equipments and 
inventories).They are major 
investment and reduces flexibility in 
budgeting.
3. CASH BUDGET: 
Planned to make 
adequate funds available 
and to use extra funds 
profitably. Should not 
have too much cash on 
hand during budgetary 
period.
4. LABOR OR PERSONNEL 
BUDGET: 
- Estimate cost of direct labor 
necessary to meet agency 
objectives. Determine the 
recruitment,hiring,assignm 
ent,layoff,discharge of 
personnel.Nurse manager 
has to decide number of 
aids,orderlies required 
during a shift months and 
areas.
5. FLEXIBLE BUDGET: Some costs are 
fixed ,others changes with volume of 
buisness. Some expenses are 
unpredictable and can be determined 
only after change has begun.Periodic 
reviews required to compensate for 
changes.
6. STRATEGIC 
PLANNING BUDGET: 
Long range budget for long 
range planning. Projected 
for 3-5 years. Programme 
budget is a part of this 
budget.
1. INCREMENTAL:Based on estimated 
changes in present operation plus a 
percentage increase for inflation,all of 
which is added to previous year budget. 
2. OPEN ENDED A financial plan in which 
each operating manager present a single 
cost estimate for what is considered 
optimal activity level.
3. FIXED CEILING BUDGET: The 
uppermost spending limit is set by top 
executive before the unit and divisional 
manager develop budget proposal for the 
areas of responsibility. 
4. FLEXIBLE BUDGET: Several financial 
plans each for different programme 
activity.
5. ROLL OVER BUDGET: Forecast 
programme,revenues and expenses for a 
period greater than a year, to 
accommodate programme larger than 
annual budget cycle. 
6. PERFORMANCE BUDGET: Allocates 
functions not divisions(direct nursing 
care ,in service education,nursing 
research,quality improvement).
7. PROGRAM BUDGET: Where cost are 
computed for a total program(group total 
cost for each service program). Eg. 
MCH,FP,UIP. 
8. ZERO BASE BUDGET :Requires nurse 
manager to examine ,justify each cost of 
every program both old and new in 
every annual budget preparation.
9. SUNSET BUDGET: Designed to “self 
destruct” within a prescribed time period 
to ensure the cessation of spend in by a 
predetermine date. 
10. SALES BUDGET: Is starting in budget 
program,since sales are basic activities 
which gives shapes to other acitivities. 
Compiled in terms of quantity and value.
11. PRODUCTION BUDGET: Aims at 
securing the economical manufacture of 
production and maximising the 
utilization of production facilities. 
12. REVENUE AND EXPENSE BUDGET: 
Expressed in financial terms and take the 
nature of performa income statement for 
future.Shows the item of profits and loss.
13. CASH BUDGET: 
Prepared by way of 
projecting the possible 
cash receipts and 
payments over budget 
period.
 STEP 1: Establishment of operational 
goals and objectives and policies. 
 STEP 2: Goals must be translated into 
quantifiable management objectives for 
organizatioal units.Departmental goals 
are made.
STEP 3: Formal plan for budget 
preparation and review including 
assignment of responsibilities and 
timetable is prepared. 
STEP 4: Departmental budget are revised 
and master budget is prepared. 
STEP5: 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 
prepare budget estimate in respect of 
salaries of establishment,contingent 
expenditure and others.eg. 
Telephone,office expenses,rent of 
building etc.
1. Fixes accountability,assignment of 
responsibility and authority. 
2. Encourages managers to make careful 
analysis of operation. 
3. Weakness is revealed,corrective 
measures taken. 
4. Financial matters can be handled in 
orderly fashion. Activities are balanced.
1. Converts all aspects of organizational 
performance in monetary values.Only 
easy aspects can be considered and 
equally important facts such as 
organizational development may be 
ignored. 
2. May become an end in itself instead of 
means to end.Budgetary goals may 
superzede agency goals.
3. Skills and experiences are 
required for successful 
budgetary control. 
4. Time consuming and 
expensive.
 To properly negotiate budgets for 
research studies it is important to assess 
protocol feasibility and identify the costs 
to conduct the study. A study should not 
be pursued if it does not cover the costs 
to conduct it, unless there are additional 
financial resources identified.
 The first step to create a comprehensive 
budget is to develop an internal budget. 
Internal budgets are used for sites to 
identify all of their costs to conduct a 
study and can be used as a tool to 
negotiate the sponsor budget. It is critical 
to have a thorough understanding of the 
study documents to develop a 
comprehensive budget.
 This entails reviewing the protocol, 
contract, consent, and case report forms 
to identify each procedure, visit, 
participant contact, supplies, and patient 
care costs that are needed to conduct the 
study. It is recommended to identify the 
work that is required per participant. All 
of the identified items should be listed in 
the internal budget.
 Once all items are identified to conduct 
the study, a determination needs to me 
made if the service is considered 
Standard of Care (SOC) or Research 
Only. Standard of Care services are 
those that are typically performed in the 
participant population for the disease 
being studied and will be billed to the 
patient/insurance.
 Research Services are those that are 
performed for research purposes 
only. Research services are NOT billed 
to the patient/insurance. See the Clinical 
Research Billing Guide for information 
regarding how to make this 
determination. Mark the SOC and 
Research determinations in the internal 
budget. The Research services will be the 
costs to conduct the study.
 It is important to note that one size does 
not fit all when it comes to 
budgeting. There are many different 
types of studies and sponsors who all 
have different budgeting needs. There 
are, however, common core components 
to developing any study budget.
 Core budget components include: 
administrative costs, travel, staff costs, 
supplies, equipment, patient care costs, 
etc. There may also be a need for cost 
sharing or subcontracts.
 Basavanthapa BT,Nursing 
administration, jaypee brothers 
publications; 2nd edition;2009;page 
number-306-317. 
 www.unsouthal.edu/osp/documents/sa 
mple research budg.doc. 
 www.doculink.org/downloads/doc 
sample.
Budgeting Essentials for Clinical Research Studies

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Budgeting Essentials for Clinical Research Studies

  • 2.  DEFINITION: Budget is an operational plan, for a definite period usually a year . Expressed in financial terms and based on the expected income and expenditure.
  • 3.  DEFINITION: Budget is a concrete precise picture of the total operation of an enterprise in monetary terms. By: H.M. Donoven
  • 4.  Machanism for translating fiscal objectives into projected monthly spending pattern.  Enhances fiscal planning and decision making.  Clearly recognises controllable and uncontrollable cost areas.  Offers a useful formate for communicating fiscal objectives.  Allows feedback of utilization of budget.
  • 5.  Helps to identify problem areas and facilitates effective solution.  Provides means for measuring and recording financial success with objectives of organization.
  • 6. 1. ORGANIZATIONAL STRUCTURE: - Need a sound organizational structure with clear line of authority and responsibility
  • 7. 2. NONMONETARY STATISTICAL DATA:- - Such as number of admissions ,average length of stay, percentage of occupancy and number of patient’s days –used for planning and budgetary process.
  • 8. 3. CHARTS OF ACCOUNTS : -Designed to be consistent with the organizational plans.Revenues and 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.
  • 9. 4. MANAGERIAL SUPPORT: -Essential for the budgetary programme .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.
  • 10. 5. FORMAL BUDGETING PROCESS AND PROCEDURES: - Should be available in budget manual, in which objective are clarified and instructions for budget development are discussed. - Calendar of budgeting activities with the schedule for each stage of programme is presented.
  • 11. 1. Should be flexible. 2. Should be synthesis of past ,present and future. 3. Should be product of joint venture and cooperation of executive/department head at different level of management.
  • 12. 4. Should be in the form of statistical standard laid down in the specific numerical terms. 5. Should have support of top management throughout the period of its planning and implementation.
  • 13. 1. Needed for planning future course of action and control over all activities in the organization. 2. Facilitates coordinating operation of various departments and sectors. 3. Helps to weigh values and make decision when necessary.
  • 14. 1. Should provide sound financial management by focussing on requirment of the organisation 2. Should focus on the objectives and policies of the organization. 3. Should ensure the most effective use of financial and non financial resources.
  • 15. 4. Programme activities should be planned in advance. 5. Requires consistent delegation for framing and executive budget. 6. Should include coordinating efforts of various departments establishing a frame of reference for managerial decision and evaluate managerial performance.
  • 16. 7. Requires an adequate checks and balance against adoption of too high and too low estimates. 8. Must be appropriate to nature of buisness ,services and to the type of budget. 9. Prepared under the direction and supervision of administrator or financial officer.
  • 17. 10. To be prepared and interpreted throughout the organization . 11. Requires review of performance of previous year and adequacy both quantitatively and qualitatively. 12. Provision should be made for flexibility.
  • 18. 1. OPERATING BUDGET(Revenues and Expenses): - Provides an overview of agency function by projecting the planned operation for upcoming year. Deals with salaries,medical-surgical supplies,office supplies, laundary services,books periodicals,recreation and contractual services.
  • 19. 2. CAPITAL EXPENDITURE BUDGET: - Related to long range planning.Includes physical changes (replacement and expansion of plant,major equipments and inventories).They are major investment and reduces flexibility in budgeting.
  • 20. 3. CASH BUDGET: Planned to make adequate funds available and to use extra funds profitably. Should not have too much cash on hand during budgetary period.
  • 21. 4. LABOR OR PERSONNEL BUDGET: - Estimate cost of direct labor necessary to meet agency objectives. Determine the recruitment,hiring,assignm ent,layoff,discharge of personnel.Nurse manager has to decide number of aids,orderlies required during a shift months and areas.
  • 22. 5. FLEXIBLE BUDGET: Some costs are fixed ,others changes with volume of buisness. Some expenses are unpredictable and can be determined only after change has begun.Periodic reviews required to compensate for changes.
  • 23. 6. STRATEGIC PLANNING BUDGET: Long range budget for long range planning. Projected for 3-5 years. Programme budget is a part of this budget.
  • 24. 1. INCREMENTAL:Based on estimated changes in present operation plus a percentage increase for inflation,all of which is added to previous year budget. 2. OPEN ENDED A financial plan in which each operating manager present a single cost estimate for what is considered optimal activity level.
  • 25. 3. FIXED CEILING BUDGET: The uppermost spending limit is set by top executive before the unit and divisional manager develop budget proposal for the areas of responsibility. 4. FLEXIBLE BUDGET: Several financial plans each for different programme activity.
  • 26. 5. ROLL OVER BUDGET: Forecast programme,revenues and expenses for a period greater than a year, to accommodate programme larger than annual budget cycle. 6. PERFORMANCE BUDGET: Allocates functions not divisions(direct nursing care ,in service education,nursing research,quality improvement).
  • 27. 7. PROGRAM BUDGET: Where cost are computed for a total program(group total cost for each service program). Eg. MCH,FP,UIP. 8. ZERO BASE BUDGET :Requires nurse manager to examine ,justify each cost of every program both old and new in every annual budget preparation.
  • 28. 9. SUNSET BUDGET: Designed to “self destruct” within a prescribed time period to ensure the cessation of spend in by a predetermine date. 10. SALES BUDGET: Is starting in budget program,since sales are basic activities which gives shapes to other acitivities. Compiled in terms of quantity and value.
  • 29. 11. PRODUCTION BUDGET: Aims at securing the economical manufacture of production and maximising the utilization of production facilities. 12. REVENUE AND EXPENSE BUDGET: Expressed in financial terms and take the nature of performa income statement for future.Shows the item of profits and loss.
  • 30. 13. CASH BUDGET: Prepared by way of projecting the possible cash receipts and payments over budget period.
  • 31.  STEP 1: Establishment of operational goals and objectives and policies.  STEP 2: Goals must be translated into quantifiable management objectives for organizatioal units.Departmental goals are made.
  • 32. STEP 3: Formal plan for budget preparation and review including assignment of responsibilities and timetable is prepared. STEP 4: Departmental budget are revised and master budget is prepared. STEP5: Financial feasibility of master budget is tested and final document is approved and distributed to all parties involved.
  • 33. STEP 6: Every head of the office required to prepare budget estimate in respect of salaries of establishment,contingent expenditure and others.eg. Telephone,office expenses,rent of building etc.
  • 34. 1. Fixes accountability,assignment of responsibility and authority. 2. Encourages managers to make careful analysis of operation. 3. Weakness is revealed,corrective measures taken. 4. Financial matters can be handled in orderly fashion. Activities are balanced.
  • 35. 1. Converts all aspects of organizational performance in monetary values.Only easy aspects can be considered and equally important facts such as organizational development may be ignored. 2. May become an end in itself instead of means to end.Budgetary goals may superzede agency goals.
  • 36. 3. Skills and experiences are required for successful budgetary control. 4. Time consuming and expensive.
  • 37.  To properly negotiate budgets for research studies it is important to assess protocol feasibility and identify the costs to conduct the study. A study should not be pursued if it does not cover the costs to conduct it, unless there are additional financial resources identified.
  • 38.  The first step to create a comprehensive budget is to develop an internal budget. Internal budgets are used for sites to identify all of their costs to conduct a study and can be used as a tool to negotiate the sponsor budget. It is critical to have a thorough understanding of the study documents to develop a comprehensive budget.
  • 39.  This entails reviewing the protocol, contract, consent, and case report forms to identify each procedure, visit, participant contact, supplies, and patient care costs that are needed to conduct the study. It is recommended to identify the work that is required per participant. All of the identified items should be listed in the internal budget.
  • 40.  Once all items are identified to conduct the study, a determination needs to me made if the service is considered Standard of Care (SOC) or Research Only. Standard of Care services are those that are typically performed in the participant population for the disease being studied and will be billed to the patient/insurance.
  • 41.  Research Services are those that are performed for research purposes only. Research services are NOT billed to the patient/insurance. See the Clinical Research Billing Guide for information regarding how to make this determination. Mark the SOC and Research determinations in the internal budget. The Research services will be the costs to conduct the study.
  • 42.  It is important to note that one size does not fit all when it comes to budgeting. There are many different types of studies and sponsors who all have different budgeting needs. There are, however, common core components to developing any study budget.
  • 43.  Core budget components include: administrative costs, travel, staff costs, supplies, equipment, patient care costs, etc. There may also be a need for cost sharing or subcontracts.
  • 44.  Basavanthapa BT,Nursing administration, jaypee brothers publications; 2nd edition;2009;page number-306-317.  www.unsouthal.edu/osp/documents/sa mple research budg.doc.  www.doculink.org/downloads/doc sample.