davidbaileyfcca finance development consultancy Leadership Skills for Service Redesign Leadership Skills for Service Redesign 17 January 2018

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1 Objectives Identify the costs of redesigned services Use practical planning tools Create process maps Create a mobilisation plan. Programme Cost behaviour and Costing service changes Full, marginal and retained costs Fixed Costs Total costs that do not change with activity Process mapping Mobilisation plans. 3 4 Variable costs Total costs that change in direct proportion to changes in activity Semi-Variable Costs Total costs with both a fixed and a variable element mail@.com 1

2 Stepped-Fixed Costs Total costs which change in steps with activity Cost Behaviour The way in which total costs change with activity 7 8 Avondell v Bathpool Changing the Financial Equation Unit Costs = Total Cost / Total Activity Total Cost = Total Fixed Cost + Total Variable Cost Total Variable Cost = Unit Variable Cost x Total Activity Total Cost surplus Income surplus Expenditure deficit Income deficit Under Purchaser Provider Block Under Contracts Payment By Results Activity 10 Cost Structure Cost Structure Full cost The full cost of a service includes the direct costs of provision and an apportionment of all the indirect costs and overheads. This is absorption or full costing. The full cost includes a proportion of every kind of overhead, even part of the Chief Executive's secretary's salary. Patient Care mail@.com 2

3 Direct costs - allocated to the activity being costed. Direct costs are all those that can be directly attributed to a particular activity or output being measured. Indirect costs - apportioned to the activity as the cost is shared over a number of areas. Indirect costs cannot be directly attributed to a particular cost centre but can usually be divided up between several. Indirect costs need to be split over the various user departments by choosing some rational basis of apportionment Overhead Costs Overhead costs - apportioned over all activities as they are the costs of support services. The overhead costs of premises are the costs of support services which contribute to the general running of the hospital but cannot be directly related to the volume or quantity of activity or service provided in individual services. Cost Structure Patient Care Full Cost v Marginal Cost What Is A Project? Full Cost The total cost of providing a service including all the costs. Marginal Costs The extra costs of providing one extra unit of service, at the upper margin of activity, assuming there is spare capacity. Something which starts and ends with a goal in mind. Constrained by time, people and money. Cross-functional mail@.com 3

4 Need - - Delivery Exercise Planning a Tender Process Contract Dispute Error Dissatisfaction Adequate Delivery Overquality Happy Accident Client Needs Waste Delivery Costing the service organisation chart Researching public health information Reading the Service Answering the tender questions Researching National and local best practice Completing a Mobilisation Plan Service Model Researching the geography activity model Recosting the service staffing governance What others? Put them in a logical order. 20 Planning a Tender Process Mobilisation Research Costing the service Completing a mobilisation plan Reading the Service staffing governance Service Model activity model Answering the tender questions Why are we bothering? Who do we need in our core team? Mobilisation session: Don t write a list! Relationship building, ground rules and personal goal setting Value divergent thoughts more than convergent Jointly create a project brief Project Planning Technique: Sticky Steps An approach to breaking down big issues In order to.(verb) I would have to.(verb)... Working backwards, Keep repeating this until you have tasks that feel manageable. In order to deliver for Service Redesign I would have to develop a Sticky Steps exercise Precedence Diagramming Method (PDM) PDM network rules: Activities are represented by boxes Precedences are shown by arrows with direction and time properties Precedences consist of two parts: A relationship : Finish to Start FS Finish to Finish FF Start to Start SS Start to Finish SF and a lag value the waiting time between activities mail@.com 4

5 PDM Logic Relationships PDM Logic Relationships Finish to Start (FS) must Finish before may Start. The lag is usually zero. FS is the most common type. Finish to Finish (FF) must Finish before may Finish. The lag value is usually greater than zero. FF is a less common type. Start to Finish (SF) must start before may Finish. The lag is usually greater than either activity duration. FS is the least common type. Start to Start (SS) must Start before may Start. The lag value is usually greater than zero. SS is a less common type. Gantt Charts Project name: My_Project Month: February, Your task #1 Your task #2 Your task #3 Your task #4 Your task #5 Your task #6 Your task #7 Objectives Identify the costs of redesigned services Use practical planning tools Create process maps Create a mobilisation plan. Start End mail@.com 5