Pros And Cons Of Cost Benefit Analysis

The United States Department of Veterans Affairs (VA) was founded in 1930, and today, “operates one of the largest health care delivery systems in the nation, with 168 medical centers and more than 1,000 outpatient facilities organized into regional networks” (GAO, 2017). The VA employs nearly 350,000 people at its facilities and serves approximately 9 million veterans each year (VA, 2017).

The New York Times article, “Wait Lists Grow as Many More Veterans Seek Care and Funding Falls Far Short” says the Department of Veterans Affairs agency has a new crisis they’re facing. The wait list of Veteran’s is more than 50% higher than it was last year, departments say. They are also facing nearly a $3 billion budget short, which could very well affect the care of our veterans.

According to Epstein and Buhovac, (2014), costing system is a process designed to monitor the costs incurred in a certain business. Costing systems are meant to advise the management on how to choose the most appropriate course of action with cost efficiency and capability. According to Cardinaels and Labro (2009) costing system provides detailed cost information needed by management needs to control current operations with the aim of improving the future. Below are some of the costing systems that are common to many organizations (Epstein & Buhovac, 2014).

One of the most serious problems facing all veterans today is the lack of proper healthcare. Soldiers, sailors and airmen are leaving active duty without having proper healthcare to cover their physical or mental injuries. The department responsible for veteran’s healthcare is the Department of Veterans Affairs. (VA) According to The department of Veterans Affairs website, “The United States Department of Veterans Affairs (VA) is a government-run military veteran benefit system with Cabinet-level status. It is responsible for administering programs of veterans’ benefits for veterans, their families, and survivors. The benefits provided include disability compensation, pension, education, home loans, life insurance, vocational

Along with the Benefit Measurement Method, Constrained optimization method can also be used which involves mathematical approach. Since this method involves the mathematical approach, several calculations are performed in order to take a decision to accept or reject the project. “Mathematical models, also known as Constrained Optimization Methods, are a category of project selection methods, which is a tool and technique of the Develop Project Charter process” (PMP, 2008). Cost-benefit analysis is one of the methods which fall into this category. All the positives and negatives of the project are taken into consideration and then the negatives are carefully excluded from the benefits. Different results are produced for the different projects. The most worthy and financially rewarding option are selected from these results. When employing this method, there are many things that are to be considered such as the impact of the decision on the development of the organization in the future, the length of time the equipment lasts and whether it is possible to do the cost control during the project.

The Veterans Affairs Department (VA) oversees a disability program that seeks to compensate US veterans for injuries or medical conditions aggravated or incurred during military duty. The disability program makes payment to the veterans through the Veterans Benefits Administration, (VBA). According to CBO, VA disability compensation accounted for 70% of VBA’s total mandatory spending in 2013, amounting to $54 billion. This compensation was distributed to about 3.5 million of the nation’s 22 million veterans

I currently work at the Hunter Holmes McGuire Veterans Administration Medical Center. “The Hunter Holmes McGuire VA Medical Center, located in Richmond, Virginia, is a 399-bed facility offering primary, secondary, and tertiary health care in medicine, surgery, neurology, rehabilitation medicine, intermediate care, acute and sustaining spinal cord injury, home care, and palliative care” (Hunter Holmes McGuire VA, 2015). At this facility it is very important that they prepare and manage a budget, so that they can strategize for the future, creating goals and plans. It also creates accountability, since they are spending tax payer’s money.

According to a report by CNN in 2016, 307,000 veterans may have died waiting for healthcare from the VA (Devine). Considering that this might not be an outstanding number, it is still a major issue, and presents one of the more prevalent concerns with the VA today. Wait times are one of the most common complaints with the organization, and according to The New American, “The VA has been caught having large-scale problems with unsanitary conditions (spreading diseases), poor care, long waits, corruption (including bribes and kickbacks), enormous waste, inefficiency, falsifying wait lists, denial of services, unnecessary surgeries, and more” (Williamsen). Additionally, one VA audit found that 10% of veterans attempting to obtain medical care at a VA or VHA institution were forced to wait at least 30 days to get an appointment (“The US Veteran Health Care System Is Overwhelmed and Failing”). With a larger budget, the VHA could hire more medical employees to care for their numerous patients, and build more facilities across the country, giving them more space and increasing their capability to aid all veterans who require their services.

The fiscal year 2010 increased funding for the Department of VA affairs by $25 billion over the next five years. The budget includes an 11% increase in resources funding of 55.9 million dollars. The budget increases health care funding for veterans enabling the VA to provide time, high quality care to 5.5 million veterans. The budget provides for a collaborative pilot program with non-profit organizations to help veterans avoid homelessness.

Consider the following; The VA spends about $186 Billion for healthcare with no built in feedback loops. It is one of the oldest known bureaucracies, that constantly fails at basic functions. According to the VA Office of Rural Health, veterans from these areas are less likely than urban veterans to access mental health services, in part because of the greater distances they must travel.

USA Today obtained data in June 2014 showing that they had a total of 41,500 job vacancies, this data which was obtained through the Freedom of Information Act. This information also showed that because they were undermanned they paid for 1.5 million veterans to see doctors outside the agency in the past year. These private visits cost American taxpayers more than 7.7 billion dollars. (Meghan Hoyer and Gregg Zoroya) The main reasons for these shortages in staff are that the VA pay a fraction of the price of what the private health care sector will pay doctors. Another good reason for this is that doctors have an attrition rate of fewer than 10 percent which puts them on high demand giving doctors their choice of work

A) I believe the best cost-benefit analysis technique is the “time value of money” technique. Of course it is beneficial for a project manager to know the benefits of the project as well as the overall cost of the project, but determining if the time value of money is worth the effort is another factor the manager must consider. The time value of money is the comparing the expected cost of the project compared the expected returns/benefits of the project. If the costs both present and future outweigh the benefits, the project is probably not worth the time spent.

The Cost benefit analysis is a financial model where companies or government establishments implement on their decision making. The model simply evaluates costs and benefits of a certain decision which enables the organization to choose the “right” option. (O’Farrell, R.,n.d.) The beauty of the CBA model lies in its simplicity, the chosen option is easily justifiable, when the costs are higher than the benefits then there is no compelling reason to make that decision. (O’Farrell, R. ,n.d.) In addition to its simplicity, the model is applicable to various types of decisions, it enable

Cost benefit analysis can be used to assist in the decision making of a proposed project. The proposed project is to make a scenic forested area into a national park. However there is controversy as the opposition wants to use the land for timber and agriculture. The first step in conducting a CBA is to identify the costs and benefits of the proposed project (Harris et al 2006). Benefits will include income gained as well as indirect benefits such as environmental benefits. The benefits of a national park are income from tourist and camping areas. The land can be used for carbon sequestration and to reduce pollution and natural disasters such as the effect of flooding. Costs include any direct expenses related to the project such as construction and maintenance costs. Costs also include opportunity costs such as income forgone from the agriculture and timber industries.

The first step in Cellini and Kee's framework is to determine if the analysis will be cost-benefit or cost-effectiveness. Cost benefit analysis is considered by the authors to be the superior technique (p.496) so that is what will be used. The