Operational Requirements Document
In previous blog posts I spoke about what comes first in determining the viability of a new community or expansion of an existing community. While a feasibility study will provide solid information on market demand, and a financial analysis will determine if it will be economically viable, to really nail down what is being proposed for any market area, a detailed and well-defined Program Narrative needs to be developed. Another term for this is an Operational Requirements Document (NASA uses this approach – but it’s not really rocket science!).
A requirement is an attribute of a product, service or system necessary to produce an outcome(s) that satisfies the needs of a person, group or organization. This will aid in developing both feasibility criteria and a strong pro forma.
Questions To Consider
Before any estimates can be made for expenses and revenues we need to ask, what are the proposed products and services to be marketed? What levels of care are being offered and what other services are included or available as options? Is there a dining program and what is the meal plan? How many dining venues are there? These are just a few questions to consider.
For every department of the planned community a list of questions must be posed and answered. Those answers having a budgetary impact can then be estimated and further supported by historical industry data or real data from an existing similar operation.
General program questions that should be asked include:
What is the program(s) that best describes your planned community?
How well defined is each service and amenity being offered by your community?
How do these programs and services differ from and create an advantage with the competition?
How is each of these programs and services quantified in support of the operating budget?
For every service or amenity defined in the program, is there hard evidence to support the costs and revenue projections?
For an expansion, how will this impact the existing team, organization and community culture?
How does the new expansion support the current mission and vision, and how does it complement it?
A good budget or pro forma should always have a detailed narrative component to help align the overall vision and goals of the project. Without it, financial expectations may not be achieved because the operational infrastructure was not aligned properly to deliver the services needed. This is either because the services were not quantified correctly or the expectations for what was to be delivered were not defined in enough detail to allow for proper estimating.
Since labor is by far the single largest expense category of a senior community, understanding the specific services offered, skill levels needed and time requirements for delivering them is crucial to creating a financial plan that will deliver long term success for the project.
Defining Your Program
By defining your program, all other programmatic, financial and operational requirements will be easier to quantify and improve the execution of development plans up through opening and operations. This improves the chances for success by mitigating the opportunities where unfocused and undefined programs create wasted resources, trying to rein in costs as service providers try to meet the needs of residents while realigning the program on the fly.
If you’d like to learn more about creating a program narrative, send us an email and we can help you build one!