Building a new construction initiative from the ground up creates layers of financial tracking and reporting requirements that can overwhelm existing teams. When a leading healthcare system launched a multi-billion-dollar construction program, they brought in specialists from Cactus Healthcare Resources to help manage these complex business operations. The program included updating the main hospital campus, building an imaging center, medical office building, new outpatient clinics, a cancer center, hospital, and ancillary buildings to support their healthcare mission.
Program Setup: Asset Tracking and Capital Management
Our team’s priority was setting up proper tracking between construction programs and accounting assets. Rather than relying on spreadsheets, we leveraged agile project management tools from day one to connect the dots. This prevented the common headache of matching completed work to assets after the fact for proper capital depreciation tracking, which often requires weeks of forensic analysis to unravel associated costs when not tracked at the onset
Leadership Communication: Streamlining Approvals and Reporting
Getting funding approvals and reporting right meant understanding exactly how the board wanted to see financial information. Our Business Operations specialist worked with leadership to document these requirements upfront, capturing the proper data and creating clear templates that prevented constant rework of reports. They mapped out the approval gates needed for each phase of funding, putting everything on paper so presentations up to the board went smoothly.
Budget Development: Beyond the Basics
The Project Accounting team developed comprehensive budget worksheets that went beyond basic construction costs. They included allowances, contingency reserves, and often-forgotten items like IT infrastructure. By getting department-level review of these budgets early, we helped prevent funding shortfalls that could have meant asking for more money mid-project.
Financial Management: Maintaining Cash Flow
Understanding cash flow proved critical on a program of this scale. Our team tracked processing times for all processes including contracts, change orders, and invoices so we could provide Finance accurate forecasts of when funds would need to move. Showing exactly when and where every dollar would be spent built trust with the Finance team and kept funding flowing smoothly.
Governance: Managing Board and Committee Oversight
Managing the Board and committee relationships proved crucial to keeping this billion-dollar program on track. Our business operations team prepared monthly updates showing spending against the budget for the overall program and all subcomponents. We created distinct reporting for the finance committee, real estate committee, and full board – each tailored to their specific oversight responsibilities. By establishing appropriate industry-standard reserves, contingencies, and a clear hierarchy for draw approvals in our initial budgets, we avoided the need for additional funding requests and secured an accurate and comprehensive all-in funding amount for initial Board approval. The program stayed within its original budget by carefully tracking change orders, validating, escalating and strategically using contingency funds.
Results: Delivering Complex Programs Successfully
This structured approach to business operations helped the technical teams focus on actual construction while maintaining solid financial controls. Cactus’s specialized team demonstrates that good operational support is as important as technical expertise in successfully delivering a major hospital construction program.
Our hands-on experience continues to shape how we help other healthcare organizations manage their construction programs, letting them focus on their core patient care mission.
Grant J. Scray
Grant J. Scray is a lifelong construction & engineering enthusiast with 15 years of experience within the industry, focused on healthcare and lean operations.