Transcript Proposal to Change Portal Environment

2004-2005 Support Budget Strategy
& related proposals
An Overview
Informal Executive Board Discussions
29 August 2003
Session objectives
1. Developing the 2004-2005 support budget
strategy
2. UNDP funding and related challenges
3. The rationale for a real growth budget and
elements of the 2004-2005 budget strategy
4. The 2004-2005 support budget proposals
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1. Developing the 2004-2005 support budget strategy
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Critical path in
Developing the
Budget Strategy
Corporate vision
Business model
•UN Coordination
•Advisory Services
•Development Services
•Operational Services
Change requirements
• UN development
leadership: reform
• Knowledge based values
• Responsiveness
• Results-orientation
• People capacity
Funding
Key influencing
factors
• UN reform & UNDP
role
• MDGs
• Changing needs of
programme countries
• Growing role in crisis
prevention & recovery
• Funding environment
for ODA
Priorities
Change
levers
Strategic
Structure
Key recommendations
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UNDP’s limited base of total resources
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UNDP 2004-2005
budget strategy:
Key Principles
• A multi-funded UNDP – revised cost recovery policies – addressing
Partnership capacity & support to MDG outreach, & Resource Mobilization
• Maximizing available resources – through efficiency & re-prioritization
• Presenting a real growth budget – imperative for sustainability
Funding
• Rationalizing UNDP costs between programme & overhead
• Preserving UNDP’s universality of presence – alternative approaches to
country presence – recognizing UN-DP roles as intrinsic to one another
Structure
• Determining a base structure for country offices and Headquarters (fixed
vs. variable costs) – as well as cost effective and efficient processes
(ERP)
• UNDP leadership in UN reform
• Ongoing strengthening of UNDP’s “people capacity” as well as
Knowledge Based capacities
Strategic
• UNDP’s ability to be more responsive to changing demands from
programme countries, including the increasing UNDP role in the area of
crisis prevention & recovery
• Embedding results & performance measures as key factors for success
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The overall
context
MYFF 2004-2007
Vision & priorities
Management Results
Framework
Strategic Results
Framework
Resources: 2004/5 & 2006/7 Biennial support budgets
(structure) & 2004/7 Programming arrangements (programmes)
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2. UNDP funding and related challenges
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A multi-funded UNDP: Biennia 1992-1993 to 2002-2003
with estimates for 2004-2005
Local Resources: Govt.
cost sharing
2200
2000
Donor Resources: Trust
Funds & 3rd Party cost
sharing
1800
millions of US$
1600
1400
Donor Resources:
Regular Voluntary Contr.
1200
Donor Resources - untied voluntary
contributions - Regular resources internationally generated & deployed
1000
800
Donor Resources - tied voluntary
contributions - Other resources internationally generated & deployed
600
400
Local Resources: tied voluntary
contributions - Other Resources - locally
generated & deployed
200
0
1992/1993
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1994/1995
1996/1997
1998/1999
2000/2001
2002/2003
2004/2005 (est)
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Funding UNDP’s Business Model & its sustainability
UNDP has moved from
principally a “funding
entity” to an “advisory
and capacity
development entity”
UN
DEVELOPMENT
COORDINATION:
RC SUPPORT
A multi-funded UNDP:
Regular versus Other
resources
Programme versus
Overhead costs
OPERATIONAL
SERVICES
Implications?
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A Multi-funded Approach To Funding UNDP
Operations
• A base structure covering core functions for UNDP
country offices and headquarters funded from regular
resources – recognizing UNDP’s core mandates
• Attain equity between regular and other resources in
funding capacity over the base (fixed versus variable costs)
• Rationalizing costs between the programme and support
budgets based on UNDP’s Business: what are intrinsically
programme or overhead costs?
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Proposed Cost Recovery policy
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
Two categories of services: General management services (GMS) relates to the general
oversight and management functions of UNDP HQ and CO units; and, Implementation
support services( ISS) relates to direct or in-direct transactional services provided mostly
by Country Offices in the implementation of programmes and projects. Overall approach is
consistent with latest JIU recommendations on extra-budgetary activities;

Base structure approach for COs & HQ: Requires equity between the regular & other
resource contributions to cover the variable support budget costs of COs & HQ based on
programme volume; and,

All funding sources; to progressively contribute to UNDP’s variable cost (above base
structure) proportionately – by levying a fee and charging all implementation costs to
projects (guidelines to be provided to COs). Proposed rates are as follows:

Trust Funds and Third-Party Cost-Sharing: GMS fee would be usually fall in the 57% range. Based on estimated workload a higher percentage fee could be negotiated;
and,

Programme Country Cost-Sharing: GMS fee would be usually in the range of 2.53% in addition to the related interest generated from programme balances. Based on
estimated workload a higher percentage fee would be negotiated.
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Rationalizing costs between the programme and support budgets
The strategy is to consult with ACABQ and the Executive Board in an
overall review of UNDP costs and related funding modalities, with the
objective that the next support budget for 2006-2007 reflects the new
approach. This review will encompass the following:
• Clarifying what are activities directed towards clients (Programme costs)
versus activities directed towards the organization (administrative or
overhead costs);
• Ensuring that the overall budgeting methodology reflects the current
business model; and,
• Reaching an agreement with the ACABQ & EB on costs definitions and
classification, including relevant funding sources.
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3. The rationale for a real growth budget and
elements of the 2004-2005 budget strategy
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Regular Support Budget Post reductions - Biennia 1990/1991 through
2002/2003: International & National Professionals, & Support staff
1990/1991
303
461
1992/1993
289
1994/1995
269
369
1996/1997
252
349
1998/1999
231
345
2000/2001
213
2002/2003
213 275
764
409
1990/1991 2002/2003
-36%
314
488
3828
1990/1991
480
429
1992/1993
491
456
1994/1995
456
548
2919
2728
1996/1997
374
1998/1999
389
603
2496
2000/2001
390
606
2505
2002/2003
363
0
571
2834
1938
1,000
1,500
International Prof.
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-26%
2451
533
500
1990/1991 2002/2003
2924
2,000
2,500
3,000
National Prof.
3,500
4,000
4,500
5,000
General Service
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RATIONALE FOR A REAL GROWTH BUDGET
• Cost increases will enable UNDP
sustain its current structure (level
of cost increases attributed to
currency, inflation, salary
increases, etc.)
• Volume increases relate to
specific strategic investments that
are crucial for UNDP under its
current reform process
• UNDP needs a period of
consolidation so as not to
jeopardize its reform process
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• Needs to be viewed in context of
consecutive budget reductions
since 1992-1993 amounting to
$203 million
• Further reductions will have
considerable implications on
country office & headquarters
capacities – which are already
stretched
• Ongoing operational reforms will
continue to ensure UNDP viability
& sustainability (ERP will play a
key role)
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Elements of the 2004-2005 budget strategy
Improving efficiency, performance & results
• Improving client service & productivity through ERP and business re-engineering
• Establishing regional support facilities to enhance country office capacities, while
further decentralizing headquarters support functions
• Improving people management
• Enhancing oversight, accountability & results based management/budgeting
Deepening partnerships within the UN system and beyond
• Strengthening the Resident Coordinator role in building partnerships around the
MDGs
• Implementing the simplification and harmonization agenda & other UN reform
initiatives to enhance the collective impact of the UN system at the country level
• Strengthening the core capacity of UNDP’s crisis prevention and recovery function
Strengthening knowledge and learning
• Enhancing participation of staff in practices
• Increasing training & learning
• Upgrading ICT for knowledge management
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Introduction of a Base structure: Country Office sustainability
1.
2.
3.
Towards preserving UN-DP’s universality (fixed element):

A common “base structure” to cover core functions in all LICs/MICs where
UNDP has an office – funded from the Regular Resources support budget;

Regular Resources only pays for the RC/RR when UNDP has a presence in an
NCC based on a viable programme.
Augmenting the basic structure (variable element):

Methodology for augmenting the base capacity from the Regular support
budget: TRAC size, multi-country office, complexity, etc;

Relevant services related to Other Resources activities are funded through cost
recovery – fee basis or as direct project inputs – depending on the specific
activities;

Addressing the funding of UNDP substantive capacities from the programme.
Other implications for UNDP’s structure at the field level:

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Piloting Regional Service Center Initiatives along the lines of the SURFs.
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Typologies of Country Offices and Base Structure
Four Typologies of Country Offices
• RR offices (6 countries): 1 IP + 2 NOs + 3 GS
• RR/RC offices (100 countries): I P + 3 NOs + 4 GS
• RR/RC/HC (21 countries): 2 IP+ 3 NOs+ 4 GS
• NCCs (9 countries): 1 IP + 0 NO + 0 GS
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Introduction of a Base structure: Headquarters sustainability
1.
2.
3.
A basic structure for Headquarters Units (fixed element):

A “base structure” for covering the core corporate responsibilities of each
headquarters unit – funded from the Regular Resources support budget

With considerable downsizing of headquarters over 5 biennia, the current
structure under the regular support budget, will constitute the base
structure
Augmenting the basic structure (variable element for supporting other resource
activities):

Relevant services related to Other Resources activities are funded through
cost recovery

Addressing the funding of UNDP substantive capacities from the programme
Other implications for UNDP’s structure at headquarters:

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Specific activities requiring sustained funding or strengthening: Crisis
Prevention & Recovery, Resource Mobilization & Partnerships capacity and
support to MDG outreach activities
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4. 2004-2005 support budget proposals
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Summary of Net Adjustments in determining the 2004-2005 biennial support budget level (in millions
of US dollars)
DESCRIPTION
CO
Gross 2002-2003 support budget (net $502. 6 m)
371.6
AMOUNT ($ million)
HQ
Total
195.3
566.9
33.7
20.3
54.0
• UN system partnering & beyond
1.3
1.8
3.1
• Regional operations expansion & related strengthening at country &
regional levels
4.5
2004-2005 Estimated Net Adjustments:
• Net cost increases (inflation, currency, post related costs including
reclassifications & other mandatory increases)
Investments & Strengthening:
• Crisis Prevention & Recovery
4.5
4.9
4.9
• Separations
2.0
1.0
3.0
• Learning
3.1
1.0
4.0
• 10 LEAD posts
2.7
0.2
2.9
• Knowledge networking & RBM
1.0
1.0
2.0
Sub-total : investments & strengthening
14.6
9.9
24.5
Gross 2004-2005 support budget
Less: budget income (2002-2003: $64.3m)
NET PROPOSED 2004-2005 SUPPORT BUDGET
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645.4
(4.0)
(2.0)
70.3
575.1
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ESTIMATED TOTAL 2004-2005 UNDP RESOURCES (net $5 896.3)
(Millions of US$, Percentages)
Programme Support &
Management & Administration
11%
Programmes
83%
Management &
Administration
2%
155.6m
Programme support/
123.9m
Headquarters
4 872.0m
391.0m
353.8m
Programmes & Support to the
Operational activities of the UN
89%
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2%
Programme support/
Country offices
7%
Support to the
operational activities of
the United Nations
6%
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ESTIMATED TOTAL 2004-2005 DONOR RESOURCES (net $3 945.9m)
(Percentages)
Programme Support &
Management & Administration
15%
Management &
Administration
3%
Programme support/
Headquarters
3%
Programmes
76%
Programme support/
Country offices
9%
Programmes & Support to the
Operational activities of the UN
85%
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Support to the
operational
activities of the
United Nations
9%
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Discussions
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