The UNOPS Budget Estimates, 2014-2015 Executive Board September 2013 1
Key results of 2012
Benchmarks and standards
Content UNOPS strategic plan 2014-2017 UNOPS budget estimates 2014-2015 Review of the operational reserve Report of the ACABQ 4
Developing countries expect increased value add There are heightened demands as to what and how we contribute and on how we distinguish ourselves from other service providers in the same field. We must offer added value and tangible contributions to the results of our partners, especially to their capacity to deal with challenges. [Para 6 in UNOPS Strategic Plan] Effective and sustainable development cooperation requires the use of country systems as the default approach. UNOPS must be prepared for a future in which it potentially manages smaller volumes of funds and increases its advisory services. The importance of UNOPS can thus no longer be judged by its delivery volume but by its contribution to partner results. [Para 80 in UNOPS Strategic Plan] 5
The UNOPS identity Mission: serve people in need To serve people in need by expanding the ability of the United Nations, governments and other partners to manage projects, infrastructure and procurement in a sustainable and efficient manner Vision: advance sustainable practices To advance sustainable implementation practices in development, humanitarian and peacebuilding contexts, always satisfying or surpassing partner expectations Values: service to others National ownership and capacity Accountability for results and transparency Partnerships and coordination Excellence 6
Deliver sustainable results in our areas of focus... Contribution goals Sustainable project management Sustainable infrastructure Sustainable procurement National capacity Products and services Equitable economic growth Environmental impact Social justice and inclusion Management goals Recognized value Financial stewardship Process excellence People excellence 7
...and pursue organizational excellence Holistic picture of how we enable results Results of first external assessment of UNOPS Excellence Model Notable strengths in: a. Leadership b. Strategy c. Managing knowledge partnerships, resources and suppliers Areas for improvement: a. Managing personnel b. Processes, products and services Overall, Recognised for Excellence 4 star certification 8
Executive Board endorsed UNOPS strategic plan 2014 2017 Executive Board decision 7 June 2013 (Annual Session) on UNOPS strategic plan 2014 2017 (DP/OPS/2013/3) Welcomes the enhanced focus of UNOPS services to partners in the United Nations and beyond, the emphasis on sustainability, national ownership and capacity development, recognizing that it is firmly grounded in the self-financing business model of UNOPS Calls on Unites Nations organizations to actively seek efficiency gains through greater collaboration, taking into account the competitive advantages of UNOPS in its mandated areas of expertise: procurement, infrastructure and project management, including provision of implementation, transactional and advisory services. Encourages UNOPS to contribute, within its mandated areas of work, to innovation and the adaptation of best-practice standards of sustainability and quality 9
Content Recap on UNOPS strategic plan 2014-2017 UNOPS budget estimates 2014-2015 Review of the operational reserve Report of the ACABQ 10
Geared towards implementing the UNOPS strategic plan Contribution goals Sustainable project management Sustainable infrastructure Sustainable procurement National capacity Products and services Equitable economic growth Environmental impact Social justice and inclusion Management goals Recognized value Financial stewardship Process excellence People excellence 11
...the budget estimates reflect UNOPS aspirations in terms of management results 4 BSC Perspectives 4 Management Goals Respective Corporate Drivers Partners Business process People Finance Recognized value Process excellence People excellence Financial stewardship Deliver world-class products and services adding sustainable value Build sustainable partnerships Communicate effectively and transparently Manage and benchmark processes Improve process efficiency and effectiveness Innovate Business partnering Recruit, develop and recognize talent Embrace UN values Ensure financial control and efficiency Cost recovery and fair distribution Invest in innovation 12
Recognized value Coordinate value-add to partners Deliver world-class products and services adding sustainable value Aspiration: Deliver sustainable products and services that are appreciated by stakeholders, sustainable and in accordance with international standards and recognized best practice always satisfying or surpassing partner expectations Initiatives: Focus on a clearly defined catalogue of products and services, making targeted investments in knowledge, methodologies, tools, guidance and personnel. Resources are directed to improving UNOPS ability to help develop partners implementation capacity in areas of UNOPS mandate and core competencies. Build sustainable partnerships Aspiration: Strengthen UNOPS ability to uncover and address partner needs Initiatives: Key partner management approach; strengthen liaison functions; train managers; build expertise in South-South cooperation and public/private partnerships Communicate effectively and transparently Aspiration: Lead in terms of accountability for results and transparency Initiatives: Explore innovative ways of demonstrating results in real-time to partners and the wider public, especially with regards to sustainability, both in the results to which we contribute and our way of working; further improve information management systems 13
Recognized value Indicators BSC Perspective Management goal Driver Performance indicator Baseline Target 2014-2015 Overall partner satisfaction 2012: 78% 80% A1. Deliver world- class products and services adding sustainable value Share of UNOPS delivery within its areas of focus Increase in advisory services projects, directly or indirectly, to national and local governments Share of implementation services projects that include national capacity-building components Share of delivery, 2010-2012: - project management: 35% - infrastructure: 31% - procurement: 28% Share within focus areas : 94% $10.7 million of engagement additions represented advisory services in 12 95% 300% Approximately 50% of projects in 12 65% Partners A. Recognized value A2. Build sustainable partnerships Share of UNOPS infrastructure projects that include elements of resilience consideration Not available 100% Share of UNOPS projects on track for cost and schedule 80% in 12 80% Substantive UNOPS contributions to relevant UNDAFs 83% in 12 90% Increase in share of UNOPS projects in direct partnership 21% of UNOPS delivery was in direct 10% with national and local governments partnership with governments in 12 Increase in engagement addition from identified key Not available 15% partners Increase in UNOPS share of UN procurement of construction and common user items, while maintaining UNOPS share of UN procurement for health items UNOPS share of UN procurement 11: - construction items: 23% - common user items: 31% 15% A3. Communicate effectively and transparently Average number of monthly visits to UNOPS public website 86,000 in 12 95,000 Introduction of sustainability results information, categorized by country, partner or UNOPS delivery 0% in 12 100% practice, on UNOPS public website starting in 2014 UNOPS compliance with IATI standards 100% in 2012 14 100%
Cost recovery principles reaffirmed in QCPR The General assembly, 49. Acknowledges the principle of full cost recovery; 50. Also acknowledges that United Nations organizations have different business models and mandates and that this implies that their funding structures differ; 56. Requests the United Nations funds and programmes to further pursue reductions in management costs in the effort to minimize the necessary cost recovery rate within the existing budget framework; 15
Planning in view of demand UNOPS expects demand for its services to increase. This is particularly the case for advisory services in UNOPS focus areas where Member States have made a strong call for national ownership and capacity development. UNOPS sees this as an opportunity to increase both its added value to partners and the sustainability of the results achieved. [Paragraph 35 in UNOPS Strategic Plan] As a high-level planning assumption associated with the present strategic plan, UNOPS estimates that revenue from implementation and transactional services will remain at current levels, while revenue associated with advisory services will increase. [Paragraph 82 in UNOPS Strategic Plan] 16
Conservative budgeting safeguards UNOPS financial stability Following seven consecutive years of solid financial performance, including 2012, the UNOPS operational reserve is projected to remain above the minimum requirement at the end of the current biennium. UNOPS therefore targets zero net revenue for the upcoming biennium. [Executive Summary in UNOPS Budget Estimates] The budget estimates of $131.2 million for 2014-2015 correspond to a 6 per cent real reduction in management resources compared to the budget estimates for the previous biennium. [Executive Summary in UNOPS Budget Estimates] 17
Key points on prioritization of management resources A significant shift from staff contracts to individual contractor agreements has already been implemented to get the competencies required by delivery practices and flexibility required by UNOPS selffinancing business model. These changes will be maintained moving into the new biennium. UNOPS plans to make a number of investments associated with the implementation of the strategic plan: - development of products and services, - enhancements in information and communication technology support for business processes and - reporting systems which will enable sustainability and results reporting for all UNOPS engagements 18
Content Recap on UNOPS strategic plan 2014-2017 UNOPS budget estimates 2014-2015 Review of the operational reserve Report of the ACABQ 19
Options for operational reserve minimum requirement Based on an assessment of UNOPS financial risks, KPMG outlined and assessed four possible alternatives for establishing the minimum requirement: A. Maintain current reserve; B. Maintain a reserve representing six months of management expenses; C. Maintain a reserve representing three months of management expenses; or D. No reserve any formula linking the level of the operational reserve to three months (alternative C) or six months (alternative B) management expenses would be a realistic option 20
Proposed minimum requirement Recalling that the purpose of the operational reserve is to ensure continuity of UNOPS operating business on a going-concern basis, two findings by the consultants were seen as particularly important: (a) risk associated with the execution of projects is not dependent on the level of project related expenses; and (b) under International Public Sector Accounting Standards, accruals related to end-of-service liabilities for retirees have to be built, whereas under the previous accounting standard, those liabilities were deemed to be covered by the operational reserve. UNOPS proposes that the appropriate minimum requirement for its operational reserve is the equivalent of four months of the average of management budget expenses over the previous three years. 21
Content Recap on UNOPS strategic plan 2014-2017 UNOPS budget estimates 2014-2015 Review of the operational reserve Report of the ACABQ 22
Main recommendations from ACABQ The Advisory Committee recommends approval of the budget estimates for biennium 2014-2015 of $139.2 million consisting of $131.2 million in management resources and $8 million for potential provisions. (Para 18) The Advisory Committee has no objection to the proposed minimum requirement for the operational reserve of UNOPS being the equivalent of four months of the average of the previous three years expense under its management budget. (Para 23) 23
Other points highlighted by the ACABQ The Advisory Committee notes the difference in the budgetary cycle of UNOPS compared to UNICEF, UNDP and UNFPA, with which its budget presentation is otherwise aligned (Para 4 ) The Advisory Committee notes the efforts made by UNOPS towards reducing its requirements for management resources (Para 6) The Advisory Committee welcomes the efforts made by UNOPS in pursuing excellence and benchmarking itself against established global standards. The Committee encourages UNOPS to share, where relevant, its experience and best practices with other United Nations entities (Para 8) The Advisory Committee expects that UNOPS will continue to align its procurement activities and policies with that of the United Nations entities. The Committee further considers that when working in partnership with the United Nations Secretariat, UNOPS should follow the policies underlying the procurement activities of the Secretariat (Para 10) The Advisory Committee encourages UNOPS to draw on lessons learned of the service centres of other United Nations entities (Para 11) The Advisory Committee encourages UNOPS to build on the positive outcomes of the implementation of IPSAS (Para 17) 24
Backups: Details on three other management goals 25
Process excellence Efficient and effective business processes and systems Manage and benchmark processes Aspiration: Further reinforce process management, building on ISO 9001 certification Initiative: Implement externally recognized process management methodologies and framework; benchmark with world-class organizations; cross-functional design of processes; tailor internal learning and certifications based on business processes Improve process efficiency and effectiveness Aspiration: Continually improve quality, timeliness and efficiency of services by innovating and perfecting business processes Initiatives: Significantly enhance key processes in terms of design, ownership, practitioners, systems support and metrics; investments in UNOPS delivery platform; build and integrate tools in the areas of our delivery practices to improve quality and speed; standardize and automate, leveraging economies of scale where possible Innovate Aspiration: Within its mandated areas of work, UNOPS will seek to contribute to innovation and the adaption of best-practice standards of sustainability and quality Initiatives: Direct resources towards the development of sustainable products and services within our three delivery practices; develop strategic partnerships for knowledge and innovation 26
Process excellence Indicators BSC Perspective Business process Management goal B. Process excellence Driver Performance indicator Baseline B1. Manage and benchmark processes B2. Improve process efficiency and effectiveness B3. Innovate Share of entities assessed that are successful in maintaining ISO- 9001 quality management system Implementation of new process management framework based on externally recognized standards, such as APQC Target 2014-2015 100% through May 13 100% Not available 100% Implementation rate of accumulated internal audit recommendations 93% in 12 90% Engagement assurance completion rate 93% in 12 100% Timely operational closure of projects 76% in 2012 80% Average duration of procurement through formal solicitation (number of days) 2012: 78 80 Average duration of staff recruitment (number of days) Not available 80 Level of implementation of risk-based internal audit plan for Internal Audit and Investigations Group Evaluated offices compliant with minimum operation security standards (MOSS) 100% in 12 90% 84% in 2012 85% Carbon neutrality achieved 100% in 11 100% Share of projects screened and approved using minimum sustainability standards, including gender markers Share of relevant UNOPS vendors screened for adopted sustainability criteria Share of entities assessed that are successful in maintaining ISO- 14001 environmental management Increase in the number of balanced scorecard (BSC) performance perspectives linked to the UNOPS rewards and sanctions framework Not available 100% Not available 90% 100% through May 13 100% One perspective (Finance) in 12 All 27 four
People excellence Empowered and high performing people Business partnering Aspiration: Human resources will be developed in support of UNOPS focus areas; with emphasis on building a pool of experts to provide advisory services; empower people to perform at a consistently high level Initiatives: Map existing and required skills; outreach to professional forums and partnering for recruitment and personnel development; align human resources with organizational structure and strategy; pursue economies of scale in transactional services Recruit, develop and recognize talent Aspiration: Be considered an employer of choice for the best talent, attracting a diverse workforce that is available to support partners needs Initiatives: Provide a range of professional development courses and certifications based on recognized international standards; maintain and develop recognition awards and merit rewards; identify, nurture and develop UNOPS present and future cadre of senior managers Embrace UN values Aspiration: Promote and shape an organizational culture and personnel behavior aligned with the United Nations core principles and values Initiatives: Support managers in applying to the Resident Coordinator programme; strengthen gender policy framework and human resource practices, responding to the requirements of the United Nations System-Wide Action Plan on Gender Equality and the Empowerment of Women; standard costing for staff positions 28
People excellence Indicators BSC Perspective Management goal Driver Performance indicator Baseline C1. Business partnering Share of relevant practitioners externally certified Share of relevant practitioners internally certified 830 personnel participated in external certifications run by ACCA, CIPS, Cornell University and Prince2 in 12 40% of relevant project management practitioners are on course for internal certification in 12 Target 2014-2015 Overall personnel satisfaction 81% in 2011 80% 70% 50% People C. People excellence C2. Recruit, develop and recognize talent Personnel performance appraisal completion rate - 97% for personnel on staff contract in 12-70% for personnel on ICA contract in 12 90% C3. Embrace United Nations values Share of females amongst UNOPS supervised personnel 27% in 12 35% Share of females amongst UNOPS supervised international personnel Completion rate of mandatory UN learning, including UNOPS induction and security 30% in 12 35% Not available 100% 29
Financial stewardship Finances managed for development effectiveness Ensure financial control and efficiency Aspiration: Ensure accountability for resources entrusted to the organization while helping its partners exercise their own accountability Initiatives: Lead in terms of transparency; optimize roles, responsibilities and accountability framework in line with global structure; planning and resource allocation as a continuous, inclusive and performance-driven process; improve relevance and timeliness of financial information and performance metrics in corporate systems Cost recovery and fair distribution Aspiration: Attribute direct and indirect costs to projects in an increasingly accurate manner Initiatives: Activity-based costing used to attribute costs, while balancing costs and benefits of doing so; Revised pricing model to include relevant cost drivers, thereby reducing the risk associated with changes in the composition of UNOPS project portfolio and creating incentives to focus contributions where UNOPS adds most value for partners, while encouraging use of national systems Invest in innovation Aspiration: Reinvest at least half of any financial surplus into innovation for sustainability Initiatives: Results-oriented and accountable management of funding for growth and innovation, prioritizing (a) development of products and services, (b) business development, (c) strategic partnerships, and (d) strategic change initiatives; share innovations effectively. 30
Financial stewardship Indicators BSC Perspective Management goal Driver Performance indicator Baseline Target 2014-2015 Achievement of net revenue target approved by the Executive Board 100% in 10-11 100% D1. Ensure financial control and efficiency Rate of implementation of prior biennia United Nations Board of Auditors recommendations 86% for prior biennium in 12 90% Finance D. Financial stewardship Share of required personnel filing of financial disclosure 100% in 12 99% D2. Cost recovery and fair distribution Share of projects that cover their estimated indirect costs (new pricing) Not available 90% D3. Invest in innovation Share of surplus reinvested in sustainability initiatives Not available 50% 31