Contain Costs, Integrate Lessons of New York Headquarters Refurbishment, Delegates Stress as Budget Committee Examines Progress Reports on Geneva Office Renovation
As the Fifth Committee (Administrative and Budgetary) today took stock of the planned refurbishment of the Palais des Nations in Geneva, delegates stressed the need to control costs and integrate the expertise gained during the massive renovation of the Organization’s New York Headquarters.
The European Union Delegation representative said alternative funding mechanisms for the CHF 837 million multi-year renovation of the United Nations Geneva headquarters — the Strategic Heritage Plan — should be explored to help curb future assessments levied on Member States. Estimated costs had increased by CHF 219 million since the Geneva project’s conceptual engineering and architectural study was completed in 2011, he said, and asked that the Secretary-General provide detailed cost estimates at the Assembly’s seventieth session to ensure the proposed requirements reflected real needs.
The representative of Bolivia, speaking on behalf of the “Group of 77” developing countries and China, urged the Secretariat to set up internal control and oversight mechanisms for the project. Noting that the proposed Strategic Heritage Plan would be carried out in four phases over eight years, the Group hoped the Capital Master Plan to overhaul the New York Headquarters would be completed by year-end 2016 so the Strategic Heritage Plan could begin as scheduled.
Stephen Cutts, Assistant Secretary-General of the Department of Management’s Office of Central Support Services, introducing the Secretary-General’s report on the Strategic Heritage Plan, said the Assembly had approved only a portion of the necessary resources for its 2014 activities and had deferred consideration of the CHF 26.28 million needed for 2015 to the current session. Postponing a decision on the project’s next steps and resource requirements would produce delays and additional costs. The Strategic Heritage Plan’s next steps, as outlined in the report, were critical activities needed to maintain the project schedule, with construction planned for early 2017.
Carlos Ruiz Massieu, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introducing that body’s related report, welcomed the Swiss Government’s offer to contribute towards the project’s financing, including a construction loan, repayable over 50 years at zero interest; and a renovation loan, repayable over 30 years at a fixed interest rate. He noted that proposed funding mechanisms included voluntary contributions from Member States and private entities, public-private partnership arrangements and alternatives, and said the Secretary-General’s next progress report should provide more information on alternative funding mechanisms.
Representatives of Switzerland and the Russian Federation also spoke today.
The Committee will reconvene at 10 a.m. on Monday, 1 December, to discuss the financing of peacekeeping missions.
Strategic Heritage Plan of the United Nations Office at Geneva
STEPHEN CUTTS, Assistant Secretary-General, Office of Central Support Services, introduced the Secretary-General’s report on the Strategic Heritage Plan of the United Nations Office at Geneva (document A/69/417) and Corr.1), which summarized the work undertaken in 2014 and gave updates on the establishment of project internal control mechanisms and the governance and oversight framework, as well as a refined proposal with regard to the core functions of the dedicated project management team. The report also gave details on the status of negotiations with the host country on the loan package — which included separate loans for the construction and the renovation portions of the Strategic Heritage Plan — as well as information on alternative funding mechanisms. The Assembly was asked to approve the next step for the project and dedicated project management team, which had been reduced in size. Approval was also sought for CHF 26.28 million in resources (equivalent to $28.38 million at initial appropriation 2014-2015 rates) for 2015 to continue ongoing planning. The Secretary-General also solicited approval to create a multi-year account for the project and guidance from the Assembly on possible funding arrangements.
To control costs, project internal control mechanisms would be created and include a work and cost-breakdown plan that would be continuously monitored against established cost and time schedules, he said. An independent risk management consultant would advise on strategies to mitigate project risks and keep an up-to-date project risk register. The project implementation plan defined the activities and steps to ensure compliance with programme objectives in terms of scope, quality and cost standards. The report gave an update on project financing, particularly the detailed terms of the host country’s formal offer of an interest-free loan to the United Nations to replace the E building and a Swiss Government guarantee to provide a low-interest loan for a portion of the renovation scope. Regarding alternative funding mechanisms that could reduce the assessment on Member States, the Secretariat determined that public-private partnership options were not viable and were no longer being considered. Voluntary contributions from Member States were being actively sought and a significant donation had been recently pledged by the United Arab Emirates.
The previous Secretary-General report stated that estimated resources requirements of CHF 42 million would be needed for the project management team, the liaison staff and the consultancy services in 2014-2015, he said. The Assembly had approved only a portion of the resources for the 2014 activities and had deferred consideration of the CHF 26.28 million needed for 2015 to the current session. Those resources were requested for the Strategic Heritage Plan’s dedicated project management team, including a proposal for three more temporary positions and six operational experts in key technical and support areas. That was an overall reduction of four positions, compared to the previous report, and the functions of the four slots were proposed to be replaced by more flexible, specialized consultancy services. The Strategic Heritage Plan’s next steps, as described in the report, were critical activities for maintaining the project schedule, with construction starting in early 2017. Postponing a decision on the next steps and resources requirements would mean demobilizing the current consulting companies and subsequent re-mobilization, which would produce delays and additional costs. The Assembly should approve the required funding during its current session to allow critical activities to continue without interruption from the beginning of 2015.
CARLOS RUIZ MASSIEU, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced that body’s eponymous report (document A/69/580), which recommended that the General Assembly ask the Secretary-General to provide his final proposal for expediting the commencement of construction works. The report also welcomed the Secretary-General’s approach of including the provision of expert independent advice for assuring schedule and cost controls in the proposed internal project control mechanisms for the Strategic Heritage Plan. Those recommendations were also aligned with the Board of Auditors’ observations.
Regarding the Secretary-General’s refined proposal on project governance and oversight framework, there was a need to avoid any potential conflict of interests, he said. The Advisory Committee therefore welcomed the proposal to establish a Steering Committee in the initial phase of the Strategic Heritage Plan. As for the dedicated project management team, another refinement of the Secretary-General’s earlier proposal, ACABQ recommended the establishment of nine additional temporary positions and had no objection to the overall resource requirements requested by the Secretary-General for 2015, except a recommendation for a 5 per cent reduction in the resources requested for official travel.
On financing the Strategic Heritage Plan, he welcomed the Swiss Government’s offer to provide a construction loan, repayable over 50 years at zero interest, and a renovation loan, repayable over 30 years at a fixed interest rate, considering that a valuable and noteworthy contribution towards implementing a major capital project. The Advisory Committee noted that proposed funding mechanisms included voluntary contributions from Member States and private entities, public-private partnership arrangements and alternatives. It trusted that the Secretary-General would take into consideration that the United Nations was a non-profit organization and that he had been requested to explore alternative funding mechanisms, including through a donation policy, with the aim of reducing the Member States’ overall assessment. The Secretary-General’s next progress report should provide further information on that matter.
DAYANA ANGELA RIOS REQUENA (Bolivia), speaking on behalf of the “Group of 77” developing countries and China, said the Group was very concerned about the current condition of the Palais des Nations in Geneva and was fully aware of the urgent need to address the building’s health, safety, usability and access needs. The Group stressed the importance of absorbing lessons learned from capital projects, especially the Capital Master Plan. It was concerned with the Board of Auditors’ comment, contained in document A/69/5 (Vol.V), that the United Nations did not have a mechanism to embed lessons learned in the management of future major projects. Therefore, it was pleased that the lessons learned and best practices were a key pre-designed activity for the Strategic Heritage Plan.
The Group stressed the importance of establishing internal control mechanisms and project governance and oversight. The Group appreciated the loan offer from the Swiss Government for renovation and construction and was open to consider the offer’s terms while seeking the most favourable terms for the Organization. It noted that the proposed Strategic Heritage Plan implementation would take place in four phases over eight years. It hoped the Capital Master Plan would be fully completed by the end of 2016 so the Strategic Heritage Plan could begin as scheduled. That would ensure that the two major capital expenditure projects would not be implemented at the same time, and the Assembly would have sufficient time to consider the Strategic Heritage Plan in all aspects before making a final decision. The Group would have to rely on the Secretariat to provide detailed information that could be conceptualized and visualized.
FRANCESCO PRESUTTI, a representative of the European Union Delegation, noted that the total estimated project requirements had increased by CHF 219 million since the conceptual engineering and architectural study was completed in 2011. The Secretary-General should revise and resubmit detailed project cost estimates at the seventieth session to ensure that the proposed requirements reflected real needs. The Secretariat should also explore alternative funding mechanisms to reduce the need for future assessments to be paid by Member States. Establishing strong, internal and independent external oversight mechanisms was essential to prevent any future cost escalation and ensure the project proceeded smoothly, on time and within budget. Those structures would need thorough expertise to support and challenge the project team and to scrutinize project costs, schedule and scope, while constantly updating Member States on progress. The lessons learned from the Capital Master Plan and other construction projects must be properly applied to the Strategic Heritage Plan, especially with regard to the associated costs, contingency funding, cost forecast and risk management. The Secretariat should explore ways to incorporate flexible workplace arrangements in the construction design stage of the Strategic Heritage Plan.
OLIVIER MARC ZEHNDER (Switzerland) said that the Palais des Nations in Geneva was a pillar of multilateralism. As the second largest centre of the United Nations, it played an essential role of hosting thousands of delegates each year who were at the heart of global governance. To meet the needs of a modern, strong and effective United Nations, the urgency of its comprehensive renovation had become undeniable. Last year, the Assembly gave an unambiguous signal in favor of the Strategic Heritage Plan. His delegation supported the Secretary-General’s request for the resources required to complete the overall project planning in 2015. As host country, Switzerland donated CHF 50 million in 2011 for energy saving measures at the Palais. That work was completed last year on time and within budget. His Government also decided to respond to any request by the Assembly for one or more preferential loans. The progress report under consideration detailed the terms of the loans.
SERGEY V. KHALIZOV (Russian Foundation) asked for additional clarification on the project and expected the Secretariat to provide more information, including on the distribution of the roles within the project management system and ways to prevent any conflict of interest. He said he would also like more information on the associated costs. He urged the Secretariat to use the lessons learned from previous large-scale renovation projects, including the renovation of the Headquarters facility. He welcomed the Swiss Government’s offer of a loan. The creation of a multi-year account to finance the project could be considered. He agreed with the conclusions of ACABQ and supported its views on finding ways to finance expenditures for the period through 2015.