Speakers Weigh Benefits, Drawbacks of Proposed Global Service Delivery Model, as Budget Committee Reviews Business Process Streamlining Initiatives
A United Nations initiative to improve its delivery of administrative services worldwide, known as the Global Service Delivery Model, came under scrutiny today by the Fifth Committee (Administrative and Budgetary), as delegates pointed out that the envisioned system lacked an overall plan for integration with other ongoing business transformation drives.
Introducing the Secretary-General’s report on the subject, titled “Framework for a global service delivery model of the United Nations Secretariat”, Yukio Takasu, Under-Secretary-General for Management, noted that more efficient and cost-effective administrative services would enable the Organization to better deliver on its mandates.
The success of the Model would, however, depend on implementation of other initiatives, such as the Umoja enterprise resource planning system, the Global Field Support Strategy, the information and communication technology strategy, the International Public Sector Accounting Standards (IPSAS), and human resource reforms, such as mobility, he said. A business case for the Model could be presented to the General Assembly during its seventy-first session in 2016, he added, noting that subject to Assembly approval, a detailed proposal would be included in the Organization’s 2018-2019 programme budget.
The representative of the United States urged the Secretariat to heed the advice of the Board of Auditors, which noted the current framework for the Model was still limited to administration processes and lacked an overall plan for integration and synergies with other systems. If the opportunity to meld the many transformative initiatives were missed, the Model could simply reinforce outdated and redundant organizational structures and processes, rather than deliver a much more effective Organization, she said.
A representative of the European Union Delegation said that the Union concurred with the Board’s observation that the Model should have been designed before the Umoja enterprise resource planning project, and the absence of a defined destination increased the risk of expensive retrofitting of Umoja.
South Africa’s representative, speaking for the “Group of 77” developing countries and China, stressed the importance of establishing goals and objectives at the outset, conducting a detailed cost-benefit analysis and creating a business case to support proposals. The Group wished to better understand how the timing of the development of the Model would affect its integration with other reform initiatives. The Secretary-General should ensure the Model incorporated governance mechanisms for senior management ownership and accountability.
The representatives of Switzerland, also speaking for Lichtenstein, and Japan stressed the importance of, among other things, drawing upon lessons learned from past and ongoing projects.
Carlos Ruiz Massieu, the Chairman of the Advisory Committee on Administrative and Budgetary Questions, introducing his body’s related report, said that the Model should achieve the most rational distribution of functions among different locations and the most effective use of the existing Secretariat infrastructure. He emphasized the importance of providing full justifications and explanations on the methodology, criteria and assessment processes underpinning the proposal to help the Assembly make decisions. Since the Model would cover the requirements of the entire Secretariat, its development should be financed from all funding sources, including the regular budget, the support account for peacekeeping operations and extra-budgetary resources.
The Fifth Committee also reviewed progress in implementing the Capital Master Plan at the Organization’s Headquarters in New York. Salhina Mkumba, Director of External Audit and Chair of the Audit Operations Committee of the Board of Auditors, introduced the Board’s report on that matter, acknowledging that the substantial completion of the Plan by September 2014 was a significant achievement, with the Assembly building renovation completed in time for the annual General Debate. As the Board had previously noted, the Administration’s focus had been primarily on technical delivery, and it had not produced a benefit statement.
Mr. Ruiz Massieu said ACABQ recognized some of the Plan’s immediate and evident benefits, such as a more modernized working environment, improved security and the retention of important architectural heritage. Yet some quantifiable benefits, such as a minimum 50 per cent reduction in energy consumption; a 45 per cent reduction in greenhouse gas emissions related to energy consumption; and a 40 per cent reduction in fresh water consumption, were, in fact, projections based solely on engineering models and had not been substantiated. Mr. Takasu introduced the Secretary-General’s report on the subject.
The Committee also discussed issues related to deployment of IPSAS, which aims to enhance the quality, consistency and transparency of the financial reporting of entities of the United Nations system. Bettina Tucci Bartsiotas, Assistant Secretary General and Controller, introduced the Secretary-General’s eighth progress report on the adoption of the new Accounting Standards. Mr. Ruiz Massieu presented ACABQ’s related report.
The Committee will meet at 10 a.m., 3 November, to discuss construction and property management at the Economic and Social Commission for Asia and the Pacific (ESCAP) and administrative expenses of the United Nations Joint Staff Pension Board. It will also take action on a draft resolution on pattern of conferences.
International Public Sector Accounting Standards (IPSAS)
BETTINA TUCCI BARTSIOTAS, Assistant Secretary General and Controller, introduced the Secretary-General’s eighth progress report on the adoption of the International Public Sector Accounting Standards by the United Nations (document A/70/329). The United Nations had issued its first full set of financial statements compliant with the International Public Sector Accounting Standards (IPSAS), with an unqualified audit opinion for each of the Organization’s 13 financial reporting entities.
Ms. Bartsiotas pointed to several firsts that had been noted in the reports. For example, for the first time, the Organization had reported property, plant and equipment, inventories and intangible assets on the face of the financial statements, and allowance for accounts had been created to better reflect anticipated future cash flows from long-outstanding receivables. In preparation of the international standards, the Organization had already recognized the long-term employee benefits liabilities of after-service health insurance, unused annual leave and accrued repatriation benefits; and in 2014 it had also recognized its employee benefits liabilities, relating to its Appendix D Workers Compensation Programme.
Detailing the work of other groups, including the Management Committee, the Independent Audit Advisory Committee and the IPSAS Implementation Team, she said “…this progress has not come by accident, the IPSAS Steering Committee continued strong, risk-based oversight of the project.” The challenge now was to ensure the information was used to better manage the Organization. To do so, a formal IPSAS benefits realization plan had been deployed, which included 15 envisaged benefits to be realized across five major strategic benefit categories. During the reporting period, the World Trade Organization (WTO) and Food and Agricultural Organization (FAO) had become IPSAS-compliant for the first time. Now all entities of the United Nations system were IPSAS-compliant for the 2014 financial year. That was an historic achievement, she added.
CARLOS RUIZ MASSIEU, Chairman of the Advisory Committee on Administrative and Budgetary Questions, introduced that body’s related report (document A/70/7/Add.2), stressing that despite a successful in IPSAS implementation in 2014, much work remained to be done in harnessing its benefits to achieve greater efficiency, effectiveness and accountability in the management of the Organization’s resources. The Advisory Committee trusted that a necessary emphasis would be placed on long-term efforts to sustain IPSAS compliance in day-to-day operations throughout the Organization.
Managers had an important role in driving the benefit realization process by using IPSAS-generated information for better decision-making, he said. The Advisory Committee remained concerned about the delay in the deployment of the Umoja enterprise resource planning system and the risk such a delay posed to the realization of IPSAS benefits. It was particularly concerned about the continued reliance on multiple legacy systems to generate the data used in the preparation of financial statements. Close cooperation between IPSAS and Umoja project teams would minimize that risk.
LYLE DAVIDSON (South Africa), speaking on behalf of the “Group of 77” developing countries and China, said the implementation of IPSAS was a major step in modernizing the United Nations system and commended all entities for their successful implementation of the global standards and receiving unqualified audit opinions. Yet the Group agreed with the Advisory Committee that much work remained to be completed to harness the system’s benefits. The Group asked the Secretary-General, as Chairman of the United Nations System Chief Executives Board for Coordination (CEB), to continue coordination of all aspects related to the shift from the United Nations System Accounting Standards to ISPAS. That included the need to gather, analyse, and disseminate information regarding the challenges, the lessons learned and best practices and benefits. That would help refine the implementation plans and strategies until Umoja was fully implemented.
Turning to the use of the international standards in peacekeeping operations, the Group looked forward to additional information on the benefits and agreed with the Advisory Committee that inefficient inventory management policies and practices were still a concern and increased the Organization’s risk of inventory damage and obsolesce. The Group stressed the importance of sustaining IPSAS-compliance until Umoja was fully implemented. Yet it remained concerned about how the continued delay in Umoja’s use affected the Organization’s ability to fully realize all the benefits of IPSAS. The Group also stressed the key role played by managers in delivering the IPSAS benefits throughout the system and welcomed the initiative to professionalize the financial role by developing highly-skilled financial managers.
Global Service Delivery Model (GSDM)
YUKIO TAKASU, Under-Secretary-General for Management, introduced the Secretary-General’s report titled “Framework for a Global Service Delivery Model of the United Nations Secretariat” (document A/70/323), noting that more efficient and cost-effective administrative services would enable the Organization to better deliver on its mandates. While the initiative must be system-wide, modular solutions would accommodate diverse business needs and the complexities of different operating environments at Headquarters and in the field. Bundling service requests would also create efficiencies and economies of scale, allowing resources to be redirected to new functions and programmatic work.
The success of the Global Service Delivery Model would be possible only with the advance of implementation of other initiatives, such as Umoja, the global field support strategy, information and communication technology, IPSAS and human resource reforms, such as mobility. While Umoja standardized and harmonized business processes, the Model would consolidate fragmented administrative structures within and across duty stations. To prepare a business case, the report included a request for resources to establish a small temporary project team and secure expert consultants. A detailed business case with location options could be presented to the seventy-first General Assembly session. Then, subject to approval by the Assembly, a detailed proposal would be included in the Organization’s 2018-2019 programme budget.
Taking the floor again, Mr. RUIZ MASSIEU, introduced the ACABQ’s related report (document A/70/436) and stressed the importance of ensuring the Global Service Delivery Model was comprehensive and encompassed the service delivery requirements of all parts of the Secretariat, including peacekeeping and the field missions. The Secretary-General should be asked to focus on improving the delivery of administrative support services and reducing related costs. The Model should achieve the most rational distribution of functions among different locations and the most effective use of the existing Secretariat infrastructure. He emphasized the importance of providing full justifications and explanations on the methodology, criteria and assessment processes underpinning the proposal to help the Assembly make decisions. He also stressed the need for strong leadership, governance and project management arrangements, and recommended that the Secretary-General be asked to ensure the project enjoyed high levels of cooperation across the Secretariat and install a sense of ownership, particularly at the senior management level. Since the Model would cover the requirements of the entire Secretariat, its development should be financed from all funding sources. The Secretary-General should give proposals for a cost-sharing formula that included the regular budget, the support account for peacekeeping operations and extra-budgetary resources.
Mr. DAVIDSON (South Africa), speaking for the Group of 77 and China, noted that the Global Service Delivery Model was aimed at addressing complexities in the administrative structures, policies, procedures and delegations of authority in the Organization, covering some 98 stand-alone entities at more than 100 sites. The information given to the Assembly was of a general nature, and detailed proposals were expected to be presented at a later stage. But they should be presented at an earlier stage. The Group stressed the importance of establishing goals and objectives at the outset, conducting a detailed cost-benefit analysis and creating a business case to support proposals. The Group wished to better understand how the timing of the development of the Secretary-General’s proposed Model would facilitate integration with other reform initiatives.
He said that the Group would also be interested to learn how the functions and infrastructure of the Regional Service Centre in Entebbe and the United Nations Logistics Base in Brindisi were going to be factored into the upcoming proposal, as well as how the Regional Procurement Office in Entebbe would be incorporated into the proposal. Strong leadership and effective project governance were essential for the success of that complex, system-wide business transformation initiative. The Secretary-General should ensure the Model incorporated mechanisms for senior management ownership and accountability. The Group looked forward to discussing during informal consultations the preliminary project scope, delivery modalities, location assessment, client-relationship management as well as funding of shared services.
JAN DE PRETER, of the European Union, supported the goal of creating a truly global Secretariat that was better able to achieve its mandates and was supported by administrative services that provided what was needed, when needed and where needed. Member States had invested in major reform processes, and the Model would be essential for creating synergies and ensuring better, faster and more efficient service delivery with qualitative and quantitative benefits. It was clear that the Model and Umoja would be mutually reinforcing. While Umoja standardized and automated business processes, the Model would consolidate fragmented administrative structures within and across duty stations. Concentrating resources on substantive, front-line activities that made the Organization leaner and more effective would improve the quality of mandate implementation and free up resources.
To achieve that transformation, the end-state vision must be clearly defined at the start of the process, he said. In that regard, the Union concurred with the Board of Auditors’ observation that the Model should have been designed before the enterprise resource planning project and that the absence of a defined destination service delivery model increased the risk of expensive retrofitting of Umoja. The Secretary General’s report, which set froth the rationale and broad concepts for the Model, should be seen as a first step in developing a detailed proposal that would enable the Organization to dedicate more resources to substantive front-line activities while making administrative functions more effective. A truly global, system-wide approach was needed. The concepts outlined in the Secretary-General’s report were not new and existing best practices across the United Nations system should be taken into account.
MATTHIAS DETTLING (Switzerland), also speaking on behalf of Liechtenstein, said that the Secretary-General’s goal of creating a truly global Secretariat should take into account wider aspects of the United Nations operations as had been recommended by the United Nations Board of Auditors in its Volume I report. He concurred with the Board of Auditors that the Secretary-General’s proposal was an opportunity to review potentially outdated or redundant organizational structures and encouraged the Secretary-General to align the Model with programmatic requirements in subsequent phases of the project. Also, it should be considered, when meaningful and feasible, to better use synergies between the administrative support arrangements of the Secretariat and those of the funds, programmes, and specialized agencies. The four possible models of consolidated service provision identified during discussions of the High-level Committee on Management merited further consideration.
The Secretary-General should also draw upon lessons learned and build on existing shared service centres with a proven record of delivering high-quality services as well as maximize synergies with existing peacekeeping service delivery arrangements, he said. It was also important to ensure close coordination and synchronisation with all ongoing transformation initiatives, including Umoja, the Global Field Support Strategy and others.
CHERITH NORMAN CHALET (United States) welcomed the Secretary-General’s continued effort to transform the United Nations and its way of doing business to make it more effective in delivering its mandates. One of the most important elements of the modernization was appropriately tailoring the support structure to the Organization’s global footprint. The Secretary-General’s framework for the model provided an important opportunity to harness the full potential of several reform initiatives already approved by the Assembly, including IPSAS, Umoja, the information and communications technology (ICT) strategy and human resources management reforms, such as mobility. The Committee’s goal should be to increase the Organization’s productivity, allowing resources to be deployed where most needed for mandate delivery. “We should not get bogged down by details that cannot be decided until the broad parameters of the Global Service Delivery Model are established,” she said.
She encouraged the Secretariat to heed the advice of the Board of Auditors, which noted the current framework was still limited to administration processes and lacked an overall plan for integration with other systems. If the opportunity to meld the many transformative initiatives were missed, the Global Service Delivery Model could simply reinforce outdated and redundant organizational structures and processes, rather than deliver a much more effective Organization. “We must not lose this moment of change to make the UN more fit for purpose,” she added. The United States looked forward to working with other Member States to approve a framework for a model that, integrated with other systems, could drive a comprehensive process of transformation.
HAJIME KISHIMORI (Japan) said initiatives to transform and modernize the United Nations were essential for the Organization to remain relevant and meaningful in the face of new challenges in the twenty-first century. While welcoming the proposed Global Service Delivery Model, he emphasized that the fundamental principle of “do more with less” should be applied to its implementation as it was to all other reform initiatives. He expected that the lessons learned from previous reform measures, such as the Global Field Support Strategy and Umoja, would be taking into consideration when launching the Model. That Model would never be successful unless the firm commitment of all those in senior management positions was realized with a sense of ownership, and until the initiative encompassed all United Nations departments and offices, including those in the field. Japan would actively participate in forthcoming discussions to explore ideal ways to implement the Model together with all stakeholders.
Responding to some comments on the project’s scope, diverse operational environments in the field, and governance, Mr. TAKASU said that he had taken note of the Board of Auditors’ report, but the scope of the project was confined to administrative support services, endorsed by the Assembly. The Global Service Delivery Model was an enterprise-wide project. However, given the operational diversity, he would not enforce one strict model. On governance, he was putting in place a strong accountability mechanism by designating a project owner and chairing the Steering Committee himself.
Capital Master Plan
Taking the floor again, Mr. TAKASU introduced the Secretary-General’s thirteenth annual progress report on implementation of the Capital Master Plan (document A/70/343). The Plan was the largest renovation work undertaken in the Organization’s history and in the past year major progress had been achieved on its remaining portions, he said. That included completion of the line of protection along First Avenue, the opening of the visitor concourse on the first basement level of the Assembly building and the reopening of the renovated Assembly podium. During that period, the project team had closed out contracts and cooperated with internal and external auditors. As a result, the renovated facilities had already hosted many meetings, conferences and special events and the Assembly had hosted its annual General Debate two times. Despite many challenges, including the effect of Storm Sandy in 2012, the overall delay in the seven-year renovation had been limited to about one year from the original target.
The Plan’s renovation phase was completed though there were still some remaining close-out activities, including the removal of the temporary North Lawn Building, the landscaping of the compound and security-related work at forty-second and forty-eighth streets, which would be completed in late 2016, he said. The Secretariat would begin the demolition of the temporary North Lawn Building soon and a contract for demolition and landscaping already had been awarded. After landscaping work, the site would be returned to its original status in late 2016. All remaining activities and the close-out would be funded from existing approved resources, as indicated in table 3 of the report.
The Secretary-General had informed Member States many times that renovation of the Library and South Annex Buildings, at a reasonable cost, was not feasible because of the security situation along Forty-second Street, Mr. Takasu. The Secretariat had identified the most cost-efficient ways, independent of a decision on long-term arrangements, to relocate the functions carried out in the Library and South Annex Buildings. As a result, the main floors of the Library Building were reconfigured to eliminate occupancy on the southern side, which was a security risk due to its proximity to the Forty-second Street ramp. Occupancy was consolidated on the northern side. The Secretariat had proposed three new locations for food services.
The project’s financial position was consistent with the projection included in the update to the Secretariat’s twelfth annual report, Mr. Takasu said. As of 30 June 2015, the cost to complete the Plan was projected at $2.15 billion, equivalent to the approved resource level. Approved resources comprised the original budget and donations of $1.991 billion, plus $159.4 million from interest income and the Working Capital Reserve Fund. The Secretariat had received payment of 99.98 per cent of the original assessment of $1.8767 billion from Member States.
Based on Assembly resolution 69/274 approved at the April 2015 first resumed session, a mechanism was created to finance the associated costs and the secondary data centre, which totalled $154.8 million, he said. That cleared the way for the Plan to be completed within its approved resources. The Secretariat had transferred $36.6 million from the Special Account for the Plan and $73.2 million from the balance of 2012-2013 obligations. An amount of $45 million would be assessed to Member States, in the context of the 2016 assessment. The Office of the Capital Master Plan had officially closed on 31 July 2015 and the responsibilities for carrying out the remaining activities and its close-out had been transferred to the Office of Central Support Services.
Taking the floor once again, Mr. RUIZ MASSIEU welcomed the Board of Auditors’ report on lessons learned from the Capital Master Plan. As the Board noted, unlike most organizations, the United Nations did not have an established approach for managing major projects. That made the application of lessons learned problematic and the Advisory Committee welcomed the Secretary-General’s efforts to develop “guidelines for the management of construction projects,” which were slated for completion in December 2015. The Advisory Committee reiterated the importance of identifying, documenting and applying lessons learned in future capital projects. The Advisory Committee also recognized some of the immediate and evident benefits of the Plan, such as a more modernized working environment, improved security and the retention of important architectural heritage. Yet some quantifiable benefits, such as a minimum 50 per cent reduction in energy consumption; a 45 per cent reduction in greenhouse gas emissions related to energy consumption; and a 40 per cent reduction in fresh water consumption, were a concern. Those were, in fact, projections based solely on engineering models and had not been substantiated.
The Advisory Committee remained concerned with the repeated delays in the timeline for the demolition of the temporary North Lawn Building and the start of the security-related work at the forth-second and forty-eight street service drive, he said. It believed the Secretary-General should immediately implement the Assembly’s decision to deconstruct and remove the building. It also recommended that the Assembly ask the Secretary-General to ensure the completion of the security-related work before the end of 2016. Regarding resource requirements, the Advisory Committee noted the lack of detailed information and explanation in the thirteenth annual report and asked that the related information be provided to the Assembly for its consideration of the report.
Mr. DAVIDSON (South Africa), speaking again for the Group of 77 and China, said the Group was concerned that while the Plan’s anticipated cost overruns appeared to have been reduced to $65 million, the scope of the project had been significantly reduced and included three buildings, instead of five, at a higher cost than originally planned. The Group also was concerned at the omission or misrepresentation of several costing parameters, including those related to the relocation of functions of the Library and South Annex buildings. Further, it was concerned about the reallocation of funds to cover shortages of the Plan from other budget lines, particularly the use of funds allocated to cover shortfalls in insurance claims from Storm Sandy. It noted that there was still the risk of additional costs during the close-out of remaining contracts, including change orders and potential claims from contractors. The Group would seek to clarify those issues during the informal consultations.
He also expressed concern that the benefits claimed as realized by the Plan, namely a minimum 50 per cent reduction in energy consumption; a 45 per cent reduction in greenhouse gas emissions related to energy consumption; and a 40 per cent reduction in fresh water consumption, were projections based solely on engineering models and had not been substantiated. He was concerned that the Organization could not monitor and report on the relevant data, despite all the upgrades, and it could not validate the Plan’s benefits. All the quantifiable benefits reportedly derived from the capital project should be substantiated. While aware that the Plan’s Office had been closed, the Group stressed that several key elements must be completed, including remedial work and the demolition of the North Lawn Building. The Plan was an ongoing project. The omission of all errors identified by Member States, including issues relating to physical and technical accessibility, improvement of the video conferencing infrastructure and power sockets, must be addressed and rectified. “The project could not be considered completed until all these are rectified,” he added, expressing concern with the continued delay in the demolition of the North Law Building and subsequent landscaping, and stressing the need to complete that work immediately.