Concerned About Possible Cost Overruns, Delegates Discuss Ways to Contain Expenses, as Fifth Committee Reviews Ongoing Renovation of United Nations Geneva Office
Member States expressed their concerns today that the ongoing construction project at the United Nations premises in Geneva might require more assessed contributions from them, as the Fifth Committee (Administrative and Budgetary) discussed ways to mitigate a possible cost overrun for the more than $800 million undertaking in the Swiss city.
Pedro Guazo, Director of the Finance Division of the Department of Management Strategy, Policy and Compliance’s Office of Programme Planning, Finance and Budget, introduced the Secretary-General’s progress report on the Strategic Heritage Plan of the United Nations Geneva Office, noting that the construction of the new permanent building has reached roof level, with the installation of the glass façade well under way. Renovation of the existing historic buildings will not be completed until mid-2024 and the interest-free loan package of 400 million Swiss francs provided by the host country will not be enough, he said, recommending that the General Assembly decide on an assessment scheme.
Cihan Terzi, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced its related, recommending that the Assembly ask the Secretary-General to ensure all mitigation measures are taken to complete the project within the approved resources.
Switzerland’s delegate said that the construction of the new permanent building, next to the historic Palais des Nations, blends almost completely with its surroundings. The phased handover and occupation of completed floors in the new building are expected to begin as early as the second quarter of 2020. Regarding the renovation of the historic buildings, he noted that the additional six months are needed to adapt the contracting strategy and that delays are a result of the project’s scale and complexity.
Turning to project financing, he urged Member States to address the ongoing uncertainty about the project’s unresolved financing framework, also encouraging the Secretary-General to ensure the project remains firmly within the overall maximum budget, scope and schedule, as approved by Member States.
The European Union’s representative said that the refurbishment of the Geneva headquarters is a unique opportunity to make all the buildings at the Palais des Nations campus fit for the future, but the bloc’s member States are concerned about delays as well as the considerable increase in cost and the steady decrease of resources for contingency. The Union will explore possible alternative funding mechanisms, including increased rental income from other United Nations entities to be located in the renovated buildings. “We will hold the Secretariat accountable for the efforts undertaken and planned with regard to the valorization exercise,” he said.
An observer for the State of Palestine, speaking for the “Group of 77” developing countries and China, said it is “high time” that the Assembly make a decision on an assessment scheme, including the currency of appropriation and assessment, considering the size and complexity of the project. While appreciating the merits of the valorization strategy, the Group recalls that the ACABQ advised to separate valorization income from the Strategic Heritage Plan as valorization is not related to the nature of a construction project.
The United States, however, believes that to contain costs of the more than $800 million undertaking, any revenue gained from the leasing of United Nations property in Geneva or valorization of United Nations-owned land there must be applied to the Plan, said its delegate.
The speaker for Mexico said that the flexible workplace provides greater efficiency through technology, also welcoming greater accessibility that will be provided for those with disabilities and improvements in the structure’s energy consumption.
In other business, the Fifth Committee heard the introduction of the Secretary-General’s report on his practice in disciplinary matters and possible criminal behaviour by Aruna Thanabalasingam, Director of the Administrative Law Division of the Department of Management Strategy, Policy and Compliance’s Office of Human Resources. Mr. Terzi introduced the ACABQ’s related report.
The Fifth Committee is expected to meet again at 10 a.m., Monday, 2 December to discuss several issues, including financial implications related to the United Nations Joint Staff Pension Board; progress on the Umoja enterprise resource planning project; and ongoing construction projects at the Nairobi office.
Proposed Programme Budget 2020: Strategic Heritage Plan
PEDRO GUAZO, Director, Finance Division, Office of Programme Planning, Finance and Budget, Department of Management Strategy, Policy and Compliance, introduced the Secretary-General’s progress report on the strategic heritage plan of the United Nations Office at Geneva (document A/74/452). He said that construction work on the new permanent building has reached roof level, with the installation of the glass façade well under way. The construction contract for the renovation works for historic buildings was signed on 15 November, and the detailed designs for the 1970s E Building are complete. Due to some delays, the full programme of the renovation works are now projected to be completed in the middle of 2024.
Turning to project financing, he said that the major contracts committed by the Strategic Heritage Plan exceed the amount of the interest-free loan package provided by the host State. The Secretary-General recommends that the General Assembly decide on how to repay the loan from 2020 and other appropriation and assessment schemes. The total budget required to achieve an 80 per cent level of confidence would be 33.6 million Swiss francs, or 4 per cent, higher than the approved budget. This is a cause for concern. But with mitigating actions being proactively undertaken, the Secretary-General remains confident that the project can be completed within the approved budget. Through the long-term leasing of United Nations-owned land, an estimated gross income of between 80 million and 133 million Swiss francs can be achieved, and this income would be returned to Member States over the next 90 to 100 years. The Assembly is requested to endorse the implementation of the valorization strategy and authorize the expenditures on the preparatory works necessary to realize the maximum possible long-term revenue stream.
CIHAN TERZI, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced its eponymous report (document A/74/7/Add.13), which notes the delays and projected increased costs as well as the increased risk to the project schedule and cost plan presented in the sixth progress report. Noting a corresponding decrease in the estimate resources available for contingency, the Advisory Committee recommends that the Assembly ask the Secretary-General to ensure all mitigation measures are taken to complete the project within the overall resources approved by the Assembly.
Regarding the target of lowering the energy consumption of the Palais des Nations by at least 25 per cent within the 2010 baseline, the ACABQ recommends that the Assembly ask the Secretary-General to provide more information on the update target and the calculations methodology in the next progress report, he said. Regarding the valorization strategy set out in the Secretariat report, the Advisory Committee believes it lacks clarity and does not provide adequate information for the Assembly to make its decisions. In view of the scope, duration and resource requirements for the envisioned preparatory work, the Advisory Committee recommends that the Assembly also ask the Secretary-General to include in his next progress report a detailed plan for the valorization of the United Nations land.
SAED KATKHUDA, observer for the State of Palestine, speaking for the “Group of 77” developing countries and China, welcomed the voluntary contributions by the Government of China and other countries to the project and encouraged the Secretary—General to strengthen his efforts to solicit contributions from other Member States. The Group notes that the addition of a pre-construction services phase in the construction strategy has reduced execution risk but created about six months of slippage and corresponding cost implications. The Group also notes that rigorous project management, effective internal control and comprehensive risk mitigation measures are key to ensure construction is completed in a timely manner and within the overall approved resources. The Group further notes that the variations instructions for the new permanent building have led to an updated cost estimate of 4.9 million Swiss francs more than in the previous reporting period. The Group had expected flexible workplace strategies and other variations in the project would be implemented with regard for cost-effectiveness and timelines, he said.
The Group notes that in resolution 73/279 A, the Assembly decided to revert at the main part of its seventy-fourth session to the creation of an assessment scheme, including the currency of appropriation and assessment, for the Strategic Heritage Plan, he said. It is “high time the General Assembly took a decision on this long-standing issue, especially considering the size and complexity of the project,” he stressed. While appreciating the merits of the valorization strategy, the Group recalls that the ACABQ advised to separate valorization income from the Plan as valorization is not related to the nature of a construction project. The Assembly, through its resolutions 72/262 A and 73/279 A, has consequently decided to have all valorization income reflected under income 2 of the programme budget. The Group notes that future reporting on valorization of United Nations land in Geneva will be captured under the aforementioned income section.
JAN DE PRETER, European Union, noted efforts to enhance accessibility and the importance of flexible workplace strategies to accommodate more United Nations entities, also highlighting the overall measures to promote sustainability and reduction of energy consumption. The refurbishment of the Geneva Headquarters is a unique opportunity to make all the buildings at the Palais des Nations campus fit for the future. The Union’s member States are concerned about the project delay, which pushes the expected completion into 2024, as well as the considerable cost increases and the steady decrease of the contingency fund. To mitigate cost slippage and reduce the risk on Member States assessment, the Union will explore possible alternative funding mechanisms, including increased rental income from other United Nations entities to be located in the renovated buildings. “We will hold the Secretariat accountable for the efforts undertaken and planned with regard to the valorization exercise,” he said. A good governance structure is crucial to ensure the project proceeds on target, on time and on budget. It requires strong internal oversight and independent external control mechanisms to prevent delay and possible cost escalation. The Union trusts that the Board of Auditors’ recommendations will be implemented fully and expeditiously, he said, urging the Secretary-General to put all necessary measures in place to mitigate those increases and reduce all further risks and vulnerabilities.
CHERITH NORMAN CHALET (United States) said that to contain costs of the more than $800 million undertaking, any revenue gained from the leasing of United Nations property in Geneva or valorization of United Nations-owned land there must be applied to the Plan, also noting that the Board of Auditors has low confidence that the project will be completed within budget. Her delegation looks forward to learning about these issues in the next report. During the current session, her delegation also intends to further discuss governance, risk management, space utilization, accessibility, staff welfare and productivity, along with the financing arrangement. The United States is pleased that new building H will be fitted as a flexible workplace during the transition period and its final occupancy. Regarding the Palais des Nations, her delegation wishes to hear from the Secretary-General and the Strategic Heritage Plan team about their plans to identify opportunities to ensure a more flexible workplace with increased capacity, as recommended by the ACABQ.
JESUS VELASQUEZ CASTILLO (Mexico) said the Organization’s process of reform is a priority and is meant to achieve greater efficiencies in all buildings and workplaces. The Strategic Heritage Plan is important to improve and modernize the culture of the Geneva headquarters and modernize the offices. Mexico recognizes the progress noted in the sixth progress report and agreed with the ACABQ’s recommendation to pay attention to areas of vulnerability and respect the costs approved for the project. The flexibility in the workplace reflects modernization of the workplace and provides greater efficiency through technology. He welcomed that greater accessibility will be provided for those with disabilities and improvements in the structure’s energy consumption. Mexico also appreciates the support of the host Government of Switzerland and notes the project still faces challenges surrounding funding commitments. He expressed hope that the Fifth Committee will be able to make a decision on the issue by the end of the current session.
JURG LAUBER (Switzerland), noted the last year of substantial progress, especially regarding the construction of the new permanent building H, an impressive new building next to the historic Palais that blends almost completely with its surroundings. The phased handover and occupation of completed floors in the new building are expected to begin as early as spring 2020. He noted that the additional six months are needed to adapt the contracting strategy for the renovation of the historic buildings and delays and changes in the timeline are a result of the project’s scale and complexity. He welcomed the fact that the adaptations will significantly reduce execution risks during the forthcoming renovation, and urged Member States to address the ongoing uncertainty about the project’s unresolved financing framework. He also encouraged the Secretary‑General to ensure the project remains firmly within the overall maximum budget, scope and schedule, as approved and confirmed by Member States. As host country, Switzerland has committed to support the plan financially with a zero-interest loan of 400 million Swiss francs. By 13 December 2019, Switzerland will have disbursed more than half of the loan reserved for construction. The year 2020 will mark the year of occupancy of the new building and the beginning of the 50-year loan repayment.
Human Resources Management: Disciplinary Matters
ARUNA THANABALASINGAM, Director, Administrative Law Division, Human Resources, Department of Management Strategy, Policy and Compliance, introduced the seventeenth report of the Secretary-General on his practice in disciplinary matters and possible criminal behaviour (document A/74/64), on behalf of Martha Helena Lopez, Assistant Secretary-General for Human Resources. The report covers a 12-month reporting period ending 31 December 2018. She said that the report’s last section provides information on the cases of proven misconduct and/or criminal behaviour in which the Organization informed Member States. With respect to the summaries of individual cases in which the Secretary-General imposed one or more disciplinary measures during the reporting period, the report gives information to explain the considerations the Secretary-General takes when deciding on the measures. “This is a delicate task, as it is important that the information provided does not breach the right to confidentiality of the staff members involved,” she said. The report shows that while equal treatment and consistency are part of the foundation of considering disciplinary cases, the decision on which measures to impose in a particular case is informed by facts specific to each case and the case’s unique aggravating and mitigating circumstances, she said.
Mr. TERZI, ACABQ Chairman, introduced the body’s related report (document A/74/558), recommending that the Assembly encourage the investigating entities to redouble their efforts to expedite disposition of cases. The Advisory Committee notes with concern a doubling in the backlog of appeals cases against disciplinary sanctions since 2015, trusting that all efforts will be undertaken to reduce this backlog and recommends that the Assembly request the Secretary-General to report on this in his next report.
Mr. KATKHUDA, observer for the State of Palestine, speaking on behalf of the Group of 77, expressed a concern that relevant reports on human resource management have not been issued, impeding consideration by the Fifth Committee. Stressing that a strong, reliable disciplinary framework is paramount to create a work environment that is fair, transparent, accountable and responsive to the needs of its member States, she noted with concern that the backlog of appeals cases against disciplinary sanctions has doubled since 2015. The Group believes that these matters should be resolved as expeditiously as possible. The Group welcomes the efforts undertaken to strengthen accountability on different conduct-related matters including through the update of policy guidance and enhancement to investigation capacities, she said.