Concerned by Persistent Cost Overruns, Delays of Renovation Project at United Nations Headquarters in Geneva, Delegates in Fifth Committee Call for Mitigation Measures
Delegates at the Fifth Committee (Administrative and Budgetary) today considered the persistent cost overruns gripping the Strategic Heritage Plan renovation project at the United Nations Office at Geneva.
The representative of Uganda, speaking on behalf of the Group of 77 and China, said the Group did not understand how in one year the project’s estimated cost overrun increased from 3 per cent to 14 per cent of the approved budget, an additional demand of CHF 118.2 million. “This is without even having certainties on the amount of the guaranteed maximum price for Building E,” he said, adding the project is facing additional delays of 24 months to renovate historic buildings and 16 months for building.
With significant increases in projected costs and expected delays, he said the Secretariat needs to account to the General Assembly “on how it has allowed the situation to progress to this stage, and to urgently put in place mitigation measures to salvage the situation”. The Group seriously doubts that previous Assembly resolutions — stressing the importance of effective governance, oversight, transparency and accountability to ensure timely completion within the approved budget — have been taken into account “when we are asked to provide almost 80 more million Swiss francs than we were asked just last year”. Noting that the Board of Auditors has also recommended that project managers strengthen oversight and mitigate the risks of additional costs and delays, the Group finds the situation untenable for a project in this stage of maturity.
Host Country Switzerland Cites Factors Causing Increased Budget
The representative of Switzerland said Member States’ decision in 2015 to begin the renovation of UN Headquarters in Geneva combines the rich history of multilateralism with modernity. Noting the progress, such as the completion of Building H, she said the COVID‑19 pandemic and subsequent supply chain disruptions could not have been seen when the budget was decided 10 years ago.
“These are developments that the project is now feeling strongly, and which, together with inflation, mean that the budget is likely to be exceeded,” she said, urging delegates to view the situation in context. “The construction market in Europe in 2024 is not the same as it was in 2015. The rise in prices in recent years is several times higher than the figures in the Strategic Heritage Plan. We congratulate the project team on its efforts to mitigate these negative effects.”
She noted that any change in the project’s scale does not absorb all additional costs. “On the contrary, the necessary work is only delayed and has to be carried out later at higher cost,” she added, calling on Member States to support the project in its entirety and not delay the Assembly's decision and risk significant additional costs.
Board of Auditors’ Report Points to Reasons for Project Delays
In introducing the Board of Auditors’ report (document A/79/166), Ge Shen, Director of External Audit (China) and Chair of the Audit Operations Committee of the UN Board of Auditors, said the audit showed the project’s governance and management could have been better defined at the outset. “This had a significant impact on the ability to implement the work in optimum conditions of time, cost and quality,” Mr. Ge said.
At the time of the audit, the Strategic Heritage Plan team expected that the programme could be completed before June 2027, representing a delay of four years. External events, such as the pandemic and unfavourable economic conditions, slowed down the work while difficulties faced by the contractor and the project management team led to numerous changes to the initial plan, resulting in cumulative delays.
Regarding budget implications, he said an overrun of the initial envelope of CHF 836.5 million is expected. While the project managers estimated the overrun “with confidence between 6 to 7 per cent” when the audit was carried out in early 2024, it may reach now beyond 10 per cent. “The Board will pay specific attention on its next audit on budget implications,” he said. Noting that the actual space usage of the completed buildings remains at a low level, he said average employee attendance throughout the weeks was at approximately 45 per cent. There was important latitude to optimize the use of space, considering that other buildings are still being leased in Geneva at significant cost.
Turning to the Board’s recommendations, he said that out of 14 recommendations made in its previous report, only seven, or 50 per cent, have been implemented, four are still under implementation, and three are considered as overtaken by events. The Board has made eight new recommendations in its current report.
Secretariat Official Presents Secretary-General’s Eleventh Progress Report
Kelvin Ong, Director of Field Operations in the Finance Division of the Department of Management Strategy, Policy and Compliance’s Office of Programme Planning, Finance and Budget, presented the Secretary-General’s eleventh annual progress report on the project (document A/79/352), which summarizes activity from 1 September 2023 to 31 August 2024. The project is currently expected to have a cost overrun of 14 per cent of the approved budget of CHF 836.5 million. He said the project’s full cost will not be known with certainty until the guaranteed maximum price is finalized with the contractor for Building E in mid-2025.
The Secretary-General believes finishing the project in its full scope is in the Organization’s best interests and “represents the best value for money for the Member States”, he said. Any delay in accepting the guaranteed maximum price for Building E will further increase the project’s cost overrun, given that there would be additional costs of approximately CHF 2.5 million per month.
Advisory Committee on Administrative and Budgetary Questions Presents Eponymous Report
Vice-Chair of the Advisory Committee on Administrative and Budgetary Questions, Jakub Chmielewski, presented the Advisory Committee’s related report (document A/79/7/Add.12).
United Nations Information and Communications Technology (ICT) Strategy
Speaking again for the Group of 77 and China, the representative of Uganda said that, as Secretariat spending on ICT by all entities averages more than $773 million annually, the Group believes the Secretariat should more effectively and efficiently use - and report on - ICT equipment and assets. The Group agrees with the Advisory Committee that the Secretariat’s report does not adequately respond to the specific requests made in Assembly resolution 78/243.
Anthony O’Mullane, Director of Policy Strategy and Governance of the Office of Information and Communications Technology, presented the Secretary-General’s report on refined elements of the ICT strategy (document A/79/339). The report lays out a five-year plan that envelops enhancing governance, building data ecosystems and modernizing ICT infrastructure.
Mr. Chmielewski presented the Advisory Committee’s related report (document A/79/7/Add.17), which recommends that the Secretariat submit an ICT report each year for the strategy’s life cycle. Noting the critical risks relating to information security, the Advisory Committee recommends intensified efforts to mitigate these risks through the ICT strategy and provide an update on related activities in the next report, he said.
United Nations Pension System
Patricia Nemeth, Chair of the seventy-eighth session of the United Nations Joint Staff Pension Board, presented the Pension Board’s report (document A/79/9), which contains its conclusions at the Board’s three sessions held in 2024, and the proposal for 2025 administrative expenses of the United Nations Joint Staff Pension Fund. The Board noted that no liquidity issues were expected over the next 50 years and that the Fund remained in a strong financial position, with a reported funded status above 100 per cent as of 31 December 2023.
Pedro Guazo, Representative of the Secretary-General for investment of the assets of the Fund, presented the Secretary-General’s report on the Fund’s investments and measures taken to increase diversification (document A/C.5/79/3).
Mr. Ge took the floor again to present the Board of Auditor’s report on the Fund for the financial year ending 31 December 2023 (document A/79/5/Add.16).
Fifth Committee Chair Egriselda Aracely González López (El Salvador) then drew delegates’ attention to the following documents: a report detailing revised estimates for the Fund, based on the effect of changes in exchange rates and inflation (document A/79/234), and a report detailing the implementation of the Board of Auditor’s recommendations for the Pension Fund for the financial year ending 31 December 2023 (document A/79/311). Both reports were prepared by the Chief Executive of Pension Administration and the Representative of the Secretary-General for the investment of the Fund’s assets.
The Chair drew attention to a statement on the programme budget implications arising from recommendations and decisions contained in the Pension Board’s report (document A/C.5/79/4).
Mr. Chmielewski then took the floor again to present the Advisory Committee’s related report (document A/79/7/Add.16).
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