PROGRAMME IMPLEMENTATION REPORT 2006-07

C. Efficiency Savings

304. In the PWB 2006-07, FAO committed to attaining a typical public sector efficiency savings rate of 1.0–1.5% p.a., recognising that the increasing complexity of measures for the attainment of cost savings on an ongoing basis would require investment or readiness to incur transitional costs. The proposals also foresaw the implementation in 2007 of two types of incentives: an innovation fund and an efficiency savings tax to reward particularly good ideas or performers in terms of efficiency savings which was not possible to implement these two mechanisms during the biennium as intended, due to the difficult financial situation that marked most of the biennium, a comprehensive framework to identify further efficiencies was put in place around the five overarching principles presented in the Revised PWB 2006-07³⁰. The main achievements are as follows.

305. It was recognised that unrecovered variable costs of providing administrative and operational support (AOS) services to extrabudgetary projects are borne by the Regular Budget, thereby straining the Organization’s capacity to implement its Programme of Work. The change in support cost policy and increase in support cost rate approved by governing bodies in November 2005 for emergency and rehabilitation assistance projects and the increase in support cost rates for projects in direct support of Regular Programme activities approved by the governing bodies in 2006, together with increased delivery, resulted in an increase of reimbursements to the General Fund of respectively about USD 10³¹ million and USD 3 million in the biennium. The Organization also began charging projects for housekeeping and utilities costs related to project occupancy of headquarters office space; reimbursement to the Organization during the biennium was USD 2 million.

306. With regard to other areas of efficiency savings and productivity gains, the Director-General established an interdepartmental working group that identified 55 specific opportunities for streamlining administrative procedures. This process led to the issuance on 5 May 2006 of the Director-General’s Bulletin “Delegations of Authority and Streamlining of Administrative Procedures” which covered 19 streamlining initiatives and 31 delegations of authority on a range of management and administrative actions. These measures contributed to productivity gains, by redirecting effort to higher priority activities.

307. The Organization continued to streamline decision-making and promote empowerment by eliminating layers of management through the reduction of Director-level and associated General Service posts at headquarters. Savings from the elimination of 21 Director-level and associated support staff posts, most of which were reallocated to the same units, amounted to some USD 9 million in 2006-07.

308. Changes to headquarters' organizational structure led to: i) the abolition of the Office of World Food Summit Follow-up and Alliances (OFA) with most of its activities transferred to other units; ii) an adjustment in the non-staff resources of communications and public information activities; and iii) the elimination of a post in the TCP unit, without loss of output through redistribution of work. Taken together, these actions yielded savings of USD 1.3 million in 2006-07, which were utilised to bolster high-priority areas.

309. Outside of headquarters, the Organization was able to successfully "offshore" administrative and information systems development work related to the Human Resources Management System (HRMS) and other projects, to the less costly location in Bangkok. Furthermore, the streamlining of policy and operations groups in regional offices yielded savings of USD 2.9 million in 2006-07.

310. Complex business process changes were set in motion in 2006-07 with respect to the full implementation of the Shared Services Centre (SSC), where savings of USD 8 million are anticipated after a period of transition during the 2008-09 biennium. The positioning of multidisciplinary teams in new geographical locations, recognising that the cost of inputs varies substantially between geographical locations, also began to yield savings arising from favourable staff-cost differentials for which savings of USD 4.1 million are expected to accrue from 2008-09 onwards. Establishment of additional subregional offices opened up opportunities for the Organization to benefit from substantial contributions in kind and in cash by host governments, towards one-time and running costs of these offices. On average, biennial contributions towards running costs in excess of USD 300,000 per office were negotiated and foresee the provision of some 7 junior technical officers and 8 support staff in every subregional office. The benefit of these services and contributions, largely to be realised from 2008-09, is estimated at approximately USD 15.9 million per biennium.

311. The implementation of the HRMS in March 2007 provided the foundation for further streamlining of business processes, including the remote processing of administrative actions. Development of electronic personnel records and electronic workflows were initiated to derive maximum benefit from the new system. During 2007, the Organization began to deploy the HR Management Model – a new arrangement for managing HR processes and supporting managers in HR matters – that will improve the overall quality and efficiency of HR management while achieving cost savings. However, like the SSC, this complex deployment will continue to require investment in 2008-09.

312. The Finance Division prepared a new banking structure for headquarters which will generate cost savings in 2008-09 by consolidating transactions through one bank, increased automation of the banking process and the phasing out of manual payment methods. The Finance Division also continued to improve efficiency through the conversion to electronic workflows such as with the electronic payment request form and improved consultant payment functionality.

313. At the inter-agency and UN system level, the Joint Meetings of the 97th Session of the Programme Committee and the 118th Session of the Finance Committee³² in September 2006, and of the 99th Session of the Programme Committee and the 122nd Session of the Finance Committee in May 2008³³, received progress reports on the extent of close collaboration on “back-office” administrative and processing work between the Rome-based agencies, as well as other areas of cooperation, which could lead to overall efficiency savings. These areas, highlighted in the boxes below, illustrate the wide range of services across the three organizations, where back-office service delivery is provided on a joint basis, and indicates the close and effective working arrangements in place between the managers of the back-office functional areas.

314. In order to ensure continued coordination at a senior level, an Inter-Institution Coordination Committee (IICC) was established, composed of the heads of administration and finance departments and heads of units responsible for interagency affairs of FAO, IFAD and WFP, with responsibility for reviewing, approving and prioritising the overall programme of inter-organization activities, provide authority for the necessary resources, and ensure that approved initiatives were included in each institution’s overall management plan.

Procurement

There was joint development of specifications for purchase of goods, of tender documents, contract templates and terms and conditions, shared with the objective of converging towards common standards amongst the three agencies. Clauses were included in tender documents to extend the validity of bids to all sister institutions, and joint training courses on procurement were offered. Through the above and monitoring the contractual performance with the contractor jointly, savings of 9-15% were achieved on the cost of procurement. There was also a joint tender for the contract for travel services between FAO and IFAD, and joint negotiations with airlines for travel pricing for IFAD, FAO and WFP. In addition there was considerable cooperation in procurement activities relating to IT acquisitions. For example, in mobile telephony, FAO and WFP jointly prepared the Request for Proposal text and tendered at the same time to the same bidders with a common aggregated volume, thereby achieving better rates than either institution would have attained if tendering alone.

Human Resources

The Management Development Centre was established for the Rome-based United Nations institutions as a joint project that arose from the WFP, FAO and IFAD HR Network, receiving significant ongoing support from the UK Department for International Development. The three institutions also collaborated with the UN Staff College in the design, development and delivery of a UN system-wide programme for leadership development for the proposed Senior Management Network. IFAD and FAO have recently supported the launch of the Local Expatriate Spouse Association (LESA) in Rome, which is chaired by WFP.

Finance

IFAD worked directly with FAO and WFP on a joint tender for the new actuary for after-service medical coverage and a joint Actuarial Review of the after-service staff benefits plan. There have also been in-depth discussions and exchanges between the three institutions regarding the UN General Assembly decision to move to internationally accepted accounting principles (IPSAS).

Knowledge Exchange

Collaboration in Web site design and development and the exchange of experiences, has enhanced knowledge and Web technologies, allowing the re-use of structures, solutions and platforms. A common platform was developed for collaborative work-space and knowledge exchange as well as guidelines for document scanning and conversion, and for Web publishing.

"Delivering as One"

FAO has been an active participant in the “Delivering as One” process in all eight pilot countries (Albania, Cape Verde, Mozambique, Pakistan, Rwanda, Tanzania, Uruguay and Viet Nam). One of the main focuses of FAO’s participation has been to contribute to the shaping of the new operational environment. During 2007, the "Delivering as One" initiative set up new working modalities for the UN Country Team (UNCT), creating new accountability frameworks and setting up a new operating mechanism at country level.

³⁰ The overarching principles were: all activities are included; targets are agreed with managers who are then held accountable for delivering and reporting results; appropriate levels of delegation and internal control are defined; effective internal pricing strategy and incentives are established to promote greater interdisciplinary collaboration; and all programmes are auto-evaluated using common criteria and procedures (PC 95/3 – FC 113/14 paragraph 23).

³¹ This biennium was the first one that foresaw the integration of support cost income from emergency projects into the PWB 2006-07 and reimbursements to support units other than TCE.

³² JM 07.1/3

¹ JM 08.1/2