With Major Administrative Reform Initiative Facing Delays, Cost Overruns, Budget Committee Delegates Urge Strong Secretariat Leadership to Keep Project on Track
With Major Administrative Reform Initiative Facing Delays, Cost Overruns, Budget Committee Delegates Urge Strong Secretariat Leadership to Keep Project on Track
|Department of Public Information • News and Media Division • New York|
Sixty-seventh General Assembly
14th Meeting (AM)
With Major Administrative Reform Initiative Facing Delays, Cost Overruns, Budget
Committee Delegates Urge Strong Secretariat Leadership to Keep Project on Track
The implementation delays and cost overruns surrounding the Secretariat’s efforts to carry out a major enterprise resource planning (ERP) project meant to streamline the administrative practices and boost efficiency of the United Nations were in the spotlight at today’s meeting of the Fifth Committee (Administrative and Budgetary).
The costs of the massive project, known as Umoja, has escalated from $315.8 million to about $348.2 million, just for the system’s initial two phases, said Collen V. Kelapile, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ). The project’s timetable had slipped back by three more years to 2018, and he urged the Secretariat to craft a workable, realistic plan to successfully complete “this complex business transformation project”.
Acknowledging the intricacy and scope, a key United Nations auditing official said the Board of Auditors was concerned that the Secretariat’s existing plans were “highly optimistic and lack rigour”. As he introduced the Board’s report, Hugh O’Farrell, who is Director of External Audit of the United Kingdom and a member of the Board and its Audit Operations Committee, said many of the implementation problems were avoidable.
He pointed to the Secretariat’s weak governance and management and the wider Organization’s more systemic weakness in carrying out meaningful transformation of its business functions. He acknowledged that the Board had nevertheless been reassured by the Administration’s response to the concerns outlined in its report, which reflected the Board’s position as of spring 2012.
Switzerland’s delegate, speaking on behalf of Liechtenstein, also was encouraged that the project had finally gained some momentum though many challenges remained. Its successful adoption would require a significant cultural shift in the way the Organization carried out its business functions. He wanted more details on how the Secretariat meant to support that shift.
Speaking on behalf of the “Group of 77” developing countries and China, Algeria’s delegate said the Group was very concerned by the Board’s conclusions. While acknowledging that the Administration was acting on the Board’s recommendations, the Group would analyse the root cases of the delays and wanted additional information on the associated costs that were already being predicted by the Secretariat.
The representative of the United States said that his delegation was very concerned that the United Nations system still was not prepared to adopt Umoja and urged the Secretariat to prepare every entity to embrace Umoja while instilling an understanding of it as a business transformation project.
The Committee began its work today hearing an address, for the first time this session, by General Assembly President Vuk Jeremić, who recognized the body’s significant responsibilities as it tried to reach agreement on the scale of assessments, peacekeeping, backstopping and other issues. He urged the Committee to move ahead determinedly and reach consensus on all agenda items and wrap up its work on schedule.
Yukio Takasu, Under-Secretary-General for Management, introduced the Secretariat’s reports on Umoja; and Maria Eugenia Cesar, Controller, introduced the Secretariat’s reports on the International Public Sector Accounting Standards (IPSAS).
Also speaking today were delegates from the European Union, Canada (also on behalf of Australia and New Zealand), Japan, Kuwait, Republic of Korea, Russian Federation and Pakistan.
The Committee will reconvene at 10 a.m. Tuesday, 20 November, to discuss human resources management.
The Fifth Committee had before it seven reports detailing the Organization’s progress on two major business transformation projects: Umoja, the enterprise resource planning system; and the International Public Sector Accounting Standards (IPSAS). These projects are being discussed under the agenda item, Programme budget: biennium 2012-2013.
The Secretary-General’s fourth progress report on the enterprise resource planning project (document A/67/360) indicates the system’s implementation schedule has been revised to accommodate the extra time needed to close open design issues, incorporate a scheduled contingency plan to absorb possible complications, and accommodate various levels of preparedness across the Secretariat.
By 31 December 2015, all the functions included in Umoja Foundation and Umoja Extension 1 (the human resources and travel processes) will be fully implemented. The design blueprint and baseline configuration of Umoja Extension 2 (the remaining processes) will be complete and ready for construction. Umoja Extension 2 will be built in two successive, annual releases. The design validation of the first release (Umoja Release 2017) would take place in the second half of 2015 and go live in early January 2017. Umoja Release 2018 would follow a year later.
With the extended implementation schedule, additional funds are necessary to complete the deployment and stabilization of Umoja Foundation and Umoja Extension 1, as well as the design blueprint of Umoja Extension 2. Project estimates through 31 December 2015 are expected to increase to $348.1 million, up from the previous estimate of $315.8 million. In addition, a preliminary estimate of $30 million in contracted services would be needed to build, test and deploy the Umoja Extension 2 processes in two annual releases. Subject to a decision by the Assembly this year, details will be presented in the Secretariat’s fifth progress report on Umoja.
After the completion of the Foundation and Umoja Extension 1 implementation activities, the remaining Umoja project team resources will be wound down. From 1 January 2016, the support and maintenance of Umoja would be integrated into the Organization’s daily operations.
The Secretariat asks the Assembly to approve the revised plan of completing the design, construction and deployment of Umoja Foundation and Umoja Extension 1 by December 2015; the design of Umoja Extension 2 (which would include the 133 remaining processes); and postpone the building and deployment of Umoja Extension 2 to two annual Umoja releases in 2017 and 2018.
The Assembly also is asked to note revised requirements for the Umoja project of $65.24 million in 2012, and approve proposed requirements of $69.64 million for 2013. It is also asked to approve estimated requirements of $348.14 million to implement Umoja Foundation and Umoja Extension 1 through 31 December 2015.
The Assembly is further asked to note that additional requirements until 31 December 2015, totalling $32.37 million, would be distributed as follows: $4.86 million, or 15 per cent, from the regular budget; $20.05 million, or 62 per cent, from the support account for peacekeeping operations; and $7.48 million, or 23 per cent, from extrabudgetary resources. The report also asks the Assembly to note that the upcoming requirements of $35.98 million would be included in the proposed programme budget for the biennium 2014-2015.
In the fifth progress report on the adoption of the International Public Sector Accounting Standards by the United Nations (document A/67/344), the Secretary-General lays out the work under way to maintain the target dates for implementing these global standards: 1 July 2013 for peacekeeping operations and 1 January 2014 for other Secretariat operations.
This report covers the 1 September 2011 to 31 August 2012 period. As of 31 December 2011, 11 of 24 organizations with the United Nations system had completed IPSAS implementation and received an unqualified audit opinion on their financial statements. Implementation is on schedule for 12 of the remaining 13 organizations, including the United Nations Secretariat, while one organization decided to postpone its implementation to 2014. The Secretary-General asks the Assembly to note the report.
In his report, proposed revisions to the Financial Regulations of the United Nations for the adoption of International Public Sector Accounting Standards (document A/67/345), the Secretary General lays out the changes to these regulations and asks the Assembly to approve them for effect on 1 July 2013. Yet the report notes that the current Financial Regulations will be used to prepare financial statements for the regular budget, trust funds and reserves and special accounts, other than peacekeeping, until 31 December 2013.
The United Nations Financial Regulations and Rules govern the broad financial management of the United Nations. The revisions are necessary to support compliance with the requirements of the international standards. United Nations financial statements are now prepared in accordance with United Nations system accounting standards (UNSAS).
The Advisory Committee on Administrative and Budgetary Questions (ACABQ) weighed in on the shift to international standards with its report fifth progress report on the adoption of the International Public Sector Accounting Standards by the United Nations and proposed revisions to the Financial Regulations (document A/67/564).
After making a variety of recommendations, the Advisory Committee recommended that the Assembly note the progress and ask the Secretariat to continue its updates. The ACABQ did not object to the Assembly’s approval of the proposed Financial Regulations of the United Nations, subject to comments in paragraphs 29 and 30 of its report, and accounting for the transitional provisions found in paragraph 21 of the Secretary-General’s report (document A/67/345).
The Board of Auditors weighed in on Umoja for the first time with its first annual progress report of the Board of Auditors on the implementation of the United Nations enterprise resource planning system (document A/67/164), which the Secretary-General transmitted to the Assembly on 30 June 2012.
Its assessment of the enterprise resource planning (ERP) system was carried out between April 2011 and April 2012. The project faced severe difficulties in 2011 and early 2012 and the Board is concerned that the plans covering the project’s scope, budget and timetable (included in the Secretary-General’s third annual progress report released in 2011) are highly optimistic and lack rigour. It cannot assure that the project can be delivered on time, within cost and to specifications. Many of the problems were avoidable and point to weak project governance and management, as well as wider and deeper weaknesses in the United Nations governance and management of its business transformation processes.
Since the ERP project encompasses many different entities and business models within the United Nations system, the Board believes the Secretariat’s implementation strategy has been too ambitious from the outset both in terms of time frame and its goal of achieving a simultaneous roll-out in all locations and at all entities. The strategy also did not account for other transformation projects, such as implementing the IPSAS. Senior management did not provide an overall assessment of the sequencing and capacity needed to deliver multiple transformation programmes.
The Board is also concerned that the reported costs and progress are not transparent and governance arrangements have been ineffective. Under way for four years, the project still does not have a detailed project plan. Administrative decisions have been driven by a desire to meet an increasingly unrealistic timetable, rather than ensure the ERP system can help the Organization meet its strategic aims and objectives.
Regarding costs, the Board has serious concerns that the administration’s anticipated final estimate does not account for several factors that are likely to significantly boost costs. In addition, the administration has been unable to demonstrate whether the project is under or over budget because it cannot determine what should have been achieved in return for the $123 million already spent. The original $248.3 million estimate was revised to $315.8 million in October 2009.
In the second progress report of the Board of Auditors on the implementation of the International Public Sector Accounting Standards (document A/67/168), the Board of Auditors lays out detailed recommendations to ensure the United Nations effectively makes this shift to the use of those standards. The Chairman of the Board transmitted the report, through the Secretary-General, to the Assembly on 30 June 2012.
Among its key recommendations, the Board recommends that the United Nations finalize a comprehensive implementation plan that lays out how IPSAS statements will be reliably supported with valid transactional data. The Board wants this implementation plan to clarify how and when the switch from the Integrated Management Information System (IMIS) to the new enterprise resource planning project will be made. It also wants to know how and when it will be confirmed that IMIS will be able to handle accruals-based data for Headquarters and offices away from Headquarters.
The report notes that a key decision was made in early 2012, due to the delays in implementing Umoja, to use IMIS as a transitional measure for producing IPSAS financial statements. Umoja would only be used when available, and if testing confirmed it was ready. Even with the progress made so far, the Board considered the successful implementation of IPSAS — in peacekeeping operations by July 2013 and the rest of the United Nations by January 2014 — to be at high risk.
For the United Nations and the funds and programmes implementing the international standards, the Board repeated its previous recommendation that all entities should lay out the benefits they expected to achieve from the new information that will be available by using the international standards. Additional Board recommendations are contained in its detailed reports on individual entities.
In its report, Enterprise Resource Planning project (document A/67/565), the Advisory Committee provides its views and recommendations on this massive project and the corresponding reports prepared by the Secretary-General and the Board of Auditors. The Advisory Committee is satisfied with the Board’s audit and commends the quality of its report, which provides an independent assessment.
But it is deeply disturbed by the Board’s findings, which reveals the extent of the failings in the governance and management of the project since its inception. The Committee is very concerned that it has only now been revealed that a project of such scale, complexity, scope and budget has been managed for a period of over four years without a detailed implementation plan or adequate project management controls. The Board’s report points not only to serious deficiencies in project management, capability and methodology, but also to the need for zero tolerance for lack of managerial accountability and responsibility.
The Advisory Committee urges the Secretary-General to ensure rapid implementation of all the Board’s recommendations. It expects the Secretary-General to continue to cooperate and to work collaboratively with the Board in a fully transparent manner to address the serious issues identified by the Board, so this critical project can be successfully completed.
Statement by General Assembly President
VUK JEREMIĆ, General Assembly President, said the Committee had a big responsibility. During the sixty-seventh session, it had the demanding task of reaching agreement on the scale of assessments, peacekeeping, backstopping and other issues. The Fifth Committee tended to be last of the Assembly’s Committees to complete its work. He encouraged it to proceed with determination and willingness to reach consensus on all agenda items and expressed hope that it would conclude its work on schedule.
“I don’t consider this to be a very flexible deadline. You still have time to adjust the intensity of your deliberations,” he said. Given the complexity and sensitivity of matters under the Committee’s consideration and the economic context of the day, he was not inclined to go forward with consideration of items in Assembly Plenary for a vote without having gone first through the Committee. As times were difficult, Member States should conduct their responsibilities properly. The overall goal must continue to be increased efficiency without sacrificing equality. He welcomed the significant progress in human resource management reform in recent years.
This year, the Secretary-General’s proposal on mobility policy that aimed to make the United Nations workforce more adaptable was a main issue, he continued, expressing the hope that the Committee’s decision on that policy would be based on the central goal of human resource reform. Management reform required appropriate human and financial resources. In a time of global economic austerity, the Committee must perform a delicate balance. He was aware of the level of underfunding in the human rights arena. Also, Member States’ concern for transparent financing of the Capital Master Plan was understandable. It was important that the project be completed within the existing time frame and budget. The scale of assessments must be applied according to one’s capacity to pay. He urged the Committee to work in the spirit of compromise on the scale of and modalities for financing peacekeeping operations.
For the Assembly to respond effectively to emerging global challenges, the Office of Assembly President must be strengthened and adequately budgeted. He urged the Committee to increase the allocation for that Office starting with the sixty-eighth session as a way to reduce the financial burden of the Member State occupying the Office. Increasing that budget would enable small countries to contemplate a run for the Assembly presidency.
Committee Chair MIGUEL BERGER ( Germany) said the Committee would work in earnest to finish its work on time. It had lost one week of meeting time due to Hurricane Sandy. That must be taken into account.
Introduction of Reports
YUKIO TAKASU, Under-Secretary-General for Management, introduced the Secretary-General’s fourth progress report on the enterprise resource planning project (document A/67/360). Full implementation of Umoja was essential to make the United Nations efficient, global and unified. After Member States expressed concern about project governance and delays in implementation, the Board of Auditors conducted a comprehensive audit of Umoja from April 2011 to April 2012. The Secretariat accepted all of the Board’s recommendations made. Significant remedial action had been taken and the situation had evolved considerably since then.
Mr. Takasu said that immediately upon taking up his functions in May 2012, he also assumed the role of Chair of the Umoja Steering Committee and Project Owner. The post of Project Director was upgraded to the level of Assistant Secretary-General starting 1 July 2012, and Ernesto Baca was appointed to that post effective 1 September 2012. The terms of reference of the five process owners had been clarified to better define their accountabilities and role. The deployment strategy and timetable had been revised.
The potential benefits of that revision were estimated at $80 million to $150 million annually effective 2017, he continued. After the deployment and stabilization of Extension 2, an additional potential $60 million to $80 million could be realized annually, reaching a combined benefit of between $140 million and $220 million in 2019. While some qualitative benefits would accrue immediately, quantitative benefits would not be apparent until Umoja was fully stabilized. Potential benefits should not necessarily be seen as budget savings and should not be factored in until Umoja was fully deployed.
MARIA EUGENIA CESAR, Controller, then introduced the Secretary-General’s fifth progress report on the adoption of IPSAS (document A/67/334) and the proposed revisions to the Financial Regulations of the United Nations for the adoption of IPSAS (document A/67/345). The first report discussed how the Secretariat was addressing key concerns expressed by the Board of Auditors in its report A/67/168.
Eleven organizations had obtained a “clean” audit opinion from their external auditors. The 10 organizations implementing IPSAS in 2012 had reported that their implementation was progressing well. She said that the report outlined how the Secretariat was addressing the challenges of meeting the deadline for implementing IPSAS in peacekeeping operations by 1 July 2013, in order to prepare the first IPSAS-compliant financial statements for the fiscal year 2013/14 by 30 September 2014; and implementing IPSAS in all other operations by 1 January 2014, in order to prepare financial statements for 2014 by March 2015. The report included the concerns in that regard of the Board of Auditors, ACABQ and the Assembly.
The Management Committee was actively monitoring the project, including its links to the Umoja project, she said. The IPSAS Steering Committee continued to use a risk management approach to steer the project. In the last seven months, IPSAS’ implementation strategy had been continually adapted in close collaboration with the Umoja project. The Board of Auditors had called the ISPAS approach “sensible and feasible”. The two projects had undertaken a joint, external validation of the IPSAS transition plans.
Turning to the second report, she said the proposed revisions to the Financial Regulations were organized into 12 broad categories. Section II of the report, from paragraphs 6 to 20, briefly outlined those categories. Paragraphs 17 and 18 dealt with the annual audit of financial statements. As any further delays in implementing the IPSAS would lead to a greater cost and reputational damage, the Administration was determined to synergize its change management initiatives in order to ensure they had the necessary senior management sponsorship and support to ensure timely implementation.
HUGH O’FARRELL, Director of External Audit of the United Kingdom, Audit Operations Committee, Board of Auditors, introduced the Board’s reports on the implementation of IPSAS and its first progress report on Umoja. He said that projected benefits were an important part of the business case for implementing those accrual-based international standards. The delivery of intended benefits was the ultimate test of success, not the delivery of unmodified opinions. The Board had seen limited progress in that area as there had been a strong focus on technical and practical delivery. He added that “failure to actively manage benefits realization alongside technical delivery is a common factor in failed projects”.
Despite the progress made in 2011 and 2012, the successful implementation of the standards within peacekeeping operations by mid-July 2013 and the United Nations by January 2014 remained at high risk. Significant tasks, such as data collection and cleansing, remained to be completed and the implementation environment was complex. “So implementation is inherently risky”, he said, adding that there had been uncertainty over which implementation strategy was to be adopted. He was referring to the use of Umoja or the current core financial system Integrated Management Information System (IMIS).
Risks remained in gathering and cleansing the data on schedule and the use of manual “workarounds” created the risk of errors as all non-IMIS accounting data would be posted using manual journal vouchers. In addition, there was a lack of clarity on funding and resourcing for IPSAS implementation outside Headquarters, which could hinder progress if local implementation teams had insufficient resources. IPSAS implementation was on track in the seven funds and programmes to implement IPSAS in 2012 and produce IPSAS financial statements in early 2013.
Turning to Umoja, he said the Organization’s proposed $315.8 million ERP system spanned most of its administrative and support functions across five areas: finance; supply chain; human resources; central support services; and programme and project management. Its objective was to simplify a wide range of administrative practices and give the United Nations updated and accurate data that would then enable quicker decision-making and better service delivery through the improved planning of programmes and measurement of results.
The project encompassed many entities within the United Nations system beyond the core Secretariat and was a “very complex and challenging transformation project,” he said. The Board was concerned that the existing plans covering the scope, budget and timetable for the project were “highly optimistic and lack rigour”, and it could not provide any assurance that the project could be delivered to time, cost and specification. He added that many of the problems were avoidable and pointed to weak project governance and management and wider and deeper weakness in the United Nations ability to affect meaningful business transformation.
Among the Board’s concerns were that the Administration had not been approaching the ERP implementation as a business transformation project and it had no plans for how it would manage change and embed more efficient working practices across the Organization. There was a lack of sufficiently detailed monitoring and analysis of project costs against clear budgets and deliverables. That meant the Administration was unable to manage its resources effectively, he said. “The Administration is unable to demonstrate whether the project is under or over budget because it cannot determine what should have been achieved in return for the $123 million spent so far,” he added.
The Administration’s timeline was unlikely to be reached and its reported anticipated final cost was not robust, he said. The Administration’s estimated cost of the ERP system remained unchanged even though the timetable was being extended by two years, he added. The Board was concerned that the Administration could not provide the Board with robust supporting evidence for the anticipated final cost of $315.8 million, as first stated in October 2009. The impact of significant delays and changes since October 2009 had not been reflected in the Administration’s cost forecast.
He said the report reflected the Board’s position as of spring 2012 and it had been reassured by the seriousness with which the United Nations Management Committee, the new Project Director and the Under-Secretary-General for Management reacted to the Board’s concerns. It was pleased to note the full acceptance of its recommendations and had fully acknowledged, in the report, the actions being taken by the Administration to turn the project around.
COLLEN V. KELAPILE, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced the Advisory Committee’s reports on the progress in the implementation of the Umoja project (document A/67/565) and the adoption of IPSAS (document A/67/564). The Committee was satisfied with the scope and depth of the Board’s audit, which provided an independent assessment. He noted that the Under-Secretary-General for Management had assumed his duties in May 2012 and his role as Chair of the Steering Committee and Project Owner. The position of Assistant Secretary General/Umoja Project Director had been filled on a permanent basis in August 2012.
While welcoming the actions taken so far to address the governance and leadership issues, the Advisory Committee stressed that much needed to be done to spark a sense of ownership and proper accountability for the project’s success across the Secretariat. The Advisory Committee also urged the Secretary-General to establish a detailed project plan and introduce robust project management tools and methods in order to measure progress against the project plan and the actual use of resources against budgeted estimates, he said.
The ACABQ cautioned against any approach that would essentially only achieve a costly replacement of IMIS and perpetuate the weaknesses of the “current outmoded and stand-alone information and communications technology systems”. It stressed that the project’s full implementation was paramount to avoid such a risk and protect the investment already made by Member States, he said.
Continuing, he said that the Advisory Committee was concerned that the Administration’s proposed dismantling of the project team prematurely created risks that Umoja Extension 2 (which covered more strategic functions including planning and programming, supply chain management and budget formulation) might not be implemented effectively. It believed the project team should be maintained until completion of Extension 2, without precluding any needed adjustments.
He noted that the timetable for the deployment of the entire system would slip by three more years to 2018 and costs would escalate from the $315.8 million approved for the project to about $348.2 million, just for the first two phases of the system. The Advisory Committee urged the Secretary-General to ensure that a realistic and workable plan, which could be followed through to successful completion, was in place.
Turning to the adoption of the international accounting standards, Mr. Kelapile underscored the importance of taking all necessary measures to ensure correct opening balances were used to prepare IPSAS-compliant financial statements. The Advisory Committee was concerned about the risks that the prolonged delays in Umoja’s implementation created for the timely realization of IPSAS benefits. It expected that efforts would be made to absorb additional costs within approved resources, before any requests were made for additional resources.
It welcomed the progress made by several United Nations system organizations towards implementing the international standards. He pointed out how that would increase the number and information content of the financial and audit reports that the Advisory Committee and Assembly would have to consider.
ABDELHAKIM MIHOUBI (Algeria) spoke on behalf of the “Group of 77” developing countries and China and noted the Group’s long-term support of management reform initiatives meant to boost the Secretariat’s efficiency and capacity to deliver better results for the Organization. The delegation was very concerned with the Board’s conclusions, especially its assertion that there was no holistic assessment by Senior Management of the sequencing and capacity needed to deliver multiple transformation programmes. It also was concerned that no due account had been taken of the interdependency of other major transformation projects, such as the implementation of IPSAS, Global Field Support Strategy and the Capital Master Plan. The Group wanted more information during the informal sessions with a view to avoiding the reoccurrence of such shortcomings.
The Group welcomed the fact that the Administration had accepted the Board’s recommendations and was already acting on them. He said that the Group would scrutinize all the root cases of the delays in the ERP project and wanted additional information on the associated costs already predicted by the Secretariat. It wanted to ensure that the project reached its goals in a timely manner and without additional costs, he said. The Group agreed with the ACABQ and reiterated that strong leadership was crucial to restore confidence in the Secretariat’s ability to successfully manage and deliver a complex business transformation across the Organization.
Noting the impact of the recent tropical storm Sandy, the Group wanted detailed information on the project’s business continuity and organizational resilience management components, both presently and how it could be improved to anticipate any disruption in the Organization’s global activities.
MATTHIAS DETTLING (Switzerland), speaking also on behalf of Liechtenstein, said a year after the Secretary-General, upon the Assembly’s request, began implementing bold measures to address deficiencies in Umoja’s management and governance, he was encouraged that the project had finally gained some momentum. Although much needed to be done and many challenges remained, he was reassured by the more proactive leadership, rigorous governance and more efficient, accountable project management now in place. He urged the Secretary-General to do his utmost to sustain that momentum and build on it. Staff members must be engaged as early as possible and have a plan in place to manage and mitigate potential resistance as constructively as possible. The successful adoption of Umoja would require a significant cultural shift in the way the Organization did business. He was interested in learning more about how the Secretariat intended to support that cultural change proactively and comprehensively.
A clear definition of Umoja’s desired outcome and the organizational change needed to implement that should have been given due consideration from the outset, he said. In that context, he found particularly pertinent the Board of Auditor’s observation that there was no plan on how working practices or staff structures should be organized to harness efficiencies. Without such a blueprint for change, some of the benefits of implementing Umoja could not occur. He fully endorsed the recommendations of the ACABQ and Board of Auditors.
Creation of clear benefits realization plans was critical to IPSAS’ successful adoption. IPSAS’ adoption would significantly impact the work of the ACABQ, Committee and Assembly. He asked for more information on the exact impact and whether Member States needed to take action. Noting that information and communications technology was not on this session’s agenda, he said smaller projects or an activity report of the Office of Information and Communication Technology could have been considered by the Assembly. He would welcome an informal briefing during the sixty-seventh session on the Office’s activities.
GERTON VAN DEN AKKER, representative of the Delegation of the European Union, said that Member States had always been staunch supporters of Umoja and its potential for business transformation within the United Nations system. He called for strong leadership to restore confidence in the ability of the Secretariat to successfully manage and deliver Umoja. He believed that much remained to be done to ensure stricter management of the implementation timetable and costs of the project. Furthermore, he expected continuous monitoring by Senior Management to ensure that all recommendations, including those that were accepted by the Secretariat, were implemented rapidly.
He noted that delays in the Umoja timetable did not only postpone the realization of benefits, but also had a certain impact on the delivery of other initiatives, with financial and operational implications for the Organization. Workaround solutions were necessary to produce IPSAS-compliant financial statements using legacy systems such as IMIS. This had a one-time cost implication, but might also impact the operational effectiveness of different offices within the Secretariat. He believed that the aim over time should be to build a truly global Secretariat with standardized, location-independent service delivery, facilitated by process harmonization and a shared information technology platform. This would create opportunities for strengthened transparency and oversight, along with more cost effective ways of working. Both Umoja and IPSAS were of critical importance to the transformation to this future model, and a truly global Secretariat could not be realized without either.
PHILIPPE GENEST (Canada), speaking also on behalf of Australia and New Zealand, recalled that resolution 66/246 had referred to a “governance crisis” in Umoja and called for immediate action to be taken to address that, as well as the issue of project costs. The delegation was pleased that the governance and accountability structures of Umoja had been substantially strengthened and efforts were being deployed by the Umoja team to increase transparency and improve communication with Member States.
However, he added, his delegation was concerned about the conclusion of the Fourth Progress Report on the Enterprise Resource Planning Project that, due to earlier setbacks, the implementation of the full Umoja model would be subject to further delay and additional resources were required to complete the project design. While the delegation was not suggesting that the Assembly “shoot the messenger”, — indeed the Secretariat was to be commended for its “careful and reasoned” analysis of the current state of Umoja and the steps required to get the project back on track — it was concerned that full implementation would now be delayed by three years to 2018, and that Umoja could require additional resources to design, build and deploy the full range of its processes. Such developments were “unwelcome and he strongly encouraged the Steering Committee and the Umoja team to continue to work actively to improve delivery schedules and reduce costs.
Commending the caution with which the potential benefits of the revised Umoja implementation schedule had been described, he added that the Steering Committee and the Umoja project team should nevertheless keep in mind that “the potential for real benefits and quantifiable results was one of the main selling points” for Member States since the approval of the project. Turning to the management of indirect costs, he added that the delegation endorsed the approach set out in the report that the entities within the Organization that would be the front-line beneficiaries of the more efficient business practices supported by the Umoja platform should take responsibility for the costs related to the implementation of the ERP system within the units.
SHO ONO ( Japan) said he was encouraged by the strengthening of the Umoja governance structure, including the designation of the Under-Secretary-General for Management as the Umoja Project Owner. He was pleased that the project was now on track and backed the ACABQ’s statement that its full scope should be delivered in the interest of the Organization. Regretting further delays in implementation, he nevertheless welcomed the revised deployment strategy and timetable as a practical proposal under the current circumstances. It was expected that with strict management, each phase of the project would be completed in line with the proposed timetable.
The Secretary-General’s strong leadership was vital for Umoja’s success. Key actors, such as the Project Owner, Project Director and process owners, must be given the appropriate authority to enforce organizational decisions across the Secretariat. He asked for further detailed information on the estimated requirements for 2014 and 2015 in order for Member States to discern whether the some $32 million increase for the project was appropriate. He welcomed the Secretary-General’s initiative to ask all concerned departments to make every effort to absorb indirect costs within their existing budgets.
The size and composition of the project team should be aligned with the requirements of each implementation phase, he said. Japan would look at the Secretary-General’s proposal on the Umoja Centre of Excellence, which would be established upon completion of the Foundation and Umoja Extension 1 implementation activities. He welcomed the projected benefits cited in the Secretary-General’s report, but asked for more detailed information on the staff-related cost benefits, including those expected to arise from the decommissioning of existing systems.
He urged the Secretariat to explore ways to expeditiously reflect expected savings from implementing Umoja within budget. Welcoming progress thus far in implementing IPSAS, he underscored the importance of fully preparing for such implementation, including ensuring correct opening balances in IPSAS-compliant financial statements and close collaboration between the IPSAS and Umoja teams. The increased number of audit reports would help strengthen transparency and accountability. Its impact on the Committee’s work should be examined. EOB
Mr. AL HAJERI ( Kuwait) endorsed the statement made on behalf of the Group of 77 and China. He urged other Committee members to implement their commitments. Risk management was particularly important, as were the qualifications of those responsible for implementing Umoja, as part of a clear strategy to deliver the project on time and within budget. The role of the risk management team was very important, as was transparency and continuity. It was important to stick to the timetable for peacekeeping and special political missions. Referring to document A/67/360, he reaffirmed the Gulf Cooperation Council’s (GCC) statement to reject changes to the scale for peacekeeping, which must stay in category C. The Group of 77 had refused to increase the level of contributions for developing countries. It was necessary to recall that Kuwait was modernizing its infrastructure and spending funds towards that end. That was why it had refused an increase in the scale of assessments.
KIM SEO JUNG ( Republic of Korea) noted with appreciation the Secretary-General’s action to strengthen the governance structure and establish a strong leadership scheme for the Umoja project. His steps to designate the Under-Secretary-General for Management as Steering Committee Chair and Project Owner, and to revise the Terms of Reference for process owners in order to better define accountabilities and expedite decision-making were generating good momentum for success. Republic of Korea still had concerns about the revised deployment strategy and timetable presented in the Secretariat report. According to the fourth progress report, full deployment, including the Umoja extension 2, would be finished in 2018. While acknowledging the project’s complexity and scope, the delay was worrisome considering the potential ramifications of cost escalation and impact on realizing the project’s benefits. He fully shared the ACABQ’s view that all efforts should be directed to ensure the project did not further delay and that resources were utilized efficiently.
Given the tight budget and the project’s cost escalation, it was critical to absorb the indirect costs of implementing Umoja, including for cleansing data, system validation, user testing, and end-user training, he said. In that regard, the Secretary-General had stated that the Working Group would formulate new estimates and all concerned departments would make every effort to absorb those costs. The Secretary-General should make sure his intentions were translated into tangible results. The Republic of Korea would engage constructively and actively in the discussions on the enterprise resource planning.
STEPHEN LIEBERMAN ( United States) noted the encouraging transition of the Umoja project last year and applauded Under-Secretary-General Takasu and Assistant Secretary-General Baca for taking ownership and assuming the responsibility for its success, as well as the Umoja project leadership for implementing all of the Board of Auditors’ recommendations. It was encouraging that the Secretary-General and his Senior Management team were working seriously to bring the project back on track and as close as possible to the original time frame and budget.
Still, he was seriously concerned that the Organization was not prepared yet to adopt Umoja, which was the highest risk factor to its successful completion. The Organization must prepare every entity to embrace Umoja and adopt an operating model with a single common set of processes. To that end, he strongly encouraged the Secretary-General to continue efforts to implement the project technically and instil in all parts of the Organization an understanding and appreciation that Umoja was a business transformation project. Umoja’s full implementation was in its best interest and paramount in order to avoid risk, protect Member States’ investment and realize the project’s full benefits, he said. The Umoja Foundation must be kept within budget. Once the exact financial requirements were known for Extensions 1 and 2, the United States would closely scrutinize the request for more funding in order to maintain the overall resource envelope already approved for the project.
He looked forward to hearing about the Working Group’s efforts to identify preparatory activities and indirect costs related to Umoja’s implementation. He encouraged the Secretariat to continue implementing the Board of Auditor’s recommendations. Member States must stay engaged and maintain oversight. IPSAS was critical to ensuring quality, comparability, credibility and transparency of financing reporting in the United Nations. He noted the Board of Auditor’s findings and was concerned with the risk they had identified for IPSAS implementation. He looked forward to learning more about the IPSAS transition plan as Umoja was incrementally deployed.
Noting the ISPAS reports, SERGEY A. SAFRONOV ( Russian Federation) said the transition to international accounting standards would improve the quality of the Organization’s management and give Member States a better picture of its financial health. That was a large-scale project and it needed to be fully implemented on time and within budget. The impact of the adoption of those standards on the Fifth Committee, the ACABQ and relevant departments had to be considered, as reports now would be prepared every year. The volume and quantity of reports would increase and more time would be needed by the ACABQ and Fifth Committee, which already had busy timetables. The Russian Federation would like comprehensive information from the Secretariat on this issue.
Turning to Umoja, he said that project should improve the quality of management and strengthen budget discipline. It was important to stick to the approved plan. Russia wanted more information from the Secretariat about the timetable. He noted the Audit Board’s concerns about the project, including that the full implementation of the project was originally planned for 2013 and the budget had increased. Some of those problems had been identified by Member States when other large-scale projects had been carried out. The risks had to be identified and “nasty surprises” had to be avoided in the future.
Aligning with the statement of the Group of 77 and China, MUHAMMAD IRFAN SOOMRO ( Pakistan) said his country supported the objectives of the Umoja system. The Board’s concerns, including costly delays in the project’s implementation, cost overruns and the absence of clear lines of accountability, were very serious. He would like to know in detail what remedies were being taken by the Secretariat. Member States wanted assurance that the Secretariat had a robust plan in place and was acting on the concerns included in the Board’s report.
In addition to resolving the governance issues, the Secretariat needed to put credible mechanisms in place to ensure the objectives of the ERP were met. He would like to know the indirect costs of the project, which included items such as user training and data cleansing. He also wanted information on the project’s operational readiness.
Responding to those statements, Mr. TAKASU said the Committee had the full confidence of the new Umoja leadership. All the points made by delegates today would be fully taken into account in the successful implementation of Umoja. In terms of weaknesses in auditing, the Secretary-General had taken them into account and they were reflected in annex I of the Board of Auditor’s report. Organizational readiness was a top priority of the Secretary-General. The Secretary-General had challenged all Department and Programme Heads to ensure that their programmes were aligned, including the senior officers’ compact. There were three specific indicators that the heads of programmes and departments must be committed to and aligned with the Umoja project, and his Office was committed to making sure that was respected. He would be happy to provide more detailed information on the project’s potential benefits and costs.
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