Concerns over Increase in Project Cost, Delay in Performing Staff Impact Study Aired as Budget Committee Discusses Use of Flexible Workplace at Headquarters
As the Fifth Committee (Administrative and Budgetary) discussed the use of more flexible and open workplace at the United Nations, delegates raised concerns about upwardly revised cost estimates for the now $65.7 million project, and that an assessment of its impact on productivity and staff well-being had not been finalized.
Thailand’s representative, on behalf of the “Group of 77” developing countries and China, noted with serious concern the revised estimates for the project to carry out activities that should have been included in the renovation of the New York Headquarters, the Capital Master Plan. Initiatives, including Umoja, the information and communications technology strategy, long-term accommodation needs for Headquarters and the study on a Global Service Delivery Model, could directly impact the number, skills and location of staff. The Group would seek clarity on how those would impact the scope and duration of the flexible workplace project.
The European Union’s delegate deeply regretted the missed opportunity of the Capital Master Plan, noting that approval of the Strategic Heritage Plan to renovate the historic Palais des Nations in Geneva was a good opportunity to make the strategy work in a cost-effective way. He pointed to some concerning changes which needed to be clarified in order for the Union to renew its support, among them, the updated project scope, the revised real estate plans — including the number of buildings that would be vacated — and additional funding requirements.
Further, said China’s representative, the timetable for implementation should be specific, clear-cut, feasible and pragmatic. He was concerned by the Secretariat’s request for additional budget resources while the final costs of the programme had yet to be determined. The flexible workplace strategy was part of overall change management initiatives and should be coordinated with the strategic capital review and ongoing capital projects in order to minimize resource waste.
The United States’ delegate, expressing support for the concept, said it should be implemented in all duty stations. The issue should be examined carefully and adjustments made, so that the best possible strategy emerged. “This is a concept that is well worthy of the Organization to pursue,” she stressed.
Stephen J. Cutts, Assistant Secretary-General for Central Support Services, presented the Secretary-General’s first progress report on the topic, noting that increased customization and use of the most recent pricing information had raised the estimated cost of implementation per floor.
He said the plan presented in the previous report had a total estimated cost of $49.6 million. The current plan still involved reconfiguring 26 floors of the Secretariat building, accommodating 800 more staff as previously envisaged, but also three floors of the FF building, accommodating 75 more staff, and five floors of the DC1 building, accommodating 75 more staff, at a total estimated cost of $65.7 million. The reduction in rent and operating costs would offset the estimated project costs in 2023, from which time savings would accrue.
Carlos Ruiz Massieu, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introducing his body’s related report, noted that the Secretary-General had not yet finalized an assessment of the impact of a flexible workplace on overall productivity and staff well-being. He recommended that the Assembly ask him to provide a plan for the project’s full scope, to serve as a “reliable” basis for estimating the resource requirement and time frame. The overall $16.1 million increase in estimated project costs, presented in the Secretary-General’s current proposal, was not in line with the Assembly’s request to review cost reductions “to the maximum extent possible”, under specific items.
The Fifth Committee will reconvene at 10 a.m. Friday, 18 March, to discuss the 2016-2017 programme budget as it relates to the Resident Coordinator system, special political missions, the United Nations monitoring mechanism on Syria, construction and property management and human resources management.
2016-2017 Programme Budget: Flexible Workspace at Headquarters
STEPHEN J. CUTTS, Assistant Secretary-General for Central Support Services, introduced the Secretary-General’s first progress report on the implementation for flexible workplace strategies at United Nations Headquarters (document A/70/708), citing “substantial” progress, with the project’s first phase under way. Each phase would take about three months and involve a few floors at a time.
In line with General Assembly guidance that flexible workplace strategies should aim to improve productivity, he said the project team had taken an incremental approach focused on customizing space to meet specific work needs of staff on specific floors. Increased customization and use of the most recent pricing information had increased the estimated cost of implementation per floor. Extensive consultations had led to delays in completing the first phase; however, not the overall schedule. Staff currently in swing space would move back to their reconfigured floors in mid-June.
In response to the request by the Department of General Assembly and Conference Management to continue occupancy of the Albano building, and as some departments had requested more time to consider how to retain the least cost per square foot lease, the Secretariat had also adjusted its lease exit approach, he said. The current plan was to vacate two buildings at the end of their leases — the Innovation Luggage building and the Daily News Building — while the decision not to vacate the United Nations Federal Credit Union (UNFCU) building, as originally planned, was due to long-term accommodation factors, rather than flexible workspace considerations.
He went on to say that the plan presented in the previous report had a total estimated cost of $49.6 million. The current plan still involved reconfiguring 26 floors of the Secretariat building, accommodating 800 more staff as previously envisaged, but also three floors of the FF building, accommodating 75 more staff, and five floors of the DC1 building, accommodating 75 more staff, at a total estimated cost of $65.7 million. The reduction in rent and operating costs would offset the estimated project costs in 2023, from which time savings would accrue.
It had become clear that flexible workplace strategies would be a substantial change for the United Nations operating environment, he said, noting that his office had informed colleagues in Geneva it would help them incorporate flexible workspace into the planning of the Strategic Heritage Plan. It also was coordinating with the team studying approaches to global services delivery and related Umoja impacts. Subject to Assembly guidance, the next steps for the Secretariat were to continue planning and implementation of project phases; engagement with departments directly affected by those phases; and communications and change management efforts.
Based on the experiences gathered, his office would develop plans for further implementation at Headquarters, he said, which would align with long-term accommodation and global service delivery objectives. The Secretary-General had requested approval of the revised project sequence, implementation schedule and next steps; as well as of the continuation of three temporary positions in the project team, and approval of two additional General Service positions, with effect from 1 April 2016. He also sought authorization to enter into commitments up to $47.3 million related to project costs in 2016-2017, and proposed submitting his next report during the Assembly’s seventy-second session.
CARLOS RUIZ MASSIEU, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introducing his body’s related report (document A/70/7/Add.45), noted that the Secretary-General had not yet finalized an assessment of the impact of a flexible workplace on overall productivity and staff well-being, and reiterated the Assembly’s request in that regard. In his current proposal, the Secretary-General had provided project implementation plans for only the first and second phases that extended until June 2016. In that context, the Advisory Committee recommended that the Assembly ask the Secretary-General to provide an implementation plan for the project’s full scope, he said, to serve as a “reliable” basis for estimating the corresponding resource requirement and time frame. ACABQ had noted with concern that the current proposal had indicated both a longer time frame for offsetting implementation costs by the anticipated reductions in rental and operational costs, and a lower reduction in annual rental costs, after the project costs had been fully offset.
The Assembly had requested the Secretary-General to review implementation costs, he recalled, including by reviewing reductions “to the maximum extent possible”, under specific items. The overall $16.1 million increase in estimated project costs, presented in the Secretary-General’s current proposal, was not in line with the Assembly’s request. Thus, the Advisory Committee recommended that the Assembly ask the Secretary-General to revisit his cost estimates and provide updates in his next progress report. ACABQ also recommended that the Assembly authorize the Secretary-General to enter into commitments of up to $18 million for the 1 January to 31 December 2016 period, and to submit his next report on that topic at the main part of the Assembly’s seventy-first session.
SIRITHON WAIRATPANIJ (Thailand) spoke on behalf of the “Group of 77” developing countries and China, recognizing the importance of organization transformation initiatives that contributed to a modern, adaptable and effective United Nations and the need to implement them in a well-considered, phased manner. Flexible workplace would significantly impact the Organization’s working environment. The Group was concerned that the assessment of the impact of a flexible workplace on overall productivity and staff well-being was not yet finalized, while the project was moving ahead. Inadequate change management could result in lower staff morale and lower productivity. The Group planned to seek further clarity on the status of the assessment and how its findings could influence future stages of implementation.
A well-substantiated, reliable and predictable business case was essential for the Committee’s consideration of costly major transformation initiatives. She noted with serious concern the revised estimates for the project, which stood at $65.7 million, to undertake activities that should have been included in the Capital Master Plan. Other initiatives, including Umoja, the information and communications technology strategy, long-term accommodation needs for Headquarters and the study on a Global Service Delivery Model could have a direct impact on the number, skills and location of staff. In this regard, the Group would seek further clarity on how those would impact the scope and duration of the flexible workplace project.
JAN DE PRETER, representative of the European Union Delegation welcomed all proposals by the Secretary-General aimed at making the Organization more modern, adaptable and effective. The Union believed that flexible workplace strategies should be taken into account as early as possible in the design phase of such projects and deeply regretted the missed opportunity of the Capital Master Plan, in this regard. The approval of the Strategic Heritage Plan in Geneva was a good opportunity to make the strategy work in a cost-effective way.
The European Union attached great importance to budgetary discipline and proper budgetary procedures. He noted some concerning changes which needed to be clarified in order for the Union to renew its support. Those included the updated scope of the project, the revised real estate plans, including the number of buildings that would be vacated, and additional funding requirements. The Union looked forward to hearing from the Secretariat about the impact of a flexible workplace on overall staff productivity and well-being.
GUO XUEJUN (China) associated himself with the Group of 77 and said the principles and objectives of implementing the flexible workplace strategy at Headquarters included improving efficiency and enhancing the overall productivity of the staff. There should be predictability in implementing the strategy and preparing the budget. The timetable for implementation should be specific, clear-cut, feasible and pragmatic. He was concerned by the Secretariat’s request for additional budget resources while the final costs of the programme had yet to be determined. The implementation of the flexible workplace strategy was part of overall change management initiatives and should be coordinated with the strategic capital review and ongoing capital projects in order to minimize resource waste.
CHERITH NORMAN CHALET (United States), expressing support for the flexible workplace concept, said it should be implemented in all duty stations. Her Government would have questions about the revised plan and cost implications. The issue should be examined carefully and adjustments made, so that the best possible strategy was pursued. “This is a concept that is well worthy of the Organization to pursue,” she stressed.