Hundred and eighth Session
Rome, 27 September – 1 October 2004
Progress Report on Efficiency Savings
Pursuit of Proposals for Efficiency Savings 2004-05
Extracts from the Reports of the Programme and Finance Committees regarding the reinstatement of certain posts in the PWB 2004-05
1. Efficiency Savings have been defined by FAO Council as “reductions in the costs of inputs without material negative impact on the outputs”. In accordance with this definition, the Organization has approached achieving efficiency savings in three ways: by pursuing input-oriented measures, by identifying process-oriented efficiency savings, and by increasing recovery of the cost of various services provided by the Organization.
2. In November 2000, the Council reviewed a Report on Efficiency Savings1 which provided a summary of the process which has been underway in FAO since January 1994 to improve the Organization’s efficiency. Subsequent Programme of Work and Budget documents have provided updates on the Organization’s continual efforts to improve efficiency2.
3. Members have appreciated the information presented in these documents, and the Finance Committee, at its 107th session in May 2004, noted the following in its report:3
“The Committee looked forward to receiving a document, at its next Session, on efficiency savings including updated information on progress, issues and options and comparisons to the experience of other Organizations including, where possible, other UN agencies. The secretariat indicated that it would welcome ideas from the Committee on possible sources of comparative data and on areas in which efficiency savings might be made.”
4. In response to the request, this document outlines the progress to date in pursuing further efficiency savings.
5. In the early part of 2004, the main service-oriented central units (the Administration and Finance Department (AF) and the General Affairs and Information Department (GI)) worked together with the Office of Programme, Budget and Evaluation (PBE) and Internal Audit (AUD) to identify potential areas for further efficiency savings. In addition to these proposals from central units, the Secretariat reviewed recommendations coming from external audit and other independent studies, including the Independent Evaluation of FAO’s Decentralization and various studies under the auspices of the Field Programme Committee. Proposals put forward for consideration under Capital Budgeting were also analyzed for their potential for efficiency savings.
6. The process was further informed by the medium-term planning process, where the non-technical and technical cooperation units participated for the first time and were specifically asked, when formulating their major outputs, to identify the type of efficiency savings that could be pursued over the Medium Term Plan 2006-11.
7. As a result of these various analyses, a short-list of areas for potential efficiency savings was identified.
8. A subsequent meeting with top management, including the Deputy Director-General and the Assistant Director-Generals of the relevant departments, was held with the objective of agreeing on the specific proposals to be investigated for efficiency savings this biennium. The list is attached as Annex A.
9. For each proposal, a department, division or unit was assigned responsibility for taking the lead in investigation and then taking whatever action may be needed to realise the savings considered feasible. Key collaborators were also identified.
10. Each unit assigned responsibility for a particular aspect of the efficiency savings exercise was asked to contact their peers in other UN agencies so as to obtain relevant comparative data and any information on lessons learned from their respective experiences.
11. Expected timing for the process was also discussed as some areas (for example the Human Resources Management System (HRMS)), have undoubted potential for savings on which work could start but these are not achievable until after 2005, while other areas could result in gains in the short-term.
12. Finally, the outstanding requests from the Programme and Finance Committees that the first calls on any efficiency savings are to be the Finance Division (AFF) and the Regional Office Policy Assistance Branches were also recalled (see Annex B for excerpts from the relevant reports).
13. Responsible units are committed to preparing a first progress report to the Deputy Director-General in mid- January 2005, which would also include a forecast of the likely point in time (quarter/year) when the flow of those savings found to be achievable could be expected to commence, and, where possible, comparisons to the experience of other Organizations, including sister UN agencies.
14. The Secretariat believes that with this framework a concrete process has been put into place, with full support from Senior Management for the Organization to renew its ongoing effort of pursuing and achieving efficiency savings. The Summary Programme of Work and Budget 2006-07 will provide an update on the process and report any savings that have accrued.
1 CL 119/INF/12 refers.
2 C 2001/3, paras 89 to112; C 2003/3, paras 177 to 190; and PC 91/3, FC 107/14, JM 04.1/2 paras 41 to 43 refer.
3 CL 127/14 para. 66 refers.
1. Efficiency and savings in Governance
(N.B. Many of these proposals require the specific involvement of the Governing Bodies including, in some cases, Conference approval. The process would commence with proposals being put to the Joint Meeting of the Programme and Finance Committees.)
|1.1||Streamlining Governance||The duration of the Conference will be reduced from 9 to 7 days. Conference working hours would not go beyond 18.00 hours in order to avoid evening sessions. The second Saturday of the Conference would be a working day, thereby reducing the impact of overtime charges. There would be fewer messengers available during Governing Body meetings.||GIC|
|1.2||Reduction of maximum length of meetings documentation||It may be feasible to reduce the length of documents to 5000 words, giving waivers for documents over this word limit, but not exceeding 6400 words. The total volume of documentation for all Governing Body meetings could be reduced by 10% in terms of word length. Permanent Representatives frequently express concern about the length and volume of documentation and would welcome these measures. Information documents could be made available as print-on-demand papers posted on the internet, thus reducing printing and despatch charges.||GIC|
|1.3||Reduce length of programme planning documentation (MTP, SPWB and PWB) and post facto implementation reporting documentation (PIR and PER)||The proposal builds on the idea that the Membership feels that the documentation is too voluminous and on the fact that FAO seems to produce much more planning documentation than some of its sister agencies.||PBE|
|1.4||Elimination of verbatim records||Verbatim records of Council and Conference are a requirement of the Basic Texts. However, they are very expensive to produce and are a duplication of the audio tapes. The proposal is to investigate the feasibility of following practices in other UN bodies, which make audio/video recordings available on their Website or on CD ROMs and thus eliminate hard copy verbatim records.||GIC|
|1.5||Committee on Commodity Problems (CCP) and Committee on Agriculture (COAG)||The Joint Meeting of the Programme and Finance Committees (May 2004) unanimously supported the proposals as summarized in paragraph 21 of the document JM 04.1/3 which proposed shortening the sessions of the CCP and COAG, among other measures. The Committees also expressed preference for holding the meetings back-to-back. They recommended that the proposals be implemented on a trial basis in 2005, and that the Programme Committee be subsequently provided with an assessment of the implementation of this new arrangement.||AGD/ESC|
|1.6||Application of UN Secretariat system-wide best practices for Governing Body meetings||Review and implement other best practices in the UN, if applicable to FAO. The Geneva-based agencies’ approach of assisting Permanent Representations to access the Web could be investigated with a view to enabling the Organization to replace labour intensive paper correspondence with e-mail or web-posted communications when appropriate.||GIC|
|2. Document and Publication Management|
Reduction of publication production costs
The proposed measures include:
|2.2||Reduce the costs of storage and distribution of publications||Advances in technology will allow individual publication mailing and packing costs to be charged back to the concerned units, based upon bar-coding techniques. It is expected that by transferring the budget for complimentary copy distribution lists to these units and then charging for actual costs, much greater attention will be given to the need to minimize distribution costs.Related to this, the cost of storage could possibly be reduced through improved policies and procedures imposing maximum storage periods for publications. The possibility of also charging back such costs will be re-examined.||AFS|
|3. Registry Management|
|3.1||Restructuring of Registries and consolidation at departmental level||The Digital Records Management System (DRMS) has reached the stage of maturity where it can be reasonably assumed that certain improvements can be made to the physical structure of registries – in particular, through their consolidation at departmental level. The review is currently being conducted.||AFS/AFH|
|4. Business Process and Entitlement Changes|
|4.1||Implementation of a lump-sum arrangement for Removal of Household Goods||Has already been implemented in several UN system organizations and is being investigated for FAO.||AFDS|
|4.2||Travel arrangements||Savings may arise through the retendering (currently in progress) of a travel agency service contract and a coordinated effort with other UN system bodies to benefit from the UN’s overall bargaining power with airlines.||AFDS|
|4.3||Outsourcing and/or relocation of administrative/ financial transaction processes||Considerable cost saving can theoretically be made by outsourcing administrative work to developing countries or, alternatively, by offshoring it to staff located in a suitable Regional Office, where the cost of GS posts is much lower than at HQ.A similar approach is being investigated for information systems development and maintenance work.||AF(PBE)|
|4.4||Seeking the appropriate balance in outsourcing of services||Cost savings can be made by correctly balancing internally provided services with outsourcing. Areas for further exploration include the production of information/ communication materials; the development and staging of exhibits and displays; interpretation services; and the possible outsourcing of the cashier function to the commercial bank on HQ premises.||AF/GI|
|5. Information Systems Governance|
(N.B. In addition to the areas proposed below, the non-technical and technical cooperation units have indicated in the MTP 2006-11 a number of areas where potential efficiency savings could be achieved through the improved use of information technology. These areas should be further explored and brought to the attention of PBE, as appropriate.
|5.1||Outsourcing mainframe services to ICC||Operation of the mainframe computer environment was outsourced to ICC in Geneva in mid-January 2004, where FAO’s mainframe systems operate on a dedicated computer at ICC at similar cost to previous arrangements. It is proposed later in 2005 to move to a larger mainframe at ICC, where FAO applications would share this resource with applications from other UN agencies, resulting in cost savings as usage of that environment reduces following implementation of HRMS (see 6.1).||AFI|
|5.2||Central governance of Corporate Web systems||The synergy between these areas (FAO Internet site http://www.fao.org, FAO Extranet site and the FAO Intranet site http://intranet.fao.org) may result in increased standardization and improved efficiency if the (currently separated) funding is merged and policies are aligned.||AFI|
|5.3||Central governance of Departmental Network Service Systems (file and print sharing, e-mail, registries) – HQ||For HQ, efficiency savings could be expected as server sizing and capacity is shared across HQ needs and considered holistically rather than at departmental level.||AFI|
|5.4||Central governance of servers for divisional/ departmental projects||Projects could share server platforms rather than buying one for each project resulting in minor purchase-cost savings and reducing the need to support multiple platforms.||AFI|
|5.5||HQ and RO PABX systems||At the expiry of economic life of existing PABX equipment, FAO may be able to improve efficiency by by ensuring a common approach to the adoption of emerging voice technologies, especially “Voice over IP”.||AFI|
|5.6||Information Technology Officer posts||Review will be made to determine whether AFI and a slightly enhanced OTC network could cover current functions of Headquarters ITOs .||AFH (AFI)|
|6. Streamlining Business Processes|
|6.1||Human Resources Management System (HRMS)||This major development which includes integrating and interfacing many individual systems, is bound to have implications for efficiency throughout the house. While any benefits are unlikely to be realized before 2006, an approach should be developed to identify (and quantify to the extent possible) such efficiency savings as may arise out of the successful implementation of HRMS.||AF|
|6.2||Streamlining of regional and country level administrative activities||Suggestions for changes in financial related workflows from the various reviews carried out under the leadership of the Field Programme Committee and in particular the Review of Field Programme Support to FAO Regions (ROB/MSU report) which could potentially result in savings, include:
The above delegations could take place provided there was an adequate system of internal control on place.
Similar recommendations are presented in the Independent Evaluation of FAO’s Decentralization report and should be pursued in conjunction with the above, subject to their approval.
|AF(TC, OCD and AUD)|
|6.3||Streamlining business processes in the management support services||
A Steering Group is to be chaired by PBE to examine management support services and units with a view to identifying potential efficiency savings arising from streamlining.
|7. Improved Support Cost recovery to reduce Regular Programme contribution|
|7.1||Ways and means of improving support cost recovery both for Technical Support Services (TSS) and for Administrative and Operational Support Services (AOS)||Items that will be reviewed include:
||TC and PBE|
- CL 127/14 Report of the 107th Session of the Finance Committee
(Rome, 10-18 May 2004)
70. The Committee concluded by expressing its concern that the abolition of the five general service posts in AFF could put the Organization’s internal control at risk and requested that these posts be restored as the first call against additional efficiency savings if and when they became available.
- CL 127/11 Report of the Ninety-first Session of the Programme Committee
(Rome, 10-14 May 2004)
22. Within Major Programme 3.1 Policy Assistance, the Committee expressed serious concern about the reduction of 14.3 percent in Programme 3.1.2 Policy Assistance to Various Regions, as it accorded high priority to delivery of policy advice to Member countries through decentralized offices. The Committee requested that the reduction be brought in line with the average for the Organization at the approved budget level for 2004-05, that is 6.4 percent below Zero Real Growth. It requested that the resulting need for an additional US$ 1.34 million for Programme 3.1.2 should be found through reallocation of efficiency savings expected to be generated by measures to be taken by the Secretariat within the biennium.
- CL 127/8 Report of the Joint Meeting of the Ninety-first Session of the Programme Committee and the Hundred-and-seventh Session of the Finance Committee
(Rome, 12 May 2004)
7. The Committees also endorsed the two specific areas identified during the individual discussions (and as reflected in their respective reports) calling for lower reductions than originally proposed in the document, i.e. Programme 3.1.2 Policy Assistance to Various Regions and Programme 5.2.1 Financial Services, which would be achieved through redirection of efficiency savings to the extent that they could be generated in the biennium.