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Modernization Overview for CAAP: 15 July 2014 julianmurrayconsulting@gmai l.com
Overall approach
Nine work areas
Four time phases
Several items sequenced after Strategic Vision, and after new SG appointed in 2015
Presentation today in 4 sections
Specific Funds and Leadership
2015 current budget items
2015 capital expenditure items
Looking ahead to 2016 and beyond
Specific Funds management (1)
Reduction in small specific fund projects with high management load
No. % $ %
o 375 52% 0.0 0.0%until 50,000 154 21% 2,107,765 3.4%until 100,000 69 10% 5,107,227 8.2%until 200,000 56 8% 8,020,964 12.9%until 500,000 35 5% 10,549,994 17.0%
until 1,000,000 23 3% 15,401,080 24.8%More then 1,000,000 10 1% 20,989,031 33.8%
TOTAL 722 100% 62,176,061 100.0%
PROJECTO COMPLETION
COST AVERAGE
Specific Funds management (2)
Creation of Specific Fund “baskets”: where the OAS designs a programme and several donors contribute
Take the MAPP model, apply it to the IACHR, and then to the Election Observer Missions
Benefits of streamlined administration, more efficiency, better results
Some degree of earmarking still possible in a hybrid model
Leadership Training
Should be a priority for a restored training budget
There is a middle-management gap in the organization that creates a long-term risk
P1-P4 level employees with less than 10 years at the OAS are the least engaged, according to the staff survey. But they represent the future
Current vs Capital expenditure
Current expenditure is“Spending on items that are consumed or only last a limited period of time”
- Maintenance, salaries, travel, CPRs, training, evaluations, audits
Capital expenditure is“An amount spent to acquire or upgrade productive assets such as buildings, equipment and software, in order to increase capacity or efficiency for more than one accounting period”
- Building renovations, videoconference and computer equipment, software upgrades, converting to new HR or accounting systems
Independence of the Inspector-General
Strengthen the IG office Oversight by an External Audit
Committee, in accordance with global standards
Expand the role of the Board of External Auditors to include the External Audit Committee functions
Evaluation
Evaluation is a core accountability and performance function
Currently only financed by some Specific Fund donors
More efficient to contract out rather than conduct with in-house staff
Evaluation emphasis should be on learning and improvement rather than control
Restore the training budget
OAS needs a training budget The single most important priority
identified in the staff survey Necessary to implement all the
business process improvements Includes items like ethics training
recommended by the BEA, and basic orientation for new staff
Balancing revenues and expenditures Three sets of measures recommended
will need significant new spending: Stronger Inspector-General Office Evaluation function Restored training budget
Propose to provide additional funds through three main measures Removal of early payment discount Closer application of Direct Costs ICR increase from 2016
Early payment discount
Clearly met a need at a time of critical cash-flow problems
But has “cost” the OAS about $5.5m since 2000
$533,000 discounted in 2013 Recommended by the BEA Needs approval at the Special GA
Direct Costs
Direct costs are currently being undercharged
Definition of Direct Costs is broad and application subjective
Both programme staff and Specific Fund donors want to keep Direct Costs down, but this is concealing the real costs and significantly taxing the Regular Fund
Indirect Cost Recovery Current rates of 11% and 12% do not
reflect actual costs Need to finance Inspector-General
and Evaluation costs that are currently unfunded
Propose increase to UN standard 13% for all new agreements effective 2016
Also propose to introduce a minimum ICR for small projects
Possible expenditure reductions
Limit the number of staff attending international meetings
Reduce the frequency of some international meetings, and hold more of them virtually
Require rent-share from host states for all national offices, and/or
Co-locate national offices with other InterAmerican organizations
Postpone new mandates until they have full costing and an identified source of funds
Rethink the number and size of reports to Member States, so they get what they need
OAS Capital Plan 2015-2018
A capital plan will encompass Long-term capital measures such as
building renovations and overdue maintenance
Once-in-a-decade exceptional measures such as SG transition costs and replenishing the reserve fund, and
Modernization measures including IT systems, accrual accounting, procurement reform and modernization of human resources management
Modernization capital measures
IT upgrade is the basis for modernization and streamlining in three other areas Conversion to accrual accounting Streamlined procurement Modern Human Resource Management
Together will need about $8 million of which $4 million for IT and $1.5 million for accrual accounting (not full IPSAS)
Buying business cards: $15
Human Resources Successive cuts have left critical gaps
and left the OAS exposed Start with Strategic Vision Then Organizational Design Then skills and gap analysis Classification review Fitting the people to the tasks
3-4 year process, including updated Human Resources regulatory framework
Looking ahead to the other 2015 items
New quota system
4 options Change nothing Fix the US contribution at about $49m and
49% and increase the rest to 100m Leave the total budget at $83m, reduce US
to 49% and increase the rest to $83m Leave the non-US budget at $34m, reduce
the US to 49% and reduce the whole budget to $66m
Change Management Change is always uncomfortable Change should be actively managed
Have a plan (based on a clear vision) Communicate to engage Implement (through empowerment) Monitor progress and adjust
Implementation Team Management Modernization Ombudsman
