Value Engineering in Hungary Orlando, June 11 2012

Zsuzsanna Kondor Director GeneralCoordination Managing Authority

National Development Agency , HUNGARY

• The European Union and its Cohesion Policy

• Value engineering in Hungary • The role of the National Development

Agency in financing development programmes

• Value engineering case studies • Challenges: preparing for 2014+

Cohesion Policy

Content of the presentation

• The European Union and its Cohesion Policy

<50

50 - 75

75 - 90

90 - 100

100 - 125

³ 125

Differences in development in the

EU-27GDP per head as a % of the

community average

Disparities across the European Union

Hi Lo Ratio

GDP per cap (% EU27 average)

Luxembourg251%

Bulgaria33% 7.6*

Population Germany82.5 million

Malta404,000 204

*In US, this difference is only 2.5 and Japan 2

How much does it cost? One third of the EU budget 2007-2013

€347 billion over 7 years*

*1 EUR = 1,31 USD in January 2007

What does the EU citizen get for this?

The three funds target:

• ERDF (€201 billion): regional development, economic decline in industrial or rural areas, competitiveness and co-operation

• ESF (€76 billion): employment, social inclusion and tackling discrimination

• Cohesion Fund (€70 billion): environment and transport

……with overarching aim of “boosting growth and employment”

Research/Innovation

EnvironmentTransport

Information societySocial infrastructureEnergy

TourismCultureInstitutional capacity

Human capital

Employment

Adaptability of workers and firmsSocial inclusionCapacity buildingTechnical assistance

What do we spend the money on?European Regional Development Fundand Cohesion Fund (€271 billion)

European Social Fund (€76 billion)

Who gets what?• Convergence 81.9% (regions lagging behind the

most)

• Competitiveness 15.7%

• Territorial co-operation 2.4%

• Total budget €347bn, which will unlock up to €700bn

A method based on what works: Programming, Partnership and Decentralised Management

Index EU 25 = 100 Source: Eurostat

Geographical Eligibility for Structural Funds Support 2007-2013

Objective 'RegionalCompetitiveness and Employment'Phasing-in regions, "naturally" above 75%

Convergence objectivestatistically affected regions

Objective 'RegionalCompetitiveness and Employment'

Convergence objective(Regions < 75% in EU 25)

• Value engineering in Hungary

HungaryKnown of:

HungaryKnown of:

• 20 CVS• 19 PVM• over 1000 AVS• 11 Universities• 20-30 VM projects/year

• SHVA 70 members

VM & the Government19

49

L. D. Miles: VE

VM & the Government19

49

1968

L. D. Miles: VEVE in Hungary

VM & the Government19

49

1968

1991

L. D. Miles: VEVE in HungarySociety of Hungarian Value Analysts

VM & the Government19

49

1968

1991

1996

L. D. Miles: VEVE in HungarySociety of Hungarian Value AnalystsVE in Hungarian Public Procurement Act

“The tender-owner might oblige the tenderer to utilize Value Engineering…”

Hungarian Public Procurement Act, 2003. CXXIX. 53. § (4)

VM & the Government19

49

1968

1991

1997

1996

L. D. Miles: VEVE in HungarySociety of Hungarian Value AnalystsVE in Hungarian Public Procurement ActVE in Hungarian Highway Design Act

Prime Ministers Office – Preparation of legislation

Entities utilising VEPUBLIC SECTOR PRIVATE SECTOR

NON-PROFIT SECTOR

• National Bank of Hungary• Nuclear Power Plant• Ministry of Social Affairs• Transport Agencies• National Development

Agency• Hospitals

• Telecommunication• Construction• Banks• Pharmaceutical• Many others

• Autism• Mentally Handicapped• Blind People• Hearing Impairment

• The role of the National Development Agency in financing development programmes

EU funds, 1989-2013

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Phare Phare + ISPA + Sapard SFs + CF ERDF + ESF + CF

Distributing EU funds…

NSRF operational programmes (2007-2013)

Implementation OP

1,3%

State Reform OP

0,6%

Social Infrastructure

OP7,8%

E-Admin. OP1,4%

Economic Development

OP10%

Transport OP25%

Environment and Energy OP

16,8%

Social Renewal OP

14%

ROPs23,2%

• coordination of implementing Structural and Cohesion Funds in Hungary

• USD billion 32,75 for the period 2007-2013• 15 operational programmes - economic,

social, public administration, regional, European territorial cooperation development programmes etc.

• 52,000 projects approved since 2004

National Development Agency

• Value engineering case studies

• National Strategy of Supporting Autistic People, 2008

• Implementation rules for EU funds, 2005• Data and documents handling, 2009• Public procurement control system, 2010• Comperative assessment of EU and national

level regulations, 2012

Successful projects

National Strategy of Supporting Autistic People, 2008

Focus on supporting the autistic children

BEFORE AFTER

Project Owner: Ministry of Social and Labor AffairsProject Subject: Institute Development Conception 2008-2013

Focus both on suporting the autistic children and

adults

Implementation rules for EU funds, 2005

Focus on individual, institutional interests

BEFORE AFTER

Project Owner: National Development AgencyProject Subject: Revision of Implementation Rules for EU funded projects

Focus on programme objectives and common

interests

Data and documents handling, 2009

Focus on various sources of information

BEFORE AFTER

Project Owner: National Development Agency Project Subject: Purchase of Sophisticated IT tool

No change in focus!!!

Public procurement control system, 2010

Focus on large projects and established,

institutional practices

BEFORE AFTER

Project Owner: National Development Agency Project Subject: Redesign of Public Procurement Control System (reduce risks)

Focus on risky public procurements and unified

approach

Comperative assessment of EU and national level regulations, 2012

Focus on

BEFORE AFTER

Project Owner: National Development Agency Project Subject: Reduce administrative burden, restrictions and speed up absorption of funds

Focus on

• Reinforces institutional knowledge • Enhances intraorganisational cooperation

and team work • Top and middle management level support

is a must• Implementation of recommendations is also

a credibility issue• Changes the way we think

Experience

• Challenges: preparing for 2014+ Cohesion Policy

Current context• Crisis, austerity measures in many

Member States, less monies to be better spent

• Use of public funds, accountability, error rate to be reduced

• Need for increased effectiveness

Challenges: preparing for 2014+ Cohesion Policy

The role of the EU 2020 strategy

• Principles of the reformed Cohesion Policy • Thematic concentration• Result orientation (negative and positive

sanctions) • Integrated approach, strenghtened

partnership

Thank you for your attention!

Any questions?