INTERNATIONAL TELECOMMUNICATION UNION
Council Working Group for the Elaboration of the
Draft Strategic Plan and the Draft Financial Plan,
2008-2011
Document: WG-SP-FP-06/37
28 June 2006
English
GENEVA, 27 and 28 JUNE 2006
PORTUGUESE COMMENTS ON
THE DRAFT FINANCIAL PLAN
I
Introduction
1.1
The present memorandum contains the comments of the Portuguese delegation
on the Draft Financial Plan and the new documents presented to the Council Working
Group for the elaboration of the Draft Strategic Plan and the Draft Financial Plan, for
the period 2008-2011.
1.2
Consistently with the position taken during the 2006 Council in April and after
an analysis of the revised figures, Portugal has the following introductory comments:
II
•
The documents presented now show an effort to address some of the
issues on the Draft Financial Plan made at the Council;
•
The revisions made do not represent however significant
improvements of form or substance, as compared to the original
document;
•
Due to the implementation yet in progress of the project for the linkage
between strategic, operational and financial planning (KPI project), the
document cannot reflect the benefits which the project will bring to the
quality of the planning and management of ITU.
Comments on Draft Financial Plan
2.1
We would like to comment in more detail on a number of shortcomings in the
preparation, of the draft financial plan:
Linkage of plans
2.2
As stated in the draft document under discussion “The main purpose of the
Financial Plan is to translate in monetary terms the objectives and their relative
priorities set forth in the Strategic Plan” and its primary objective is ”to allow
Member States to know at the end of the PP the framework of their financial
commitments for the 2008-2011 timeframe”.
-22.3
However, it has been broadly recognized that the current financial plan does
not establish a clear linkage between strategy, operations and financial requirements
and this lead to the requirement of implementation of a project which was expected to
be completed before the PP. The missing link lays in the fact that it is not clear how
the operational activities serve as the bridge between strategy and finance.
2.4
On the other hand, ITU has made significant improvements to the quality of
the Operational Plans. These documents define in detail the activities to be carried out
by the sectors and the GS and they contain sufficient information to determine the
linkage between the strategies approved, the activities proposed and the quantification
of resources needed to calculate financial requirements.
2.5
Therefore, we believe that the information available in the Operational Plans
should be formally used as the basis to prepare the Financial Plan as now they can be
used as the bridge between strategic and budgetary and financial planning.
Process for the calculation of the Contributory Unit
2.6
In order to adopt more effective management principles and to take advantage
of the existing Results Based Budgeting (RBB), the ITU planning systems should
become a central part of the management process, rather that the continuation of the
administrative practice of working on the basis of a renewal of existing activities.
Moreover, planning should allow for identifying how all the ITU revenues are
allocated. On the other hand the calculation of the financial requirements should be
based on a bottom up approach and this can be only achieved if the calculations are
based on the quantification of resources required established by the Operational Plans
and their linkage with the Strategic Plan. The Financial Plan should also show the
allocation of revenues to the Sectors and then it should be possible to monitor
performance of the Sectors, based on their capacity to obtain contributions for their
activities, their achievement of cost recovery objectives and the percentage of their
budgets that have to be financed by resources of the general budget coming from
contributions of the Member States.
Basis for estimates and forecast for the current financial period
2.7
ITU does not follow the practice of preparing forecasts and, due to the timing
requirements for the preparation of plans at the various levels, has continuously
followed a practice of comparing the proposals with past plans rather than with
current performance. If the periods 2000-2003 and 2004-2007 are considered,
discussions and decisions were mislead by that practice. Even if only the current
period is considered, the financial plan 2004-2007 presents a level of budget
realisation substantially below the estimates in revenues and expenses in the first two
years. In spite of that, ITU has not presented any study of the impact of this
performance in the current budget period, assuming that expenditures in the last two
years will be largely in excess of the preceding two years. Even considering that there
are events that can provide some explanation for these facts such as untimely
recognition of transactions and no-recurring events such as the PP 06, the estimates
and comparisons can be highly misleading and the ITU assumptions and calculations
need to be properly supported. Therefore the proposed draft financial plan should be,
among other things, supported by a forecast for the period 2003-2007.
-3-
Efficiency measures
2.8
In the last years ITU has been operating under a rapid changing environment
in terms of technological evolution, competition of other organisations and more
recently the introduction of new management tools and technologies. In the case of
the later, the implementation of RBB, ICT tools and others do not represent by
themselves an improvement unless all the related implications are taken in
consideration. To give just an example, these systems and tools would not be justified
unless they are used to improve the quality of management. Another example is the
need to rapidly implement Results-Based Management (RBM) in the ITU. RBM
represents a logical step beyond RBB, a process which has evolved from decisions
taken by the 2002 Plenipotentiary Conference to improve the effectiveness, efficiency
and economy of the management and administration of the Union as a whole. Since
2002 considerable progress has been achieved in this regard and based on this
foundation, the ITU can now focus on improving performance (achieving results) to
supplement the important work clearly achieved in the area of budgeting and
programming aspects of management.
2.9
The above finds its justification in the necessity to improve transparency,
productivity and effectiveness, decentralizing responsibility and increasing
accountability. None of these subjects are addressed in the Draft Financial Plan as
ITU management considers that the “Union has reached the limits of what can be
realized for the optimisation of resources”.
2.10 This assumption is difficult to accept as a valuable one for the preparation of
the Draft Financial Plan, as there are clearly significant opportunities to improve
efficiency and reduce costs, and this should be considered in the Draft Financial Plan.
ITU Telecom
2.11 ITU Telecom activities have been developed as a black box. That was not a
serious problem in periods when there were significant profits on these activities
simply by doing them. Recent experiences show that these activities although being
still an opportunity represent a risk and require a different approach particularly
giving them more transparency and incorporating them in ITU subject to the same
control measures of the Sectors. The cost allocation methodology in use should be
implemented to ITU Telecom.
2.12 Except to incorporating an estimated result into the revenues of ITU, there is
not other information concerning ITU Telecom in the Draft Financial Plan.
III
Recommendations
3.1
Due to the mentioned shortcomings, we believe the draft financial plan does
not contain yet the substantive information necessary to form an opinion concerning
the level of the contributory unit required for the period 2008-2011. As a
consequence, it is not a sound basis to fix the financial commitments to be made by
the Member States vis a vis the activities of the Union.
-4-
3.2
In view of the above, the Portuguese delegation has the following
recommendations
•
ITU should give priority to the necessity of establishing a clear linkage
between Strategy, Operations and Finance and the Draft Financial Plan
should reflect this position. IT should demonstrate clearly the linkage
between the three levels. If the linkage is not clearly established in this
Plan, it means that another four years will be lost as against the
objectives established in Marrakesh. This can only be achieved by
giving priority to the implementation of the related project which
according to the report of the Project Team is now delayed.
•
The Draft Financial Plan should be based on a reconciliation between
the manpower requirements as defined in the Operational Plans and the
levels of staff that are being proposed by the Sectors and the GS.
•
ITU should develop a forecast for the current period based on the
actual results for 2004-2005 and the actual performance for 2006 and
the estimates until the end of the current budgetary period.
•
ITU should be instructed to give priority to implementation of the KPI
project as the elements necessary for the preparation of the linkage can
be prepared until the PP. Elements of the Project that have to be
developed after the PP, should not delay the work that needs to be done
now to benefit from the new approach in the next period.
•
ITU should develop a study to determine the impact of efficiency
measures it has to implement to increase efficiency and reduce costs.
•
ITU Telecom should be dealt with as the Sectors, to be covered in the
Draft Financial Plan with the same details and transparency used for
the other Sectors.
3.3
As a final comment, the Portuguese Administration considers that there has
been a significant improvement arising from the work done with regard to the
strategic planning; however, the work must continue and it is our understanding that
improvements outlined in the preceding paragraphs can be gradually introduced, some
until the Plenipotentiary Conference, others in the next four years period until PP10.
___________