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-06/22
20 April 2006
English
Comments from ITU Membership - Response
REPLY TO THE COMMENTS MADE BY
THE UNITED STATES OF AMERICA ON THE DRAFT ITU FINANCIAL PLAN,
2008-2011 (Document WG-SP-FP-06/21)
AND BY FRANCE REGARDING DECISION 6 (MARRAKECH, 2002)
Question
1.2 Process
1.2 c states that the draft financial plan shall include only the level of activities consistent with
the level of activities for the previous period as well as new activities already authorized. It
appears that the Plan as presented goes beyond this guideline. In addition, it is important for the
Secretariat to identify those activities from the previous four years that will not be needed in the
next quadrennial period or may be given lower priority.
Answer
The draft Financial Plan has been prepared on the basis of the conditions prevailing for the 20062007 approved budget, with the January 2006 values. It reflects the level of activities foreseen by
the Sectors for the 2008-2011 timeframe.
Question
Part 2 Summary
2.1 Income
The information provided throughout the document is based solely on the contributory unit of
329,000 CHF. In order to fully assess the financial plan, it is imperative that more complete
figures also be provided at the three other levels of contributory unit requested at the January
Working Group meeting, i.e. 318,000; 322,000 and 325,000. The United States believes that a
budget based on the contributory unit of 318,000 is needed to serve as the baseline for budget
discussions.
Answer
The four different scenarios are included in the draft financial plan, with an indication of the
resources that are needed for the implementation of the full programme.
Question
2.2 Expenditure
The purpose of this paragraph is unclear as it proposes a contributory unit that is far in excess of
any currently under consideration. The Secretariat was asked to prepare four budget scenarios,
all using a balanced budget approach. To propose additional activities outside those scenarios
2
was not part of the charge to the secretariat from the Working Group. The United States is also
concerned about the lack of any provision for prospective cost increases in the years 2006-2011
and believes that increases based at least on the Swiss CPI should be factored into the budget.
Answer
The provision for the prospective cost increase during the years 2008-2011 would amount to
approximately CHF 35 million, based on the Geneva CPI of 2005 (+1.13 %). Based on a 1% annual
increase, it would amount to CHF 31 million as mentioned under paragraph 4.4.
Question
2.3 Firm Plan
The figures in ‘Variance in %’ indicate increases of 7 and 9 % for various sectors and the
general secretariat. Additional information on why these increases are included and what
activities or positions are included is needed.
Answer
The variances first of all include the cost increase which represents 2.4% on average. Further, the
table compares the 2008-2011 estimates with the 2004-2005 actuals and the 2006-2007 budget. The
2008-2011 estimates are based on the 2006-2007 approved budget. The savings realized in the
2004-2005 biennium are mostly non recurrent and consequently cannot be reincorporated into the
2008-2011 plan. These savings have been achieved in the spirit of Resolution 1250 and through the
implementation of efficiency measures. The high staff turnover in 2004-2005 effectively resulted in
recruitment delays which produced some significant reductions of expenditure. A favorable
exchange rate also contributed to positive financial results. The planning of uncontrollable factors
such as the exchange rate would put the budgets of the Union at risk, and a conservative approach
must be taken to this effect.
Question
Part 4 Main Assumptions and Targets
4.3 Resource planning (see 7.1.8)
Please provide additional explanation for the rise in the number of General Secretariat positions
by nine.
Answer
The need for additional resources is specified in paragraph 7.1.8 – page 14 (see the corresponding
answer below).
Question
4.8 Reserve Account
Additional clarification is sought on what the Secretariat is referring to or proposing when
discussing reassessing the minimum level of the Reserve Account and how it is calculated.
Answer
It is rather difficult to predict the level of the Reserve Account during the next period of the
financial plan. A prudent and conservative approach should be taken in that matter. To minimize the
potential risks a revaluation of the minimum level could be considered. It would be appropriate to
take all the ‘variable’ income as the basis. Cost recovery income and other income represent some
17% of the total planned income, at approximately CHF 57 million for a budgetary period. The
coverage rate of the Reserve Account would have to be assessed on that basis, taking into account
the trends and the experience of the past years. The level of the Reserve Account is to be set by
Council.
3
Question
Part 5 Contributory Unit
5.2 Ratio between Member States and Sector Member’ Contributions
The text indicates that, for purposes of preparing this Financial Plan, an increase from 1/5 to ¼
of the contributory unit has been applied to Sector Members and Associates. However, there is
no justification provided for this unauthorized increase. This skews the budget figures based on
unsubstantiated premises. The Financial Plan should be prepared using the current 1/5 ratio. If
the Secretariat wishes to propose such a change, full justification in terms of expenditure and
cost must be provided and approval requested.
Answer
The change of the ratio from 1/5 to ¼ would increase the level of income by CHF 21,7 million.
The principle of 1/5 ratio of the unit was introduced in 1982, based on the structure of the ITU at
that time. The question may be asked whether this ratio accurately reflects the proportion of the
Sectors' expenses today. The full costs of Sector activities including the costs reallocated from the
General Secretariat should be considered in establishing contributory units for Sector Members.
Since the Union is now in a position to provide detailed assessment of costs with the use of the new
cost allocation methodology (Decision 535), participation by Sector Members should be based on
the full costs of the Sector outputs. The new financial management system currently in place
provides for transparency in accounting for costs of outputs.
On the other hand an across the board increase in the ratio of the Sector Members unit to the
Member States unit may adversely affect the participation of some members, particularly those with
limited interest in the activities of a Sector.
To be fair and equitable, it would seem reasonable to assess the true costs of the services benefiting
Sector Members and determine the financing of these services in terms of the level of the
contributory unit. This could be calculated on the basis of certain pre-determined assumptions. Such
an analysis may be provided if necessary.
Question
Part 7 Projected Expenditure
7.1.2 No provision has been made for additional staffing in the General Secretariat as a result of
WSIS outcomes. This is appropriate, as most WSIS-related implementation should be
undertaken in the Sectors and, with the conclusion of the Summit, resources devoted to that
phase of WSIS can be reprogrammed to assist with implementation activities.
Réponse
A provision for additional staffing in the General Secretariat as a result of the WSIS outcomes is
provided in Annex II – point 2 of the draft Financial Plan document, and would amount to CHF 2,8
million. Further resources would also be required in BDT for an amount of CHF 1,6 million.
Question
7.1.4 Infrastructure Buildings
Justification for upgrades and renovations for buildings need to be provided in light of limited
budgetary resources.
Answer
Infrastructure Buildings resources are in line with the previous budgetary provisions (CHF 1,5
million per biennium). No increase is hence foreseen. A list of the planned projects for the 20082011 plan period is given in Annex B.
4
Question
7.1.8 Secretary General Office and Departments
This section lists nine additional posts being added to the Secretariat. Six are related to security.
The question arises if in-house employees and provision of such services is the appropriate
mechanism or if this is a service that can be outsourced more efficiently.
Two positions are envisioned for IM. Again, it is unclear if full consolidation of IM services has
taken place within ITU to utilize the IM staff as fully and effectively as possible. What extrabudgetary resources were used in the past and why are they no longer available?
One position is proposed to be reactivated in the finance section. ITU has already completed
substantial work in moving toward results-based budgeting. Why is this being requested at this
time?
Answer
The provision of six security positions, filled in by short term staff, is to comply with the identified
requirements in this field. It is in line with the UN policy and in conformity with the practices of
other organizations. Retired police officers are contracted as night guards only.
The two posts in IS department are currently funded by the TIES contributions. The functions
involved are operationally necessary. These should be included in the regular budget as the
functions are ongoing regular work.
One professional position in Finance Department is proposed to be reactivated in view of the
increasing workload and the lack of resources. This post is not linked to the work of moving
towards RBB. It is in line with the recommendation number 2 of the external auditor to reinforce
the finance department and to take all necessary steps with a view to establishing an effective
internal control system and to identify back-ups for key functions in the Finance Department (see
document C06/8).
Question
7.2 Radiocommunication Sector
With no RRC being planned in this Financial Plan period, this results in a savings of 10 million
CHF. However, the R budget rises. Additional justification for why the full amount of savings is
being reallocated to other activities is needed.
Answer
Taking into account the program variance between the two Plans (no RRC in 2008-2011), the
variance would amount to CHF 10,4 million, or an increase of 8%, which is in line with other
Sectors. More detailed explanations are provided in Annex A below.
Cost increase: 3% out of 8%
Real growth and program variation: 5% out of 8%
- Major CPM planned in 2010
- Increased number of RRB meetings
- Additional security costs for WRC/RA
- Increased interpretation level for RRB
- Normal steps increases explain the cost increase of the Bureau
Question
7.3 Telecommunication Standardization Sector
Substantial increases in funding are envisioned, including for WTSA regional consultation
sessions (121 to 353) and study group meetings (3,891 to 4,572). Additional concrete justification
for such figures is needed.
5
Answer
Concerning the WTSA regional consultation sessions, expenditure level has been set in line with
the 2004 initial approved budget for WTSA regional sessions (346,000 CHF). This is a minimum
level to comply with the newly adopted WTSA Resolution 43 (Florianópolis, 2004). Previous level
of actual expenses corresponded to TSB Director’s initiative to launch regional discussions. Since
2004, the regional sessions have been institutionalized and need a budget to be organized.
When comparing the addition of 2004-2005 and 2006-2007 appropriations for ITU-T Study Group
meetings with the 2008-2011 request, we can see that there is actually a substantial decrease, the
amount falls from 4,967,000 CHF to 4,572,000 CHF. The amount of 3,891,000 CHF corresponds
to the addition of actual expenses for 2004-2005 and the budget for 2006-2007. Some savings were
achieved in 2004-2005 that would not be possible in the future. ITU-T faces a multitude of new
work areas like NGN, Home Networking, IPTV, RFID, Multilingualization, Grid and the fully
networked vehicle. The level of 4,572,000 CHF allows ITU-T study groups to face additional
workload that will occur and gives the Sector a minimum flexibility to adapt quickly to the
changing environment.
Question
7.4 Telecommunication Development Sector
Substantial increases in funding are envisioned, particularly in RTDC (742 to 1104), TDAG (435
to 852) and study groups meetings (1577 to 2377). Additional concrete justification for these
figures is needed.
Answer
Cost increase: 3% out of 7%
Real growth: 4% out of 7%
- 1 extra TDAG in 2008-20111, compared to 2004-2007 The draft financial plan represents a
return to the normal cycle of an annual TDAG meeting, whereas the 2004-2007 was
exceptional situation given the late date of the PP.
- Extra study groups activities The increase represents a restoration of annual meetings
whereas for budgetary reasons a budget for 2006 was not provided (which has been
reinstated through Bureau savings followings results of TDAG and the WTDC).
- For the RTDC, no resource increase was requested against the prior period. The
discrepancy results from the fact that the expected expenditure were lower due to the
generosity of host countries in absorbing certain expenditures.
- Normal steps increases explain the cost increase of the Bureau
Question
Annex I Assessment Matrix between Objectives and Outputs
The United States compliments the ITU on the useful matrix provided in Annex I. Analysis of
this matrix allows for a more accurate picture of the use of the Union’s resources and provides
some indication of the priorities of the sectors. Greater disaggregation of the information in the
sector matrixes would be useful, for example by providing greater breakout of costs by study
group, showing concentration of activity by individual study group. The model used in ITU-D
for the Programs should be applied to other outputs in all sectors as well.
We would note however that it remains difficult to discern the level of WSIS expenditure as some
of such activities may be dispersed in several outputs. For example, the General Secretariat in
the matrix has a line for WSIS at 460,000 CHF; that WSIS line in 7.1 is listed as 0. In addition,
it appears that WSIS-related activities may be also undertaken under New Initiatives (from 0 to
202,000 in 7.1 and listed as 1,276,000 in Annex I) and projects (3,500,000 in 7.1 and 3,981,000
here).
6
Answer
Breakout of costs by study groups: planning has been established on an aggregated level. Actual
costs are collected on detailed level. General Secretariat will be able to provide in the coming
months the first actual figures at this level of details.
Difference between tables: tables 7.1, 7.2, 7.3 and 7.4 provide primary costs only (costs than can be
directly assigned to an output or to the Bureau), while the matrix in Annex 1 provides the full cost
of outputs (including reallocated costs).
Question
Annex II Pending Items
The majority of these items should remain unfunded or be incorporated into Sector budgets, with
appropriate offsets being made to allow higher priority items to be undertaken first. Some items
may be duplicative, such as the security projects and WSIS or unnecessary such as IT services.
In all, this section asks for 24 new positions to be created, the majority of them in the General
Secretariat. This would run counter to efforts made over several years to make the Union more
effective and cost efficient and to streamline the staffing to an appropriate level.
Answer
All pending items can be identified separately. None is duplicative.
Question
Annex V Draft Decision 5
Paragraph 1.3 should include interpretation so as to read “that expenditure on interpretation,
translation and text processing…” This is in line with the recommendation of the Working
Group on Languages to provide total budgetary information regarding the provision of all
language services to the Members.
The United States does not support the inclusion of paragraphs 4 and 5 in their entirety. OP 4 is
redundant and addresses items already taken into consideration by Council as part of budget
deliberations and decisions. OP 5 addresses the authority of Council to override the decisions of
the Plenipotentiary Conference in reference to the limits established to the contributory unit for
the quadrennial period. The United States does not support inclusion of this additional provision
and believes that Paragraph 7 adequately addresses any adjustments that must be made.
Answer
It is up to the membership to agree on the revision of Decision 5. The inclusion of interpretation in
paragraph 1.3 is considered appropriate.
Question (France)
Draft financial plan for 2008-2011: comparison with Decision 6 (Marrakech, 2002)
Answer
The draft financial plan approved by the 2002 Marrakesh Plenipotentiary Conference in Decision 6
foresaw a financial envelop of KCHF 128,848 for the ITU-R, value 1st January 2002. So as to
provide a proper comparison with the proposed estimates for the 2008-2011 timeframe, this amount
is to be re-evaluated on the same basis, i.e., 1st January 2006.
As indicated in the draft financial plan document, the cost increase between the 1st January 2005
and the 1st January 2006, i.e., for one year, amounts to KCHF 4,280 for the Radiocommunication
Sector (Paragraphs 4.1 and 7.2).
The comparison stands as follows:
7
ITU-R Financial envelop as per Decision 6 at January 2002 value
Annual cost increase
Estimated cost increase for four years (from January 2002 to January 2006)
CHF(000)
128'848
4'280
17'120
ITU-R financial envelop as per Decision 6 at January 2006 Value
145'968
Proposed estimates for the ITU-R for the 2008-2011 timeframe
137'311
Difference
-8'657
The proposed estimates for the R-Sector for the 2008-2011 timeframe are some CHF 8.7 million
lower than the financial plan approved for the 2004-2007 timeframe in Decision 6 (Marrakesh,
2002).
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ANNEX A
Answer to USA comments on the draft financial plan, 2008-2011, relating to the
Radiocommunication Sector
1
The difference of CHF 10 million should be adjusted to CHF 6.1 million for a fair an
appropriate comparison at the same value or purchasing power of the Swiss Franc, as explained in
the table below:
Estimates 2008-2011
Less cost increase (between 1.1.2005 and 1.1.2006)
Actual 2004-2005 + Budget 2006-2007 excluding RRC
(136,990-10,077)
Difference
2
CHF(000)
137'311
-4'280
126'913
6'118
This difference provides mainly from the two following factors:
A) The use as a comparison basis of the 2004-2005 actual which include significant
exceptional and non recurrent unspent appropriations;
B) The program variation between the 2004-2007 and the 2008-2011 timeframes.
A) 2004-2005 unspent appropriations
CHF(000)
1 - The significant savings achieved for the Study Group meetings during the
2004-2005 timeframe were mainly on account of reduced level of
interpretation. It is important to note, however, that the cost savings achieved in
2004-2005 are not necessarily recurrent and cannot be assumed to be replicable
in the future, and in many instances (e.g. interpretation costs) also depend to a
large extent on the cooperation of the membership.
1'525
2 - The sales of publications for the Radiocommunication Sector were in the
magnitude of CHF 16.5 million, i.e. some 70% of the overall ITU sales of
publications. This result was achieved while generating some important savings
in the production and dispatch costs for the ITU-R Publications. These factors
have already been taken into consideration in the estimates used for the
elaboration of the draft financial plan for 2008-2011.
1'185
3 - The unspent appropriations for the Bureau were mostly due to the
unforeseen and exceptional recruitment delays that occurred during this
timeframe.
2'720
4 - With regards to The RRB and the RAG, some savings were made possible
with regards to a reduced interpretation level. Nonetheless, the comments in 1-)
on the exceptional nature of these "savings" is also valid for this point
Total 2004-2005 non recurrent unspent appropriations
440
5'870
These factors have been duly considered when preparing the financial estimates for the
2008-2011 timeframe but were recognized as non-recurrent factors.
9
B) 2008-2011 program variation
1 - Increased security costs for the WRC/RA
2 - Increased number of meetings of the RRB (15 meetings for 20082011 as against 13 in 2004-2007)
3 - Anticipated increased interpretation level for the RRB
Total 2008-2011 program variation
CHF(000)
300
350
200
850
The total of the two above factors amounts to CHF 6,720, i.e., some 0.6 million more than the
difference indicated in paragraph 1 above.
3
Should the comparison of the 2008-2011 estimates be made with the 2006-2007 budget and
with the same output program, the comparison would be as follows:
CHF(000)
2006-2007 Budget excluding RRC (CHF 75’250’000 – 7’151’000)
68'099
Multiplied by 2 to consider a four-years period
136'198
Less the estimates of one WRC and one RA (only one venue during the
2008-2011 timeframe)
Plus the program variation as indicated above
Plus cost increase
Estimates 2008-2011
Difference
-2'723
850
4'280
137'311
-1'294
Using the 2006-2007 budget as a reliable comparison basis, the 2008-2011 estimates appear CHF
1.3 million lower than the current level of appropriation. It is also important to note that, as
indicated in paragraph 4.3 of the draft financial plan and as it was already the case for the 20062007 budget, the anticipated staffing level for the 2008-2011 timeframe is 3 positions lower than
the current planned one.
ANNEX B
List of projects planned for 2008-2011 to be funded from the Buildings Maintenance Fund (in thousands of CHF)
Category
E
BD
BD
BCE
E
DE
E
B
BE
AE
E
E
BE
BCE
E
Description
Buildings
Replacement of condenser banks
Rearrangement and renovation of Tower meeting room vestibule (Salle des pas-perdus)
Rearrangement and renovation of reception (Tower)
Facade renewal (Tower)
Replacement of inverter unit (Tower)
Renovation of men's facilities for delegates (2nd basement of Tower)
Replacement of control unit for backup electrical power system (Tower)
Modification of LV cabinets for backup and main power
Replacement of lighting (Tower)
Renovation of the kitchen of the cafeteria (15th floor of Tower)
Restaurant (cafeteria on 15th floor of Tower): furniture and equipment
Buildings
Complete renovation of wastewater/rainwater runoff collectors (Tower)
Renovation of domestic hot water system (Tower and Varembé) (excludes central cafeteria)
Replacement of radiators (Varembé)
Facade renewal (Varembé)
Renewal of slab sealing system (Tower lawn)
Biennium
2008-2009
Biennium 20102011
400
800
850
11'000
55
310
40
*)
*)
*)
217
40
60
*)
10'500
2'750
11
Restaurants (central cafeteria): furniture and equipment
Total per biennium
Allowance for sundries and contingencies (5%)
Indexed at 5% per biennium (on 2006-2007 basis)
Grand total per biennium
GRAND TOTAL 2008-2011
*) Figures unavailable
Explanation of categories:
A – Urgent works related to safety and/or hygiene
B – Works leading to savings and/or greater efficiency
C – Works required for compliance with host country codes
D – Works related to improving ITU's image
E – Works related to replacement of facilities in disrepair
129
13'672
684
718
15'074
30'642
13'479
674
1'415
15'568