Value Engineering in Hungary
Orlando, June 11 2012
Zsuzsanna Kondor Director General
Coordination Managing Authority
National Development Agency , HUNGARY
Content of the presentation
• 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
• The European Union and its
Cohesion Policy
Differences in
development in the
EU-27
GDP per head as a % of the
community average
<50
50 - 75
75 - 90
90 - 100
100 - 125
 125
Disparities across the European Union
Hi
Lo
Ratio
GDP per cap
(% EU27
average)
Luxembourg
251%
Bulgaria
33%
7.6*
Population
Germany
82.5 million
Malta
404,000
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”
What do we spend the money on?
European Regional Development Fund
and Cohesion Fund (€271 billion)
European Social Fund (€76 billion)
Employment
Environment
Transport
Human capital
Research/Innovation
Information society
Social infrastructure
Energy
Tourism
Culture
Institutional capacity
Adaptability of workers and firms
Social inclusion
Capacity building
Technical assistance
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
Geographical
Eligibility for
Structural Funds
Support 2007-2013
Convergence objective
(Regions < 75% in
EU 25)
Convergence objective
statistically affected regions
Objective 'Regional
Competitiveness and
Employment'
Phasing-in regions,
"naturally" above 75%
Objective 'Regional
Competitiveness and
Employment'
Index EU 25 =
100
Source: Eurostat
• Value engineering in Hungary
Known of:
Known of:
•20 CVS
•19 PVM
•over 1000 AVS
•11 Universities
•20-30 VM
projects/year
•SHVA 70
members
1949
L. D. Miles: VE
VE in Hungary
1968
1949
L. D. Miles: VE
VE in Hungary
Society of Hungarian
Value Analysts
1991
1968
1949
L. D. Miles: VE
1996
1991
1968
1949
L. D. Miles: VE
VE in Hungary
Society of Hungarian Value Analysts
VE in Hungarian Public Procurement Act
“The tender-owner might oblige the tenderer to
utilize Value Engineering…”
Hungarian Public Procurement Act, 2003. CXXIX.
53. § (4)
1997
1996
1991
1968
1949
L. D. Miles: VE
VE in Hungary
Society of Hungarian Value Analysts
VE in Hungarian Public Procurement Act
VE in Hungarian Highway Design Act
Prime Ministers Office – Preparation of legislation
PUBLIC SECTOR
•National Bank of Hungary
•Nuclear Power Plant
•Ministry of Social Affairs
•Transport Agencies
•National Development
Agency
•Hospitals
PRIVATE SECTOR
•Telecommunication
•Construction
•Banks
•Pharmaceutical
•Many others
NON-PROFIT SECTOR
•Autism
•Mentally Handicapped
•Blind People
•Hearing Impairment
• The role of the National
Development Agency in
financing development
programmes
Distributing EU funds…
EU funds, 1989-2013
35 00
30 00
25 00
20 00
15 00
10 00
Phare
Phare + ISPA + Sapard
SFs + CF
ERDF + ESF + CF
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
1989
50 0
NSRF operational programmes
(2007-2013)
Econom ic
De ve lopm e nt
OP
10%
Tr ans por t OP
25%
Im ple m e ntation
OP
1,3%
Envir onm e nt
and Ene r gy OP
16,8%
ROPs
23,2%
E-Adm in. OP
1,4%
State Re for m
OP
0,6%
Social Re ne w al
OP
Social
14%
Infr as tr uctur e
OP
7,8%
National Development Agency
• 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
• Value engineering case studies
Successful projects
• 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
Project Owner: Ministry of Social and Labor Affairs
Project Subject: Institute Development Conception 2008-2013
BEFORE
AFTER
Focus on supporting the
autistic children
Focus both on suporting
the autistic children and
adults
Project Owner: National Development Agency
Project Subject: Revision of Implementation Rules for EU
funded projects
BEFORE
AFTER
Focus on individual,
institutional interests
Focus on programme
objectives and common
interests
Project Owner: National Development Agency
Project Subject: Purchase of Sophisticated IT tool
BEFORE
AFTER
Focus on various sources
of information
No change in focus!!!
Project Owner: National Development Agency
Project Subject: Redesign of Public Procurement Control
System (reduce risks)
BEFORE
AFTER
Focus on large projects
and established,
institutional practices
Focus on risky public
procurements and unified
approach
Project Owner: National Development Agency
Project Subject: Reduce administrative burden, restrictions
and speed up absorption of funds
BEFORE
AFTER
Focus on
Focus on
Experience
• 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
• Challenges: preparing for
2014+ Cohesion Policy
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
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?