1 RBM Workplanning and Budgeting-FAO Managing for results in FAO Module III. Budgeting, review and approval

2 RBM Workplanning and Budgeting-FAO 1. Distribution of staff costs across organizational results 2. Validation of unit results 3. Development of products and services and related activities for each UR and preparation of workplans 4. Adjustment of estimated planned costs for URs 5. Review of financial feasibility of URs 6. Quality assurance 7. Final approval of workplans Operational Planning Steps in the workplanning process

3 RBM Workplanning and Budgeting-FAO Step 4 Adjustment of estimated planned costs for Unit Results Calculate reasonable estimates of non-staff planned costs to do planned activities to deliver products and services and, in turn, URs Estimate staff planned costs for the same map post contributions ensuring skills sets needed and roles and responsibilities in the workplan estimate in work-months review staff mappings across all unit result and organizational result to ensure all staff resources are accounted for, that they do not exceed 100% and to clarify what %FTE was entered under each result.

4 RBM Workplanning and Budgeting-FAO 3 main components / constraints that managers and staff have to work with –Cost / resources available –Time –Scope of result Tips in budgeting: the Triple Constraints Model QUALITY OUTPUTS & OUTCOMES RESOURCES/COSTS SCOPETIME

5 RBM Workplanning and Budgeting-FAO Scope, Time and Resources KEY: Red = scope Blue = time Green = $/resources If one changes, another must be adjusted. When the right balance and sufficient amount of each (Resources, Time, Scope) exists, we get quality outputs and outcomes.

6 RBM Workplanning and Budgeting-FAO Estimating non-staff planned costs Non-staff costs and staff costs need to be estimated separately

7 RBM Workplanning and Budgeting-FAO Standard budget categories for estimating non-staff cost Consultants Travel Equipment / Procurement Research contract Supplies Contractual Fellowships Fee (if applicable) The estimated non-staff planned costs are most easily set by first estimating them by type of expenditure where feasible Activity Level Aggregating them Product or service level (Minimum Requirement) Option 1 (preferred Option) Option 2 Where it is not feasible to determine the planned costs for the individual activities Unit Result Level

8 RBM Workplanning and Budgeting-FAO Other Direct Costs (ODCs) Operational/Recurring Costs Often based on historical data and adjusted for inflation, currency fluctuations each year Include: Office expenses (rent, supplies, other contracts), shipping and communications, vehicle and equipment lease and maintenance, bank fees, etc. Facility or system rehabilitation costs, if anticipated Activities/Workshops Conferences / Trainings / Workshops / Meetings Renovations (not equipment procurement) Supplies and commodities

9 RBM Workplanning and Budgeting-FAO Since costing is linked to activities (preferred option), you should be able to answer the following questions for each activity: –What will you do? –What are the steps you will take to do it? –With whom will you work? –What resources (if any) will you use (e.g. training manuals, tools, etc.)? –Who will benefit? –What will be the end result of the activity? –When will you achieve the result? –How will you measure and show achievement? Alternatives and options should be collectively considered, not only for defining these activities, but also for detailed costing Costing activities - an iterative process An iterative process for getting consensus on the scope of the proposed activities to deliver the agreed products/services, and on the reasonableness of estimated cost within the unit owning the work plan.

10 RBM Workplanning and Budgeting-FAO Activities consuming only staff time are indicated in the workplan with no costs Non-staff planned costs include the cost of consultant and staff for whom it is not required to establish a position Issues in estimating non-staff costs During the biennium, when revision of a workplan involves an increase of the total estimated planned costs exceeding the approved allocations, formal submission, review and approval of the changes are required.

11 RBM Workplanning and Budgeting-FAO Estimating planned staff cost "Staff costs" relate to staff members or posts in the establishment.

12 RBM Workplanning and Budgeting-FAO Estimating planned staff cost: Basic Requirements The estimated planned costs Product or Service Level Aggregating them Option 1 (preferred Option) Option 2 Where it is not feasible to determine the planned costs at the product or service level Unit Result Level Ensure that the skill set requirements and individual roles and responsibilities are reflected in the workplan.

13 RBM Workplanning and Budgeting-FAO Mapping of Staff Member and Positions to Unit Results, and Products and Services (Person months)

14 RBM Workplanning and Budgeting-FAO Estimating Staff Costs Based on the mapping, the estimated staff costs are then determined by multiplying the staff time in person months by the average staff cost for the staff’s grade.

15 RBM Workplanning and Budgeting-FAO Staff shared across various projects Proportion of time charged per project No. Detail FTETOTALProject AProject BProject CProject D % # wks % % % % 1 SAMPLE: Mohammed Ibrahim/Snr Officer % % % % 4 20 % 9 2Staff member name/title 0%0 3Staff member name/title 0%0 4Staff member name/title 0%0 5Staff member name/title 0%0 Level of Effort (LOE) Non-FAO Example to Determine Staff Cost

16 RBM Workplanning and Budgeting-FAO Task Allocation: Sample Responsibility Matrix TASKSINDIVDUALS/POSITIONS AND ROLES Person 1Person 2Person 3Person 4 Task 1CII, RR, A Task 2ICAR Task 3IICR KEY: C = coordinate; I = give input; R = review A = approve Other options: S = support Others???

17 RBM Workplanning and Budgeting-FAO Being too optimistic & ambitious: –Be realistic! –Build in some slack to allow for the unexpected (“Defensive scheduling and budgeting”) –Remember: exceeding expectations is more appreciated than behind schedule or off target due to unanticipated expenditure Pressure from “higher ups”: –Resist the temptation to rely upon speed as the only selling point. –Emphasize quality (requiring higher budget), staff morale and beneficiary satisfaction. Practical Guesstimation Problems

18 RBM Workplanning and Budgeting-FAO Sources of Funds Extra-budgetary (EB) and Regular Programme (RP) resources need to be planned in an integrated way. Targets have been provided to ADGs and Heads of Independent Offices at the department/office level for both sources of funds.  Regular Programme targets are binding  The EB targets provide guidance based on expected delivery levels. Units are asked to estimate and plan extra-budgetary funds based on three considerations:  the projects pipeline  non-project contributions and  prospects.

19 RBM Workplanning and Budgeting-FAO Sources of Funds Units should estimate the picture of actual overall resource availability based on four elements: RP targets provided at the department/office levels, including regional, sub- regional and liaison offices Delivery estimates for the biennium for on-going and pipeline field projects funded from voluntary contributions Entity contributions not related to projects, such as WHO contributions for Codex, World Bank and investment earnings Prospects reflecting project ideas or, more simply, staff knowledge of developments that are likely to occur in the biennium, allowing for a “top-up” of available resources based on this knowledge. While the first element has been provided, the other three must be estimated and planned by Units.

20 RBM Workplanning and Budgeting-FAO Step 5 Review the financial feasibility of Unit Results Review feasibility of activities, products and services, and unit results for both budgetary and extra-budgetary resources based on total estimated staff and non-staff resource requirements. Adjust accordingly where necessary to secure financial feasibility

21 RBM Workplanning and Budgeting-FAO Groupwork Your turn Steps 4-5 based on your own unit

22 RBM Workplanning and Budgeting-FAO Step 6 Quality assurance Peer review of URs, products and services and activities; for soundness, logic, roles and responsibilities; indicators and result measurement Ensure synergies and linkages across SOs and FOs Finalize workplans reflecting peer reviews

23 RBM Workplanning and Budgeting-FAO Pitfalls with Results and Assumptions Results not linked to the strategy above e.g. URs are not logically linked to OR Results derived without effective stakeholder participation A single result statement includes several results at different levels joined with ‘by’, ‘through’, ‘in order to’, ‘so that’ URs do not clearly convey what a unit expects to achieve Result is not achievable within the biennium Products and services proposed are not sufficient to achieve the UR, the unit’s expected contribution to OR. Multiple Unit Results overlap towards one OR Similar URs under different ORs Results dependent on conditions that have not been analysed and, where relevant, mitigated; no robust risk analysis

24 RBM Workplanning and Budgeting-FAO Pitfalls with performance measurement Unrealistic targets within the timeframe Components (often adjectives) of results not addressed in indicators Baseline data not known Excessive number of indicators Too much data collected; data not used Underestimated cost of data collection False proxy indicators Data not available when needed Indicators measure actions and not results

25 RBM Workplanning and Budgeting-FAO Review: budgeting questions Does the proposed service level justify the budget request? Could the money be put to better use elsewhere? Are the objectives of the service worthwhile? Is the best approach being taken to achieve the objectives? Is there adequate financing for the service level proposed? Will spending more on the service next year save money in the long run? Can existing services be delivered in ways that are more efficient thus reducing costs? Have price changes been taken into account? If there is not enough money to fund all services, which are to be eliminated first?

26 RBM Workplanning and Budgeting-FAO Review: budgeting issues Workplanning and Budgeting-FAO Work together as a team to complete the budget and review against the workplan. Budget recurrent expenses (i.e., utilities, communication, supplies and other office expenses) based on actual expenditures from previous months; you may refer to quarterly pipelines and/or monthly financial reports. If there are ‘extraordinary’ expenses, make note of them and include a justification. Make sure there is no duplication. Verify that all recurring, monthly costs are budgeted at the correct number of months (i.e. in line with the duration of the budget). Review and check formulas!

27 RBM Workplanning and Budgeting-FAO Step 7 Final approval of workplans Compliance with business rules Signing off and formal approval by sub-regional coordinator, ADG/RR, ADG s in HQ as appropriate Party and / or sleep!!