Capital Master Plan
UNITED NATIONS GENERAL ASSEMBLY – Fifth Committee
Item 134: Proposed programme budget for the biennium 2014-2015: Capital Master Plan
Statement by Mr Emil Stojanovski, Counsellor, Permanent Mission of Australia to the United Nations on behalf of Canada, Australia and New Zealand (CANZ)
31 October 2013
Thank you Mr Chairman.
I have the honour to speak on behalf of Canada, Australia and New Zealand. I thank the members of the Secretariat, the ACABQ and the Audit Operations Committee of the Board of Auditors for introducing their respective reports for agenda item 134: Proposed programme budget for the biennium 2014-2015: Capital Master Plan.
CANZ delegations remain strong supporters of the CMP project, as we have since its inception. We are very much pleased to see the light at the end of the tunnel. The Secretariat Building has been reoccupied; the Conference Building has been completed and is open for business; and, despite the effects of Hurricane Sandy last year, work on the General Assembly Building is well underway. The project timeline remains broadly on track and we look forward to the General Debate of the 69th session of the General Assembly resuming its place in the newly-renovated General Assembly Building.
We also recognise the efforts that have been made over the past year by the Office of the CMP and others to put the project on a more sustainable footing. This includes the Secretariat’s acceptance of nearly all of the recommendations arising from the audits of both the Board of Auditors and the Office of Internal Oversight Services. Importantly, we are pleased to see that lessons are being learned, captured and documented to ensure future capital projects start off on the right track, with realistic budgets and a proper appreciation for risk analysis and mitigation
However, as with many other delegations, CANZ remains concerned at the ongoing cost overruns associated with the CMP.
Last year CANZ said it fully understood that most of the cost overruns relating to the CMP, including the worse than anticipated concrete and asbestos conditions in the basements and the Conference Building, could not have been fully foreseen at the outset of the project. With hindsight, there are many lessons to be learned for future projects, including how better to assess the conditions of buildings, provide more accurate forecasting, and communicate better with key stakeholders, including the General Assembly. But we continue to accept that most of the cost overruns associated with the project itself could not have been fully foreseen at the time the initial budget was approved. We note that the Secretary-General has proposed recommendations to finance the project shortfall of $224.4 million, including the continued suspension of the renovation of the Library and South Annex buildings, the application of accumulated interest income and working capital reserve, and the application of projected future interest income.
With only one more year remaining until the project’s completion, CANZ is very much attuned to the fact that we will shortly need to make the difficult decisions we have so far been putting off. These include making decisions on the final project scope, and the financing of associated costs and the cost of the secondary data centre. On the former, CANZ understands why the General Assembly has been asked to remove the renovation of the Library and the South Annex Building from the project scope, given the ongoing security concerns with both buildings. We agree that replacing both buildings on their existing site at a cost of some $350-450 million is a poor use of scarce financial resources. We note the recommendation of the ACABQ for the General Assembly to make a decision on the location of the functions currently housed in the South Annex and Library Buildings independent of its consideration of the UN’s long-term headquarters accommodation needs. We look forward to discussing this important issue with other delegations so we can all come to a consensus decision promptly.
On the latter, however, CANZ is disappointed that despite the Secretariat’s best efforts, only a small amount of the associated costs have been absorbed by the Organization. Since the Secretary-General’s tenth progress report on the implementation of the CMP, only $1.7 million has been shed from the total projected associated costs, which still amount to $141.4 million — in other words, a little over one per cent of the projected associated costs as of last year. We expect the Secretariat to continue to examine closely the opportunities for further absorbing these costs among the various departments as we enter into the final year of the project.
At this critical juncture in the CMP, it is essential that the sources of funding which have not yet been made available to the project are done so without delay. We sincerely thank all of the Member States which have made voluntary contributions to the project, and urge those Member States with outstanding assessed contributions to arrange for payment of those contributions expeditiously.
The final point we wish to make about project finance relates to the level of contingency remaining. There is still one more year left to run on this project, not to mention potential post-project claims, and we will be seeking further information during our deliberations on the contingency available, including potential savings across a number of guaranteed maximum price contracts, to verify whether this level of resources is sufficient. We expect the Secretary-General and the Office of the CMP to be ever-vigilant with respect to potential risks that could give rise to a financial liability, and to report to the General Assembly on those risks as soon as practicable.
As we look back on this project, we realise that the CMP presented us with a valuable opportunity to consider how large companies and organisations around the world manage their office space with optimal efficiency, and to ensure that the UN followed best practices in this regard. Unfortunately, we missed that opportunity. As many of us understand well, implementing more flexible workspace arrangements can provide a significant source of savings and, more importantly, can lead to more productive workplace practices. Yes, such arrangements will require a shift in mindset and a change in entrenched workplace culture — of that there is no doubt. But such a change is entirely possible to achieve. As those companies and organisations which have been through such changes can attest, once the benefits of more flexible workspace arrangements are realised by both staff and managers, there is no going back. CANZ can only hope that this lesson is among the most important of those learned over the past seven years for future capital projects.
In closing, Mr Chairman, let me reiterate our delegations’ strong commitment to seeing the CMP project though to its successful completion. We will work constructively with all other delegations to ensure our collective concerns are met, and to ensure the project can be delivered in a manner which is not only expeditious, efficient and affordable, but which will also result in a newly-renovated headquarters complex in which we are all proud.