1

PROGRAMME-LEVEL MULTI-YEAR FUNDING COMMITMENT

Discussion toward FY14 Budgeting Process

2

Scope

• The funds which have no specific donor restrictions on project allocation under the same Programme– Mainly Sponsorship– But not limited, e.g., PNS general funding

which has no donor restrictions.– Grants (Gov’t, Multi, PNS) are out of scope

3

Background

• When LEAP was introduced, Programme-Projects structure started. (previously it was Project-its components)

• Methodologies of Programme/Project Planning/Designing and Management became well organized.

• Programme/Project Financial System became complicated– Budget files, PBAS entries, C/F and Project Core and Logframe Financial Report

became 5 times• But, Donor restriction (mainly SP) is not changed

– If same Programme, it seems that many SOs have flexibility of fund allocation among Projects

Not changing Programme-Projects structure in Development theory and accountability-level, change to Programme-level Commitment as one figure

4

Pre-conditions & Directions

• Pre-conditions– No design changes on IT systems such as

• MyPBAS DB• SunSystem• Horizon• LEAP Budget Template• Project Core & Logframe Financial Report Template

– No structure change on Programme and Project

• Directions– Simplify, Reduce not-value-added work– Keep project-level accountability– Ensure the concept of Multi-Year Planning & Budgeting in Programme– Ensure more flexibility of annual cashflow and budget reallocation

among projects under the same programme

Key PBAS Activities

Support Office National Office Attention

Enter programme total budget into one project (SMP, as SO Forecast) for entire lifecycle based on the agreed PDD/MY Budget [Lock 5 years commitments]

Enter project budget (5 projects, as NO Planned Budget) for entire lifecycle based on the agreed PDD/MY Budget

Do not change SO Forecasts unless PDD/MY Budget is revised

Update CY NO Planned Budget (5 projects) in PBAS based on the Revised LEAP Budget template every year (Programme Budget Summary of CY to SOs)

CY SO Forecast ≠ CY NO Planned Budget

Copy SO Forecast to SO Proposed Budget & Approved Budget using macro in PBAS every year

Copy NO Planned Budget to NO Proposed Request & Approved Request using macro in PBAS every year

SO Approved Budget ≠ NO Approved Request

(SO Approved Commitment) – (Prior Year Funding to Project) = (Available Carryforward)

(NO Approved Request) – (Prior Year Funding to Project) = (Available Carryforward)

C/F in SO ≠ C/F in NO

Settle the remaining balance after the lifecycle ends [make zero balance]

No action

5

6

Example

Agreed MY Budget (3-year & 2 Projects)Projects Year 1 Year 2 Year 3 TotalProject A(SMP) 100 120 130 350 Project B 200 250 240 690 Total 300 370 370 1,040

NO MyPBAS Project A(SMP) Project B Total SO MyPBAS Project A(SMP)(Year 1) (Year 1)

C/F - - - C/F - Year 1 Request 90 150 240 Year 1 Commitment 300 Year 1 Spending (100) (130) (230) Year 1 Spending (230) C/F (10) 20 10 C/F 70

(Year 2) (Year 2)C/F (10) 20 10 C/F 70 Year 2 Request 140 240 380 Year 2 Commitment 370 Year 2 Spending (145) (250) (395) Year 2 Spending (395) C/F (15) 10 (5) C/F 45

(Year 3) (Year 3)C/F (15) 10 (5) C/F 45 Year 3 Request 150 265 415 Year 3 Commitment 370 Year 3 Spending (120) (250) (370) Year 3 Spending (370) C/F 15 25 40 C/F 45

3-year total Request 1,035 3-year total Funding 1,040 3-year total Spending (995) 3-year total Spending (995) Balance 40 Balance 45

Revised CY Budget

7

Project B

Year 1

Current Proposed

Budget Request

Current Proposed

Budget Commitment

Variance

NO Planned

Budget

SO Forecast

Budget

Variance

Quality of Value Revised CY Budget

Per PDD

PY Carryforward 0 0 $0

Budget for Expenses at Project (DPC) 150,000 0 ($150,000) 150,000 0 ($150,000

Subtotal $150,000 $0 ($150,000 Budget for NO

Allocation (IPC) 0 0 $0 0 0 $0 Total Proposed Budget $150,000 $0 ($150,000) $150,000 $0 ($150,000

Project A(SMP)

Year 1

Current Proposed

Budget Request

Current Proposed

Budget Commitment

Variance

NO Planned

Budget

SO Forecast

Budget

Variance

Quality of Value Revised CY Budget

Per PDD

PY Carryforward 0 0 $0

Budget for Expenses at Project (DPC) 90,000 300,000 $210,000 90,000 300,000 $210,000

Subtotal $90,000 $300,000 $210,000 Budget for NO

Allocation (IPC) 0 0 $0 0 0 $0 Total Proposed Budget $90,000 $300,000 $210,000 $90,000 $300,000 $210,000

1st year in MyPBAS & C/F

Carryforward Availability All amounts shown in US Dollars ($)

Prior Year Final Approved Commitment - Prior Year Funding

to Project = Available Carryforward

Year 1 90,000 100,000 (10,000)

Carryforward Availability All amounts shown in US Dollars ($)

Prior Year Final Approved Commitment - Prior Year Funding

to Project = Available Carryforward

Year 1 150,000 130,000 20,000

SO enter based on the agreed PDD/MY Budget at

Programme-level

NO enter based on the Revised CY Budget for CY, and agreed

PDD/MY Budget for future years at Project-level

8

3-year in MyPBAS

Summary: NO Approved Request Project A

SMP

Year 1

NO Approved Request

Year 2

NO Approved Request

Year 3

NO Approved Request

Year 4

NO Approved Request

Quality of Value Revised CY Budget

Revised CY Budget

Revised CY Budget

PY Carryforward - 10,000 - 15,000 15,000 Budget for Expenses at

Project (DPC) 90,000 140,000 150,000 Total Direct Expense

Forecast $90,000 130,000 135,000 Budget for NO

Allocation (IPC) 0 0 0 Total $90,000 $130,0000 $135,000

Forecast RC 3000 3000 3000

Summary: SO Approved Commitment Project A

SMP

Year 1 SO Approved Commitment

Year 2

SO Approved Commitment

Year 3

SO Approved Commitment

Year 4

SO Approved Commitment

Quality of Value Per PDD Per PDD Per PDD PY Carryforward 70,000 45,000 45,000

Budget for Expenses at Project (DPC) 300,000 370,000 370,000

Total Direct Expense Forecast $300,000 440,000 415,000

Budget for NO Allocation (IPC) 0 0 0

Total $300,000 $440,000 $415,000 Forecast RC 2500 2500 3000

Summary: SO Approved Commitment Project B

Year 1 SO Approved Commitment

Year 2

SO Approved Commitment

Year 3

SO Approved Commitment

Year 4

SO Approved Commitment

Quality of Value PY Carryforward

Budget for Expenses at Project (DPC)

Total Direct Expense Forecast

Budget for NO Allocation (IPC)

Total Forecast RC

Project BProject A (SMP)

Summary: NO Approved Request Project B

Year 1

NO Approved Request

Year 2

NO Approved Request

Year 3

NO Approved Request

Year 4

NO Approved Request

Quality of Value Revised CY Budget

Revised CY Budget

Revised CY Budget

PY Carryforward 20,000 10,000 25,000 Budget for Expenses at

Project (DPC) 150,000 240,000 265,000 Total Direct Expense

Forecast $150,000 260,000 275,000 Budget for NO

Allocation (IPC) 0 0 0 Total $150000 $260,000 $275,000

Forecast RC

This is real balance at Programme-level

9

PCFR and NO CF Explanation Forms

Section A: Expenses by 8ZZ (T2)Account Account Last Semester Current Year-To-Date Year-To-Date Year-To- Annual Remaining

Code Description Actual Actual Actual BudgetBudget Varianc

e %Budget Budget

800 Salaries - Casual Labour 22,222.78 10,464.14 32,686.92 25,337.00 -29% 25,337.00 (7,349.92)

801 Natl Staff/INSS 3,193.69 2,141.37 5,335.06 1,668.00 -220% 1,668.00 (3,667.06)

802 Staff Training 37.34 5.23 42.57 360.00 88% 360.00 317.43

880 Capital Expenditure $8000&Over 0.00 40.28 40.28 0.00 - 0.00 (40.28)

Grand Total: 56,473 43,527 100,000 90,000 -11% 90,000 (10,000)

Revised CY Budget= NO Approved Request in MyPBAS= LEAP Budget Template (revised CY)

SunSystem Actual

Continue to produce Variance Explanation (T2 and T6) in PCFR

• Revised CY Budget vs. Actual• For usual project management purpose

Stop NO Carryforward Explanation Forms

• Become meaningless• SOs will refer Variance Explanation in PCFR and Management Report

10

New Year-End Entry

• Transfer a part of SMP income to other projects to cover YTD Actuals

• Transfer $130 from Project A(SMP) to Project B through A9/Project number

• Sep-30 transaction (one time)

NO MyPBAS Project A(SMP) Project B Total SO MyPBAS Project A(SMP)(Year 1) (Year 1)

C/F - - - C/F - Year 1 Request 90 150 240 Year 1 Commitment 300 Year 1 Spending (100) (130) (230) Year 1 Spending (230) C/F (10) 20 10 C/F 70

11

Pros and Cons

Pros Cons

SO • Drastic reduce of PBAS work• Demonstrate multi-year planning

theory in PBAS (and internal mid-term financial planning)

• Fear for failure of fundraising• Need additional formula of SO C/F in

PBAS

NO • More flexibility of fund allocation among projects over the lifecycle

• Driving shift from SOs’ commitment-based budgeting to the real-needs-based budgeting

• No more C/F negotiation and NO CF explanation form

• Mitigate from trend of heavy spending in year-end

• A new Year-End Entry• Risk of sloppy management• Need to monitor remaining available

amount at programme-level per lifecycle (may OLAP Cube help by Horizon data + PBAS + SS)

Others • More focus on quality programme • C/F in each project (surplus, deficit) might be larger, and may affect Global-level cash management

12

Q) In lifecycle, how many % is acceptable overspent?

5-year total programme budget = $3,000,000Overspent

3% $3,090,0005% $3,150,0007% $3,210,000

10% $3,300,00015% $3,450,00020% $3,600,000

Feedback