A $286.6 million computer and software system upgrade, described as the "cornerstone of a United Nations-wide effort to bring groundbreaking reform" to the management of the U.N. Secretariat, is already about three to four months behind schedule, and is headed to be tens of millions of dollars over budget, less than a year and a half after being approved.
Those tidings are contained in a 53-page draft report on the project obtained by FOX News, which was prepared on behalf of a steering committee of top U.N. bureaucrats overseeing the information technology overhaul. The head of the committee is Secretary-General Ban Ki-moon's Under Secretary General for Management, Angela Kane.
The technology system described in the report is intended to unify and coordinate — as well as redefine — jobs and functions across the global secretariat, including its fast-expanding peacekeeping efforts, which have grown in cost from $1 billion to $8 billion annually in just the last five or so years.
Yet despite the unappetizing revelations about the cost and timing of the technology project-named Umoja, or "unity" in Swahili — the bureaucrats in charge of the scheme remain relentlessly upbeat about the final outcome.
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They dub it a "once-in-a-generation chance to equip the Organization with twenty-first century practices, tools, training and technology," in order to "enable a more streamlined, cost effective, agile and accountable United Nations."
"Umoja is more than a project," the report declares. "It is a movement of continuous administrative report and improvement."
The bureaucrats claim that by the time their project is concluded in 2012 it will be back on schedule, and will pay for itself in cost efficiencies and other savings in just two years' time after it is operable and "stabilized." Their report offers little evidence beyond sweeping generalities, however, of how those efficiencies will be achieved.
And by then, the report says, the technology upgrade will have cost a staggering $337 million, or about $50.4 million more than was planned when the scheme was approved about a year and a half ago.
Even that cost-overrun is considerably understated. The original $286.6 million price tag for the Umoja information technology project, known as an enterprise resource system, or ERP, included $37.2 million worth of funding over and above the expected cost, or roughly 15 percent, for "contingencies" In effect, the report projects that the worst-case over-run will be exceeded by 135 percent.
There is a new 15percent budget line for "contingencies" in the $337 million total for Umoja revealed in the latest draft report, which the authors promise that U.N. bureaucrats will flag to the General Assembly as it is spent. But the "contingency" part of the price tag is considerably lower than the high range of 25 percent of the overall cost that the report says was recommended as a possibility by non-U.N. sources.
Ironically enough, the report was prepared, its authors say, in response to a General Assembly request in 2008 to update the business plan for the ERP, and provide options for a reduced ERP package at a lower cost than originally budgeted. The draft report offers up such packages, but only as interim steps toward full rollout of the system.
Along the way, the draft report offers some fascinating insights into the process of cost inflation within the U.N., at least on major projects like the ERP — the same cost inflation that has driven up the cost of the U.N.'s headquarters renovation, now underway, from an estimated $800 million in 1999 to the current-and not finalized — $1.88 billion.
The Umoja draft report also pulls back the curtain slightly on the near-Paleolithic state of outdated and chaotic technology and management practices within the sprawling U.N. Secretariat today.
Among other things, the report says in a footnote that the new ERP system will replace "several hundred" of the "existing 1400+" information systems in use at the U.N. — which would leave roughly 1,000 or so still out there.
Elsewhere, the report says many of the existing electronic systems are only used to back up hand-entered paper systems, which employees trust more than their electronic tools. "Paper documents are usually the source of trusted information," the report confides, adding that at the U.N. "we often have several versions of 'the truth.'"
But above all, the draft report shows that the U.N. is continuing to shower fearsome amounts of money on complicated technological fixes for its management problems, which even before the latest ERP effort had reached runaway proportions. The earlier technology fixes apparently have not achieved much U.N. unity or management efficiency.
According to a 2005 report by the Joint Inspection Unit (JIU), a small, independent branch of the General Assembly that looks at issues across the sprawling array of U.N. funds, programs and agencies worldwide, the global organization-even then — had spent more than $1 billion on various information management systems over the previous decade.
"The United Nations system's investment in ICT [Information and Communications Technologies] is growing at a faster rate than the operating budgets of most United Nations organizations, or than worldwide inflation," the JIU observed, while noting that the U.N. system still had not managed to create even a common payroll system for the tens of thousands of employees worldwide.
Umoja is not intended to solve the problems of the entire disparate U.N. system, just of the U.N. Secretariat — and according to the draft report authors, it would result in "efficiency and productivity gains in the order of 4 to 7 percent of the Organization's entire annual spend."
The draft report's description of how it calculated those savings, however, is sometimes puzzling — starting with the fact that, using the table of dollar values for the 4 percent to 7percent savings provided on page 10 of the report, the total "annual spend" of the U.N. they describe would seem to wobble between $11.03 billion and $11.85 billion, an $800 million difference.
Among other things, the report claims that Umoja's automated processes would "drastically reduce the 207-day average time between the creation of a requisition for goods and the creation of a purchase order" in the Secretariat's procurement system — a claim that seems unarguable. The report says that there would be $32 million to $64 million of process efficiency gains" as a result.
But the report also says that "renegotiating contracts for more favorable pricing based on better usage and performance information" will yield cost savings of $76 million to $117 million, without providing hard details about how the reduction in overcharging will be achieved, or whether contracts can successfully be renegotiated on that basis.
"Better forecasting for goods required" could save $56 million to $70 million, the Umoja document claims. But the report also says that a "one-time savings of $18 million to $27 million" would come from a reduction of inventory, followed by "additional benefits of reduced carrying costs" — which sounds like more of the previous $76 million to $117 million saving.
When it comes to U.N. travel, the report describes a horror story, in which simply processing travel claims on expense accounts each year currently takes up the equivalent of 60 full time employees working full-time. Fixing that would save $21 million to $34 million a year, the report says. The same goes for other accounting exercises. Closing the U.N. Secretariat's year-end accounts "currently involves 40,000 working hours and takes three months." The new system would cut that in half, the report says.
Some projected savings, however, appear bizarre. One example: "Umoja would also generate opportunities for the United Nations to generate income with ... sales of publications, postage stamps and gift items." Expected revenue: $11 million to $21 million. No explanation is provided of how that would happen. The U.N. postal system has been a scandal-tainted perennial money loser.
When it comes to Umoja's own ballooning costs, however, the high tech project looks less like a revolutionary reform and more like a return to the U.N.'s bad old days, especially when compared to the original budget for the tech overhaul put forward last year.
The original plan for the project called for 44 "core" or full-time staffers to manage the Umjoa installation and roll-out. The new draft report bluntly declared the project "could not possibly be executed" without 36 additional bodies. Cost: $32.4 million. Another $18.1 million would be required to replace staff brought in from other parts of the U.N. to help out along the way.
Even though the staffing climbs to 80, the revised Umoja budget includes office rental for 236 people ($6.7 million) with "minor alterations" to the office space ($4.2 million).
The original budget for the tech overhaul had a minimal expense line for travel. That's changed: now the budget calls for "a total of 1,285 trips by the ERP team, subject-matter-experts and corporate consultants," at an average air ticket cost of $6,000, plus $202 "terminal expenses," plus $5,000 for per diem expenses, "with each trip is [sic] estimated to cost $11,202/person."
Total cost: $14.4 million.
The draft report authors claim that Umoja's timetable is "slightly off" its previously announced schedule because the General Assembly only provided $20 million in initial funding, when the Secretariat had asked for $43 million in 2008-2009 for the design of the startup, which was supposed to allow building to start on January 15, 2010.
Now that is likely to begin after the first "three or four" months of 2010, though the report authors insist that "excellent progress" on the overall project will have been made by the end of this year.
Among other things, after what it calls a "comprehensive and competitive bidding process," the Umoja team has chosen a software provider for Umoja: SAP. But negotiations on how to proceed with the software contracts have barely begun, the report says.
The draft report ends with a warning that the technical overhaul involved in Umoja must be accompanied by an overhaul of a wide variety of U.N. rules and regulations, amounting to an entire redefinition of how work is done at the U.N., and by a total restructuring, in effect, of the unwieldy organization. There is no cost attached to that full-scale upheaval — and no sense that the extraordinary reorganization of personnel might cause additional delays.
How the General Assembly, and its often skeptical budget committees, will react to the ballooning price tag for Umoja is not known. The Assembly does not convene until mid-September.
George Russell is executive editor of FOX News.