1. PROGRAMME-LEVEL MULTI-YEAR FUNDING COMMITMENT Simplify MyPBAS related operations and Ensure Multi-Year Planning & Budgeting in Programmes toward FY14 Budgeting Process 1 Version 3 Blue: added in version 2 Green: added in version 3

2. Background When LEAP was introduced in 2005, 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 WV’s Development Programme Approach (IPM adoption) requires more flexible operation to work with local partners Not changing Programme-Projects structure in Development theory and accountability-level, change to Programme-level Commitment as one figure 2

3. Where we stand now Jan 21/22: Conducted two discussion WeBEX inviting SO IPG heads, SO IPG Finance heads, SDOs, RFDs and RFMs. Feedback received from 8 SOs, 2 ROs and 10 NOs including Operation/Programme, Ministry Quality and Finance. Feb 20: Discussed in GFFT call (GC Finance, RFDs, SO IPG Finance heads) inviting GFO and DPE/IM. Feedback received from 7 SOs and 2 ROs. The most of feedback required clarifications on the proposed new business process. The direction to simplify MyPBAS operation with the related works was endorsed by SO&ROs/NOs, and especially NOs appreciate more flexibility so that they can accommodate field-level timely needs. Attached feedback summary focus on key concerns/issues, cartelized by 5 areas, and add comments/clarification with the name of groups to follow up. Texts in blue are based on the feedback after GFFT call. –SO internal operation issue: SP economic model/PCPY based approach, SP Reserve management –Business protocol: Loosing SOs’ control power at project-level, too much flexibility –Programme financial management issue: why only for SOs, overspending risk, poor agreement status of PDD/MY Budget, NOs capacity for better budget management –Roll-out –Clarification: meaning of “commitment”, accounting, etc. Based on the additional suggestions, this 3 rd version is developed. 3

4. 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 Funding commitment which is tied with the specific activities should be made in a separated MyPBAS document (individual T4 code) by SOs (no change) –E.g., FY14 ADP total budget of $500K is funded by Sponsorship mainly but a part of Education project is funded by PNS Grant with $50K. –SO enters $450K to SMP and $50K to Education project in MyPBAS. 4

5. Pre-conditions & Directions Pre-conditions –No design changes on IT systems such as MyPBAS DB SunSystem: v6 is now roll-out Horizon: system linked with LEAP budget template LEAP Budget Template: v10 is not yet fully implemented Project Core & Logframe Financial Report Template: new template starts from FY13 Q2. –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 –Give more flexibility of annual cashflow and budget reallocation among projects under the same programme, but no overspent in each year-end per programme. –Ensure responsibility of line management in NOs and ROs for programme quality assurance functions aligned with one Operation one Organization. 5

6. Overview 6 MyPBAS SO enter one big $ NO enter five $ over lifecycle MyPBAS SO enter one big $ NO enter five $ over lifecycle Revised CY Budget Project Core & Logframe Financial Report MY Budget Annual Budget ITD Budget YTD Actual Inception-to-date (ITD) Budget/Actual is cumulative budget/actual of the phase. If in 3 rd year of the current phase, ITD budget/actual is total budget/actual from 1 st year to 3 rd year. ITD Actual Living Budget Budget Framework

7. Budget Types Multi-Year Budget (MY Budget) –This is 3 to 5 years of lifecycle budget created along with Programme Design Document (PDD). –MY Budget is be kept over 3 to 5 years of lifecycle unless PDD is revised or material budget change such as caused by exchange rate, inflation, etc. –This will be used as Inception-To-Date (ITD) Budget. Revised Current Year(CY) Budget –This is one-year (CY) updated budget along with revised one-year (CY) Detailed Implementation Plan (DIP) –Revised CY Budget reflect previous year’s accomplishments. For example, if there are some remaining activities but need to carry out, those activities are included in the Revised CY Budget. –It is called “Annual Budget” in Project Core & Logframe Report. Both use LEAP Budget Template (currently v10.1) 7

8. Key Business Process (1) Support OfficeNational OfficeNote Develop MY BudgetsIf 5 projects/ADP, 5 LEAP Budget template files created Agree on MY BudgetsIn Horizon Enter annual programme total budget into one project (SMP, as SO Forecast) for entire lifecycle based on the agreed PDD/MY Budget. These figures won’t be changed unless PDD/MY Budget is revised. Enter annual project budget into 5 projects (as NO Planned Budget) for entire lifecycle based on the agreed PDD/MY Budget. These figures won’t be changed unless PDD/MY Budget is revised. Final goal is to create automatic posting system from Horizon to MyPBAS based on the agreed MY 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 Commitment in SMP = Total NO Requests of all projects (based on the agreed MY Budget) Easy analysis by OLAP cube. NOs import the agreed MY Budget as ITD Budget into SS budget ledger (as one of 10 ledgers) over 5 years. (only one time in 5 years) If Horizon Programme/Project profiles have enough data, FRSC can do ITD analysis in OLAP Cube. 8

9. Key Business Process (2) Support OfficeNational OfficeNote SOs review based on PSC(Programme Support Code) or other relevant documents NOs update CY Budget of each project as Revised CY Budget with the cap of SO’ CY PBAS commitment at programme-level (=C/F+ CY portion of MY Budget) LEAP Programme Budget Summary Template to SOs. Revised CY Budgets of all projects ≤ SO’ CY Commitment of SMP with programme- level amount (not necessary to be exactly same) NOs export the revised CY Budget as Annual Budget to SS budget ledger (as another one of 10 ledgers) NOs may update the CY budget during FY. SOs review as a part of Management Report based on PSC or other relevant documents NOs prepare Project Core & Logframe financial reports with variance explanation (annual budget vs. actual) Under SMP, C/F available at programme-level is shown. Under each project, C/F available at project-level is shown. C/F under SMP in SO = Total C/F of all projects in NO Settle the remaining balance as of the phase-end Settlement is done in the 1 st year of the next phase in MyPBAS. 9

10. Example - MyPBAS 10 440(70+370) is the cap for NO for Year 2 total budget for Project A & B

11. 3-Year in MyPBAS 11

12. PCFR and NO CF Explanation Forms Revised CY Budget CY SS Actual 12 Continue to produce Project-level Financial Reports and Variance Explanation (T2 and T6) in PCFR Variance explanation is for Revised CY Budget vs. Actual at Project-level For usual project management purpose Stop CF Explanation Forms in Year-end process Become meaningless SOs will refer Variance Explanation in PCFR as a part of Management Report MY Budget (= Cumulative amount of PBAS fresh commitments)

13. Transition Plan Projects that have SO Forecasts at Project-level in FY12 MyPBAS DB (up to FY15 data) –If SO Forecasts are based on the agreed PDD/MY Budget, keep them at Project-level and simply copy to SO approved commitments until FY15. –If SO Forecasts are not the final agreed amounts, Either keep them at project-level forecast but reflect agreed PDD/MY budgets at project-level, and copy them to SO commitments at project-level (up to FY15 data), or Change to Programme-level forecast in FY14-16 planning and budgeting process. –From FY16 MyPBAS data, all SOs Forecasts are shown under one project with Programme-level total amount. Projects that have SO Forecasts at Programme-level in FY12 MyPBAS DB –Keep Programme-level but update to the agreed the total Programme- level amount. NOs keep to reflect agreed MY Budget to MyPBAS at project-level, and won’t change to the revised CY budget from FY14 MyPBAS. NOs upload agreed MY Budget into SS budget ledger as ITD Budget from FY14. –If current phase is from FY11-15, upload FY14-15 ITD budget. 13

14. Pros and Cons ProsCons SO Drastic reduce of PBAS work Demonstrate multi-year planning theory in PBAS (and internal mid-term financial planning) OLAP Cube is available for timely and detailed analysis Fear for failure of fundraising  see feedback summary Need additional formula of SO C/F in PBAS  will follow up with GICT/FRSC NO Reduce of PBAS work and related reconciliation work More efficient budget control for ITD Budget and Revised CY Budget. More flexibility of fund allocation among projects over the lifecycle Driving shift from SOs’ commitment-based budgeting to the real-needs-based budgeting Increased Trust to SOs by communities/ADP teams for continuation of ADPs No more C/F negotiation and NO CF explanation form Mitigate from trend of heavy spending in year-end OLAP Cube is available for timely and detailed analysis Risk of sloppy management  LEAP Standards v3 will address programme management standards. Others More focus on quality programme 14