1. Copyright 2010, The World Bank Group. All Rights Reserved. Managing resources Finance – People – Knowledge Part 1 Strengthening Statistics Produced in Collaboration between World Bank Institute and the Development Data Group (DECDG)

2. Copyright 2010, The World Bank Group. All Rights Reserved. Branches of management Management comprises several branches or specializations: Strategic management Financial management Human resource management Operations management Facility management Marketing management Information technology management 2

3. Copyright 2010, The World Bank Group. All Rights Reserved. Resources of statistical agencies The main resources or assets of a national statistical office are: Its budget Its human resources Its physical infrastructure Its organizational infrastructure Its management and leadership Its position, as defined by law and otherwise Its brand name or reputation Its knowledge base 3

4. Copyright 2010, The World Bank Group. All Rights Reserved. Financing There are different visions on how official statistics should be funded In practice there are three sources of financing: Appropriations through the government budget, both for the central statistical agency and for statistics cells in ministries Grants from international organizations or bilateral donors Revenue that statistical offices may generate by selling products and services In most countries, the first source is by far the most important Few statistical offices generate more than 10-20 per cent of their income from sales Ideally, the funds received from the government should suffice to maintain the statistical infrastructure and the implementation of a basic statistical program of economic and social statistics. 4

5. Copyright 2010, The World Bank Group. All Rights Reserved. The financial management function Financial management is the administration of financial assets Financial management is associated with financial planning and financial control Financial planning is concerned with quantifying various financial resources available and planning the size and timing of expenditure A unit in charge of finance is necessary to the proper functioning of a statistical agency It should not merely be a unit in charge of bookkeeping, but also an analytical unit, providing advice to senior management Registration of transactions must be conducted in compliance with local legislation, such that the results can pass inspection by the auditing services of the government One obvious function of the financial unit is to advise on the legality of expenses Another function is identifying risks of over- and under-spending 5

6. Copyright 2010, The World Bank Group. All Rights Reserved. Finance management in practice Defining projects and activities within projects Defining types of cost Bookkeeping by projects and types of cost Monitoring project budgets Regular reporting 6

7. Copyright 2010, The World Bank Group. All Rights Reserved. Budgets/1 Budgets provide a forecast of revenues and expenditures Budgets enable the actual financial operation of the organization to be measured against the forecast The budget is the business of all senior staff in the organization The budget translates plans into money and tells how much money is needed to carry out activities, and when 7

8. Copyright 2010, The World Bank Group. All Rights Reserved. Budgets/2 The budget enables monitoring income and expenditure The budget is a basis for financial accountability and transparency Money from funding agencies (the government or donors) cannot be raised unless there is a budget Funding agencies use the budget as a basis for deciding whether what is requested is justified 8

9. Copyright 2010, The World Bank Group. All Rights Reserved. The income budget Organizations generate income in many different ways Broad categories of the income budget are: Financing by government Grants by donors Income generated from sales Income generated from services In the income budget, reasonable estimates of the expected incomes are presented for each category specified as targets for income generation 9

10. Copyright 2010, The World Bank Group. All Rights Reserved. Expenditures - types of cost/1 There are three basic types of costs: Operational costs - direct - indirect Labor - direct labor cost - indirect labor cost (overhead) Organizational costs 10

11. Copyright 2010, The World Bank Group. All Rights Reserved. Expenditures - types of cost/2 Organizational costs, mostly labor - allocation indirect labor cost (overhead) over projects: - redefining labor cost as direct costs related to projects - allocation total overhead as a percentage of total operational costs Capital costs, also called investments - redefining capital costs (partly) as direct costs related to projects - allocating operational cost as a percentage of total operational costs. 11

12. Copyright 2010, The World Bank Group. All Rights Reserved. Cost accounting Cost accounting establishes budget and actual cost of operations, processes, departments or products Activity-Based Costing (ABC) is a costing system that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each ABC assigns indirect costs (overhead) into direct costs enabling the organization to establish the true cost of its individual products and services Cost centers are divisions that add to the cost of the organization, but only indirectly add to the outputs Fixed costs are business or organization expenses that are not dependent on the activities of the business or organization Variable costs are expenses that change in proportion to the activity of a business Fixed costs and variable costs add up to total costs A cost estimate is what helps to determine realistically what it will cost to implement the operational plan 12

13. Copyright 2010, The World Bank Group. All Rights Reserved. Project management Many statistical operations may be considered as ‘projects’ A project management system is one of the core tools of statistical offices Projects have a project leader For big projects a steering committee is needed The creation of a project follows a recognizable pattern There are several software tools for project management The creation and operation of projects involves discipline, which takes some time to acquire 13

14. Copyright 2010, The World Bank Group. All Rights Reserved. Project Management: Main components Scope of the project. Work Breakdown Structure (WBS) Project Time-frame and Management. Costs Management. Project Quality Management. Project Human Resource management Project communications Project Risk management Project procurement. 14

15. Copyright 2010, The World Bank Group. All Rights Reserved. Project budgets A project budget is the estimated financial plan for a project A project must be broken down into activities The budget is an important component of a proposal, as it represents a financial picture of the project A well-crafted budget adds greatly to the understanding of a project The best person to prepare a project budget is the project leader The starting point of the preparation should be a worksheet listing all personnel and non-personnel expenses related to the project Once the entire proposal has been completed, it should be reviewed by others The finance manager of the organization must be involved in the review The typical elements of a budget include a list of expenses, as well as support and revenue, and a narrative 15

16. Copyright 2010, The World Bank Group. All Rights Reserved. Special financial issues Special questions concerning the financing of statistics include: What information is placed in the public domain free of charge or at the marginal cost of dissemination and what information will be provided for a fee? If information is provided for a fee, what should the charges be based on? Should charges apply to intra-governmental purchases/sales of information? 16