Operationalizing the workplan and budget STOP TB workshop 14 December 2005.
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Transcript of Operationalizing the workplan and budget STOP TB workshop 14 December 2005.
Operationalizing the workplan and
budget
STOP TB workshop14 December 2005
OUTLINE
1- The budget and workplan process overview
2- Global Fund policy on budgets and workplans
3- Budgets and workplans: approach and presentation
4- Issues in setting budgets and workplans
5- Global Fund budget review process
6- Miscellaneous issues
Slide 2
Grant process key dates
Proposals Submitted
1.3 Screening
Eligible Proposals Selected
1.4 TRP
Review
TRP Recommend
ations
TRP Chair/Vice Chair Sign-off (Final Board
Approval)
1.5 Board
Approval
1.6 TRP Clarification
(as required)
Call for Proposals
1.1 Future Round Planning
1.2 Guidelines for Proposal
Refinement & Call for
Proposals
Board Approval
I. Proposals Management
Board Approval
Grant Start
Grant Renewal (2 years)
Grant End (up to 5 years)
The Global Fund grant process
Grant Signing
2.1 CCM Confirmation
of PR Nomination
PR Nomination Confirmed Grant Signing &
First Disbursement
2.2 LFA Selection and Contracting
II. Grant Negotiation and First Disbursement
Grant Negotiations
2.4 Review of Budgets, Workplan, and Indicators
2.5 Negotiation (including conditions
precedent)
2.6 First Disbursement Preparation
LFA Contracted
2.3 PR Assessments
18 months since first disbursement
3.3 Phase 2 Grant Renewal
Process
Updated Grant
Agreement
3.5 LFA Management
Phase 2 Go/No Go Decision
3.4 Grant Extension
3.6 Grant Support
Performance-based Funding
3.1 Ongoing Reviews &
Disbursements
3.2 Grant Revisions
III. Performance-Based Funding and Grant Support
Performance-based Funding
3.1 Ongoing Reviews &
Disbursements
3.2 Grant Revisions
End of Phase 2 Support
ARCH/300704/3Slide 3
Budget and workplan steps to grant signing
Grant Proposal
Board Approval
Grant
Cycle
Board approves grant budget upper limits
Budget and workplanaspects
Grant signing
FMS Assessment
Budgetand workplan
review
GrantConditions
TRPClarifications
TRP reviews budget
TRP review
Approx timeline
Budget prepared to
support proposal
TRP requests PR for further
information
8 weeks 3 weeks4 weeks (cat 1)5 ½ months (2) 3 months av
Max. 6 months
from board app
Slide 4
From proposal to workplan and budget
Proposal
Assumptions are based on the overall strategy of the given health intervention
Large elements of the detailed operationalization will not have yet been decided
Increasingly proposals contain more budget information than before
Workplan: What is the Global Fund workplan?
No specific format but acts like any other plan
Converts the proposal and overall strategy into a workable, coherent plan which provides accountability of action
It is based on real assumptions and risks. It harmonizes program targets with realities of implementing activities eg procurement, resource availability
Slide 5
From proposal to workplan and budget
Budget
Also no defined format, usually part of the same document as the workplan
Puts the financial realities to the workplan (operationalizes the workplan)
Ensures accountability of implementation
The workplan and budget are living documents. They will be changed over time.
Slide 6
Budget and workplan policy
TRP reviews technical merit of proposals and may seek clarifications which impact budget
A budget reduction at the TRP stage is, by default, reduced from the board approved 2 year amount
Budget and workplan should be broadly in line with the approved proposal (as adjusted by TRP issues raised)
Budget and workplan can be in the same document. If not, they should clearly reconcile
There is no firm policy on the format of budgets and workplans.
Preference for the budget to follow the program objectives and therefore be activity based
Budget periods
Slide 7
Budget and workplan policy (2): exceptional situations
What if?:
There are major changes in macro-economic or programmatic issues between the proposal and grant signing which may result in major changes to the budget and workplan?
Examples:
• major foreign exchange swing, changing the real value of the approved amount
• civil strife or other force majeure
• there is new information on treatment methods with a material budgetary and planning impact
If impact not material, proceed as normal
If impact material PR can apply for re-programming (discussed later)
Slide 8
Budget and workplan presentation and approach
Overall approach to preparing budget and workplan
Bottom up?
Top Down? Whats in the
envelope?
Trial and error?
Cost based?
Activity based?
Slide 9
Budget and workplan presentation and approach (2)
Example budgets and workplans
Activity based budget and workplan recommended following objectives and SDAs from the proposal
•Proposal template
•Grant agreement
•Detailed budget and workplan
Example workplan and budget setting process in practice.
Slide 10
Activities rollout. Budget
prepared to support
activities.
Budget and workplan presentation and approach (3)
ActivitiesBudget
and workplanaspects
ActivitiesActivitiesActivities
Approx timeline Q1 (3 months) Q2 (3 months) Q3 (3 months) Q4( 3 months)
SDA1SDA2SDA3
ObjectiveIndicators &Targets
Indicators &Targets
Indicators &Targets
Indicators & Targets
As per M&E plan and AttachementAs per proposal
Slide 11
Budget and workplan presentation and approach (4): good practice
Good budget and workplan sets good impression
Makes review and analysis easier which can mean better decision making
Be transparent
Do not be scared to provide more detail rather than less
Model should be very clear; narrative review/explanation will be positively received
Keep your portfolio manager informed. Raise concerns early and articulate them clearly
Ask the portfolio manager for advice
Develop good working relationship with LFA – understand their needs
AIDSPAN booklets www.aidspan.org
Slide 12
Budget and workplan presentation and approach (5): not so good practice
Taking the exact same budget as was contained in the proposal – unless for very good reasons
No narrative
Assumptions not clear
Envelope approach (eg balancing figures dumped)
Dropping SDAs, activities without explanation
Being unrealistic
Not reconciling the various interlinked activities eg equipping should precede implementing
Not questioning excessive costings
Not reviewing what has been prepared
Slide 13
Budget and workplan issues for grant signing
Presentation issues
Grant specific factors
Secretariat review
outcomes
Macro economic
factors
TRP review outcomes
Proposal budget
The right budget
Slide 14
Budget and workplan issues: the proposal and TRP clarification process
Round 5 proposal instructions contained fairly specific budgeting requirements
TRP reviews the technical merit of the proposal
Budget is presumed to be indicative
Detailed attention to budget by TRP is limited by time
The clarification process may or may not include issues relevant to the budget and workplan
Where there are workplan and budgetary implications the PR should demonstrate how it has taken account of them
Examples…
Slide 15
Budget and workplan issues: macro- economic factors
Foreign Exchange
No specific policy on foreign currency issues other than that grants may be denominated in USD or Euros
In budget setting use best estimates of exchange rates
Make clear assumptions on USD or euro relationship with local currency:
• eg does USD purchasing power parity apply?
Make clear assumptions on currency base of budget items:
• are budget items denominated in USD or local currency?
Inflation
Inflation: is there an underlying local inflation trend which is separate from that caused by devaluation of the local currency
Slide 16
Budget and workplan issues exercise: macro- economic factors (2)
Discussion exercises:
1. Choosing the right exchange rate and inflation factors in Ruritania
2. Significant local currency exchange rate appreciation: what approach to take?
Slide 17
Budget and workplan issues: macro-economic factors (3) – taxation
Global Fund policy
Quote from the grant agreement
General approach:
• Tax clearance certificate before grant signing
• Material amounts of tax paid are quantitied and reduced from following disbursement
Occasionally waived if not material eg VAT on local petty cash purchases
What if the tax is only recoverable in future?
What if the tax authorities refuse to exempt the PR from tax?
Slide 18
Budget and workplan issues: grant specific – procurement issues
General approach:
Procurement plan including quantities and prices not always available
Use best available information and document assumptions
Key issues
Material changes between proposal and grant negotiation
Timing issues
Planning other resources which are dependent on procurement
Slide 19
Budget and workplan issues: grant specific – procurement issues (2)
Example for discussion:
What do you do if:
The price of xxx drugs increases by 30% between proposal and grant negotiation and the drug component of the grant represented 40% of the grant in the proposal budget.
Do you:
just decrease the treatment targets in line with the increase in unit costs and avoid adjustments to other SDA’s?
hold the targets as they were in the proposal and cut other activities?
cut all activities evenly (ie pro rata to the increase relative to the whole budget)?
look for other areas of potential saving and first offset the cost increases against those, then negotiate with the GF on targets?
Look for other sources of funding?
Slide 20
Budget and workplan issues : grant specific – overlapping grants
Where separate rounds may overlap geographically and programmatically
Presently each grant stands alone for financial reporting purposes
The budget preparation should avoid possible double counting
Grant rationalization is under discussion. Recommended interim steps:
• Reporting dates
• Financial reporting system
• Align financial reports
• LFA work
Slide 21
Budget and workplan issues : Global Fund review
Review process
LFA review, scope of work
Example reviews
Secretariat reviews, roles and responsibilities
Slide 22
Budget and workplan issues : grant negotiation/ LFA assessments
LFA assessments may raise issues with budgetary implications
The Secretariat may raise issues with budgetary implications
What if the changes cannot be delivered with the budget available? Discuss
Slide 23
Budget and workplan issues : grant specific – Miscellaneous issues
CCM costs
Sub-recipients
Administration and overhead costs
Budget revision
Slide 24