Appendix A4 Mid-term Evaluation Report (February 2003) Introduction

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5. Options for Optimizing Remaining Project Resources

Remaining resources

To optimize the budget for the remainder of the project, it is essential to know what the remaining resources are. Although the focus is mainly on GEF/Third Party financing, we also considered the resources remaining from Government of China (i.e. co-financing).

GEF and Third Party Financing

The MTR found it difficult to obtain a clear financial picture of the remaining resources. For project redesign purposes it is important to know the resources available for programming and for management, accordingly we sought the following information:

The total budget available by line item, after all liabilities have been met
The amount of budget needed for management purposes.

Total available budget.

The CPMU provided the MTR with a combined delivery report on November 29 of what the estimated project budget would be as of Dec. 31, 2002. This combined report is summarized below along with the original budget. (See Appendix D for the combined delivery report table provided by CPMU). According to this budget, $5,498, 562.54 US has been spent and the total remaining donor budget (GEF + AusAID monies) is $8,782,437.46 US. The remaining GEF budget (without AusAID) is $ 6,392,437.46 US. This remaining budget includes $484, 298.93 that remains for sub-contract 1 and $134,742.22 that remains for sub-contract 3. Also, according to figures received from CPMU, it will costs approximately $245,000 to pay salaries and other liabilities for the first quarter of 2003^¹⁹, so if these liabilities are deducted ($864,041.15), the actual remaining budget available for re-programming is roughly $7.9 million (GEF + AusAID monies). The remaining available GEF budget (without AusAID) is roughly $5.5 million. However, as discussed below under management, there is considerable confusion about some line items (eg 54), and it is possible that the available budget could be several hundred thousand dollars more.

Summary of Remaining Budget as of Dec. 31, 2002

Description	Budget		Amount Remaining
Description	Current (revised)	Original	Amount Remaining
International Experts & Consultants (11)	2,463,480	2,546,000	836,297.00
National Consultants (17)	1,777,300	1,672,000	978,491.93
Sub-contract 1 (21.01)	740,000	740,000	484,298.93*
Sub-contract 2 (21.02)	1,080,000	1,130,000	998,870.82
Sub-contract 3 (21.03)	270,500	270,500	135,757.78*
Sub-contract 4 (21.04)	2,400,000	2,540,500	10,000 + 72,000 to CICETE
Training Total (31 & 32) Fellowships (31.01 & 31.02) Study Tours (32.01 &32.03) Group training (32.02)	1,911,920 519,120 353,920 1,518,000	2,093,000 315,000 0.00 1,738,000	1,155,490 454,817.39 321,640.41 949,290.70
Equipment (45)	1,827,650	1,827,650	637,342.64
Report, translation & interpretation (52)	289,300	438,000	256,043.12
UNDP management costs (54)	281,780.00 missing	629,460	0
Budget Total (99)	14,281.000	14,281,000	8,782,437.46

Management costs

We were unable to determine either the total amount or proportion of the budget used for management/administration costs, due to the variety of accounting practices and assumptions used by CMPU, UNDP, UNOPS. For example:

The combined delivery report provided by CPMU does not separate out management costs. During the initial MTR briefing provided by CPMU we asked for a breakdown of the budget with the management and administration costs of CMPU and PPMU separated out. Although CPMU said it would provide this, we never received it.
Line item 54 for UNDP management costs may have been incorrectly deducted and should actually go back into the budget.
At the time of the MTR, there was a discrepancy of approximately $500,000 between the amounts UNOPS estimates showed as spent vs. the budget of CPMU. This problem has something to do with the lag between UNOPS/UNDP accounting systems in New York and the actual disbursement figures. Although the problem happened in the previous fiscal year and had been known for over 6 months, it had not been fixed at the time of the MTR.
$72,000 had been deducted for CICETE NEX administration costs; it was not clear whether this amount was over and above the 3% normally paid to CICETE to execute UNDP projects.

Thus we are unable to determine how much it has costs to manage the project to this stage, and whether management costs are in-line with what they should be. In our experience management costs for a project of this nature should be around 20%.

Need for a full Audit

Because of the uncertainty of management costs and the discrepancies in budget figures between UNDP, CPMU and UNOPS, we recommend that a full audit be done of the project. This would include more than CPMU activities and should cover the management costs incurred to date by CPMU, UNDP, UNOPS, CICETE and GEF-UNDP. We understand that costs for this audit would be borne by UNDP or UNDP-GEF and not by the project.

Government Co-financing

The GOC has invested a counterpart contribution of $6.28 USD (CPMU statistics) so far, mainly on infrastructure for nature reserves and capacity building. However, the MTR team observed some discrepancies between the items listed as counterpart funds provided by CPMU, the items NRs included in counterpart contributions (from our site observations) and the items included in the counterpart budget in the project document. We believe these discrepancies are due to misunderstandings and lack of clarity among CPMU, provincial and nature reserve staff about what is and is not included in counterpart funding. For example, although the size of staff at East Dongting Nature Reserve has declined since the project began, the staff salaries for East Dongting NNR are included in the counterpart contributions. Normally, only the salaries of additional staff hired because of a project are included in counterpart contributions^²⁰. CPMU, PPMU and Nature Reserve staff need to develop a clear and common understanding of the items eligible for counterpart funding. Also, CPMU needs to check and verify the contributions reported by provinces and nature reserves.