STATEMENT ON BEHALF OF THE GROUP OF 77 AND CHINA BY MR. RICHARD TUR, SECOND SECRETARY OF THE PERMANENT MISSION OF CUBA TO THE UNITED NATIONS, ON AGENDA ITEM 134: PROPOSED PROGRAMME BUDGET FOR 2024: CONSTRUCTION AND PROPERTY MANAGEMENT: ECLAC, ESCAP AND UNON BLOCKS A-J PROJECTS, AT THE MAIN PART OF THE SEVENTY-EIGHTH SESSION OF THE FIFTH COMMITTEE OF THE UNITED NATIONS GENERAL ASSEMBLY (New York, 14 November 2023)
1. I have the honor to deliver this statement on behalf of the Group of 77 and China. The Group wishes to thank all briefers for introducing their respective reports. We express our deepest gratitude to Chile, Thailand and Kenya as host countries of ECLAC, ESCAP and UNON respectively, for their continued support to facilitate the implementation of the relevant construction projects.
2. The Group encourages the Secretary-General to continue to take steps to engage with the local Governments in order to ensure the success of these projects and to share the knowledge, best practices and applicable lessons learned among other United Nations construction projects, including with regard to energy efficiency strategies and the enhanced use of local materials, expertise and labour.
3. We further acknowledge the coordination and oversight provided by the Global Asset Management Policy Service for the implementation of these projects.
4. The Group takes note of the fifth progress report by the Secretary-General on the seismic mitigation and renovation project of the North Building at the Economic Commission for Latin America and the Caribbean (ECLAC) in Santiago, which is expected to be the first "net-zero" building within the United Nations system.
5. We note that the approved budget will not be able to deliver ECLAC's North Building project considering the actual construction costs. The overall maximum cost of the project has now been estimated at $19.2 million based on an 80 per cent cost confidence level, which represents a $4.9 million increase.
6. After assessing the abundant technical information provided by the Secretary General, we acknowledge the existence of unfavorable conditions that have led to this rise in the costs. We can name the significant price increases for materials in the project's scope and the increase of 530 per cent in freight rates from 2019 to 2022, which added more costs to the supply chain for this project. We notice that the available project contingency and escalation budgets are insufficient to cover the updated costs.
7. We look forward to the discussions on the revised cost plan in order to seek its approval, which remains the prerogative of the UNGA. At the same time, we stress the importance of effective governance, oversight, internal control and accountability to ensure that the project will be implemented within the proposed revised budget and the established timeline.
8. We recognize that the highest Best-Value-for Money (BVM) scoring vendor is a locally based construction company, that was awarded after using a multistage request for proposals. We also recognize the multiple proactive risk mitigation measures put in place by ECLAC in the procurement, contracting and contract execution stage.
9. Regarding the Economic and Social Commission for Asia and the Pacific (ESCAP) with premises in Bangkok, the Group welcomes the continued progress of the Seismic Mitigation Retrofit and Life-Cycle Replacement Project (SMP) and stresses the importance of its successful and timely completion.
10. We note that the project is currently expected to be substantially completed by July 2024, due to unforeseen circumstances, including the late impact of COVID-19. We welcome ESCAP's efforts to minimize this delay, including through project risk management.
11. We stress the need for the project to be adequately funded as it nears completion. We welcome the continuous efforts on cost control, but are concerned that the likelihood to deliver the project within its approved budget of $40 million is now slightly below 5 per-cent. We note that the ESCAP's updated cost plan leads to a project budget of $41.2 million, and that this is the first time the ESCAP has requested additional budget in order for this project to be completed.
12. We further note that the ESCAP, in consultation with the Office of Legal Affairs, is currently reviewing contractual options available to close the P80-gap and managing the process of delay damages with the General Contractor to arrive at mutually acceptable terms. We recognize the rationale of the approach used by the project team as regards the confidence level and hope that every effort will be made to reduce the cost of the delays.
13. We also reiterate the need for the project to be properly staffed and look forward to receiving an update on measures underway in this regard.
14. The Group continues to attach great importance to progress on the replacement of office blocks A-J at the UNON, the only UN's headquarters station in the Global South.
15. We note with satisfaction that the three components of the project are on track for substantial completion by the end of 2024 within the approved overall schedule, with project close-out activities for completion by the end of 2025.
16. We recognize the increased confidence level to 97 per cent, the achievements on the completion of construction and renovation works, the successful design, procurement and award of contract for the new office building component, as well as the efforts of UNON's project management team to take proactive measures to manage risks. The Group hopes that Secretary-General will continue to closely monitor and mitigate project risks to ensure the delivery of the project within the scope, budget and timeline.
17. We also stress the need to continue collaboration with the co-located United Nations Office at Nairobi conference services facilities project. In addition, we hope to receive updates on the implementation of the service level agreement with UNHCR.
18. In conclusion, Mr. Chair, the Group would like to assure you of our continued commitment to work constructively with all delegations on this agenda item.
I thank you.