CEB MECHANISM:

Working Group on Cost Recovery Policy

The main objective of this UNDG-HLCM WG is to improve the level of consistency and harmonization across the UN system in relation to the practices and procedures governing the attribution of costs (with a focus on administrative and support costs), related to extra-budgetary funded activities. Co-chairs: Mr. Ashok Nigam, UNDG and Ms. Yolande Valle, UNESCO.

This initiative builds on the coordination efforts done in recent years by the HLCM Working Group on “Support Costs for Extra-budgetary Activities” and by the UNDG Management Group, and intends to establish common cost recovery guidelines for the UN system organizations. A first HLCM working group on “Support Costs for Extra-budgetary Activities” was activated in October 2003 and concluded its activity at the end of 2005. Its main deliverable was a system wide cost classification policy which classify costs in three main categories in relation to field projects: direct variable costs, indirect variable costs and indirect fixed costs. The HLCM/FB Network meeting held in Geneva the 20-22 June 2007 decided to reactivate the Working Group on cost recovery policies with the mandate to develop and further pursue the harmonization of cost recovery policies in a system-wide consistent way. This mandate is currently being undertaken as a joint effort with the Development Operations Coordination Office (DOCO) of UNDG. In the fall 2008, a UNDG-HLCM study was launched with the objective to accelerate the harmonization process of UN Organizations’ cost recovery policies, taking into account that a consensus had been reached on a 7% programme support costs (PSC) rate for Multi-Donor Trust Funds (MDTFs) and Joint Programming activities, while maintaining the objective of full cost recovery. In May 2009, the UNDG-HLCM Working Group held a meeting in order to review the draft consultants' report. In September 2009, the working group held its last meeting. Although participants expressed their concerns regarding the consultants’ report, they recognized some useful elements to allow mutual understanding of UN Organizations’ cost recovery policies, and provided more insight into accountancy tools and options for re-allocating costs. In October 2009, HLCM decided to move towards the creation of a small group to discuss the future strategic direction of the cost-recovery harmonization initiative, acknowledging significant differences between organizations’ funding structures and building on the excellent work already completed by the joint HLCM/ UNDG working group.

For more information, please check the repository on Cost Recovery Policy with reports, plans and other materials.