Doing Better With Less: Unlocking Efficiency in the UN

This section examines how principles of economic efficiency, including cost-efficiency, cost-effectiveness and related dimensions of value for money, are integrated in operational management at the organisational and project levels. It also considers the efficiency dimension of timeliness at the project level. The strategic integration of efficiency, along with the measurement of progress across its various dimensions, is essential for driving improvement. Equally important is the ability to identify poor performance and apply adaptive management to address issues effectively.

Several organisations have adopted strategic objectives, targets, or corporate initiatives related to efficiency, with varied emphasis. IFAD, for example, measures the ratio of administrative expenditure to its Programme of Loans and Grants. UN Women’s organisational effectiveness and efficiency targets encompass resource management (e.g. budget execution rate, transparency standards), partnerships and resourcing, business transformation (e.g. field-to-headquarters ratio, process improvements, common premises), human resource management and the timeliness of shared services. UNRWA monitors indicators linked to operational efficiency, such as vacancy rates, the timeliness and implementation of audit recommendations and measures like the ‘coefficient of internal efficiency’ and ‘percentage of planned indicators achieved ahead of schedule’. Both UNESCO and WHO have integrated enabling objectives on efficient and effective management into their programmes of work.⁴⁵ WFP’s strategic and management plans highlight efficiency as a priority. There is also supplementary reporting on cost and time savings from corporate efficiency initiatives.⁴⁶

Anectodal examples from MOPAN assessments⁴⁷ suggest that concepts such as economic efficiency and value for money (VfM) are occasionally referenced or implied but are not clearly defined, with limited evidence of their systematic integration into policies and budgeting processes. For example, WFP loosely describes VfM as “getting the best results for our beneficiaries by wisely using our resources.” IOM engages in regular dialogue with Council members on value for money within its administrative budget, but, like UNHCR, does not provide a definition. UNFPA has hinted at value for money and cost-effectiveness considerations in its strategic planning by calculating the return on investment of family planning: every dollar invested yields USD 8.40, with projected economic benefits of USD 660 billion by 2050. VfM considerations are included in certain policies or guidelines, with procurement emerging as the area where these principles appear to be most clearly embedded.⁴⁸  IFAD does not have an activity-based recording system to record staff costs, making it challenging to determine their impact and compare the cost-benefit of various processes within the organisation. WHO is a clear exception to this trend with a clear definition of VfM and a framework for its operationalisation. It is worth noting that VfM remains a relatively under-evaluated area within the United Nations system.⁴⁹

All organisations have implemented some form of cost-minimisation or cost-saving measures. The overhead rates of humanitarian organisations assessed by MOPAN are generally justified, fall within a reasonable range and are subject to regular review.⁵¹ Notably, WFP has achieved a declining ratio of overheads to operating costs and has, with Executive Board approval, used unspent Indirect Support Costs to fund corporate initiatives, among other purposes. As noted in previous sections and in line with the UNDS efficiency roadmap, UN entities have stepped up efforts to improve administrative efficiency and reduce related costs through both intra-agency and inter-agency initiatives.

There is mixed evidence regarding the integration of cost-efficiency and cost-effectiveness considerations into project design and implementation. Evidence shows that WFP undertakes cost-effectiveness analysis, assessing alternative approaches to project delivery; for example, it has increasingly employed cash-based transfers (CBTs) to reduce transaction costs. Similarly, UNHCR has sought to improve its delivery modalities, including the use of cash-based interventions in contexts such as Ukraine. IFAD has implemented an operational plan to enhance project-level efficiency and has increased the minimum project size, with the aim of achieving efficiency gains through lower average fixed costs for design, implementation and closure. There is also some evidence that UNRWA considers unit costs and delivery modality choices in its interventions to improve cost-efficiency and cost-effectiveness.⁵² By contrast, there is no evidence that IOM systematically integrates cost efficiency considerations into project design (e.g. cost-efficiency analysis or cost variance analysis across similar programmes), except within procurement processes.

Systems to measure and monitor economic efficiency at the project level are weak in most organisations. Anecdotal evidence points to both internal and external factors that hinder cost management. Where cost-efficiency is tracked, indicators often focus on budget execution or smooth process management rather than on cost-efficiency and cost-effectiveness considerations.⁵³ IFAD is one of the few organisations that systematically measures projects’ economic return rates alongside disbursement rates. Several factors have been reported as hindering value for money, including project and portfolio fragmentation leading to high transaction costs, short-sighted cost-cutting, underfunding and short-term funding. For example, at UNRWA, cost-cutting measures - such as reductions in staff, assets and project components - often driven by austerity requirements, have reduced immediate expenditure but undermined delivery quality, placed strain on resources -including increased staff stress - and negatively affected future cost management and cost-effectiveness.

Timeliness is usually tracked⁵⁴, but not always benchmarked. Evidence on the overall timeliness of interventions across agencies is mixed, while delays in project implementation remain a recurrent issue.⁵⁵ These are often linked to business processes in need of streamlining, including internal procedural challenges related to project design, human resource capacity and recruitment, procurement and funding. External factors such as COVID-19, the war in Ukraine, limited government capacity and fluctuating currencies have also contributed to these delays.

Elements of project performance management, which are key to avoiding unnecessary costs and delays, are in place across several organisations but are not always fully effective. While some organisations have systems or procedures to identify and address poorly performing interventions, this is not universal. Even when such systems exist, their effectiveness in enabling timely corrective action is often limited. Some organisations, such as IFAD, IOM, UNHCR, UNRWA and UNOPS, have effective mechanisms for tracking and addressing underperformance, whereas others, such as FAO, UNESCO and WHO, rely on ad hoc or incomplete processes. In some cases, such as UNICEF and UN Women, weak data quality, reporting delays and insufficient real-time monitoring tools hinder performance management. Overall, monitoring does not consistently translate into timely corrective measures, reducing the effectiveness of performance management.

Digital information management systems have played a key role in tracking project implementation and efficiency, although their quality and integration vary across organisations. IFAD uses the Operational Results Management System (ORMS) to monitor project implementation speed and management effectiveness, tracking pre-implementation timelines, such as the time from concept note to approval and from approval to first disbursement and comparing disbursement rates against benchmarks. UNESCO employs a dashboard to track spending and implementation rates at the project level, while UNFPA monitors project execution through its Dashboard 2.0. UNRWA’s agency-wide RBM system records whether project implementation is ahead of plan, on track or behind schedule. FAO uses the Field Programme Management Information System (FPMIS) to track programme progress, with delays flagged up the management chain.

However, challenges remain with data quality, user-friendliness and the integration of these systems. FAO, for example, uses several digital systems to monitor results, but these are poorly integrated. IOM is developing supplementary tools, such as decision-support dashboards and teamwork-support solutions, to address gaps in its new ERP system, although integration with the ERP remains a challenge. Similarly, WFP operates numerous internal digital systems, and staff report that poor interoperability and system fragmentation undermine efficiency and knowledge sharing.