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UNDP risk management measures during grant formulation

A number of standard and key controls should be established in the key phases of project formulation and implementation to ensure a mitigation of some of the most common risks faced by UNDP-implemented Global Fund projects, as listed in the Risk Catalogue for Global Fund projects. Some key risk management considerations to embed in the formulation of the grant are listed below.

Risk Assessment during key start-up activities: when notified that UNDP is being considered as Principal Recipient (PR), the UNDP Country Office with support from the Regional Bureau and the BPPS GFPHST, should conduct an assessment of the risks in taking the PR role to inform the decision to accept the role and the formulation of the transition and grant making work plan. See Principal Recipient Start-up section of this Manual.

Project quality assurance and appraisal - UNDP POPP (Programme and Project Management (PPM) Appraise and Approve) requires the appraisal of the quality of every project before finalisation. This is done via a Project Quality Assurance assessment of the project by the Project Assurance function in the Country Office (CO) and a Local Project Appraisal meeting. In this regard, during the formulation of Global Fund-funded projects, ensure:

  • The CO programme team (as Project Assurance) is involved in the quality review of the project during the grant formulation phase. If UNDP is not assigned as PR during the funding request, consider involving the CO programme team as soon as possible during the negotiation of the project.
  • UNDP’s Quality Standards for Programming are reflected in the formulation of the funding request, the negotiation of the grant (if UNDP is not assigned as PR during the funding request stage) and the UNDP project document.
  • It is recommended to ensure a UNDP’s preliminary feedback to the draft funding request is collected and integrated in the funding request / project as soon as possible. This feedback includes programming quality, security, health procurement and supply management, oversight, financial management, human resources, and monitoring and evaluation considerations from the UNDP CO, BPPS Global Fund Partnership and Health Systems Team (GFPHST). If the project has been classified as a ‘high-risk project’ by the Regional Bureau/BPPS, also include Regional Bureau’s feedback.

Construction - The Construction Works policy and the PPM Appraise and Approve policy foresee the delegation for construction works by the Regional Bureau to the Resident Representative (RR) before project approval. Ensure this is obtained before the finalisation of the project. The Delegation of Authority for construction requires the submission of key preliminary assessments to demonstrate CO’s procurement capacities, Social and Environmental considerations in the design of the construction work and management of the contractor, feasibility of the construction project, contractor oversight, etc. The assessments and the approval could take time, so consider developing the background documents as soon as possible, during grant formulation.

Project governance: When designing the Global Fund project governance structure, ensure this is aligned to the UNDP PPM - provide oversight policy. Specifically:

  • Although project assurance functions are outsourced to the Local Fund Agent from the donor’s perspective, ensure CO representatives attend Project Board / Country Coordinating Mechanism (CCM) meetings and assure UNDP compliance over project implementation and the achievement of results.
  • Ensure the project governance arrangements in the project document reflect the independent Project Assurance function provided by the CO’s programme team, as first line of defence. These are UNDP’s internal oversight arrangements and in addition to the implementation arrangement mapping requested by the donor. See UNDP Standard Terms of Reference (ToR) for a Development Project Board or Project Steering Committee and PPM oversight policy.

Internal Control Framework (ICF) - When designing the Programme Management Unit, ensure adequate implementation of the UNDP Internal Control Framework (ICF) Policy. Specifically:

  • Segregation between project oversight and implementation. Global Fund Project/Programme Managers (first authority) cannot have an Approving Manager (second authority) or Disbursing Officer (third authority) profile in the CO ICF/Quantum Identity and Access Management (IDAM) profile for the project they manage. The second authority, usually CO Programme Officers, CO Management / Programme Support Unit or Deputy Resident Representative (DRR), acts as an independent check on the Global Fund Project/Programme managers and verifies that applicable policies and procedures have been followed. They must have oversight functions over project implementation and its transactions.
  • If a direct reporting line is established between the Global Fund Project/Programme Manager and the RR/DRR, ensure Standard Operating Procedures (SOPs) are in place for key business processes (FACE forms review, results reporting review, AWP review/approval, budget revisions, etc.) to ensure regular CO’s oversight on UNDP compliance and the quality assurance of project M&E, reporting, implementation, financial transactions, procurement, etc.

Prevention of Sexual Exploitation, Abuse and Harassment: All UNDP projects operating in an humanitarian context have to adhere to the Inter Agency Standard Committee (IASC) Minimum Operating Standards (2012) and the IASC Core Humanitarian Standard on Quality and Accountability (2014). The IASC has also identified a number of priority countries for Prevention of Sexual Exploitation, Abuse and Harassment (PSEAH) and the list is available here. When employing Programme Management Unit members, verify whether such individuals have a record of SEA or SH by vetting them against Clear Check. In managing SEAH risks at the Sub-recipient’s (SR) level, consider the following measures:

  • Before engagement with the partner, ensure a screening of the SR’s PSEAH capacities and policies. The SR’s Capacity Assessment Tool includes an assessment of SR’s PSEAH policies to identify and take action on SEAH.
  • Building on the findings of the SR capacity assessment, develop appropriate risk mitigation measures, including capacity building and monitoring, for partners with limited PSEAH capacities. Refer to the UN SEA Implementing Partners protocol and the UNDP SEA Risk Management Tool for more details and examples of appropriate risk measures.
  • When entering cooperation with the partner, ensure SRs and Sub-sub-recipients (SSRs) are fully aware of the UNDP zero tolerance policy and the standard SEA text in the legal/grant agreement.
  • As part of the SEAH capacity building plan, include the completion of the prevention of SEAH online training from SRs, SSRs and their staff (UNICEF training), face-to-face SEAH training, dissemination of awareness raising tools, support in establishing policy and implementation of reporting procedures, etc.
  • Stakeholder engagement mechanisms and grievance redress mechanisms are established and made available for all projects with SES and SEAH risks to allow communities to raise feedback and complaints. Ensure wide communication of the Grievance Redress Mechanism and complaint mechanisms.
  • Promptly report all SEA allegations through the Secretary General’s general reporting on SEA, i.e. Ethics office and UNDP Office of Audit and Investigations (OAI) hotline, and the BPPS Global Fund Partnership and Health Systems Team’s Focal Point for advice on how to engage OAI and the donor.

Anti-Money Laundering and Countering of the Financing of Terrorism (AML/CFT):

Sub-recipients (SRs) selection: When selecting the SRs for the implementation of the grant, ensure transparency and adequate risk management. Closely follow the steps in the Sub-Recipient Management section of this Manual, and specifically:

  • No SR Agreement can be signed before the results of the SR Capacity Assessment (CA), through the SR Capacity Assessment – SR CA (conducted by a qualified third-party provider (audit firm), not in-house or a self-assessment by the SR) are in place and show adequate capacities and no exclusionary criteria. If the results of the SR CA are negative (i.e. the capacities of the SR cannot be meaningfully developed early on in the project lifetime for the effective implementation of a 3-year grant), partner selection cannot proceed. Negotiate the SR Agreement with the SR to embed specific risk measures and address the capacity gaps identified during the capacity assessment.
  • Design work plan, budget, cash transfer modalities, disbursement schedule, and results framework in line with the findings of the capacity assessment. No direct cash advances or reimbursement can be given to high risk partners, without UNDP Office of Financial Management (OFM) approval routed through the Regional Bureau (see POPP HACT policy and outcome of SR’s capacity assessment section of this Manual). Direct payments and reimbursements may be used only in selected areas where the SR internal control framework is assessed as adequate.
  • Ensure no procurement activities above 10 per cent of the SR agreement’s amount or USD 100,000, whichever is lower, are included in the work plan/budget of the SRs.

Monitoring and Evaluation (M&E): Closely follow the steps in the Monitoring and Evaluation (M&E) section of this Manual, and specifically:

  • Ensure allocation of adequate resources (time, staff, systems) for M&E activities. The GF recommends that grants allocate 5 to 10 percent of grant funds to M&E, which includes strengthening national data systems for reporting.
  • Design a comprehensive and realistic site visit plan and ensure it is regularly carried out (e.g. quarterly).
  • Consider designing a variety of monitoring tools, in person visits, tech-based systems (GIS based, social media, photos, etc.), third-party monitoring, and involving end-users in the validation of data and in the review/assessment of the quality of services through client reviews.

Procurement and supply management: Closely follow the steps in the Procurement and Supply Management section of this Manual, and specifically:

  • Develop the Health Procurement Action Plan (HPAP) as soon as possible, preferably before the programme begins, to ensure it is aligned to the Health Product Management Template (HPMT) approved by the Global Fund.
  • Ensure SRs have adequate capacities for asset management, including internal controls for asset management, safe storage, etc.
  • SR’s procurement should be limited to minor supplies of limited value (office supplies, low value services, etc.). Capital assets should be procured by the UNDP Country Office and in no instances, SRs should be authorized to procure more than 10 per cent of the SR Agreement’s amount of USD 100,000, whichever is less, on procurement.
  • Ensure budget and capacities to establish digital asset management systems, if not in place already.
  • Establish mechanisms to reduce collusions, by defining opposite responsibilities for the storage, delivery, and distribution of stock. Ensure asset focal points have the relevant experience and their work is overseen regularly.

Additional guidance to support this area of work are also available through a number of resources listed below:

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