In 2017 PUM has implemented a strategic transition with the objective to strengthen the sustainable impact for its customers. This transition is to result in an adapted production approach; from a volume-driven approach based on a (close to) fixed set of activities and cost structure to an impact-driven approach which calls for more differentiation in activities and cost structure.
The 2018 budget was based on an increase of the number of cases to a total of 2047 cases. This total number includes the 72 cases planned as part of the programme initiative “Towards more, better and greener jobs”.
The 2018 budget did not sufficiently consider the time and effort needed to implement the strategic transition, to adapt the new production approach and the effect of the more focused portfolio of countries and sectors on the number of cases realised. Therefore, the total number of cases planned in 2018 proved to be unfeasible.
Income for 2018 was budgeted at € 12.7 mln. Realised income was 9.6 mln, about € 3 mln lower than budgeted. The main reason for this difference is the transition to the new impact driven approach resulting in a lower number of realized cases, which affects the income derived through the subsidy from the Ministry of Foreign Affairs. This income was budgeted at € 11.2 mln, while the realised income amounted to € 8.8 mln, a difference of € 2.4 mln. Other income streams were also lower than budgeted; € 0.7 mln realised against the € 1.5 mln budgeted.
Total expenses in 2018 amounted to € 9.5 million, against € 12.7 budgeted. The main reason for this difference is also the lower number of realized cases. As a result, the direct costs and the indirect costs were lower than budgeted, € 2.1 mln and about € 0.8 mln respectively. Overhead costs were € 0.3 mln lower than budgeted.
Explanation deviation per budget category:
Direct costs mission/advice:
the average actual direct costs were lower than budgeted because of a discrepancy in weight between the countries where the cases were targeted and the countries where the cases were realised. Moreover, for 2018 there was budgeted for extra costs within the framework of our programme initiative “Towards more, better and greener jobs” in which local costs are not (fully) compensated. These costs are likely to incur in 2019 and 2020.
Direct costs Business Links:
this cost category varies from year to year as costs depend on the location, length and design of these activities.
Direct costs coordinators:
this category includes costs of so-called fact findings conducted as part of our programme initiative “Towards more, better and greener jobs”. Not all planned fact findings have been conducted in 2018, some will take place during 2019.
Direct costs Programme Monitoring:
programme monitoring that includes programme quality assurance has been incepted mid-2018. During this inception phase the costs were not booked as (direct) production costs but as (indirect) staff costs.
Direct costs management travel: there was less management travel than budgeted due to management changeover during 2018.
Regional marketing & Country Team Meetings (CTM):
we are very committed to teambuilding between the country coordinators, project officers and local representatives to improve the quality of the customer applications and to successfully implement the programmatic approach. As a result, we have organized more so-called Country Team Meetings than was planned for.
in 2018 we have implemented a revised remuneration policy which states that local representatives are remunerated and financially compensated for additional efforts other than their role in acquisition and on-the-ground support during the execution of cases, such as their contributions to fact findings and the programmatic approach.
Hans Blankert Fund:
extra effort in the second half of 2018 has helped to redress the relatively low number of applications submitted to the Hans Blankert Fund during the first part of the year. In 2018 a total number of 44 grants were awarded.
Indirect staff costs and overhead
In 2018 actual total staff costs were € 270,000 lower than budgeted for. Overhead is around € 50,000 lower than budgeted, while the indirect costs are € 220,000 lower than budgeted. PUM has covered staff shortages due to maternity and sick leave by hiring temporary agency workers. PUM’s sick leave insurance has compensated for some of these costs. Due to the lower number of cases realised than planned, staff absence has not been fully covered for particularly those departments associated with indirect staff costs.
In January 2017 VNO-NCW has concluded a new pension contract according to the current defined contribution. PUM has decided to comply with this new pension scheme. In the future pension costs for PUM will not follow changing interest rates based on the total pension equity but the pension contribution for employees will be yearly adjusted once for that year only. The acquired pension rights will be indexed as possible, thereby following VNO-NCW. The de-committed pension allocation of € 100,000 will be used to compensate for the pension costs.
Indirect production costs
These costs are related to the number of cases realised; these costs rise as the number of cases realised increases.
Business Development: the 2018 budget committed € 200,000 for collaboration with third parties as part of the programme initiative “Towards more, better and greener jobs”. The actual costs are booked under the budget category Third Parties Contracting.
Third Parties Contracting: this budget category includes the costs associated with the collaboration agreements concluded with third parties. Examples are the contract with IOM the Netherlands and BiD Network as part of the programme initiative “Towards more, better and greener jobs”. The actual costs are € 222,000 lower than budgeted as these financial obligations entered into force only later the year and will be allocated over the years that these obligations apply to. This means that the larger part of these costs will be booked during 2019 and 2020.
Volunteer Development: this budget category includes the costs for training courses and events. In 2018 we have organized one major event to celebrate our 40th year of existence instead of the traditional two semi-annual events per year. These costs are largely booked under the budget category Communications.
Costs of staff volunteers: this budget category includes the financial compensation provided to staff volunteers. In 2018 the compensation scheme has been simplified and this has resulted in higher costs than budgeted because of an increase in the number eligible staff volunteers.
Other indirect costs: the actual costs in this budget category are lower than budgeted, partly due to lower costs of external consultancy. Costs of our Corporate Social Responsibility activities (CSR) are partly booked under other budget categories, including costs of staff volunteers and volunteer development.
Overhead costs are fixed in principle, which means that these costs are not dependent on the number of cases realised.
Housing costs: these costs are slightly higher than budgeted due to higher utilization of the office facilities of the Malietoren such as the use of meeting rooms.
Office costs: the depreciation costs are lower than expected due to lower investments in office furniture and department development. Other office costs are also less than budgeted.
Automation: the costs for automation are significantly lower due to a smaller reliance on external consultancy and lower depreciation costs. Costs of key automation adjustments such as to our customer relationship management system, the bookkeeping system and the procurement process will be booked during 2019.
Communication: this budget category includes promotion costs, marketing materials and the website. The rebranding planned for in the 2018 budget has been postponed until further notice, just as the 2018 budget allocation for website adjustments of € 14,000 is decommitted. The costs for realizing a new website will be booked in 2019. Apart from the costs for the celebration event, the 2018 budget is in line with the actual costs.
General expenses: this budget category includes costs for external consultancy not already included in other categories, accountancy costs, bank charges, insurances and other miscellaneous costs. The difference between the 2018 budget and actual costs is due to the lower expenses than budgeted for external consultancy.