2006/07 DPW Annual Report Presentation to the Portfolio Committee

2006/07 DPW Annual ReportPresentation to the Portfolio

Committee

17 October 2007

Table of Contents • Introduction• Strategic Overview• Programme Performance

– Asset Management– Operations – Re-Kgabisa Tshwane– NPWP and Policy– Expanded Public Works Programme

• Financial Management• Human Resources Management• Strategic Corrective Measures• Conclusion.

Introduction• For the first time in the 2006/07 the Department

reported on two sets of financial statements including the Trading Account;

• Performance audit was carried out on main programmes of the Department and these programmes will form the core of this presentation;

• This report is for the period of 01/04/06 to 31/03/07

Strategic Overview• Refocusing DPW from coordination to leadership and implementation roles;• Capacitating the EPWP Unit for the massification of the EPWP roll-out• Strong intergovernmental relationship and close cooperation with provinces and Public

Entities (DWINIF, HOD Forums);• Presentation and Gazetting of the Construction charter to the Minister of Trade and

Industry;• DPW Lekgotla and adoption of key strategic imperatives;• Increasing DPW contribution to ASGISA / JIPSA, (NIMS, NYS, Professional skills audit

and Cuban experience) ;• Budget Devolution in line with the PFMA ethos of transparency and accountability.• Maximizing the performance of our assets in relation to their value to service delivery

Programme Performance

Asset Management

Draft Turn-Around Strategy

• Revenue generation and cost reduction measures;• Financing and restructuring;• Integrated approach to decommissioned and/or un-

utilised assets;• Value enhancement; • Institutional reform; and• Implementation plan (to be finalised in 2007/08)

Pan African Parliament (PAP) • Completion of the options analysis and identification of

Randjesfontein, Midrand as the preferred location for PAP;

• Options analysis skills transfer to the department through the options analysis process by the private sector;

• Approval of the procurement option and budget for the PAP by the IMC.

• Approval of the jury members and technical team structures by the IMC;

• The website address is www.papcompetition.co.za .

National Infrastructure Maintenance Strategy (NIMS)

• This strategy was approved by Cabinet and DPW appointed as a lead department; and

• Covers infrastructure owned by State; SOE, and Municipalities

• The following institutional structure to manage the implementation of the strategy was proposed:– An institutional framework for the management of

NIMS comprising political oversight function; and – A steering committee up whereby key infrastructure

departments are represented was also proposed.

Prioritized Capital Works and Planned Maintenance 2006/07

• For the second consecutive year, DPW rolled out prioritized capital works and planned maintenance over the MTEF period as opposed to year on year.

• Also the determining principles and factors in the prioritisation of maintenance were reviewed in order to make a significant socio-economic impact on government’s programmes such as:– EPWP ( Must ask - Why is a Project not linked to EPWP?);– NYS;– Project Consolidate;– ASGISA

• For monitoring and evaluation purposes, a Planned Maintenance Budget Committee (PMBC) was established;

User Asset Management Plans (UAMP)

• Match the service delivery objectives with accommodation;• Verify the accommodation occupied by the user;.• Determine functional performance of accommodation;• Determine utilization of accommodation;• Conduct a gap analysis;• Determine new accommodation requirements;• Determine the need for refurbishment or reconfiguration of

existing accommodation;• Determine surplus accommodation to be relinquished;• Determine repairs that need to be conducted; and• Prepare a budget for accommodation occupied by the user.

Investment Analysis Framework

• To be used in the evaluation of clients’ proposals for fixed property acquisitions, refurbishments, exchanges, demolitions and disposals;

• To implement the options analysis process that has been developed by the department and the National Treasury;

• To provide relevant stakeholders with information required for investment analysis process; and

• To provide a clear picture of existing business processes.

Service Delivery Standards (SDS)

• The production of the SLAs require the definition of SDS. DPW has developed more than 300 SDS that serve as a base for the conclusion of the SLAs with client departments. These SDS are split into head office service standard performance and regional offices service standard performance include but not limited to:– Acquisition of fixed property (buying and leasing);– Disposal of State Owned Property;– Facilities management;– Property payments; and – Utilisation and contracts.

Border Control Operational Coordinating Committee (BCOCC)

• DPW Chairs the BCOCC Development Committee whose value of work is R4bn

• 43 of the 54 Land Ports of Entry were under various repair and maintenance programmes including the construction of residential accommodation at certain bases

• ICT – Upgrading worth R204 million was spent at certain sea, land, and air ports of entry in 2006/07

Conclusion – Asset Management

• In compliance with GIAMA and Strategic Asset Management Life Cycle, DPW continuously implement:– NIMS;– Draft Turnaround Strategy – On-Going Consultations;– UAMP;– AREP (Phase II)– SDS; (300)– PAP & 2010.

• All of these initiatives have been done for the first time in managing State immovable property portfolio.

Operations

Purpose and Objectives

• Execute all operational activities related to provision and management of state owned property on behalf of government and its departments/institutions;

• Align and utilize expenditure to promote BEE and influence ownership partners in the property and construction industries.

• Coordinate Service Delivery Improvement Programme (Zimisele – Give it Your Best programme).

• Achieve Expanded Public Works Programme goals using capital and maintenance budgets.

• Comply with regulatory and statutory requirements.

Achievements• Debt reduction by regional offices is improving. The

outstanding debt was 24 million and has been reduced to date to 6 million rands.

• The design and tender documentation for the Foreign Affairs embassies in Addis Ababa, Lesotho and Nigeria was completed in January 2006 and November 2006 respectively and is in an advanced stage of commencement with construction.

• Draft property management strategy for BEE, Poverty alleviation and job creation has been developed.

• The Zimisele call centre for unplanned maintenance was implemented in March 2007 at 3 pilot sites (PE, KBLY, JHB).

…Achievements

• In Kimberley the R 35 million pipeline contract was completed, using EPWP guidelines.

• In Mmabatho 6 projects were identified for CIP and the contractor moved on site.

Challenges

• BEE participation in the construction and property sector.

• Skills shortage in the built environment industry.

• Registration of professionals in the built environment industry.

Challenges: Legislation/Regulation

• Special attention must be given to the requirement to ensure that all DPW owned buildings are complying with the National Building Regulations and Building Standards Act, regarding facilities for the disabled.

• The cost to make the DPW buildings compliant is roughly estimated at R600 million as it involves the installation of lifts in some buildings.

Re-Kgabisa Tshwane Programme

Purpose and objectives• Development of a conceptual framework for long term

accommodation solutions for government in partnership with the city of Tshwane.

• Improving the standard of physical accommodation of national departments’ head offices in the inner city of Tshwane

• Integrating the RKTP with the City of Tshwane Metropolitan Municipality (CTMM) inner city development strategies in order to assist CTMM to improve the urban environment around government accommodation

• Cost management and quality improvement• Promoting government’s socio-economic goals including

BEE

Achievements…

• 13 departments needs, location and procument strategies have been generated and approved by the clients departments.

• Developed a draft multimodal transport strategy. A study tour to South America by CTMM to benchmark the Bus Rapid Transit models within the RKTP was taken in January 2007.

• A database of the status of land and building management within the inner city was developed and has been finalised.

…Achievements

• Land identified for the 13 departments is to the value of 120 million mainly from propnet properties within the inner city.

• The RKTP branding has grown and became part of the city’s landscape – a tangible proof of the growing stature of the programme.

• Four projects initiated through RKTP are at implementation stage by our operations branch.

Challenges • Capacity problems both in the Department and external

consultants to understand and implement Options Analysis processes have confounded the need for structural changes like the creation of fully staffed entity to drive the Programme.

• The viability of the RKTP affects other portfolios and therefore there is a growing need to involve other Ministries of Transport, Local and Provincial Government, Housing and Foreign affairs.

• In turn, the viability of the Programme is impacted upon, among others, by the complex and slow site acquisition processes as well as the ability of the Municipality to fast track municipal town planning processes. Also the availability of sites around the preferred nodal areas remains a key challenge.

• In line with the precinct development, it is advisable that another precinct be considered around Marabastad area.

NPWP & Policy

Purpose and Objective

• Management and regulation of the property and construction sectors for transformation, growth and development;

• Promotion of good governance in the management of public immovable assets - GIAMA.

Highlights• Draft Charters were submitted to the Minister of Trade and

Industry for gazetting Construction Charter was gazetted in February 2007.

• Successful facilitation between the private sector and graduates of the departmental Military Skills Development Programme, for placement and academic scholarships.

• Successful hosting and implementation of the maiden annual National Construction Industry Development Week campaign – August 2006.

• GIAMA passed by National Assembly 30 March 2007• SADC Forum of Public Works Minister’s successfully

launched and hosted – April 2006.

Challenges

• With the gazetting of transformation Charters, the department needs to align its procurement processes to BEE contained in and stipulated by Charters.

• There is a need to establish a value-chain of bursary management processes and alignment to successfully absorb relevant bursary requests and graduates of the Military Skills Development Programme.

• The continued effective functioning of the SADC, DPW Forum – Need to resuscitate Forum

Expanded Public Works Programme

Purpose and Objective

• The EPWP is to create work opportunities (coupled with training) for a minimum of one million people so that the unemployed and marginalized can gain productive employment and work experience.

Highlights…• Shift from Co-ordination to strategic leadership – New

Structure approved by the Minister;• Alignment of EPWP Guidelines to DPW Maintenance and

Capital Works Programmes;• Vuku’phile Programme – Additional allocation to roll-out

Programme to meet overall target of 3 000 learnerships;• More Departments/Public Bodies are now participating in

the EPWP – Created more work Opportunities;• Kamoso Awards launched in February – In recognition of

best performing Public Bodies• Additional R4.2bn and R3.2bn to upscale Social Sector

and access roads, respectively.

…Highlight

• Total wages paid amounted to at least R917m; • At least 6 290 person-years of training and 85 700

person-years of work had been completed and created on EPWP projects;

• 320 694 gross work opportunities (i.e. at least 316 814 net work opportunities) were created for the period under review;

• Approved Plans to initiate NYS.

11Total: about 1 million net.

1,112,000Total

1,112,000282,0002008/09

830,000280,0002007/08

550,000250,0002006/07

300,000190,0002005/06

110,000110,0002004/05

EPWP Cumulative Gross Targets

EPWP Annual Gross Targets

Overall Annual Targets (1st 5 Years)

Challenges

• Improve the quality of data and reporting by public bodies;

• Increase the labour intensity of the projects;

• Improve the training and exit opportunities;

• Mobilize more public bodies to implement the programme.

Financial Management

Expenditure Report: DPW

• The department was allocated R5.63 billion;

• R99 million remained unspent by year-end due to delays in site acquisitions of the properties identified for the RKTP projects, R68M of which has been rolled over with Treasury approval

Revenue and Expenditure report of the Trading Account

• R3.9 billion revenue generated through the agency work of the Trading Account

• Actual expenditure amounted to R4, 095 billion resulting in the deficit of R165 million – the deficit is as a result of services rendered by 3’rd parties and paid for by the Trading Account, but were subsequently recovered from clients after year-end

Budget Devolution Results

• For the first time, DPW Annual report, contained audited financial statements of the Trading Account

• The Trading Account obtained an unqualified audit report from the AG – a positive sign of the department’s stewardship on the funds of its clients.

Significant Audit Issues

• Asset Management: Furniture & Equipment• Property register:

– Completeness

– Valuations

– Vesting

• Rental Debtor Management;• Classification of Maintenance Expenditure• Failure to pay service providers within 30 days.

Human Resources Management

DPW Employment Profile• Overall vacancy Rate throughout DPW including regions

17 % (995)• Among critical professional occupations including SMS

39% (220)• Women (all) – 45% (Men 55%)

– African 69%– Whites (all) 14%, (SMS-25 %)– Coloureds 15%– Indians 2%

• Disability - 1% (29)• Learnership programmes on various occupational classes.

Strategic Corrective Measures• Addressing audit concerns and other matters of emphasis

through a comprehensive action plan;• Implementing turn around strategy refocusing the mandate

and functions of the department;• Capacitating the organization for increasing contribution to

ASGISA, JIPSA and service delivery:– Vacancy rates- reduced from >900 in April to <400 currently

(DDG’s Operations and Corporate Services);– Cuban experience- replenishing professional skills;– External bursaries launched and internship programme in place;– Built environment and industry related skills improvement drive;– NIMS operationalised and EPWP up scaled– Transformation charters

…Strategic Corrective Measures

• Improving corporate governance:– Anti fraud and corruption measures-known

cases;– Cooperation with Public Entities, Provinces and

Public Representative bodies;– Devolution of budgets and Trading Account;– GIAMA implementation;– Audit and Risk Management committee

Conclusion• Audit opinion on DPW a concern, Trading

Account a positive start;• EPWP exceeding targets;• Asset register- work in progress, end in

sight (intersite and servcon);• Alignment of RKTP and Operations;• HR Retention strategy• Property Transformation Charter- gazetted.