OVERVIEW OF CONSTRUCTION MANAGEMENT UNIT WITHIN THE NWRI BRANCH Presented by: Zandile Makhathini Acting Director-General Date: 20 March 2018

Contents History of construction unit Construction staffing Transformation Construction projects Construction assets Recommendations

History of Construction As early as 1930, the development of water resource infrastructure required a labour intensive approach to construction. The Water Act (No.54 of 1956) saw a more formalised formation of construction capacity. (1965: Orange-Fish River Project) Subsequent to Democracy (1994), the National Water Act (1998) sought to amend recruitment.

National Water Act, Act No 36 of 1998 Section 76. Appointment of persons on contract. (1) The Director-General may, when necessary, appoint employees on contract outside the provisions of the Public Service Act, 1994 (Proclamation No.103 of 1994). (2) Appointments made under subsection (1) must be limited to persons to perform duties at sites where the Department— (a) is engaged in actual construction or investigatory work; or (b) is associated with specific projects relating to actual construction or investigatory work. (3) The Director-General must, from time to time, and after consultation with the Department of Public Service and Administration, determine the conditions of employment of such employees. (4) Such employees shall be remunerated from money appropriated for that purpose by Parliament. 4

Construction Management Purpose & Mandate The construction, rehabilitation, refurbishment and maintenance of National Water Resources Infrastructure, in order to ensure a sustainable supply of water to meet the social and economic needs of the people of South Africa. The CD:CM resides within the NWRIB, and is mandated to construct new water resources infrastructure to meet industrial, agricultural and social (domestic) bulk water supply requirements and to facilitate economic growth and development, including the rehabilitation and upgrading of existing water supply infrastructure to comply with international dam safety standards.

CD: CM within the Department MINISTER DIRECTOR GENERAL DDG: NWRI CD: INFRASTRUCTURE DEVELOPMENT CD: ENGINEERING SERVICES CD: CONSTRUCTION MANAGEMENT CD: OPERATIONS AND MAINTENANCE STRATEGIC ASSET MANAGEMENT REGIONAL BULK INFRASTRUCTURE GRANT

NWRI Organisational Chart Relating To Construction Management DEPUTY DIRECTOR GENERAL DDG: NWRIB CD:CONSTRUCTION MANAGEMENT Vacant CONSTRUCTION SUPPORT M Maraka CONSTRUCTION EQUIPMENT K Fortuin CONSTRUCTION NORTH F Mothiba CONSTRUCTION EAST Z Zenani CONSTRUCTION SOUTH H Swart CONSTRUCTION WEST W Theron FLEET MANAGEMENT CENTRAL WORKSHOP J Bezuidenhout CONSTRUCTION PROJECTS CONSTRUCTION PROJECTS CONSTRUCTION PROJECTS CONSTRUCTION PROJECTS EQUIPMENT AQUISITIONS MANUFACTURING Tshwane (DWS Head Office) Head Office: Construction Management, Support and Equipment Management, Drilling Workshop Paarl Construction South Headquarters: Implementation of projects in Western Cape, Northern Cape and Eastern Cape Provinces. Potchefstroom Construction West Headquarters: Implementation of projects in Gauteng, Free State and Limpopo Provinces. Tzaneen Construction North Headquarters: Implementation of projects in North West and Limpopo Provinces. Standerton Construction East Headquarters: Implementation of projects in Mpumalanga and Kwazulu Natal Provinces. Jan Kempdorp Construction Central Workshop Headquarters: Manufacturing, refurbishment and re-building of plant and equipment. EQUIPMENT RE-BUILDS

CD: CM Core Competencies Core competencies includes the construction of, but is not limited to: Large Dams; Rehabilitation of existing Dams; Pipelines (Bulk and Reticulation); Canals; Roads (Gravel, Paved and Asphalt); Gauging Stations; and Building work. Water Purification Works; Reservoirs; Pump Stations; Bridges; Weirs;

2. Construction Staffing

CD: CM Personnel Complement as at June 2017 Count of Pers.No. Column Labels Row Labels Project Based Specialist Contract Standard Contract Grand Total CONST MNGMT SUPPORT 1 12 13 CONST NORTH SUPPORT 372 22 226 620 CONSTRUCTION CENTRAL 93 94 CONSTRUCTION EAST 730 41 298 1069 CONSTRUCTION SOUTH 126 33 145 304 CONSTRUCTION WEST 728 74 228 1030 FLEET MANAGEMENT SUP 5 1956 172 1007 3135

Contract vs. Permanent Appointments Type of Appointment No. of Employees Levels NWA Section 76 Employees 3135 Up to Level 12 PSA Employees 3 (+1 Vacant) Level 13 Upwards It would only be Director level upwards who are appointed as permanent staff to ensure continuity at management level.

CD: CM Professional Registrations Race Gender

CD:CM EMPLOYMENT PATTERN OVER THE 5 YEARS Total Workforce in Construction - 3 747 No. as at May 2017 Engineers - 9 No. [1 Black, 3 Female] Technicians - 136 No. [ 63 Black, 16 Female ] Workforce Black - 85 % Workforce Female - 25 % Workforce Youth - 41 % 13

CD:CM OVERALL DEMOGRAPHIC OVER THE YEARS (Management Levels) BLACK COLOURED INDIAN WHITE TOTAL 9 4 37 45 10 6 1 22 30 11 34 36 12 104 122 2008 LEVEL BLACK COLOURED INDIAN WHITE TOTAL 9 52 2 83 137 10 23 4 61 88 11 12 3 47 64 31 33 89 222 322 2012 LEVEL BLACK COLOURED INDIAN WHITE TOTAL 9 100 13 1 55 169 10 42 69 122 11 25 6 36 68 12 2 27 44 180 31 5 187 403 2017

3. Transformation

Transformation of the Construction Unit: CD: CM Overall Demographic over the Years (Management Levels) Transformation of the Construction Unit: There has been a concerted effort to transform the management of the unit to portray the demographics of the country (primary transformation initiative) A Joint Transformation Committee was established in October 2015 to ensure that transformation is an inclusive project. Part of the transformation process is to find the most viable option to ensure economic viability. (secondary transformation initiative) Transformation is still work in progress. Various (Business Model) options are currently being explored. An example of one of the options…. LEVEL BLACK COLOURED INDIAN WHITE TOTAL 9 4 37 45 10 6 1 22 30 11 34 36 12 104 122 2008 LEVEL BLACK COLOURED INDIAN WHITE TOTAL 9 52 2 83 137 10 23 4 61 88 11 12 3 47 64 31 33 89 222 322 2012 LEVEL BLACK COLOURED INDIAN WHITE TOTAL 9 100 13 1 55 169 10 42 69 122 11 25 6 36 68 12 2 27 44 180 31 5 187 403 2017

Business Unit Option Example This would mean that the current could be sub-divided into the following sub-units Sub-Unit Option Function(s) Possible Funding Source 1) Specialised Construction Unit -Dam Construction -Dam Rehabilitation (Advanced) -Measuring Weir Construction Project-based Augmentation 2) Project Management Support Unit -Focus on support to all CAPEX projects incl. RBIG, ACIP, ROCS (or anywhere where contracts used as means to assist with SMME development). 3) Rapid Response Unit (lean and mean; fit-for-purpose) -Respond to Drought and Flood related emergencies, -Respond to Water Services (Supply and Sanitation) related emergencies. Could be possibly funded by the Water Management Charges as part of the Catchment Management functions. (There will be a need to differentiate between Government Water Scheme and Water Services emergencies). 4) Operations and Maintenance Support Unit -Support with Maintenance -Assist with maintenance requirement assessments to reduce outsourcing dependency. -Respond to O&M related emergencies. This function can be included in the WTE Revenue stream as part of the O&M function. 17

4. Construction Projects

CD:CM Project Expenditure over 4 Years * All values excluding VAT and R ‘000 19

Construction Project Allocation Programme 2014/15 Budget (R`000) 2015/2016 Budget (R`000) 2016/2017 Budget (R`000) RBIG R 387 564 R 581 169 R 498 074 Cluster Projects (Maintenance) R 390 060 R 284 304 R 328 372 Infrastructure Development R 195 343 R 100 158 R 60 945 Water Services Projects R 342 601 R 73 636 R 20 695 Dam Safety Rehabilitation R 136 738 R 183 625 R 158 227 Hydrological Services R 21 350 R 24 661 R 27 689 Intervention Projects R 84 967 R 90 868 R 145 792 TOTAL R 1 558 957 R 1 338 420 R 1 239 793

Construction Management Current Status The financial constraints that is placed on the Department as a result of the heavily reduced funds available for the 2017/18 financial year and over the MTEF is excessively felt within the CD: CM. All operational activities (Cost of Employment, Procurement of Goods and Services, Maintenance and Procurement of Construction Equipment, Manufacturing of Material and Equipment and Training and Development) are funded by projects that are obtained from clients.

CoE on Project With Budgets Vs. Projects Without Budgets At some projects clients had indicated that there is no budget allocation for the 2017/18 financial year but CD: CM still incurs costs as the sites are still operational. The intention is to deplete material which has been purchased on site before commencing with the site disestablishment process. The table below indicates the expenditure incurred on employee related costs within CD: CM during the month of August 2017 as some employees only report for work at their work stations without visiting sites:

5. Construction Assets

CD:CM Plant and Equipment as at June 2017 Total Number of Yellow Fleet – 1 317 No. Net Book Value – R 467 686 703 Acquisition Cost – R 1 026 610 019 Total Number of White Fleet - 708 No. Net Book Value – R 46 928 461 Acquisition Cost – R 117 231 290 Total Number of Stationary Machines - 720 No. Net Book Value – R 43 933 636 Acquisition Cost – R 177 026 295 Total Number of Equipment – 2745 No. Total Net Book Value – R 558 548 800 Total Acquisition Cost –R 1 320 867 603

Assets: Buildings

Recommendations Allocate projects to the CD: CM to reduce the impact of the over expenditure that is caused by the existing resources within the CD: CM. Fix the procurement processes as the delays directly hamper progress on projects. The fixing of the procurement processes must be done as a matter of urgency. If this is not fixed, the over expenditure is going to be a lot more than the mentioned R 594 Million. The CD: CM to terminate all Specialist Contract employees above 65 years of age who are still working within the CD: CM. Termination of these contracts can result to a saving of approximately R10, 452,000.00 per annum. Allow the NWRI Branch to appoint a Professional Service Provider specialising in Construction Business, Human Resources, Procurement, Construction Asset Management Specialist, Construction Administration Specialist, to further investigate the areas of wastage within the CD: CM and also develop a turnaround strategy for the unit.

Recommendations Cont.… Collapse the WTE, Infrastructure Branch (incl. Construction Unit) and TCTA to form a state owned entity: Explore a public private partnership Ownership: To be determined but the state will be the majority shareholder Get National Treasury concurrence

THANK YOU