PRESENTATION TO PORTFOLIO COMMITTEE ON HUMAN SETTLEMENTS By LIMPOPO PROVINCE

PRESENTATION OUTLINE 2017/18 Business Plan Expenditure and Performance Analysis Recovery Plan Programme Specific Interventions Way Forward

PURPOSE OF THE PRESENTATION The presentation serves to; Appraise the Portfolio Committee on progress relating to implementation of HSDG for Limpopo Province. Highlight the recovery plan the department has embarked on and, Outline the impact of the plan on performance thus far and Provide a way forward.

1. Business Plan per Programme ACTIVITIES PER PROGRAMME Budget 000’ Sites Units Accredited Municipalities R 1 500,00 Housing Chapters of IDP R - Land Parcel Procurement R 21 627,00 Priority Projects OPSCAP R 50 389,00 Rectification RDP Stock 1994-2002 R 33 541,00 500 Housing Finance Linked R 24 900,00 300 NHBRC Enrolment R 16 536,00 People Housing Process R 9 260,00 100 Emergency Housing Assistance R 37 040,00 400 Informal Settlement Upgrading R 22 380,00 Intergrated Res Develop Programme R 196 020,00 5151 CRU R 106 640,00 250 Rural Housing R 863 364,00 9245 EEEDBS R 116,00 Provincial Specific Programme R 21 148,00 EPWP R 2 000,00 Sub-total R 1 406 461,00 10895

Expenditure Analysis Financial analysis Expenditure is R553, 496, 915.25 Translating to 39% of Annual Target Average expenditure per month is R79,070,987,88 Required expenditure rate is R94, 885, 185,48

Housing Units Analysis Housing Units Delivery Analysis Units delivered to date are 5, 487 on all housing programmes. Translating to 50% of Annual Target + the roll over target Average delivery per month is 782 units Required delivery rate is 1084

Serviced Sites Analysis Serviced Sites Delivery Analysis Sites serviced to date are 1, 339 Translating to 26% of Annual Target Average delivery per month is 191 sites Required delivery rate is 762 sites

Expenditure and Performance Analysis Item ACTIVITIES PER PROGRAMME Amended Allocation '000 Total Expenditure '000 Target Units Delivered units Target Sites Delivered Sites % Expenditure 1 Accredited Municipalities R 1 500,00 R - - 0% 2 Housing Chapters of IDP R - 3 Land Parcel Procurement R 21 627,00 4 Priority Projects 5 OPSCAP R 50 389,00 R 43 788,00 87% 6 Rectification RDP Stock 1994-2002 R 33 541,00 R 25 136,78 500 226 75% 7 Housing Finance Linked R 24 900,00 300 8 NHBRC Enrolment R 16 536,00 R 10 271,44 62% 9 People Housing Process R 9 260,00 100 89 10 Emergency Housing Assistance R 37 040,00 400 303 11 Informal Settlement Upgrading R 22 380,00 12 Intergrated Res Develop Programme R 196 020,00 R 45 038,59 5 151 1 339 23% 13 CRU R 106 640,00 250 14 Rural Housing R 863 364,00 R 423 395,34 9 245 4 866 49% 15 EEEDBS R 116,00 16 Provincial Specific Programme R 21 148,00 R 4 056,36 19% 17 EPWP R 2 000,00 R 1 810,40 91% 18 Sub-total R 1 406 461,00 R 553 496,91 10 895 5 487 39%

RECOVERY PLAN

BACKGROUND TO THE RECOVERY PLAN The following have been identified as the overarching key challenges hampering human settlements delivery and performance in the period under consideration; Delays in claims processing and payments Ineffective project and contract management processes Delays in procurement processes Ineffective project planning and pipelining (preparing projects for implementation) However programme specific challenges have also been identified and mitigatory measures put in place in order to turn things around so as to meet the set targets in the short, medium and long term.

CHALLENGE DISCUSSION ACTION PROGRESS Claims Processing and Payments There has been inefficiencies in the following; Inspection process and preparation of claims by the service providers for the work done and approved, limited administration processes that has seen claims taking longer than necessary to reach the claims and subsidy administration sections and administrative errors, delays in the processing of the submitted claims and payment certificates across all programmes resulting in under expenditure. Intensive continuous assessment and logging of claimable milestones, preparation, submission and payment of claims turn-around time with the use of the electronic project management system (ePMS) recently developed. Rigorous assessment of payment certificates prior to processing and the PMU to assist administratively in assessing the claims prepared by contractors through their district and head offices in order to improve efficiency in the process Continuous monitoring of the claims process turnaround time on a daily basis to identify pressure points in the system as well as merging of certain steps within the processing to minimize handling of certificates   The electronic Project Management System (ePMS) has been piloted in Sekhukhune and will be rolled out in other districts by mid November 2017.

CHALLENGE DISCUSSION ACTION PROGESS 2. Project and Contract Management There has been gross underperformance by some contractors who have failed to deliver as per the agreed implementation plans due to the following; Majority of the underperforming contractors having limited financial and project management capacity. Limited project management capacity within the department Limited enforcement of punitive measures on underperforming contractors Delays in decision making on contract extensions, scaling down of scope and termination   In assisting contractors having capacity challenges, the department recognizes cessions entered into by contractors with sub-contractors and material suppliers. The department through the PMU avails technical expertise advisory assistance to contractors that have challenges in project management to ensure that there is timeous delivery of claimable milestones meeting the agreed specification. Establishment of a contract management committee. Weekly assessment to be done on the revised implementation plans and contract reviews to be done on a monthly basis. Finalization of all outstanding contractual extensions/scaling down and terminations. Thirteen cessions are under implementation, the department continues to evaluate credibility and processing the cessions. PMU and CoGHSTA management hold monthly technical meetings at district level and have intensified technical support to all contractors. The contract management committee was established on the 1st of September 2017 Contract management technical committee has been established that reviews contracts on a monthly basis whilst weekly assessments against the implementation plans are done by the districts. The department has finalised all outstanding contractual extensions/scaling down and terminations. meetings held with Project managers and contractors in order to accelerate delivery and expenditure. Some contractors who underperformed were terminated.

3. Procurement Processes The following were the key outstanding appointments; 2002 rural housing units earmarked for the 13 high performers of the 2016 database. 6000 rural housing units earmarked for 72 contractors on the 2017 database 500 units under blocked projects 400 units for emergency housing programme 100 for the EPHP programme 100 units for the Military Veterans Programme All these outstanding appointments are expected to rollover into the 2018/19 financial year. There is an imminent risk of disruptions in delivery during the “contractors’ break” period and also as a result of the rainy reason.   The department has concluded the appointment of 13 high performing contractors using the provisions of the Standard Operating Procedures (SOP) to deliver 2002 units. The department has concluded appointment of 72 contractors to implement 6000 rural housing units The department has concluded appointed of HDA to implement EPHP, Emergency Housing assistance, Military Veterans and additional 5000 through high capacity contractors. The appointment of 13 contractors for 2002 units have been completed in October 2017, contracts have been signed and 4 contractors have been introduced to respective municipalities. The remaining 9 will be introduced and take sites in the week of 6/11/2017 The appointment of 6000 units was completed in October 2017, signing of contracts has been completed. Contractors expected to take sites by 10 November 2017. HDA has been appointed to implement EPHP, MV, disaster and rural housing. The HDA has in turn appointed high capacity contractors for 5000 rural housing.

4. Project Planning and Packaging Project planning affected two programmes namely the installation of services and rural housing programmes. On installation of services, six contractors were unable to commence with the projects due to the developmental areas not being ready (the supply chain did not consult with ISHS when allocating those areas to service providers) In the rural housing programme, the 15 contractors appointed for 4037 units were allocated scattered units thus making it difficult to implement. Most of the units were those that fall under Mayoral discretionary allocations. As a result of the above, there is misalignment of some of the projects in the 2017/18 business plan . Revised business plan has been submitted to National HS and awaiting approval. Reallocation of the 2803 developmental areas has since been done for serviced sites and contractors have since established sites and have completed engineering services designs and established sites 279 sites have been serviced. Reallocation of the developmental areas has since been done for rural housing and contractors have since established sites and construction is underway. The department is engaged in repackaging and planning for the developmental areas which could not be implemented due to the deficiencies in the planning process for the 2018/19 financial year. In the process, the readiness matrix will be strengthened thus resulting in improved delivery on the projects. The business plan is to be revised to reflect the above. It will be submitted during the month of September 2017 which is business plan revision window. However, the target units and sites will not change or be reduced. This will be done in conjunction with National Human Settlements support.   The six services contractors having a total allocation 2803 sites have since established site. The clustering of units for all new appointments has been concluded Packaging of the projects is underway and is to be concluded before the submission of the final draft of the business plan. Submission of the final draft business plan is February 2018. The business plan has been aligned with the projects that are being implemented in this current financial year, original delivery targets will be maintained.

Programme Specific Interventions and Impact

Programme Discussion Action Progress Accreditation of Municipalities The accreditation process for the 5 Municipalities prioritized in 2016/17 is under-way. Capacity and Compliance assessment is completed for two Municipalities – namely Polokwane and Lephalale. This assessment is done through the HDA which has appointed a panel of experts. The Assessment Panel to finalise accreditation process is yet to be appointed for the 5 Municipalities prioritized in 2017/18 financial year Transfer the R1.5 million to the HDA for assessment of 2016/17 priority Municipalities. Appoint a Capacity and Compliance Panel for the 5 Municipalities prioritized in 2017/18 financial year. This will be done through the HDA that has a panel of assessors. It is expected that the appointment will be done by end November 2017  Land Procurement CoGHSTA has prioritized Municipalities where land acquisition should occur in 2017/18 financial year. These Municipalities are – Greater Tzaneen, Greater Letaba, Maruleng and Elias Motsoaledi. Land parcels were identified in the priority Municipalities. Pre-acquisition feasibility studies and land valuation reports were completed for all the 5 properties identified in these Municipalities. The following are actions to be implemented; Establishment and approval of Land Task Team – end October Land Task Team meeting on second week of November CoGHSTA to issue a formal mandate to the HDA by end November after Land Task Team meeting and recommendation. Negotiations will be completed by mid December 2017. negotiations for what with who/ is this not the responsibility of Treasury approval by end January 2018 Acquisition by 28 February 2018   Land task team has been appointed and TORs are approved.

Blocked Projects 226 units (45%) of the 500 units have been delivered to date and expenditure is at 75%, however performance of the 5 contractors on site needs to be increased. The contracts have been extended to end of march 2018. The intensified hands-on approach of assisting contractors having capacity challenges, the department recognizing cessions entered into by contractors with sub-contractors and material suppliers will realize improvement in the delivery and expenditure. The department through the PMU avails technical expertise advisory assistance to contractors that have challenges in project management to ensure that there is timeous delivery of claimable milestones meeting the agreed specification. above to be employed on the underperforming contractors. The outstanding 274 units are set to be delivered in the middle of the fourth quarter. FLISP Bendor x100 a multiyear project expected to yield FLISP but the contractor is underperforming and is yet to deliver any FLISP subsidies despite completing 34 units to date. Apart from the walk-ins, there are currently no other active projects that can yield FLISP units in the province There is a high risk that available funds will not be spent thus the department is to consider reallocating the funds to performing programmes. A contract review of the Bendor project to be conducted wherein the department will take a decision on scaling down or termination of the contract and appointment of contractors for the outstanding work. The department is in partnership with RISIMA to assist in the administration of the programme, engagements are underway to improve the marketing strategy and application of less stringent criteria of qualification to aid in increasing the FLISP subsidies. Engagement with mining companies is underway in human settlements programmes underway so as to increase the FLISP subsidies. 15 FLISP subsidies have been registered on the Bendor x100 project completed units.

NHBRC Enrolment There is about R6million left on the 2017/18 budget for the programme. Pre-enrollment of the units 2002 and the 6000 rural housing units has been done already. The NHBRC will issue an invoice of R21million by mid November 2017. NHBRC invoice for the recently appointed units will exhaust the remaining budget on the programme. Enhanced Peoples Housing Process The programme is at 89% (89 units) and progressing well for the 2016/17 appointed two contractors. Appointments for 100 units the 2017/18 has been finalized in October 2017. intensified hands-on approach being employed to ensure delivery of 100 2016/17 units by 30 November 2017. HDA has been appointed to implement 100 EPHP units. Contractors are already appointed. Construction to commence by 30 November 2017. 11 remaining units out of 100 from 2016/17 allocation on course to be delivered by 30 November 2017. The new 100 allocation will be delivered by end of financial year. Emergency Housing Assistance The programme is at 76% (303 units out of 411 units) and progressing well for the 2016/17 appointed two contractors. Appointments for 400 units the 2017/18 has been finalized. HDA has been appointed for 400 units and contractor appointment has since been finalized. Construction to commence by 30 November 2017. The remaining 108 units are on course to be delivered by end of the fourth quarter. The HDA will extend scope of work for the contractors already on site in order to mitigate against break in momentum. Installation of Serviced Sites (ISU & IRDP) The underperformance on the programme has been due to contractors’ failure to establish sites due to deficiencies in the planning process thus requiring relocations. Six contractors were unable to commence with the projects due to the developmental areas not being ready. Relocations have since been approved and service providers have established site and construction has commenced. 2803 sites were affected and contracts have been extended up to end of financial year. The areas that were deemed not ready for implementation are currently being packaged for appointment and implementation in 2018/19 financial year. All projects to be completed by the end of the financial year as the service providers have already established site.

Community Residential Units The contractor at Marapong CRU is on site. Excavations for 76 blocks (243 units) translates to 47% of the entire project. Foundations are casted for 49 blocks with a yield of 101 units translating to 30% of the entire project. Foundation walls are completed for 45 blocks with 44 units, translating to 8% of the entire project. Ground floor wall plates are in progress on 17 blocks yielding 67 units or 30% of the entire project. There are outstanding appointments for the Tshikota CRU whose feasibility studies were completed in March 2017. Terms of reference have been developed for construction. Talana CRU appointment of a service provider for feasibility studies is at SCM The contractor has been requested to submit the recovery implementation plan that will intensify delivery to meet the target of 250 units that is planned in the current financial year by second week of November 2017. The additional 50 families that have invaded the site will be moved by end of November 2017 The contractor is to submit a revised recovery plan by 1st week of November that seeks to recover the lost ground. It was submitted and rejected. A resubmission is expected in the second week of November 2017. The terms of references for appointment of a contractor for Tshikota to be finalized by end of October 2017, appointment to be done by end of January 2018 Feasibility comes first then construction. Conclusion of Talana CRU feasibility studies is still to be finalised by BAC. Overall progress is 37% Tshikota TORs have been finalized. To be advertised during November 2017 and appointed by February 2018. Conclusion of appointment for Talana CRU feasibility studies is still to be finalised by BAC during November 2017.

Rural Housing There has been general underperformance of appointed contractors particularly the 2016/17 contractors. Majority of the underperforming contractors are having limited financial and project management capacity. Appointment of 2002 rural housing units earmarked for the 13 high performers of the 2016 database has been finalized in October 2017. Appointment of 6000 rural housing units earmarked for 72 contractors on the 2017 database has been finalized in October 2017. HDA has been allocated 5000 units for high capacity contractors in order to upscale delivery and expenditure  The intensified hands-on approach elaborated above to be employed on the underperforming contractors is to be employed. The department has just concluded the appointment of 13 high performing contractors using the provisions of the Standard Operating Procedures (SOP) to deliver 2002 units. 6000 units were allocated to new contractors who were added to the existing database. Units delivered to date are 4866 fron all contractors (both 2016/17 and 2017/18), an increase of 888 over the past 4 weeks up from an average of 661 units delivered per month since the beginning of the financial year. The target for October was 5649 as per the Business plan. Military Veterans There has been gross under performance on the programme in the financial year that has seen only 3 units delivered in the financial year. This has been largely attributed to economic viability of constructing 75m2 which was demanded by the beneficiaries instead of the 50m2. The province acceded to the demands of the Military Veterans A MINMEC decision was taken for provinces to revert back to 50m2 as prescribed by national policy. A Ministerial directive was issued to all provinces to upscale delivery and comply with policy on 50m2 house. The approval to rescind the decision on house sizes was granted and the province is geared to deliver on 50m2 military Veterans houses. Title Deeds Late appointment of Service Providers. Conveyancers applications rejected at the Deeds Office due to the name change of Municipalities. This was because of the dis establishment and amalgamation of some municipalities. Unproclaimed townships. HDA and Ministerial Task Team Member roped in to assist with proclamation of the townships. Service Providers appointed from conveyancers database are now on site. 4 service providers for 6001 units. Proposed new names advertised for objections and closed. Gazetting will be done. 1777 title deeds have been registered and endorsed.

Title Deeds The Annual target is 7559 70 Properties Registered 1777 title deeds were issued. Challenges Late appointment of Service Providers. Conveyancers applications rejected at the Deeds Office due to the name change of Municipalities. Unproclaimed townships. Interventions HDA and Ministerial Task Team Member roped in to assist with proclamation of the townships. Service Providers appointed from conveyancers database are now on site. Proposed new names advertised for objections and closed. Gazetting will be done.

Military Veterans Programme Backlog is 411 The Annual target for 2017/18 is 200 units. Delivery is 3 units. Challenges There has been gross under performance on the programme in the financial year that has seen only 3 units delivered in the financial year. This has been largely attributed to economic viability of constructing 75m2 which was demanded by the beneficiaries instead of the 50m2. The province acceded to the demands of the Military Veterans. Interventions A MINMEC decision was taken for provinces to revert back to 50m2 as prescribed by national policy. A Ministerial directive was issued to all provinces to upscale delivery and comply with policy on 50m2 house. The approval to rescind the decision on house sizes was granted and the province is geared to deliver on 50m2 military Veterans houses.

MINING TOWNS 4 Areas identified namely: Elias Motsoaledi, LIM 476, Thabazimbi, and, Lephalale. Challenges Elias Motsoaledi and LIM 476 do not have projects on serviced sited due to process of upgrading informal settlements still underway. The delay is as a result of authorisations from different departments e.g, LEDET with environmental Record of decision (ROD). Thabazimbi returned allocation of units as a result of not having development areas. Interventions Service providers are appointed to formalise informal settlements and do township proclamation. 2 service providers are appointed for formalisation and contracts are in force up to end of financial year. Sites are serviced in Thabazimbi in order to construct top structure.

2017/18 MINING TOWNS BUSINESS PLAN ALLOCATIONS LOCAL MUNICIPALITY BUDGET ‘000 EXPENDITURE ‘000 TARGET UNITS DELIVERY UNITS TARGET SITES SITES ELIAS MOTS0ALEDI R71,636 R14,646 507 74 LIM 476 R55,462 R14,199 600 91 THABAZIMBI R36,835 R20,103 212 562 488 LEPHALALE R178,509 R53,912 805 96 500 TOTALS R342,442 R102,860 2124 261 1062

CONTRACTUAL COMMITTMENTS

Remaining Contractual Target for units Item Programme Remaining Contractual Target for units Remaining contractual target for Sites F W U/T Remaining Budget R'000 1 2016/17 Rural 1785   439 639 707 R 133,994.82 2 2016/17 Blocked 274 61 73 140 R 18,063.47 3 2016/17/18 Disaster 473 8 463 R 43,799.80 4 2016/17/18 EPHP 111 9 102 R 10,278.60 5 2017/18 Rural 10969 600 666 9703 R 977,422.72 6 HDA Rural 5000 R 463,000.00 7 CRU 250 514 R 106,000.00 2016/17 Services 1497 R 56,584.57 2017/18 Services 1783 R 61,336.98 10 NHBRC Enrolment R 21,000.00 11 Land Purchase R 21,627.00 12 Municipality Accreditation R 1,500.00 13 Title Deeds R 17,091.00 14 Informal Settlement Upgrading R 22,380.00 15 OPSCAP R 6,601.00 16 TOTAL 18862 3794 1102 1395 16365 R 1,960,679.96

Way Forward The above interventions of claims and contract management will place the department in a position to double the monthly expenditure from R70 000 000 to R120 000 000.00 per month. This will be made possible by appointment of additional contractors to deliver 2002, 6000 and and 5000 units by the HDA. Further to this, all services contractors have finalized designs and are on site to implement the ir respective projects. The average delivery per month is expected to be 1032 units and 759 sites. Since outstanding procurements namely, 2002 units to 13 performing contractors, 6000 units to 72 contractors and 5000 units for high capacity contractors through HDA have been concluded and construction is expected to commence by 15 November 2017, delivery and expenditure will be upscaled. 4 contractors have been introduced to respective municipalities. The remaining 9 will be introduced and take sites in the week of 6/11/2017. 72 contractors have signed their service level agreements. HDA contractors are expected to take sites by the 10/11/2017. The department will deliver at least 7342 units by end of December with the efforts of monitoring the contractors to convert 1102 foundations and 1395 wallplates into completions that will yield 2497 completions. All the outstanding serviced sites will be delivered by March 2018. Additional capacity in project planning and pipelining has been availed through the HDA and PMU that will result in addressing current planning challenges and enhanced project packaging and pipelining for the next financial year.

Way Forward The department will deliver at least 7342 units and 1205 sites by end of December with the efforts of monitoring the contractors to convert 1102 foundations and 1395 wallplates into completions that will yield 2497 completions. The projected expenditure by the end of December 2017 for all programmes is expected to be R266,319,000. All the outstanding serviced sites will be delivered by March 2018. The total to be delivered is 3794 sites at a total budget of R135,397,550. Additional capacity in project planning and pipelining has been availed through the HDA and PMU that will result in addressing current planning challenges and enhanced project packaging and pipelining for the next financial year.

DELIVERY & CASHFLOW PROJECTIONS

  November December January February March TOTAL Item Programme Units Sites Budget R'000 Expenditure ‘000 1 2016/17 Rural 525 R 39,757.60 461 R 35,840.11 318 R 24,053.26 281 R 19,758.73 200 R 14,585.08 1785 R 133,994.79 2 2016/17 Blocked 65 R 4,285.13 50 R 3,296.25 45 R 2,966.63 49 R 3,230.33 274 R 18,063.47 3 2016/17/18 Disaster 24 R 2,222.40 R 2,222.40 25 R 2,315.00 R - 73 R 6,759.80 4 2016/17/18 EPHP 11 R 1,018.60 R - R 1,018.60 5 2017/18 Rural 420 R 33,469.42 275 R 21,914.50 450 R 38,119.48 670 R 56,232.09 764 R 64,290.95 2579 R 214,026.43 6 HDA Rural 120 R 11,112.00 R 11,112.00 100 R 9,260.00 340 R 31,484.00 7 CRU R 15,000.00 R 20,000.00 514 R 20,000.00 R 85,000.00 8 2016/17 Services 310 R 11,717.58 R 10,394.63 300 R 11,339.59 R 11,339.59 312 R 11,793.18 1497 R 56,584.56 9 2017/18 Services 350 R 12,040.35 330 R 11,352.33 320 R 11,008.32 390 R 13,416.39 393 R 13,519.59 1783 R 61,336.98 10 NHBRC Enrolment R 10,000.00 R 11,000.00 R 21,000.00 Land Purchase R 11,627.00 R 21,627.00 12 Municipality Accreditation R 1,500.00 R 1,500.00 13 Title Deeds R 3,418.20 R 3,418.20 R 17,091.00 14 Informal Settlement Upgrading R 4,476.00 R 4,476.00 R 22,380.00 15 OPSCAP R 3,300.50 R 9,901.50 16 1045 660 R 137,405.28 810 605 R 128,914.42 958 620 R 138,735.98 1136 690 R 147,338.63 1213 1219 R 149,373.83 5162 3794 R 701,768.13

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