Portfolio Committee: Public Works PRESENTATION ON BUDGET 2002/2003 For Portfolio Committee: Public Works By Mr. Tami Sokutu 22 May 2002

OVERVIEW Medium Term Expenditure Framework   Medium Term Expenditure Framework MTEF Allocation 2002/2003 – 2004/2005 Comparative Analysis Between 2001/2002 Allocation v/s Expenditure

MISSION   Provide And Manage In Accordance With Prescribed Standards And Directives The Accommodation, Housing, Land And Infrastructure Needs Of National Departments And To Promote National Public Works Programme And To Provide Associated Supporting Service

PROGRAMMES   1. Administration: Provides Leadership, Management, Financial And Administration Support 2. Provision Of Land And Accommodation Provides For Accommodation, Housing, Land And Infrastructure Needs Of National Departments

PROGRAMMES 3. National Public Works Programme: Delivers Infrastructure To Meet The Physical, Social And Economic Needs Of The Population 4. Auxiliary And Associated Services Provide Financial Assistance To Organisation For Preserving Certain National Memorials And Training Facilitation, Compensation For Losses  

ACTIVITIES INFLUENCING BUDGETING   Client Department’s Strategies And Output That Affect Infrastructure Design And Implementation Of Capacity- Building Programmes For The Construction Industry Additional Accommodation Needs Informed By Government Wide Strategy On Infrastructure

ACTIVITIES INFLUENCING BUDGETING   Playing The Role Of Custodianship Of State Property Completing The State Asset Register Transformation Process Which Aligns Resources To Services Delivery Eliminating Unnecessary Costs And Duplication

ACTIVITIES INFLUENCING BUDGETING Promote Public And Private Sector Infrastructure Delivery Construct Public Assets For Disadvantaged Communities By Creating sustainable employment Opportunities  

Allocations For 2002/2003 To 2004/2005 2002/03 2003/04 2004/05   2002/03 2003/04 2004/05 Personnel 364 287 393 644 414 379 Major Cost Drivers 2 872 838 3111 493 3 293 952 CBPWP 259 820 259 820 - Auxiliary Services 11 842 12 342 12 842 Other 221 892 239 748 246 266 TOTAL 3 730 679 4 017 047 3 967 439

Analysis Of Major Cost Drivers 2002/03 2003/04 2004/05 Capital 135 148 238 266 152 883 Maintenance 536 556 536 556 593 253 Leasing 817 436 866 628 918 644 Rates 571 791 606 099 642 464 Municipal 811 907 836 944 986 708 TOTAL 2 872 838 3 111 493 3 293 952

EXPENDITURE PER PROGRAMME AS AT 31 MARCH 2002 100. 84% 101.53% 93.03% 96.89% 111.69%

EXPENDITURE PER STANDARD ITEM AS AT 31 MARCH 2002 100.84% 99.96% 2 447 110 105.34% 96.52% 132.59% 60.48% 94.14% 105.00% 865.25% 10383

CAPITAL WORKS AND PLANNED MAINTENANCE CHALLENGES Non alignment of building programmes to MTEF allocations Lack of prioritization by clients Inadequate formulation of needs assessment (Prototype Business case) Maintenance backlog  Inadequate funds to address maintenance backlog

CAPITAL WORKS AND PLANNED MAINTENANCE CHALLENGES (continued) Historical/Tedious Planning & Procurement methods. Insufficient use of Prof input & Project management principles Lack of capacity / Inappropriately qualified project managers Outdated & Unintegrated management info systems State Tender Board’s onerous requirements

CAPITAL WORKS AND PLANNED MAINTENANCE INNOVATIONS/ACHIEVEMENTS High level interventions coupled with improved co-operation by clients. Regular Strategic and operational management meetings confirming building programmes within time frames High level professional input and advices on development of “Blue Prints” Persuaded clients to undertake planned maintenance of a capital nature within their capital allocation.  

CAPITAL WORKS AND PLANNED MAINTENANCE INNOVATIONS/ACHIEVEMENTS (Continued) Introduced term contract eg RAMP to convert reactive to proactive maintenance Adopted proactive pre-planning taking into account industry benchmarks Introduction of project management occupational class Re-defined relation-ship with private sector & commissioned latter to assist with project management  

CAPITAL WORKS AND PLANNED MAINTENANCE INNOVATIONS/ACHIEVEMENTS (continued) Manual integration systems albeit that integration has not been achieved Challenged certain constraining regulations & obtained requisite approval to increase delegated authority.  

UNPLANNED MAINTENANCE CHALLENGES Insufficient funding levels  Reactive maintenance and timeous response  Ineffective PMIS

UNPLANNED MAINTENANCE INNOVATIONS/ACHIEVEMENTS Proven track record to spend all funds for the first time ever – basis to motivate additional funds Introduction of facilities management and term contracts Forced reliance on management system

LEASEHOLDS ACQUISITIONS CHALLENGES Lack of alignment of budgets  Unwillingness by clients to suspend funds for additional leasing requirements Lack of awareness on part of clients w.r.t budgets & leasing in general Lack of visibility of leasing portfolio to clients Onerous/outdated lease contract Outdated, ineffective property management information system Backlog on renewal of leases

LEASEHOLDS ACQUISITIONS INNOVATIONS/ACHIEVEMENTS Created a mechanism to allocate & monitor expenditure Agreed with clients that DPW will act as agent on their behalf & Motivate for additional funds in future. Detailed planning & prioritization Developed specific reports with portfolio information

LEASEHOLDS ACQUISITIONS INNOVATIONS/ACHIEVEMENTS Developed new standard lease contract with max. risk transfer to landlord plus maintenance responsibility Transitional measure implemented   Strategic intervention of leasing project    

Internal staff inefficiencies MUNICIPAL SERVICES CHALLENGES Ineffective PMIS Internal staff inefficiencies Complex invoicing by local Authority batch accounts etc. Fragmented approach to payment of services

MUNICIPAL SERVICES INNOVATIONS/ACHIEVEMENTS Forced reliance of manual systems Continuous training Continuous consultations with local authorities Introduction of integrated facilities management on limited scale

MUNICIPAL RATES AND TAXES One of the key cost drivers relating to ownership / holding of fixed property is payment of municipal Rates & Taxes. The expenditure for the past years were: 1998/99 1999/2000 2000/01 2001/02 488 545 499 896 508 892 594 779  

MUNICIPAL RATES AND TAXES   The reason for increases in the municipal rates and taxes expenditure has been a combination of general increases in rates charged by municipalities on existing properties as well as the additional state owned properties that have been included on the department’s asset register as we get to know about their existence.

MUNICIPAL RATES AND TAXES   The Department of Provincial and Local Government is currently formulating a Property Rating Bill, which proposes that every state owned property would be ratable. At the moment, a large portion of state owned properties are not liable for payment of municipal rates and taxes as they are not located within municipal boundaries and our department is concerned that the implementation of this Bill might drastically increase the rates and taxes budget requirements

MUNICIPAL RATES AND TAXES   Another key challenge facing the department remains that of ensuring that the inventory list of fixed properties is kept up to date and that it contains the information that enables proper management of fixed properties.

MUNICIPAL RATES AND TAXES   The other key challenge that will be prominent in the forthcoming year is the requirement by the National Treasury to attach value to the state owned fixed properties for purpose of disclosing same in the financial statements.

HIGHLIGHTS OF THE CBPWP JOB CREATION · Introduction of rapid delivery projects in order to increase the number of projects implemented as well as to ensure expenditure on the budget. · Full expenditure of the entire budget allocated in two previous financial years .

HIGHLIGHTS OF THE CBPWP JOB CREATION · Furthermore, the success of the programme has generated a lot of expectation on the part of district municipalities and communities. The Department is always inundated with requests from communities and municipalities who are currently outside of the CBPWP targeted areas.

HIGHLIGHTS OF THE CBPWP JOB CREATION · The MTEF allocation (in the order of R274 million per year) has become too small for the demand.

HIGHLIGHTS OF THE CBPWP MASSIVE PUBLIC WORKS PROGRAMME The strategy document for Massive Public Works Programme has been drafted and the unit is in a process of appointing consultants that will drive the process.

HIGHLIGHTS OF THE CBPWP MASSIVE PUBLIC WORKS PROGRAMME The terms of reference given to them are as follows: Facilitate the development of a strategy document for partnership between the Department of Public Works and partners identified for the CBPWP

HIGHLIGHTS OF THE CBPWP MASSIVE PUBLIC WORKS PROGRAMME Co- ordinate the identification of partnership project for the expanded CBPWP Facilitate the preparation of detailed business plans for the partnership projects Between the CBPWP and its partners; Mobilize the required stakeholders for the partnership projects and ensure their effective participation in the roll – out process; Investigate existing systems and realign for the management and monitoring of

HIGHLIGHTS OF THE CBPWP MASSIVE PUBLIC WORKS PROGRAMME The projects; Organise training, capacity and institution building process for the partnership Projects; Develop and implement a communication strategy for the roll-out process of the Programme; Create networks and linkages for the sustainable implementation of the partnership projects; Develop sector-based models for the partnership projects in consultation with relevant partners;

HIGHLIGHTS OF THE CBPWP MASSIVE PUBLIC WORKS PROGRAMME Manage the identified partnership projects and report on progress to the Director (CBPWP) Implementation and Partnership Steering Committee (PSC); and Continuously liaise with the District Councils on progress relating to the Implementation processes. The outcome of this strategy will ensure that the unit plays a pivotal role in coordinating Public works projects.  

AUDIT RELATED MATTERS Audit Committee The Department’s Audit Committee is fully functional and effectively supporting management in ensuring that there is good control environment upon which the financial information is developed and processed.

Internal Control AUDIT RELATED MATTERS The accounting and Internal control systems within the Department have improved drastically during the last two years, despite the inherent limitations of the accounting systems currently in use. This movement towards good control environment is evident in the observation of the Auditor General’s audit report for the year ended 31 March 2001. The department has ensured that all appropriate actions are taken to address irregularities and inefficiencies reported to management by both Internal Auditors and Auditor General.

AUDIT RELATED MATTERS Internal Control The Department is also engaged in discussions with the Auditor General on their audit approach with a view to ensuring that the audit is conducted in a manner that will help management in its public accountability function whilst also not compromising the independence of the Auditor General in its constitutional mandate. Essentially, management is keen to see an audit report that will assist in addressing the identified areas for improvement.

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