Formulation of a Government-wide Fixed Asset Management Framework Presentation to the Portfolio Committee of Public Works 13 November 2002

Why Immovable Asset Management Framework & Act? Currently no comprehensive consolidated guideline for the State’s immovable assets This is a good governance initiative - Like PMFA and Public Service Act, Asset Management Framework – later Act, will guide whole of government to enable: >Better allocation of limited resources >Better alignment of immovable assets with service delivery & community expectations >Reduced demand for new immovable assets >More effective use of existing immovable assets >Will apply to any sphere of government that has a role in immovable assets including infrastructure without taking away respective mandates or roles.

Why Specific Focus on Immovable Assets? Impact on macro-economic and physical landscape of the country– positively or negatively Have land ownership implications & often emotive Are a finite resource Are difficult to change location & use Have lengthy acquisition periods Costly to manage and maintain Have a very long life cycle

Principles: Immovable Asset Management Framework Immovable assets should support service delivery Immovable asset management policies of any authority should be consistent with the government’s policies/legislation Framework is premised on basis that ownership of immovable assets is centralised in National, Provincial, Local Government & Parastatals entities, ie. title is not devolved to individual depts. Full life cycle costing, risk analysis and better use of existing immovable assets should be the driving factors in immovable asset management decisions – (user pays) Full cost of providing, operating, and maintaining of immovable assets should be reflected in the budgets of the authority responsible for delivering a service Immovable asset management decisions should be focused on meeting the service delivery needs of the present, without compromising the needs of future generations

Immovable Asset Management in a govt-wide context Resource Strategies and Plans Service Delivery Strategy Departmental Strategic Plan Government-wide Policy/Legal Framework Community Needs and Expectations Human Resource Plan IT and Support Systems Plan Im/movable Asset Management Plan Financial Plan

Immovable Asset in Context of Service Delivery GOVERNMENT OBJECTIVES AND POLICIES Current Assets Functionality Condition Utilisation Performance Service Delivery Strategy Fixed Asset Requirements Additional Utilise Redundant

Useful Life of Immovable Asset Planning Disposal Acquisition Utilise and Maintain

Immovable Asset Life Cycle Cost Utilise and Maintain Planning Acquisition Disposal Cost Time

Details of 4 Pillars of the Government Wide Immovable Asset Management Framework Planning (1st Pillar) The key objective of immovable asset planning, is to ensure that planning for immovable assets is done in a co-ordinated manner to avoid contradictions, duplication and inefficiencies. Also that asset strategies are properly assessed and are focussed on providing effective, efficient and economical services in line with the short & long term planning framework and service delivery priorities. This framework will address mainly whether assets are appropriately located for effective service delivery?

Details of 4 Pillars of the Government Wide Immovable Asset Management Framework Investment and Acquisition (2nd Pillar) The key objective of immovable asset investment and acquisitions framework, is to ensure that investment and acquisitions of immovable assets are considered equally and concurrently with the other resource requirements used in achieving service delivery objectives and requirements. This framework will address mainly immovable asset procurement and look at whether assets should be: Owned by government? Leased from the private sector? Provide by other means, e.g. PPP, BOT, BORT, etc?

Details of 4 Pillars of the Government Wide Immovable Asset Management Framework Maintenance and Management Framework (3rd Pillar) Objectives of immovable assets maintenance and management framework is to ensure that: Immovable assets maintenance support service delivery strategies, needs and priorities Immovable asset maintenance resources are used efficiently, effectively and economically Immovable asset value is preserved

Details of 4 Pillars of the Government Wide Immovable Asset Management Framework Maintenance and Management Framework (3rd Pillar) This framework will address mainly whether: immovable assets fully used in service delivery, asset capacity: if the immovable assets sufficient capacity to provide required services, asset functionality and condition (required condition vs actual condition): if immovable assets in a suitable condition for the optimal delivery of the service they are intended to support, asset costs: how the cost of operating and maintaining assets relate to budgets and the total costs and/or price of service delivery, asset values: if asset values commensurate with service delivery requirements.

Details of 4 Pillars of the Government Wide Immovable Asset Management Framework Disposal Framework (4th Pillar) The objective of this framework is to ensure that surplus and/or redundant immovable assets are properly identified and assessed for alternative use, refurbishment, or disposal. This framework will address mainly: asset/service dependency ie. can the service delivery be provided more effectively through the use of resources other than immovable assets, if disposal is taken after correct analysis and does it yield best financial and social returns for the owner?

Proposed Institutional Environment & Processes for the Government wide Immovable Asset Management Framework Portfolio Treasury DPW/Cust DPSA FINANCIAL POLICY AND BUDGET HUMAN RESOURCE POLICY IMMOVABLE ASSET MANAGEMENT POLICY AND CUSTODIAN Advice Dept A Dept B/Prov/Mun Strategic Plan Service Delivery Strategy Immovable Asset Management Plan Additional Utilise Redundant Immovable Asset Management Plan

Conclusion Presentation outlines the backbone of initial proposal regarding a Government-wide Immovable Asset Management Framework Framework will be developed into an Act, mid next year. (GIAMA) Currently framework consultations–DG to DG Incorporation into Jan 2003 Lekgotla, anticipated. Draft Bill to be ready – Feb 2003 for public consultations & promulgation target – July03 In future, govt depts and other organs of govt will prepare yearly asset management plans, similarly to yearly budget plans. Anticipated other organs of State will begin doing the same, share information, intergrate planning and effort and follow uniform good governance guidelines and approaches, re: immovable assets.