PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND BUSINESS DEVELOPMENT ON STRATEGIC PLAN AND 2014/15 ANNUAL PERFORMANCE PLAN OF THE DEPARTMENT OF PUBLIC WORKS PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND BUSINESS DEVELOPMENT ON STRATEGIC PLAN AND 2014/15 ANNUAL PERFORMANCE PLAN OF THE DEPARTMENT OF PUBLIC WORKS Director-General Department of Public Works 15 July 2014

NoItemSlide 1. Regulatory requirements for Strategic Plans and Annual Performance Plans Part A: Strategic overview, overall performance and outlook Legislative and other mandates Introduction and strategic context Planned policy initiatives Performance environment Organisational environment Part B: Strategic objectives and programme plans PROGRAMME 1: ADMINISTRATION PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT PROGRAMME 3: EXPANDED PUBLIC WORKS PROGRAMME (EPWP) PROGRAMME 4: CONSTRUCTION AND PROPERTY POLICY REGULATION PROGRAMME 5: AUXILIARY AND ASSOCIATED SERVICES PUBLIC ENTITIES Part C: Long Term Infrastructure Plan DPW infrastructure budget PMTE infrastructure budget - planned maintenance

3 1 Regulatory requirements for Strategic Plans and Annual Performance Plans This section provides context to the regulatory requirements in accordance with the National Treasury Framework for Strategic Plans and Annual Performance Plans

The Framework for Strategic Plans and Annual Performance Plans, issued in September 2010, provides a new format and revised timeframes for the compilation of the Strategic Plan and Annual Performance Plan. National Treasury issued an Instruction Note (No. 33) in July 2011 on the full compliance to the mandatory requirements of the Framework for Strategic Plans and Annual Performance Plans. A Strategic Plan covers a period of at least five years ideally from the first planning cycle following an election linked to the identified outcomes of the Presidency. A Strategic Plan may be changed during the five year period it covers. However, such changes should be limited to revisions related to significant policy shifts or changes in the service delivery environment The Annual Performance Plan sets out what the institution intends doing in the upcoming financial year and during the MTEF to implement its Strategic Plan. The format of the APP (including the tables) is prescribed by the National Treasury Framework for Strategic Plans and Annual Performance Plans and aims is to link the plans, budget and performance of the Department. Annual targets are broken up into quarterly targets where possible to ensure effective monitoring of performance on a quarterly basis 4

5 2 PART A: Strategic overview, overall performance and outlook This section specifies the vision, mission, values and the goals that the Department aims to achieve over a five-year period. (SP Pages and APP Pages 16-50)

Constitutional mandate: The Constitutional mandate is provided for in Schedule 4, Part A, of the Constitution of the Republic of South Africa: Functional Areas of Concurrent National and Provincial Legislative Competence. Legislative mandate The legislative mandate is primarily governed by the Government Immovable Asset Management Act, The Department regulates the construction industry and built environment through the Construction Industry Development Board Act, 2000 (Act No. 38 of 2000) and the six Professional Council Acts that regulate the six Built Environment Professions (BEPs), and through the Council for the Built Environment Act (Act No. 43 of 2000) Policy mandates DPW White Paper: Public Works, Towards the 21st Century, 1997 DPW White Paper: Creating an Enabling Environment for Reconstruction, Growth and Development in the Construction Industry, 1999 Construction Sector Transformation Charter, 2006 Property Sector Transformation Charter, 2007 DPW Broad-based Black Economic Empowerment Strategy, 2006 Property Management Strategy on BBBEE, Job Creation and Poverty Alleviation, 2007 Green Building Framework,

Vision A service oriented Public Works Department delivering value and contributing to the national agenda for social and economic development. Mission Provide quality accommodation and related services to our clients, efficiently and effectively manage the immovable assets in our custodianship, actively contribute to the national goals of job creation and poverty alleviation through the Expanded Public Works Programme, provide expert built-environment advice to our stakeholders, provide strategic leadership to the South African Construction and Property Industries. 7

The following Government priorities form the basis of the Strategic Plan informed by the ruling party manifesto and National Development Plan (NDP) translated into the Medium Term Strategic Framework (MTSF): 8 Key policy priorities2014/15 Budget Outcome 4 (Chapter 3 of the NDP) - Decent employment through inclusive economic growth – The EPWP will continue to be an effective cushion for the poor and unemployed. Phase 3 of the EPWP which covers the period 2014/15 to 2018/19 aims to create 6 million work opportunities. (Detailed budget on slide 9) R1.951 bil Outcome 6 (Chapter 4 of the NDP) – An efficient, competitive and responsive infrastructure network – The Department will continue prioritising infrastructure requirements at the Land Ports of Entry (LPOE) to facilitate cross border trade and strengthen socio-economic development. National Infrastructure Maintenance Strategy (NIMS) is a coordinated programme of action being led by the Department and supported by the Construction Industry Development Board (cidb) to deal with infrastructure maintenance for different sectors. R233 mil R3 mil

9 2013/14 (R’000) 2014/15 (R’000) 2015/16 (R’000) 2016/17 (R’000) 2017/18 (R’000) EPWP Integrated grant to provinces - Infrastructure and environment and Culture EPWP Social Sector Incentive grant EPWP Integrated grant to municipalities - Infrastructure, Environment & Culture and Social Sector Non-profit institutions Total Detailed budget linked to Outcome 4

10 Key policy priorities2014/15 Budget Outcome 7 (Chapter 6 of the NDP) - Comprehensive rural development – The Department will be collaborating with sector departments and rural municipalities to coordinate infrastructure planning and ensure maximum impact in rural areas. R2 mil Outcome 12 (Chapter 13 of the NDP) - An efficient and effective development-oriented Public Service – Through strategic planning instruments (U-AMP and C-AMP) the Department provides accommodation to user departments that promotes integration, accessibility, sustainability, environmental sensitivity, economic growth and social empowerment. R510 mil

11 Key policy priorities2014/15 Budget Outcome 1 (Chapter 9 of the NDP) - Quality Basic Education – The Department in collaboration with DBE will be replacing inappropriate structures at 36 schools and making aesthetic improvements to 915 schools. - Outcome 5 (Chapter 9 of the NDP) – Skilled and capable workforce to support an inclusive growth path. The Department has a number of development programmes such as the young professionals programme, internship programme, learnership programme and artisan programme providing valuable on the job experience. R3 mil CETA funding - R50 mil Outcome 8 (Chapter 8 of the NDP) – Sustainable human settlements and improved quality of household life. The Department will release well located land and properties for development purposed to the Department of Human Settlements. - In addition the following priorities has also been considered as significant to the Strategic Plan:

12 Key policy priorities2014/15 Budget Outcome 10 (Chapter 5 of the NDP) – Protect and enhance our environment assets and natural resources. The Department will continue implementing the Green Building Framework in line with Government’s transition to a low carbon economy. - Outcome 14 (Chapter 15 of the NDP) – Nation building and social cohesion – The Department in partnership with the City of Tshwane will create a more functional and aesthetically pleasing inner city. R107 mil

Strategic goalsGoal statement 13 1.An efficient, competitive and responsive accommodation infrastructure network Manage the life cycle of immovable assets under the custodianship of the Department effectively and efficiently. 2.Strategic leadership and regulation of the construction and property sectors to promote economic empowerment and skills development Provide leadership to the South African construction and property sectors whilst ensuring transformation and regulation thereof through the development of legislation and best practice guidelines. 3.Good corporate governance to support effective and efficient service delivery Provide strategic leadership in ensuring effective governance, sound resource management and integrity of the operations of the Department. 4.Decent employment through inclusive economic growth Lead and coordinate the creation of additional employment opportunities through labour intensive delivery methods and skills programmes for the participation of the unemployed in delivering needed services and creation of assets. 5.Contribute towards comprehensive rural development Improved land administration and spatial planning for integrated development in urban and rural areas.

The Department will review and/or develop the following policies and legislation: Review of the Department’s White Papers: “Public Works towards the 21st century, 1997; and Creating an Enabling Environment for Reconstruction, Growth and Development in the Construction Industry, 1999” towards the development of an enabling legislation establish Agrément South Africa (ASA) as a public entity mandated to assess non- standardised and/or unconventional construction products, materials and systems fit for purpose, develop a draft Built Environment Professions (BEP) Policy towards possible amendments to the legislative framework governing the BEPs, promulgation of a new Expropriation Act (repealing the Expropriation Act 63 of 1975) to ensure consistency with the Constitution and uniformity in the expropriation of property by all expropriating authorities, develop legislation to establish the Independent Development Trust (IDT) as a public entity to support the State in the delivery of social infrastructure, develop a Green Building Policy and Strategy for the Department to give effect to Government’s green economy initiatives. 14

15 Turnaround Strategy: The Department launched a Turnaround Strategy in 2012 to address multiple issues of underperformance that ultimately resulted in progressively negative audit reports by the Auditor-General For reasons of impact and strategic importance, 10 projects have been conceptualised from the 23 key stabilisation projects, as essential drivers of Phase 2 for the rebuilding the Department. These projects are : 1.The development of a Service Delivery Framework 2.Operationalisation of Property Management Trading Entity and establishment of the Government Component 3.Developing a complete and credible register of State immovable assets 4.Conducting a comprehensive audit of leased properties and the establishment of a leasing management framework 5.Restructuring of Supply Chain Management (SCM) to better meet business requirements 6.Improving internal efficiencies to meet the service delivery requirements of Prestige clients 7.Developing an Information Technology strategy, architecture and platform as a key enabler 8.Improving infrastructure delivery through the application of best practice in terms of processes, structures and systems (IDMS) 9.Actively combating fraud and corruption, both within the Department and in the construction and property sectors, holding transgressors accountable for their actions 10.Development and implementation of an effective change management strategy that enables a performance driven culture

16 Turnaround Strategy Budget: Programme Project description 2014 / / /17 R`000 Programme 1: Administration Business Model Project Fraud Investigations Internal Audit Support Core Turn Around Support Team Clean Audit Supply Chain Management Review Irregular Expenditure Project Total: Programme Programme 2: Immovable Asset Management Lease review Immovable Asset Register Total: Programme Overall Total

17 The Department has reviewed the organisational structure which will be approved and implemented over the MTEF. The Department has an approved establishment of posts of which are filled. An integrated Human Resource Plan has been developed to respond to Government’s priorities and to align the Department’s workforce with the mission, vision, strategic goals and financial resources of the Department. The Department is experiencing challenges in producing the wide range of skills required in the construction and engineering fields, in order to meet longer-term infrastructure delivery objectives. The Department will therefore continue to implement its strategy to bring in skilled graduate professionals through development programmes. Targeted human resource interventions in place include the recruitment of technical and professional staff to overcome short term challenges For the 2014/15 financial year the Department has an allocation R1.660 billion for compensation of employees to deliver on its key priorities. Additional funding (estimated R3 bil shortfall) will be required in implementing the new structure over the MTEF.

18 3 PART B: Strategic objectives and programme budget This section specifies strategic objectives and their resource implications that need to be managed over the MTEF (SP Pages and APP Pages )

19 ProgrammeStrategic Objective(s)Budget AdministrationPromote sound corporate governance practices within DPW. Ensure effective and sound financial resource and corporate resource management. The Bulk of the Programme budget goes towards Office Accommodation and Corporate Services functions. The budget allocation for the Programme is R1.175 billion for 2014/15. Immovable Asset Management Effective life cycle asset management of immovable assets under the custodianship of the Department. Improved land administration and spatial planning for integrated development in urban and rural areas The spending focus for the Programme includes the infrastructure, immovable asset register and the lease review as part of the Turnaround Strategy. The budget allocation for the Programme is R2.861 billion for 2014/15. Expanded Public Works Programme Co-ordinate, monitor and evaluate the creation of work opportunities and income support to the poor and unemployed, so as to contribute to national goal of job creation poverty alleviation The bulk of the programme’s budget goes towards the payment of performance based incentives to eligible Provinces, Municipalities and Non-Profit Organisations. The budget allocation for the Programme is R1.951 billion for 2014/15. Property and Construction Industry Policy Regulations Promote growth and transformation of and competition in the construction and property industries. Promote uniformity and best practice in construction and immovable asset management in the public sector. The spending focus for the Programme will be on tabling the Expropriation Bill and the Agrément South Africa Bill in Parliament. The budget allocation for the Programme is R41 million for 2014/15. Auxiliary and Associated Services Render auxiliary services for state functions and meet financial commitments on compensation for losses, preservations of national memorials, training and skills development The bulk of spending in this programme goes towards goods and services and transfers and subsidies for the State functions and Assistance to Organisations for Preservation of National Memorials. The budget allocation for the Programme is R92 million for 2014/15.

20 Programmes 2013/ / /162016/17 Previous year Current yearMTEF Administration Immovable Asset Management Expanded Public Works Programme Property and Construction Industry Policy Regulations Auxiliary and Associated Services Total for Programmes To deliver on the Department’s strategic goals and objectives, a budget of R6.121 billion is allocated across various Programmes:

21 Economic classifications 2013/ / /162016/17 Previous year Current yearMTEF Current payments Compensation of employees Goods and services Transfers and subsidies Provinces and municipalities Departmental agencies and accounts Foreign governments and international organisations Public corporations and private enterprises Non-profit institutions Households Payments for capital assets Buildings and other fixed structures Machinery and equipment Software and other intangible assets Total economic classification

There are four Public Entities reporting to the Department of Public Works. The Entities serve as an extension of and assist the Department in delivering on its mandate. 22 Name of Public Entity2014/15 Budget Construction Industry Development Board (cidb): The cidb supports the Department by providing strategic direction and developing effective partnerships for growth, reform and improvement of the construction sector; R77 mil Council for Built Environment (CBE): The CBE implements projects and programmes that address the built environment issues and add value to the built environment professions, Government and the general public; R42 mil Independent Development Trust (IDT): The IDT supports the Department in contributing to Government’s priorities of job creation, sector skills development, green buildings initiatives and eradication of social infrastructure backlogs. R50 mil Agrément SA (ASA): ASA supports the Department by technically assessing innovative construction technologies and promoting their use to stimulate the creation of sustainable short and long-term work opportunities; R11 mil Property Management Trading Entity (PMTE): Optimal utilisation of State property to meet the service delivery objectives of Government R673 mil

23 4 PART C: Long term infrastructure plan This section considers the long term infrastructure plans (SP Pages and APP Pages )

SUB-PROGRAMME: INFRASTRUCTURE (DPW CAPITAL BUDGET) The acquisition of infrastructure for DPW’s own accommodation needs as well as for the prestige portfolio, land ports of entry, dolomite risk management, inner city regeneration programmes and accessibility programmes in terms of the disability policy is funded from the Infrastructure (Public Works) allocation. 1.New, replacement, upgrade and additions No of projects Infrastructure Programme Type Outcome Main appropriation Adjusted Appropriation Revised Estimate Medium Term Estimates 2010/112011/122012/132013/142014/152015/162016/17 R`000 95Departmental261,201285,294228,106227, ,000158,000204, Accessibility18,97811,3864,99225, ,3699,0059, Dolomite Risk Management11,86132,16732,35554, ,000141,000148, Land Ports of Entry372,000274,626233,892202, ,000285,000277, Inner City Regeneration145,38942,05994,83855, ,000101,000106,353 60Prestige446,445365,876118,820113, ,000150,000139,540 Total

2. Maintenance and repairs (PMTE - Current) The maintenance and repair of existing state accommodation as funded by the PMTE through accommodation charges received from user departments 25 No of projects Infrastructure Programme Type Outcome Main appropriation Adjusted Appropriation Revised Estimate Medium Term Estimates 2010/112011/122012/132013/142014/152015/162016/17 R` Planned maintenance (current) Rehabilitation, renovations and refurbishment (PMTE - Capital) Major renovations and refurbishment of state accommodation funded by PMTE through accommodation charges received from user departments and augmentation received from National Treasury No of projects Infrastructure Programme Type Outcome Main appropriation Adjusted Appropriation Revised Estimate Medium Term Estimates 2010/112011/122012/132013/142014/152015/162016/17 R` Planned maintenance (capital)

National Department of Public Works (NDPW) Head Office: Public Works CGO Building Cnr Bosman and Madiba Pretoria Central Private Bag X65 Pretoria 0001 Website: 26