1. South Africa Works because of Public Works
DEPARTMENT OF DEFENCE INFRASTRACTURE PORTFOLIO COMMITTEE
08 NOVEMBER 2017
Presentation to the Portfolio Committee
on Department of Defence
OFFICE OF THE DIRECTOR-GENERAL

2. PURPOSE
To brief the Portfolio Committee on the historical challenges raised by the Department of Defence.

3. DOD projects (historical challenges)
CONTENTS
DOD projects (historical challenges)
DPW responses on project related challenges raised by DOD
Accommodation charges (historical challenges)
DPW response to maintenance issues – 1 Military Hospital

4. A. DOD PROJECTS (HISTORICAL CHALLENGES)

5. HISTORICAL CHALLENGES OF DOD PROJECTS
The following are historical challenges which the DOD experienced with regards to projects executed by DPW and this has necessitated an intervention by Sec Def and DG DPW :
In identified circumstances the appointment of consultants and contractors by DPW. (In the main, due to security clearance and vetting)
No immediate remedial action against contractors on poor workmanship.
Turnaround time on Projects is too long.
At the time DPW has not responded to DOD’s request to allow DOD to execute projects on GIAMA property.
RESTRICTED

6. B. DPW RESPONSES ON PROJECT RELATED CHALLENGES RAISED BY DOD

7. DPW RESPONSES ON PROJECT RELATED CHALLENGES RAISED BY DOD (1)
The vetting of appointment of consultants and contractors by DPW takes too long
The meeting took place between the department and the security agency and the issue has been resolved
No immediate remedial action against contractors on poor workmanship
The process is in place in place the non performance contractors into terms in terms of the conditions of contract
The quality issues including performance related issues are addressed in the biweekly technical and progress meeting whereby the entire project team is in place
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8. DPW RESPONSES ON PROJECT RELATED CHALLENGES RAISED BY DOD (2)
Turnaround time on Projects is too long.
Currently we busy with the business processes re engineering to eliminate the long lead unnecessary activities within the entire planning value processes
At the time DPW has not responded to DOD’s request to allow DOD to execute projects on GIAMA property.
The approval has been granted by the Department

9. HISTORICAL CHALLENGES RAISED BY DOD
PROGRESS ON PROJECTS
S/N
DESCRIPTION
HISTORICAL CHALLENGES RAISED BY DOD
DPW PROJECT PROGRESS 1
Zeerust: 2 SAI Bn, Supply and installation of kitchen equipment and replacement of roof and ceiling of the kitchen.
Project inactive/ Contractor insolvent
Contractor had a cashflow problems however the Project is at completion stage. Beneficial occupation was achieved on 04 July The contractor is attending to the snag list and installation of the generator set had been delayed and is now expected to be completed by the end of November 2017 2
Upington: 8 SAI Bn, Refurbishment of facilities and civil services.
Delivery delays by 35 months & the scope reduced drastically
Progress on site is 95% complete
The below factors led to over-running the contract period:-
The passing away of Civil/Structural Engineer, Quantity Surveyor and Contractor’s Contracts Manager;
Late issuing of information by the Civil/Structural Engineers.
Other delays were the unavailability of subcontractors and machines to construct the roads; unavailability of general materials around Upington.
Scope reduction:
DPW is investigating the reduction scope (which was a major concern raised by the client.) 3
Middelburg: 4 SAI Bn, Repair and maintenance to civil infrastructure.
Project cancelled/awaiting outcome of legal disputes
A legal dispute has been resolved and the project will be advertised by end November 2017.
RESTRICTED

10. HISTORICAL CHALLENGES RAISED BY DOD
PROJECT PROGRESS
S/N
DESCRIPTION
HISTORICAL CHALLENGES RAISED BY DOD
DPW PROJECT PROGRESS 4
Mmabatho: 10 SAI Bn, repair of buildings structural and works services infrastructure.
Project cancelled.
A legal dispute has been resolved and the project will be advertised by end November 2017. 5
Air Force Base Waterkloof: Refurbishment of single quarters.
Design stopped.
The electrical consultant was terminated due to poor performance. New tenders were advertised and awarded on 25 October 2017 and the design process is underway. 6
Mthatha: 14 SAI Bn, replacement of kitchen equipment.
Project stopped.
Initial contractor was terminated due to non-performance not insolvency as captured in the DOD letter. Interventions were put in place for the Client to utilise the kitchen equipment and a service provider connected the Ovens end June 2017
Appointment for the replacement of a Contractor will be out on tender on 10 November and closes on the 01 December 2017 7
Middelburg: 4 SAI Bn, construction of military health sickbay.
Project not completed due to poor workmanship.
Contractor is facing cash flow problems and lack of skilled labourers. The contractor has been put on terms. The progress is being closely monitored by both Project Manager and Professional team. The project is anticipated to be completed by end March 2018.
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11. HISTORICAL CHALLENGES RAISED BY DOD
PROGRESS ON PROJECTS
S/N
DESCRIPTION
HISTORICAL CHALLENGES RAISED BY DOD
DPW PROJECT PROGRESS 8
Air Force Base Hoedspruit: Repairs to damaged facilities and infrastructure caused by floods.
Project stopped.
Initial contractor was terminated due to non performance. Completion contractor has been appointed on 08 March 2017 and site handed over on 17 March Contract period is 09 months and anticipate to complete in February 2018. 9
Air Force Base Bloemspruit: Refurbishment programme.
The 1st Contractor was stopped due to poor workmanship.
The first contractor was terminated. Poor progress on site with 2nd contractor, the second Mora Letter was issued on 02 August The Cancellation Letter has been issued to contractor on 2 November The professional team has gone to site to compile a completion report. Tender document for the 3rd completion contract will be finalised by Mid December 2017 and the project will be re-advertised by February 2018. 10
Karee Base: Planned Maintenance Programme.
No progress.
DPW has requested that this project should be transferred from Planned Maintenance Implementation Programme (PMIP) to Capital Works Implementation Programme (CWIP) due to Project Estimate which is over R500M.
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12. HISTORICAL CHALLENGES RAISED BY DOD
PROGRESS ON PROJECTS
S/N
DESCRIPTION
HISTORICAL CHALLENGES RAISED BY DOD
DPW PROJECT PROGRESS 11
A - Mess: Thaba Tshwane: Upgrading of remainder of facilities not included in WCS
No progress.
Consultants have completed the designs and tabled before Sketch Plan Committee.
Outcome of the sketch plan committee was not favourable and management intervention was required.
Project is planned to be advertise by the end of November 2017 12
B - Mess: Thaba Tshwane: Refurbishment programme
Project was re-advertised in July 2017, due to the non-compliance of the evaluation criteria with the National Treasury Regulation i.e Procurement Strategy and BID documents was not aligned. Currently the project is out on re-tender/advert and is closing on 07 November 2017. 13
PS School: Thaba Tshwane: Repair and renovations project.
Roof is leaking. In the dining hall area, 3 ceiling fans are not working. In the kitchen area, the deep fryer not functioning properly and the extractor fans are not functioning properly.
Initial Project was completed successfully, defects were due to non routine maintenance. New project request from client need to be submitted
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13. C. ACCOMMODATION CHARGES (HISTORICAL CHALLENGES)

14. HISTORICAL CHALLENGES ON ACCOMMODATION CHARGES
Accommodation Charges is a devolved budget from National Treasury.
Annually the DPW is being given up to R1bn.
DPW must use this budget to fund the Day-to-Day Maintenance, Planned Maintenance and Rates and Taxes for the DOD.
DPW has annually underperformed on the Planned Maintenance Programme notwithstanding the budget was prepaid quarterly.
The strategy from the DW Fmn is to ensure the following related to Accommodation Charges:
DPW to make visible what Planned Maintenance Programme they are going to undertake for the MTEF in order to allow DW Fmn to monitor progress.
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15. FINANCIAL SUSTAINABILITY FUNDING CONSTRAINTS (MAINTENANCE FEEDBACK)
IMPLICATIONS OF FUNDING GAP ON CONDITION OF PROPERTY PORTFOLIO AND PMTE BASELINE
Upkeep of entire portfolio is not adequately funded in User Departments’ baselines which resulted in significant repair and refurbishment backlog which led to deterioration of the condition of portfolio
The financial impact of addressing the condition of our portfolio to an acceptable level to operate a sustainable business will be significant to the PMTE
EXAMPLE
Based on 13 pilot properties in Pretoria, estimated accommodation charges required to implement a desired / sustainable FM strategy far exceeds funding currently available
17/18 ENE accommodation charges allocation for total portfolio is only R4.5 billion
If the desired FM strategy for the piloted 13 properties is implemented, a capital injection of R650m would be required immediately – this excludes operating costs (rates / maintenance etc.)
Per extrapolated ARV analysis an estimated that significant amount of money is required to uplift the condition of the entire portfolio through implementation of a Maintenance solution.

16. FINANCIAL SUSTAINABILITY FUNDING CONSTRAINTS
GROWING ACCOMMODATION CHARGES FUNDING GAP
Investment required for capital backlog
Operational requirement deficit
Current user charges based on properties occupied before 2006 and does not take into account any new facilities built or upgraded in the last 10 years (these are funded from the PMTE baseline)
Ideal

17. D. DPW RESPONSE TO MAINTENANCE ISSUES – 1 MILITARY HOSPITAL

18. DPW RESPONSE TO MAINTENANCE ISSUES RAISED AT 1 MILITARY HOSPITAL
Lengthy response time when calls are logged.
Current process are manual and unintegrated.
Introduction of an enterprise resource planning (ERP) system (Archibus) will ensure the digitisation of the complete workflow from logging of calls to processing payments.
Length of Contracts – 6 months
We are in process of implementing 24 month scheduled maintenance contracts for all critical components by 17/18 financial year.
Current Boiler operating contracts are also being revised for longer periods.
Repairs and Refurbishments – Long term
It is noted that capital is required to refurbish the facility critical component. The constraint on the capital reserve resulting from the devolution has created a significant maintenance backlog. Within the task team priorities have been identified and funding secured for immediate action.
Accruals and expenditure
The region of Pretoria has significant budgetary constraints due to the size and nature of accruals within the system. However, the department regards 1 Military as a significant facility which received prioritised maintenance care.

19. END