1. South Africa Works because of Public Works
The Performance of the Department of Public Works and PMTE
(3rd Quarter 2015/16)
PRESENTATION TO THE PORTFOLIO ON PUBLIC WORKS
PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA
CAPE TOWN
OFFICE OF THE DIRECTOR-GENERAL

2. To Contents Purpose 5 Year Strategic Goals and Outcomes
Summary of Performance Information (Programme Performance)
Performance Challenges
Financial Information (DPW and PMTE)

3. Purpose Purpose of the Presentation by the Department of Public Works
To reflect on the 2nd and 3rd Quarter Performance and Financial information of the Department of Public Works and PMTE in the financial year 2015/16 in order for the Portfolio Committee to advise on improving performance
Objective of the Portfolio Committee on Public Works
To have an understanding and measure the 2nd and 3rd Quarter Performance and Financial performance of the Department for the financial year 2015/16.

4. 5 year Strategic Goals & Outcomes
Vision - A service oriented Public Works Department delivering value and contributing to the national agenda for social and economic development
Strategic Goals and contributions to Government Outcomes
Strategic Goals
Government Outcomes
An efficient, competitive and responsive accommodation infrastructure network
Outcome 6 (An efficient, competitive and responsive economic infrastructure network) and Outcome 12 (An efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship)
Strategic leadership and regulation of the construction and property sectors to promote economic empowerment and skills development
Outcome 5 - A skilled and capable workforce to support an inclusive growth path
Good corporate governance to support effective and efficient service delivery
Outcome 12 - An efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship
Decent employment through inclusive economic growth
Outcome 4 - Decent employment through inclusive economic growth
Contribute towards comprehensive rural development
Outcome 7 - Contributing towards Government’s objective to develop rural areas

5. Setting the Scene
The Minister’s Policy Statement identified five strategic priorities for the five year period of this Administration:
The creation of 6 million work opportunities through the EPWP;
Operationalisation of the PMTE (Property Management Trading Entity) to manage the core business of Public Works – custodianship of state immovable assets and provision of accommodation to government;
Operationalisation of the Governance Risk and Compliance Branch – to strengthen the fight against fraud and corruption, as well as to spearhead the Efficiency Enhancement phase of the Turnaround - using the tools of strategic planning, Service Delivery Model processes and risk and performance management.
The Policy Review – working with all stakeholders, particularly the provinces, to develop a new Public Works White Paper culminating in the tabling of a Public Works Act to codify and clarify the mandate of Public Works;
The Transformation of the Built Environment – so that ownership, control and the composition of the professions better reflects the demographics of South Africa
All these priorities are embedded in the Programmes of the DPW and PMTE

6. Cont.…
These priorities set a different thinking around the delivery mechanisms and targets for the Department and PMTE particularly moving from Phase 1 of the Turnaround (Stabilisation) to Phase 2 – Efficiency Enhancement

7. SUMMARY OF PERFORMANCE INFORMATION
Please Refer to the Detailed Q3 Reports Attached – DPW and PMTE

8. Programmes of the DPW and PMTE
2015/16
PMTE
Programme 1: Administration
Internal Audit
Corporate Services
Finance and Supply Chain Management
Strategic Management
Performance Monitoring and Evaluation
Programme 2: Intergovernmental Coordination
Programme 2: Real Estate Investment
Programme 3: EPWP
Programme 3: Construction Project Management
Programme 4: Property and Construction Policy Regulation
Programme 4: Real Estate Management
Programme 5: Prestige Management
Programme 5: Real Estate Information & Registry
Programme 6: Facilities Management

9. Please Refer to the Q3 Reports Attached – DPW and PMTE for Detail Discussion

10. Summary of Performance Information
The performance of the Department and PMTE has slightly improved (Although a slight decline in DPW)
The reasons for a decline are mainly in the challenges in procurement processes
The combined performance (Average) of DPW and PMTE is
Q2 = 46%
Q3 = 52%
Overall the Department is performing slightly above average at 52% in Q3 compared to 46% in Q2 – despite the challenges experienced

11. Performance Challenges
Appointment of service providers – delays are still experienced in the process to appoint service providers that will provide services in in areas where certain scarce skills are required. This then contributes to delays in achieving the set targets or under-performance
In areas where there are dependencies from external stakeholders or client departments , delays or non corporation is often a challenge resulting in non-achievements of targets. This is largely applicable to Policy and legislation related matters
Capacity and Budget constraints in some areas continue to be a hindrance to performance. An example include the facilities management contracts . This is also exacerbated by the constrained fiscus
Energy & Water Efficiencies and Waste Management - Efforts are being made to reach the set goals across government as part of the Green Building Programme
The Department is continually reviewing its business model and the operationalisation of the IDMS as a delivery model for Infrastructure. This will address fragmentation and duplications. Although this financial year, the Department is starting to experience some degree of coordinated activities

12. DPW FINANCIAL INFORMATION

13. Summary Expenditure Report per economic classification –
Summary Expenditure per Economic Classification
Summary Expenditure Report per economic classification –
for the month ended 31 December 2015

14. Summary expenditure per economic classification for the month ended 31 December 2015
Appropriation per Economic classification – Third Quarter Report
For the third quarter ended 31 December 2015
2014/15
Percentage of total budget
Final Annual Appropriation
Actual Expenditure as at 31 December 2015
Actual exp. over annual appropriation
Actual Expenditure – 31 Dec 2015 %
R'000
Current payments
Compensation of employees 8%
474,995
347,361
73%
1,205,243
72%
Goods and services 6%
409,086
342,503
84%
1,019,649
75%
Transfers and subsidies
86%
5,400,081
3,767,041
70%
2,366,980
92%
Payment for capital assets
Buildings & other fixed structures -
79,251
56%
Machinery & equipment / intangible assets 0%
28,060
19,835
71%
21,833
68%
Total
6,312,222
4,479,797
4,894,971
80%
Transfers and subsidies make up 86% of the total budget

15. Notes to Expenditure Summary per economic classification
Current year vs budget analysis
Current year vs prior year analysis
Compensation of employees
Expenditure in line with the guideline and drawings.
No over spending projected at the end of the financial year.
Expenditure variance between current year spending and 2014/15 is due to transfer of function to the PMTE.
Approximately 73% (R1.3 billion) of the compensation of employees was transferred to the PMTE as part of transfer of function.
Budget allocation for the current financial year is R475 million compare to R1.7 billion in 2014/15.
Goods and services
Spending in line with the guidelines
Expenditure decreased compare to the previous year due to transfer of function to the PMTE.
Budget for Office Accommodation (R516 million) was also transferred to the PMTE.
Bulk of the Turnaround previously under the Department were transferred to the PMTE as part of the transfer of function.
Transfers and subsidies
Expenditure in line with the drawings
No over spending
Increased expenditure relates to the transfer of function from the Department to the PMTE.
The budget allocation for the PMTE increased from R673 million in 2014/15 to R3.6 billion in 2015/16.
The PMTE budget is equivalent to 66% of the total allocation for transfers and subsidies
Machinery and equipment
Expenditure in line with the drawings and guidelines
No over spending projected
Budget and expenditure decreased with the transfer of function as compare to the previous financial year

16. Appropriation per Programme For the nine months ended 31 December 2015
Notes to Expenditure Summary
Transfers and subsidies relates to:
Appropriation per Programme
For the nine months ended 31 December 2015
2014/15
PROGRAMME
Adjusted Appropriation
Actual
% spent as at
31 Dec 2015
Expenditure as at
31 Dec 2014
Expenditure
R'000 %
Construction Industry Development Board
65,626
100%
77,212
Council for the Built Environment
41,994
41,572
Independent Development Trust (Bridging finance)
50,000
Common Wealth War Graves
23,273
23,363
22,548
Parliamentary Village
9,096
8,690
Property Management Trading Entity
3,584,652
2,191,211
62%
673,372
EPWP incentives
1,674,811
1,473,205
88%
1,471,116
Construction Education Training Authority (CETA)
475
1,630
98%
Agreement SA -
11,682 -%
11,021
Households
10,154
5,953
59%
9,815
Total
5,400,081
3,767,041
70%
2,366,980
92%

17. Summary Expenditure per Programme for the period ended December 2015

18. Summary expenditure per programme for the month ended 31 December 2015
Appropriation budget per Programme
For the third quarter ended 31 December 2015
PROGRAMME 
Percentage of total budget
Appropriation
Actual
Expenditure as at 31 December
Actual exp. over annual appropriation %
R'000 1.
Administration 8
477,346
337,430
71% 2.
Intergovernmental Coordination 1
45,723
23,944
52% 3.
Expanded Public Works Programme 31
1,953,369
1,661,956
85% 4.
Property and Construction Industry Policy and Research 59
3,742,962
2,397,585
64% 5.
Prestige Policy
92,822
58,882
63%
TOTAL
6,312,222
4,479,797

19. Budget Allocation per Programme Chart - 2015/16

20. PMTE FINANCIAL INFORMATION

21. PMTE

22. PMTE Budget and Expenditure Report as at 31 December 2015
Guideline: 75%

23. % Actual Received / Claimed
Financial Performance of the PMTE
Budget
Claimed to date
% Budget vs Claimed
Actual Received/ Paid
% Actual Received / Claimed
R’000 %
Revenue
75%
83%
State Accommodation Charges
99%
Private Accommodation Charges
73%
77%
Management Fees (Municipal)
70%
Augmentation
78%
74%
Expenditure
Cleaning & Gardening
Private Leases
Rehabilitation, Repair and Maintenance
Property Rates
Municipal services
Goods and Services
Machinery and Equipment
4 398
Turnaround Projects
8 050
Compensation of Employees
110
Profit/Net Cash movement: 31 December 2015
Cumulative bank Balance: 31 December 2015

24. Summary Expenditure per Economic Classification
% of total budget
Allocation
R’000
Expenditure
% Exp
% Exp 2014/15
Compensation of Employees
12%
77% -
Goods and Services
Including Cleaning and Gardening, Operating Leases, Maintenance, Repair and Renovations and other Administrative Expenditure
65%
72%
73%
Transfer Payments
Property Payments
10%
104%
66%
Capital Payments
Rehabilitation, Repair and Renovations of a Capital nature & Machinery and Equipment
13%
76%
Total
Overall expenditure in line with Q3 expectations of 75%

25. Summary Expenditure per Objective
Guideline expenditure as at the end of December 2015: 75%
% of Total
Allocation
R’000
Expenditure
% Exp
% Exp 2014/15
Cleaning and Gardening 2%
236,024
151,254
64%
60%
The expenditure was slightly lower than expected at the end of the third quarter due to some contracts being awarded later than originally planned. The department has put special projects in place with the assistance of EPWP Branch to increase the spending and service delivery on this budget.
Leasing (Private owned)
37%
4,018,384
3,080,094
77%
76%
The expenditure is a slightly higher than the original estimation. This budget is recoverable from clients and will be monitored closely to avoid over-expenditure.
Refurbishments, Repair and Maintenance
30%
3,235,104
2,419,279
75%
Planned Maintenance Current 8%
867,917
596,523
69%
71%
Planned Maintenance Capital
881,957
640,358
73%
Rehabilitation 3%
343,365
291,662
85%
Day-to-Day
11%
1,141,865
890,736
78%
83%
This budget is based on projects on different levels of implementation. This include planning, procurement and construction. Measures have been put in place to monitor these projects, identify any actual or potential blockages and to resolve it. The expenditure on this item is improving each financial year. The programme is on schedule in terms of time lapsed, and the department will spend the full allocation by the end of the financial year.
Municipal Services
264,374 -
This item is new to the PMTE and represents expenditure previously claimed from DPW. This is due to the transfer of functions from DPW to PMTE. Expenditure will be monitored to avoid over-expenditure.

26. Summary Expenditure per Objective
% of Total
Allocation
R’000
Expenditure
% Exp
% Exp 2014/15
Property Rates
10%
1,056,178
1,093,341
104%
66%
The expenditure on this item is high due to old accounts being settled with municipalities. This is a direct result of the reconciliation project the department has embarked on to settle all invoices. Any additional funds needed will be sourced from other programmes.
Compensation of Employees
12%
994,048
77% -
The expenditure is a bit higher than the time lapsed at 77%. This is due to performance bonuses paid out and notch increases implemented during December The full budget will be spent.
Goods and Services 6%
570,244
193,805
34%
The expenditure is relatively low as at the end of the third quarter, but this will increase as special initiatives which were in planning phase are implemented during the last quarter of the year.
Machinery & Equipment 0%
30,693
8,126
26%
The expenditure will improve during the year as orders have been placed and will be paid during the next quarter.
Telkom Towers 1%
150,000
100%
The department contributed to the purchase price of the acquisitions of Telkom Towers for use by SA Police Service.
76%
73%

27. DPW/PMTE Capital Infrastructure Budget
 Office
% of total budget
Allocation
Expenditure
% Exp
% Exp 2014/15
R'000
Departmental
26%
187,000
78,632
42%
53%
Accessibility for Disabled Persons 1%
8,700
5,194
60%
73%
Dolomite Risk Management
10%
74,000
60,586
82%
78%
Land ports of Entry (BCOCC)
31%
222,350
127,551
57%
66%
Inner City Regeneration 8%
54,000
36,649
68%
65%
Prestige
23%
167,286
88,767
50%
Total
713,336
397,379
56%
DPW Capital budget has been transferred to PMTE as a result of Transfer of Function. The overall expenditure is very low at 56% with expenditure of only R million out of R 713 million. The expenditure against Departmental and Prestige will increase significantly during the last quarter when strategic acquisitions are finalised. An amount of R60m has been identified against the Land Port of Entry budget which will not be spent by the Department. Agreement has been reached between the department, Home Affairs and National Treasury that this amount will be spent by the Border Management Agency and claimed from the department. Full expenditure on the this budget is dependant on the claims to be submitted.

28. PMTE Revenue Management Report

29. Debtors Age Analysis Accommodation (State Owned)
Categories
Current
30 Days
>60 Days
Total 2014/15
Previous Years
Total
R’000
Accommodation (State Owned)
1 053
35 378
36 431
7 537
43 970
Accommodation (Private)
89 647
Municipal Services
71 805
PACE
61 416
7 757
Recoverable: CA
67 280
47 273
4 297
Percentage
58%
42%

30. INTERVENTIONS TO ADDRESS LONG OUTSTANDING DEBT
The operating model that is being utilized by the PMTE dictates that the entity should be operating an approved overdraft of at least R800 million, In essence the PMTE is providing interest free bridging finance to clients.
Clients have reported a number of reasons for not paying
Disputes on occupation periods
Unavailability of funds for previous years claims
Lack of supporting documents (lease agreements)
Amounts paid to Landlords is not in line with lease agreements
The following interventions have been implemented:
Meetings with clients departments has been held to follow up on outstanding debt
Letters of demand are written to clients
National Treasury intervention
Cleaned lease database
Complete the physical verification, confirm occupation with clients and update the system
Provide copies of lease agreements to clients
Billing in advance

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