1. REPORT TO THE SELECT COMMITTEE ON APPROPRIATIONS ON HOSPITAL REVITALISATION GRANT PERFORMANCE DR SIBONGISENI DHLOMO MEC FOR HEALTH KWAZULU NATAL

2. CONTENT Grant Framework Trends in grant Financial performance Third quarter performance Preliminary 2009/10 Outcome 2010/11 MTEF allocation Preliminary 2010/11 allocation by project and category 2009/10 Grant Performance by Project and category Some factors contributing to under expenditure Monthly Reporting Way Forward

3. GRANT FRAMEWORK To provide funding to enable provinces to plan, manage, modernise, rationalise and transform the infrastructure, health technology, monitoring and evaluation of hospitals, and to transform hospital management and improve quality of care in line with national policy objectives

4. 2005/062006/072007/082008/092009/10 R'000 Adjusted AppropriationR 223,938R 317,300R 360,194R 330,404R 449,558 Actual OutcomeR 111,821R 225,900R 333,684R 330,404R 225,000 Nominal DifferenceR 112,117R 91,76R 26,510R 0,00R 224,558 % Variance-50.06%-28,93%-7,35%0%-49,95% TRENDS IN GRANT FINANCIAL PERFORMANCE 2005/06 TO 2009/10 (AS AT 31/03/10) HRG budgets have grown rapidly over the past five years Planning and project management has not kept pace, resulting in under expenditure due to delays – explained later

5. 3 RD QUARTER PERFORMANCE -by allocation

6. PRELIMINARY 2009/10 OUTCOME -by allocation BUDGETACTUALVariance% Spent 186,445109,865-76,58059% 94,65251,277-43,37554% 53,96224,398-29,56445% 46,44920,313-26,13644% 45,62512,937-32,68828% 2,4250-2,4250% 8,000459-7,5416% 6,500460-6,0407% 5,5005,804304106% 449,558225,513-224,04550% TOTAL HRG 2009/10 Institution King George V LUWMH Hlabisa Rietvlei Dr Pixley ka Seme Dr John Dube Edendale Madadeni Grant Management Total

7. PRELIMINARY 2009/10 OUTCOME -by category

8. 2010/11 MTEF HRG ALLOCATIONS 2010/112011/122012/13 R'000 Main AppropriationR 500,815R 551,698R 572,560 Grant allocation increases by a nominal 27 percent from R449.5 million in 2009/10 to R500,8 in 2010/11 Projected allocations are expected to increase further than currently shown due to rescheduling on the 2009/10 under spent funds, currently negotiated with the National Treasury. Adjustment budget will paint a fairer picture in terms of future allocations

9. PROVISIONAL 2010/11 MTEF ALLOCATION

10. Of the Infrastructure allocations, King George V had the largest share LUWMH has the second largest allocation and only spent 25 percent of the allocation in 2009/10 BUDGETACTUALVariance% Spent 122,92586,606-36,31970% 69,66017,233-52,42725% 48,66018,000-30,66037% 40,14613,044-27,10232% 45,62512,937-32,68828% 2,4250-2,4250% 8,000459-7,5416% 6,500252-6,2484% 0000% 343,941148,531-195,41043% Institution King George V LUWMH Hlabisa Rietvlei Dr Pixley ka Seme Dr John Dube Edendale Madadeni Grant Management Total 2009/10 INFRASTRUCTURE

11. INFRASTRUCTURE PERFORMANCE -Explanatory notes (1) King George V (Under spent by R36.3m) Slow contractor: District Hospital, TB Surgical wards; Delays in designs & documentation (Consultants): TB Complex, Creche, Landscaping Ph1, Aircon TB multi storey, Psychiatric Phase 2, Waste facility, Psychiatric Closed unit; Tender procurement delays (DoW): security facility & Landscaping Ph1, Creche, Workshop & Laundry.

12. INFRASTRUCTURE PERFORMANCE -Explanatory notes (2) King George V (Under spent by R36.3m) continued Department not having adequate monitoring capacity to follow up on slow contractors and consultants’ delays in designs & documentation; Department did not act on building defects timeously; Department did not have dedicated project manager to follow up on tender document delays and variation orders.

13. INFRASTRUCTURE PERFORMANCE -Explanatory notes (3) LUWMH (under by R52.4m) Tender procurement delays (DoW): New Mother & Child Hospital (R365m) delayed for 16 months; Department did not have monitoring capacity to detect inaccuracies with tender documents (exclusive of prof. fees, escalation and contingencies); Differences in interpretation of ‘appeals lapsing’ period to re-advertise tender.

14. INFRASTRUCTURE PERFORMANCE -Explanatory notes (4) Hlabisa (Underspent by R30.7m) Tender procurement delays: New District Hospital (15 months), Kitchens to Nurses Home, Upgrade to existing theatre; Delay in Final Account (consultants): Phase 1 Dept lacking capacity to follow up and manage delays and outstanding documents

15. INFRASTRUCTURE PERFORMANCE -Explanatory notes (5) Rietvlei (R27.1m underspent) Slow contractor: Ph3A - pharmacy, laboratory Design & tender procurement delays (DoT): Access road to Hospital; Dept not able to constantly follow up/manage delays Dr Pixley ka Seme (R32.7m under) Delay awaiting NDoH approvals of Initial Project Implementation plan; Delay in constituting DoH internal design review team due to lack of capacity

16. INFRASTRUCTURE PERFORMANCE -Explanatory notes (6) Dr John Dube (R2.4m underspent) and Madadeni (R6.2m under) Non-delivery of IAs: Delay due to switching Implementing Agents from DoW to IDT, then back to DoW; Department not efficiently managing progress of IAs due to lack of capacity

17. INFRASTRUCTURE PERFORMANCE -Explanatory notes (7) Edendale (R7.5m underspent) Delay of 12 months awaiting NDoH approval of design brief (still not approved); Delay in funding approval by NDoH for emergency projects. Dept not consistently following up on outstanding approval due to lack of capacity

18. HEALTH TECHNOLOGY PERFORMANCE -explanatory notes Spending not in line with budget: Delays on construction resulted in delays in acquisition of health technology at King George V Over expenditure at LUWMH, Hlabisa and Rietvlei due to spill over of purchases that had been scheduled for the previous years Department not having a dedicated resource to drive this aspect of Hospital Revitalisation; Planning not aligned to SCM processes and timeframes

19. ORGANISATIONAL DEVELOPMENT PERFORMANCE -explanatory notes Underspending mainly due to: Non - approval of filling of ‘Critical Posts’: due to concern of committing the DoH to additional staff costs which it couldn’t meet in 3 years time, when no longer covered by Revite Delay of Implementation of Hospital Information System, initially due to finalizing the Agreement, then due to moratorium by NDoH; Delays in implementing Digital Radiography Picture Archiving Communication System / Radiography Information System.

20. Some factors contributing to under expenditure (1) IMPLEMENTING AGENTS (IAs): The DoH has no or very little control over IAs who prove to be inflexible and/ or unwilling to change, and speed things up. CONSULTANTS: IAs appoint consultants who are not qualified to do the work to the standard required or in the time lines required. Hospital design is complex and requires speciality. The time period to appoint consultants is also slow. CONTRACTORS: IAs appoint contractors who are incapable of undertaking this complex work.

21. Some factors contributing to under expenditure (2) Lack of Capacity of the Hospital Revitalisation Office; No dedicated project managers for various categories of Health Technology, Quality Assurance and Organisational Development; Supply Chain Management was not properly managed and implemented resulting in project delays, cancellation and appeals; Weak project management and planning due to lack of capacity

22. MONTHLY REPORTING Historically, formal reporting from IAs was erratic and often inaccurate; Currently, Revite Project Managers attend Contractor and Consultant meetings so they are aware of on site progress and can act timeously; Joint task team comprising DoH, DoW and other IAs was in place, but has met erratically; This has now been replaced by monthly Infrastructure Programme Management Committee meetings.

23. WAY FORWARD In 2010/11 the Department will re organise its infrastructure management unit in line with Project Management principles. Key management posts will be filled by appropriately qualified persons with formal training in built environment. Overall Quality Assurance process currently being developed, improvements expected during 2010/11

24. Thank you!