1. THE IDT’S ROLE IN DELIVERY OF SCHOOL INFRASTRUCTURE PRESENTATION TO SELECT COMMITTEE ON PUBLIC SERVICES 25 February 2014 by The Independent Development Trust

2. Outline of Presentation History of IDT’s participation in the delivery of School Infrastructure IDT Service Delivery Model IDT School Infrastructure over the last 5 years Current IDT School Infrastructure Programmes IDT Participation in SIP 13 Alternative Construction Methods Financial overview Conclusion History of IDT’s participation in the delivery of School Infrastructure IDT Service Delivery Model IDT School Infrastructure over the last 5 years Current IDT School Infrastructure Programmes IDT Participation in SIP 13 Alternative Construction Methods Financial overview Conclusion

3. History of IDT’s participation in the Delivery of School Infrastructure Participation in the Public Works funded programme for urgent school construction using alternative construction technologies: 2010-2012 Participation in the National Eradication of Mud Schools and Inappropriate Structures Programme funded by the National Treasury (Provincial Grants): 2009-11 MTEF Period An IDT funded programme in which IDT contributed Programme Management expertise as well as R150m for actual school infrastructure: 2008 - 2010 Participation in the Provincial school-building programme funded through the Infrastructure Grant to Provinces (IGP): 2000 – 2014 and the DBE ASIDI programme 2011/12 – 2013/14 Participation in the Public Works funded programme for urgent school construction using alternative construction technologies: 2010-2012 Participation in the National Eradication of Mud Schools and Inappropriate Structures Programme funded by the National Treasury (Provincial Grants): 2009-11 MTEF Period An IDT funded programme in which IDT contributed Programme Management expertise as well as R150m for actual school infrastructure: 2008 - 2010 Participation in the Provincial school-building programme funded through the Infrastructure Grant to Provinces (IGP): 2000 – 2014 and the DBE ASIDI programme 2011/12 – 2013/14

4. IDT Service Delivery Model (Infrastructure Orientated)

5. IDT’s Expenditure in School Infrastructure over the last 5 years

6. Work Opportunities - Schools Infrastructure 2012/13 REGION Work Opportunities 12/13 Expenditure Eastern Cape1949 R 341 541 000 Free State198 R 48 354 000 Gauteng1215 R 466 373 000 KwaZulu-Natal2286 R 937 389 000 Limpopo73 R 30 265 000 Mpumalanga299 R 71 209 000 North West1491 R 218 381 000 Northern Cape533 R 155 327 000 Total8044 R 2 268 839 000

7. Women/Youth Contractors 2012/13 In all IDT Social Infrastructure programmes the following was achieved: R1.035bn contract value was awarded to women contractors/service providers (18% of total programme spend) R652m expenditure on youth contractors/service providers (12% of total programme spend) R3.554bn BBBEE expenditure (63% of total programme spend) A total of 34,534 work opportunities were created by IDT in its social infrastructure programmes In all IDT Social Infrastructure programmes the following was achieved: R1.035bn contract value was awarded to women contractors/service providers (18% of total programme spend) R652m expenditure on youth contractors/service providers (12% of total programme spend) R3.554bn BBBEE expenditure (63% of total programme spend) A total of 34,534 work opportunities were created by IDT in its social infrastructure programmes

8. Total IDT Schools Infrastructure Programmes 2013/14

9. IDT New/Replacement Schools Programmes – 2013/14

10. IDT Schools Infrastructure Programmes – Water/Sanitation - 2013/14

11. IDT Schools Infrastructure Programmes – Renovations/ Additions 2013/14

12. IDT Participation in SIP 13 IDT has been appointed as one of the Implementing Agents by DBE under the ASIDI programme Appointment relates to construction work in 52 schools (10 in FS and 42 in EC). IDT appointment for ASIDI EC schools includes 27 schools to be constructed using ACMs Construction work in schools is largely upgrades of existing mud and inappropriate schools entailing additions and replacements IDT also appointed in KZN, EC, LP and NW by DBE to upgrade/install water and sanitation facilities in schools The IDT has been advised of the PICC intention to appoint it as a co-coordinator with DBSA for SIP 13. This, however, has not yet materialised IDT has been appointed as one of the Implementing Agents by DBE under the ASIDI programme Appointment relates to construction work in 52 schools (10 in FS and 42 in EC). IDT appointment for ASIDI EC schools includes 27 schools to be constructed using ACMs Construction work in schools is largely upgrades of existing mud and inappropriate schools entailing additions and replacements IDT also appointed in KZN, EC, LP and NW by DBE to upgrade/install water and sanitation facilities in schools The IDT has been advised of the PICC intention to appoint it as a co-coordinator with DBSA for SIP 13. This, however, has not yet materialised

13. Challenges and Conclusion Shortcomings in infrastructure delivery planning often resulting in non alignment between funding and delivery Timeous transfer of programme funds to implementing agents resulting in undue delays in payment of service providers Service quality degeneration in the built environment particularly in the professional consulting space i.e. Architects, Engineers & Quantity Surveyors Generally concerning levels of corruption in the country often manifests in collusions in the delivery value chain Long term sustainability uncertainty of the IDT i.e. if funding is not secured, the R20bn IDT portfolio managed for government might suffer Shortcomings in infrastructure delivery planning often resulting in non alignment between funding and delivery Timeous transfer of programme funds to implementing agents resulting in undue delays in payment of service providers Service quality degeneration in the built environment particularly in the professional consulting space i.e. Architects, Engineers & Quantity Surveyors Generally concerning levels of corruption in the country often manifests in collusions in the delivery value chain Long term sustainability uncertainty of the IDT i.e. if funding is not secured, the R20bn IDT portfolio managed for government might suffer

14. Alternative Construction Methods (ACMs)

15. What are ACMs? Alternative Construction Methods (ACM) use materials and methods that are not conventional, i.e. not brick and mortar. ACMs are Agrément SA certified complete building systems (from sub-structure to roof) ACMs are generally panelised systems Alternative Construction Methods (ACM) use materials and methods that are not conventional, i.e. not brick and mortar. ACMs are Agrément SA certified complete building systems (from sub-structure to roof) ACMs are generally panelised systems

16. Use of ACMs For an ACM to be used in the public sector it must be certified by Agrément The Certificate refers to a Quality Control Manual that ensures the system is installed according to the standards Departure from the conditions of the Certificate could invalidate the Certificate, and make the system non-compliant with Agrément, in which case an Occupation Certificate may be refused by the Local Authority ACM contractors need to be licensed by the certificate holder For an ACM to be used in the public sector it must be certified by Agrément The Certificate refers to a Quality Control Manual that ensures the system is installed according to the standards Departure from the conditions of the Certificate could invalidate the Certificate, and make the system non-compliant with Agrément, in which case an Occupation Certificate may be refused by the Local Authority ACM contractors need to be licensed by the certificate holder

17. Design ACM methods can be applied to any design. However, to achieve design flexibility using manufactured systems requires that maximum use of the kit is made, i.e., the design must follow the kit, not the kit the design. This requires a new design approach, one that is very disciplined with regard to dimensional co-ordination, modularity, size and shape, and jointing, if the kit is to be maximised and wastage reduced. ACM methods can be applied to any design. However, to achieve design flexibility using manufactured systems requires that maximum use of the kit is made, i.e., the design must follow the kit, not the kit the design. This requires a new design approach, one that is very disciplined with regard to dimensional co-ordination, modularity, size and shape, and jointing, if the kit is to be maximised and wastage reduced.

18. Energy efficiency Manufactured systems will generally out-perform conventional brick and mortar systems when it comes to energy efficiency. Most panelised systems make use of insulated cores that offer higher thermal resistance values than conventional construction. Furthermore it is possible to achieve improved air- tightness which improves the energy efficiency of the building. Manufactured systems will generally out-perform conventional brick and mortar systems when it comes to energy efficiency. Most panelised systems make use of insulated cores that offer higher thermal resistance values than conventional construction. Furthermore it is possible to achieve improved air- tightness which improves the energy efficiency of the building.

19. Environmental Considerations ACMs are generally more environmentally friendly because the materials are: Inert (no off-gassing or flaking) Safe (no toxins) Recyclable (steel) Resource efficient (minimum waste) Environmentally friendly (less cement, aggregates and water used) ACMs are generally more environmentally friendly because the materials are: Inert (no off-gassing or flaking) Safe (no toxins) Recyclable (steel) Resource efficient (minimum waste) Environmentally friendly (less cement, aggregates and water used)

20. Local Economic Contribution Materials – the local economic contribution is dependent on the type of ACM but typically the majority of building materials (by value) are conventional and can be sourced locally Labour – the construction method is labour-intensive and the larger portion of labour cost can be spent on local labour in the erection of the ACM as well as in conventional skilled labour such as plastering and painting The choice of ACM should be influenced by the availability of local materials and labour to maximise local economic contribution ACMs promote local job creation but with differentiated distribution (in factory and on site). Site job opportunities are however for shorter periods ACMs promote industrialisation and hence contribute to decent job creation Materials – the local economic contribution is dependent on the type of ACM but typically the majority of building materials (by value) are conventional and can be sourced locally Labour – the construction method is labour-intensive and the larger portion of labour cost can be spent on local labour in the erection of the ACM as well as in conventional skilled labour such as plastering and painting The choice of ACM should be influenced by the availability of local materials and labour to maximise local economic contribution ACMs promote local job creation but with differentiated distribution (in factory and on site). Site job opportunities are however for shorter periods ACMs promote industrialisation and hence contribute to decent job creation

21. Benefits arising from the use of ACMs Quality is generally higher but at least equivalent to conventional methods Facilities can be delivered more quickly than with conventional methods Construction costs are lower than with conventional methods Thermal efficiency is often better but is at least equivalent to conventional methods Delivery of materials is made easier with panelised systems (less and lighter) than conventional methods Quality is generally higher but at least equivalent to conventional methods Facilities can be delivered more quickly than with conventional methods Construction costs are lower than with conventional methods Thermal efficiency is often better but is at least equivalent to conventional methods Delivery of materials is made easier with panelised systems (less and lighter) than conventional methods

22. Benefits arising from the use of ACMs - cont Performs technically (weatherproofing,) as well if not better than conventional methods Environmentally more sustainable (water, energy, material efficiency) than conventional methods Contributes towards local economic growth through labour and material acquisition Up-skills construction industry Local skills transfer (site fabrication and assembly) Performs technically (weatherproofing,) as well if not better than conventional methods Environmentally more sustainable (water, energy, material efficiency) than conventional methods Contributes towards local economic growth through labour and material acquisition Up-skills construction industry Local skills transfer (site fabrication and assembly)

23. Limitations of ACMs Long-term durability and life cycle cost of the ACMs under local conditions has not been tested Design must take into consideration the specific nature of the ACM (e.g. panelised system) Once-off use of ACM in an area limits the benefits of skills transfer and the opportunity of utilisation of acquired skills More advocacy work is still required to promote social acceptance, but the initial response has been positive Long-term durability and life cycle cost of the ACMs under local conditions has not been tested Design must take into consideration the specific nature of the ACM (e.g. panelised system) Once-off use of ACM in an area limits the benefits of skills transfer and the opportunity of utilisation of acquired skills More advocacy work is still required to promote social acceptance, but the initial response has been positive

24. Conclusions: ACMs ACM offers distinct advantages over conventional construction in relation to speed, cost and quality Considering the maintenance intensive nature of ACMs it seems likely that conventional would outperform ACMs in life cycle cost and life span ACMs should be considered by the public sector as a feasible alternative to enhance delivery of school infrastructure, where urgency is a primary factor ACM offers distinct advantages over conventional construction in relation to speed, cost and quality Considering the maintenance intensive nature of ACMs it seems likely that conventional would outperform ACMs in life cycle cost and life span ACMs should be considered by the public sector as a feasible alternative to enhance delivery of school infrastructure, where urgency is a primary factor

25. Financial Overview The IDT is currently faced with the uncertainty of its future financial sustainabilit.y It requires short- to medium-term (two to three years) funding from National Treasury and the support from Treasury to increase the level of the management fees it charges client departments. The investment fund which has provided the means of funding a proportion of the operational expenditure has been almost depleted. Without this support, the IDT, is not a going concern. The IDT is currently faced with the uncertainty of its future financial sustainabilit.y It requires short- to medium-term (two to three years) funding from National Treasury and the support from Treasury to increase the level of the management fees it charges client departments. The investment fund which has provided the means of funding a proportion of the operational expenditure has been almost depleted. Without this support, the IDT, is not a going concern.

26. Financial Overview The Department of Public Works is currently driving the preparation of the business case and mandate for the IDT, and is interacting with Treasury on this process. It is essential that the process is concluded as quickly as possibleso as not to disrupt the ability of the IDT to deliver on its programme management functions. The Department of Public Works is currently driving the preparation of the business case and mandate for the IDT, and is interacting with Treasury on this process. It is essential that the process is concluded as quickly as possibleso as not to disrupt the ability of the IDT to deliver on its programme management functions.

27. Financial Overview It is anticipated that the IDT will no longer be in a position to take on all programmes offered to it in the future but will need to be selective in the work it does undertake – one of the determining factors will be the level of management fees recovered from the programmes, with the emphasis being on social infrastructure programmes. The efficiency ratio (operational costs expressed as a percentage of programme expenditure) has reflected significant improvement over the past four years – from 20% to 6%. It is anticipated that the IDT will no longer be in a position to take on all programmes offered to it in the future but will need to be selective in the work it does undertake – one of the determining factors will be the level of management fees recovered from the programmes, with the emphasis being on social infrastructure programmes. The efficiency ratio (operational costs expressed as a percentage of programme expenditure) has reflected significant improvement over the past four years – from 20% to 6%.

28. Financial Overview This ratio indicates that the IDT has reached a point where its resources are being stretched to a level which is inherently risky and could result in a drop in quality and performance. The optimum efficiency ratio is considered 8%.

29. Thank You