1. The Performance of the Department of Public Works (4 th Quarter) South Africa Works because of Public Works PRESENTATION TO THE PORTFOLIO ON PUBLIC WORKS PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA CAPE TOWN 02 JUNE 2015 GRC - M&E

2. 2 Contents 1.Purpose 2.Methodology in the treatment of quarterly performance information 3.Programme Performance 4.Performance Challenges 5.General Remarks

3. 3 Purpose Purpose of the Presentation by the Department of Public Works -To reflect on the 4 th Quarter Performance and Financial information of the Department of Public Works in the financial year 2014/15 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 4 th Quarter Performance and Financial performance of the Department for the financial year 2014/15.

4. 4 Methodology of Assessing the Quarterly Reports Key Focus of quarter reports Adherence/Compliance to the Policy framework for monitoring, reporting and evaluation of performance information in the Department of Public Works and other statutory requirements Effective use of the M&E toolkits to measure and judge progress (Actual versus Target) in order to learn, improve reporting, innovate and adapt to change Encourage the use of quality performance information for decision making and resource management Project the various related components of Performance Information (M&E System) - for example, the inputs, processes, activities, outputs, outcomes, and impacts that constitute projects, programmes, and services To test the appropriateness of the indicators To provide an assessment on the overall performance of the Department To test the inputs – finance, capacity and policy on the functioning of the Department Assist the oversight bodies such as parliament with up-to-date performance information that will assist in their oversight responsibilities

5. 5 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 GoalsGovernment 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 growthOutcome 4 - Decent employment through inclusive economic growth Contribute towards comprehensive rural developmentOutcome 7 - Contributing towards Government’s objective to develop rural areas

6. 6 This programme serves to provide strategic leadership and support services, including for the accommodation needs and overall management of the Department of Public Works. It is responsive to meet strategic goal 4 – Good Corporative governance to support effective and efficient service delivery. Sub-Programmes Internal Audit and Investigation Services Strategic Management Unit Monitoring and Evaluation Intergovernmental Relations Finance and Supply Chain Management Corporate Services

7. 7 Highlight/Achievement – Programme One: Administration The sub-programmes are largely supportive in nature and play a critical role in enabling the core business of the Department to achieve its objectives. Highlights/Achievements Tabling of the Annual Performance Plan and Strategic Plan– these plans spell out the strategic and operational objectives of the Department. They serve to guide the deliverables of the Department. Updated Risk Registers - Progress made on the implementation of action plans in the risk registers – the registers detail all the risks, corrective actions and the extent to which risks are mitigated in the Department. Governance Arrangement – Improved inter-governmental relations including meeting and discussions at NEDLAC of Public Works related matters. Also, the Department discussed the quarter performance of the Entities reporting to the Minister to reflect on the contributions to the mandate of the Department

8. 8 Cont. Reduction in Irregular Expenditure - 9% reduction against a 5% target. Irregular expenditure has been one of the major challenges in the Department for a long time. Efforts to significantly reduce irregular expenditure are now being realised. Payment of invoices within 30 days - 87% compliant invoices settled within 30 days for the DPW and 63% for PMTE. This is important not as a compliance requirement only but also as means strengthen and empower suppliers and boost the economy Skills development programmes - 776 beneficiaries participating in DPW skills development programme, 150 Young Professionals, 350 Interns, 69 Learners (Schools Programme), 157 Bursary Holders and 50 Management Trainees Approved HR Plan – the plan seeks to address the HR-related issues affecting the Department. This plan includes detailed action plans on recruitment and skills development initiatives

9. 9 This programme is the largest and core programme of the Department of Public Works and appropriates a large percentage of the departmental budget. It provides and management government’s immovable property portfolio in support government social, economic, functional and political objectives Sub-Programme Strategic Asset Investment Analysis Project and Professional Services Inner-City Regeneration Operations Management Key Accounts management Prestige Management

10. 10 Programme Two: Programme Two: Immovable Asset Management The strategic objective of this programme is to provide leadership in effective and efficient Immovable Asset Management and in the delivery of infrastructure programmes Highlights/Achievements Land Parcels Vested - 2 750 land parcels confirmed ownership (vested). This achievement was realised despite the fact that a significant number of title deeds and Surveyor General Diagrams are not in a possession of DPW for properties to be vested ICR - Accommodation solution for Polokwane urban centre completed. This is part of the initiatives in providing accommodation solutions for project implementation in other metros and district municipalities (outside Tshwane) Service Level Agreements - 8 Service level agreements submitted to identified User Departments, i.e. DOD, STATS SA, SAHRC, DAFF, DWA, DRDLR, DSD, DEA.

11. 11 This programme ensures the creation of work opportunities and the provision of training for unskilled, marginalised and unemployed people in South Africa by coordinating the implementation of EPWP

12. 12 EPWP The programme plays, largely, a policy and coordinating function with the rest of government. With a function of this nature, challenges such timeous and accurate data and information are a common element Highlights/Achievements Work Opportunities (WO) – a total of 990 920 work opportunities were created through the labour intensive approach aligned to the EPWP business plan Work Opportunities (WO) created by Municipalities - 594 552 Work opportunities created in rural municipalities. Beneficiaries trained – a total of 1273 learners trained through the National Skills Fund.

13. 13 This programme promotes the growth and transformation of the construction and property industries, promote uniformity and best practice in construction and immovable asset management in the public sector

14. 14 Programme 4: Property and Construction Policy This programme ensures transformation and regulation of the Construction and Property industries to ensure economic growth and development. It is a dependent programme and largely a process or chain-event driven in nature. It often experiences challenges such as delays in stakeholder feedback on a particular policy and political considerations. It also depends on the Parliamentary programme. Its function has huge impacts in the transformation of the built environment. Highlights/Achievements The Department continues to participate in Parliamentary processes towards the enactment of Agrément South Africa (ASA) Bill and in addition participation towards enactment of Expropriation Bill is underway

15. 15 This programme provide for various services, including compensation for losses on the Government assisted housing scheme and assistance to organisations for the preservation of national memorials. Meet the protocol responsibilities for state functions.

16. 16 Programme 5: Programme 5: Auxiliary and Associated Services Highlights/Achievements Infrastructure support - Infrastructure support provided to 6 Prestige Events against a target of 2 Prestige Events. This represents significant over achievement

17. 17 Performance Challenges There are challenges with the appointment of service providers in areas where certain scarce skills are required. This then contributes to delays in achieving the set targets or under- performance In areas (example immovable Asset management) where there are dependencies from external stakeholders or departments, delays or non corporation is often a challenge resulting in non- achievements of targets. This is also applicable to policy and EPWP. The underperformance in projects was characterised by a number of delays during planning stage resulting in the extension of contract duration Capacity and Budget constraints in some areas continue to be a hindrance to performance. There are challenges with the current business model/value chain. This requires a review of the individual units’ value chains and craft an integrated business model that will address fragmentation and duplications. The value chain will also assist in addressing the skewness between core and support areas. This process is underway through the development of a Service Delivery Model as well as the implementation of the Infrastructure Delivery Management System (IDMS)

18. 18 General Remarks While acknowledging the challenges in the Department, there is some improvement in other programmes The Department has taken into consideration the recommendations by the Portfolio Committee on Public Works, Parliament of South Africa regarding the quality of the reports Throughout the financial year, while taking these contributions into account, the Department continues to find ways of improving in areas of concern and effectively contribute to service delivery

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21. DPW Summary expenditure per economic classification DPW Expenditure per Programme Content 21

22. Summary Expenditure per Economic Classification 22 Summary Expenditure Report per economic classification – for the financial year ended 31 March 2015

23. 23 Summary expenditure per economic classification for the financial year ended 31 March 2015

24. Notes to Expenditure Summary per economic classification 24 Current year Actual Exp. vs AppropriationCurrent year vs prior year analysis Compensation of employees  Under spending of R22 million relating to vacant positions that were filled towards the latter part of the financial year.  EPWP (Programme 3) – R17 million  Administration (Programme 1) R3.6 million  Property and Construction Industry (Programme 4) R1 million  Average salary increase of 6 %  Average number of employees increased from 5 710 (March 2014) to number of 5775 (March 2015). Goods and services – Office accommodation  Increase on expenditure due to:  Annual inflationary increase in lease rentals.  Annual increase in municipal services Goods and services – Maintenance  Reclassification of expenditure (maintenance and repairs) adjusted from capital infrastructure budget to account for it under current expenditure)  Actual expenditure as at the end of the financial year is R128 million Goods and services – Other  Decreased on expenditure linked to exited and reduced commitments on expenditure relating to some of the turnaround projects compared to the previous financial year.

25. Notes to Expenditure Summary per economic classification 25 Current year Actual Exp. vs AppropriationCurrent year vs prior year analysis Transfers and subsidies  Transfers payments in line with the allocations  Under spending of R1.2 million under Provinces and municipalities for EPWP Integrated grant for Provinces. Withheld payments to 2 Limpopo Provincial Government department due to non-compliance to Division of Revenue (DoRA)  Over spending under Non-profit institution for Agrement SA (R11 million). Funds are allocated under goods and services whilst expenditure is accounted for under transfers.  Decrease on expenditure due to reduced allocation to Independent Development Trust. R50 million transferred in 2014/15 compared to R100 million transferred in 2013/14. Buildings and other fixed structures  Under spent budget due to late receipt of invoices.  Request for roll over submitted to Treasury.  Significant decrease in current year due to maintenance and repairs expenditure reclassified to current expenditure (Goods and services) Machinery and equipment  Significant increase in current year due to payments of prior year accruals on IT infrastructure.

26. Notes to Expenditure Summary 26 Transfers and subsidies relates to:

27. Summary Expenditure per Programme 27 Summary Expenditure per Programme for the financial year ended 31 March 2015

28. 28 Summary expenditure per programme for the financial year ended 31 March 2015

29. Notes to Expenditure Summary per programme 29  Programme 1 Compensation of employees’ under spending of R3.6 million due to vacant positions filled in the latter part of the financial year.  Programme 2 The under spending of R71 million in Programme 2 relate to late invoicing. The department is engaging with National Treasury for a roll over.

30. Notes to Expenditure Summary per programme 30  Programme 3 Compensation of employees underspending by R17 million due to vacant positions within EPWP that were only filled in the latter part of the financial year. Goods and services underspent by R2.8 million by the end of the financial year. Commitments and accruals relating to unspent funds were reported at the end of the financial year. Transfers and subsidies under-spent by R1.2 million, and relate to transfer payments to Provinces for EPWP Integrated Incentive Grant. Funds were withheld for 2 Limpopo Provincial Departments due to non-compliance to the Division of Revenue Act by the provinces. Approval for the withholding of funds was granted by National Treasury.  Programme 4 Compensation of employees underspending of R1 million due to vacant positions within the branch of which some of the posts were only filled in the latter part of the financial year. Goods and services underspending of R12.7 million include an original R11 million budget allocation to Agrement SA which was subsequently paid from transfers and subsidies. Transfers and subsidies over spending of R10.8 million is attributable to the payment made to Agrement South Africa.

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32. 32 PMTE Budget and Expenditure Report as at the end of the year Guideline: 100%

33. Financial Performance of the PMTE 33 BudgetClaimed to date % Budget vs Claimed Actual Received/ Paid % Actual Received / Claimed R’000 % % Revenue8 201 8578 441 266103%7 814 53892% State Accommodation Charges 3 631 172 100%3 578 35399% Private Accommodation Charges 3 706 9303 954 640106%3 398 27586% Management Fees (Municipal) 190 383182 08296%164 53890% Augmentation 673 372 100%673 372100% Expenditure 8 158 831 Cleaning and gardening 186 815 Private Leases 3 808 838 Rehab, Repair and Maintenance 3 211 320 Property Rates 801 817 Municipal Services (Arrears) 244 Other 149 796 Profit Vs Net Cash Movement:31 March 15 282 434-344 293 Cumulative Bank Balance: 31 March 15 -660 549

34. Summary Expenditure per Economic Classification 34 2014/152013/14 Classification % of total budget Allocation R’000 Expenditure R’000 Exp. % Current Payments Including Cleaning and Gardening, Operating Leases, Maintenance, Repair and Renovations 77% 6,432,7066,394,82499%94% Capital Payments Rehabilitation, Repair and Renovations of a Capital nature 12% 973,758962,19099%84% Transfer Payments Property Payments 11% 960,162801,81784%73% Total8,366,6268,158,83198%91%

35. Summary Expenditure per Objective 35 204/152013/14 Objective*% of Total Allocation R’000 Expenditure R’000 % Exp% Exp 2013/14 Cleaning and Gardening Services 2%202,073186,81592%70% Operating Leases45%3,801,0343,808,838100% Repair and Renovations25%2,126,6462,101,25399%84% Rehabilitation, Repair and Renovations (Capital) 12%973,758962,19099%84% Repairs and Renovations (Current) 14%1,152,8881,139,06399%84% Maintenance13%1,110,067 100% Property Rates11%960,162801,81784%73% Corporate Services2%166,644150,04190%37% Total8,366,6268,158,83198%91% * Note that the PMTE 2014/15 budget is reported on per Objective and not per Programme in accordance with its published ENE structure

36. Notes to the expenditure 36 Guideline expenditure as at the end of March 2015: 100% Cleaning and gardening: The expenditure was lower than expected at the end of the fourth quarter (although it was significantly better than the previous year) due to some contracts being awarded later than originally planned. The expenditure will improve in the next year due to contracts now being in place Operating leases: The budget was fully spent Repair and Renovations: 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 improved significantly compared to the previous financial year

37. Notes to the expenditure - continued 37 Maintenance: This expenditure item represents maintenance of a current nature and consists mainly of day-to-day repairs and service contracts (repeated maintenance to installations). The allocation was fully spent. Property Rates: Expenditure on this item has improved significantly due to interventions to identify and process outstanding claims from municipalities. Not all claims were processed before year-end, hence the under-expenditure. All outstanding claims will be settled early in the new financial year. Corporate Services: This expenditure item relates mainly to computer services. Some of the ordered equipment was only delivered after the financial year-end.

38. 38 PMTE Debt and Revenue Management Report

39. Debtors Age Analysis – 2014/15 39 Categories Current30 Days>60 DaysTotal 2014/15 Prev YearsTotal R’000 Accommodation (State Owned) 00 52,818 14,29367,112 Accommodation (Private) 237,197106,352208,544552,093774,8791,326,972 Municipal Services 216,5314,359131,378352,26897,907450,175 Client Capital Recoveries 306,23637,14745,622389,007-96,812292,195 Client Current Exp Recoveries 58,6144,52527,93991,078269,807360,885 Total 818,578152,383466,3011,437,2621,060,0742,497,336 Percentage 33%6%19%58%42%

40. Department of Public Works (National ) Head Office: Public Works CGO Building Cnr Bosman and Madiba Pretoria Central Private Bag X65 Pretoria 0001 Website: http://www.publicworks.gov.zahttp://www.publicworks.gov.za 40 Thank You