Department of Public Works' Performance in 1Q 2015/16

1. South Africa Works because of Public Works The Performance of the Department of Public Works (1st Quarter 2015/16) PRESENTATION TO THE PORTFOLIO ON PUBLIC WORKS PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA CAPE TOWN 22 SEPTEMBER 2015 OFFICE OF THE DIRECTOR-GENERAL

2. Contents To • Purpose • Methodology in the treatment of quarterly performance information • Programme Performance – Part A: DPW and Part B: PMTE • Performance Challenges • Financial Information (DPW and PMTE)

3. Purpose • Purpose of the Presentation by the Department of Public Works • To reflect on the 1st 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 1stQuarter 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

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 Work, i.e. custodianship of the State’s immovable assets and provision of accommodation to Government departments; • 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 Improvement Model processes and risk and performance management. • Priority Four: the Policy Review – working with all stakeholders, particularly the provinces, to develop a new Public Works Sector policy guideline (White Paper) culminating in the enactment 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 built environment professions better reflects the demographics of South Africa.

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. PART A: DPW PERFORMNANCE INFORMATION (Pages 1-13 of the Word Document)

8. DPW Programme 1 Administration • 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 • Investigation Services • Finance and Supply Chain Management • Corporate Services

9. Highlight/Achievements – Programme One: Administration • Reduction in Irregular Expenditure - 44% (against a 5% target) of reduction of irregular expenditure baseline. 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 - 94% of compliant invoices were settled within 30 working days. This is important, not as a compliance requirement only, but also as means strengthen and empower suppliers and their participation in boosting the economy. • Prioritised funded Vacancies - 100% funded and prioritised vacancies advertised as per Recruitment Plan, 46 Positions advertised, 103 Appointments made, 20 Promotions, 3 external transfers, 1 internal transfer, 32 additional appointments . • Skills development programmes - 1237 (Beneficiaries participating in the DPW Skills Development Programme  in the following areas - 90 Young Professionals (180%), 700 Interns (603%), 52 Learnerships (116%), 262 Management Trainees (3275%), 133 Artisans (266%).

10. Highlight/Achievement – Programme One: Administration. • Investigations imitated within 30 days - 100% (9 of 9) investigations finalised within 30 days of reported allegations. The Department’s Fraud Prevention Strategy, Anti-Fraud and Corruption Policy are now in place and a whistle Blowing Policy has been approved with the sole aim of encouraging whistleblowing on activities associated with fraud and corruption. • Fraud and Corruption cases – 100% (3 of 3 cases) reported fraud and corruption related cases were subjected to disciplinary processes.

11. Programme 2 Inter-Governmental Coordination • This programme seeks to promote sound sectorial intergovernmental relations and strategic partnerships and ensure coordination of service delivery within the public works sector • Sub-Programme • Inter-Governmental Relations and Coordination • Monitoring, Evaluation and Reporting of Public Works Sector

12. Programme Two:Inter-Governmental Coordination • This is a new programme with the following objectives: • Drive Accountability Management Committee as a mechanism to enforce compliance; • Planning for successful outcomes through long and short term strategic planning processes towards a 5 Year Strategic Plan and Annual Performance Plan; • Service delivery improvement planning and monitoring; • Quarterly monitoring, evaluation and reporting of organisational performance; • Annual strategic and operational risk management processes. • In the process numerous meetings in this regard have been coordinated to give effect to this new programme.

13. Programme 3 Expanded Public Works programme 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

14. 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 - 222 564 (out of a target of 300 000) work opportunities reported in the EPWP reporting system aligned to the EPWP Business Plan (phase 3). • Work Opportunities (WO) – a total of 6 900 (out of a target of 300 000) work opportunities were created through the labour intensive approach aligned to the EPWP business plan. The introduction of the new system has resulted in the slow reporting of many public bodies hence the figures reported. Training is continuous, which will assist to improve the figures moving forward. • Beneficiaries trained – a total of 1 428 learners trained through the National Skills Fund. The overachievement in number of participants, is due to the various approved procurement models currently being used for contracting of accredited training providers for actual training implementation i.e.Head Office Procurement Model, Decentralization Procurement Model, CATHSSETA Procurement Model, AgriSETAProcurement Model  & merSETAProcurement Model. 

15. Programme 4 Property & Construction Industry Policy Regulations 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

16. 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 • Public Works White Paper Research on identified themes was to be undertaken this quarter. Progress has been made but full swing research not yet completed. • Bill to manage the disposal of immovable assets under the custodianship of the Department – the Department has developed a Draft discussion document for consultation with stakeholders. Further processing of the draft will commence with the inclusion of inputs from stakeholders • Public Works General Laws Amendment and Repeal Bill - much progress has been made in this regard. Gazetting of the Bill will take place after scrutiny of the Bill by Office of the Chief State Law Adviser (OCSLA)

17. Programme 5 Prestige Policy This programme’s purpose is to set policy, norms and standards for the provision of prestige accommodation and meet the protocol responsibilities for State functions

18. Programme 5: Auxiliary and Associated Services • Highlights/Achievements • Policy guidelines on installation, management and maintenance of security infrastructure national key points - Draft policy guideline has been completed. • Service level Agreement (SLA) - Draft SLA for Presidency completed . • Category III clients and Public Works standards and norms – no research report on Prestige norms and standards completed. • Prestige Events - 4 of 6 events supported with moveable infrastructure (1 Awards event postponed to Sept 15).

19. PART B: PMTE PERFORMANCE INFORMATION (Pages 1-11 of the Word Document)

20. Programme 1 Administration • This programme provides leadership, strategic management, governance and support to the Property Management Trading Entity (PMTE). . • Sub-Programmes • Management and Leadership • Operations Support Services • Financial and Accounting Management • Supply Chain Management

21. Highlight/Achievements • Debtors Balance - 65.5% (against 60% target) of invoices issued during this quarter were collected within 60 days. • Payment of invoices within 30 days - 73% of compliant invoices were settled within 30 working days. This is important not as a compliance requirement only, but also as means to strengthen and empower suppliers and their participation in boosting the economy.

22. Programme 2 Programme 2: Real Estate Investment • To achieve an efficient and competitive Real Estate Portfolio for the State through effective planning, analysis and informed investments. It aims at achieving an efficient, effective and competitive State Property Portfolio in order to provide cost effective accommodation to other State Departments so they derive costs savings, meet their service delivery objectives and to realise the preservation and growth of the State’s asset portfolio • Sub-Programme • User Demand Management • Planning & Precinct (Spatial) Development Services • Property Performance Management • Investment Management

23. Highlight/Achievements • User Demand Management - seeks to determine client needs develop comprehensive knowledge of client requirements in line with their service delivery priorities – • No User Departments Framework Agreements concluded for the use of freehold property in the 1st Quarter • Planning and Precinct Development services – plan and develop integrated government precincts in urban and rural areas including planning the development of harbours for improved government accommodation and enhanced delivery and service • Preliminary investment decisions - 80% (against 75% target) preliminary investment decisions approved within 3 months from date of request (8 out of 10 requests) and 9 backlog investment decisions completed in the 1st Quarter. • In terms of investment solutions for construction within the stipulated period – No investment solutions were concluded. • No requests for Operation Phakisa initiatives received within the 3 month period. • No requests for Fishing Harbours infrastructure received within the 9 month period.

24. Programme 3 Programme 2: Real Estate Investment • To provide effective and efficient delivery of accommodation needs for DPW and User Departments through construction • Sub-Programme • Construction Project Planning • Construction Project Management

25. Highlight/Achievements • Work opportunities created through construction projects - 3 841 (against a target of 2 000) work opportunities created through construction projects. This was due to increased recruitment drive of EPWP beneficiaries on projects. • Completed projects within agreed construction period – 23 (against 16 targeted) projects completed within agreed construction period. This is a measure of efficiency. • Completed projects within approved Budget – 23 (against 16 targeted) projects completed within approved budget.

26. Programme 4 Programme: 4: Real Estate Management • The purpose of the programme is to timeously provide and manage suitable accommodation in support of Client needs to meet their service delivery objectives • Sub-Programmes: • Management of Freehold Property • Land Administration & Management • Surplus Freehold (Revenue) Management • Leasehold Management

27. Highlight/Achievements • Lease agreements reviewed - 99% lease agreements reviewed according the rental rate per square metre and escalations. • Leases renewed before expiry date - 40% (against 25% for the quarter) leases renewed before expiry date. • Leased accommodation - 28% against a target of 42% leased accommodation (lease in) provided within agreed time frame. • Surplus Freehold - 75 (or 25% of 300) surplus freehold property allocated towards BBBEE.

28. Programme 5 Programme 5: Real Estate Information and Registry Services • The purpose of the programme is to develop and manage a complete, accurate and compliant Immovable Asset Register to meet service delivery objectives for the State, Department and Property Management Trading Entity (PMTE) business requirements. Further, it seeks to provide leadership, guidance and support to National, Provincial and Local Government custodians of State assets to ensure use of applicable standards in accounting for immovable assets and management of IARs and develop, maintain and report on a consolidated National database of State properties • Sub-Programmes: • Asset Registry Services • Conveyancing

29. Highlight/Achievements • Verification of Assets - 0% of Real Estate Assets (annually identified after December) verified in this quarter. • Conveyancing - 0% Real Estate transactions conveyancedwithin 180 Days. • Coastal reserve - 0% of coastal reserves under the custodianship of Public Works mapped. • Provincial Real Estate Asset Register incorporated into the single repository - No Approved Data Migration Plan. However, much progress has been achieved.

30. Programme 6 Programme 6: Facilities Management • The purpose of the programme is to ensure that immoveable assets used by government departments and the public, are optimally utilised and maintained in a safe, secure healthy and ergonomic environment while contributing to job creation, skills development and poverty alleviation. • Sub-Programmes: • Scheduled Maintenance • SHERQ Management • Unscheduled Maintenance

31. Highlight/Achievements • Energy consumption – 18 065 380 reduction in kilowatt-hour (Kwh) usage achieved on energy consumption. • Water Consumption – 0 reduction in kilolitre (Kl) usage achieved on water consumption. • Unscheduled maintenance - 30% efficiency (turnaround time) for unscheduled maintenance on freehold property within 5 days. • Work opportunities created through maintenance programmes - 1 915 work opportunities created through maintenance programmes (DPW & EPWP).

32. Performance Challenges (DPW and PMTE) • 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 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 includes the facilities management contracts. • Efforts are being made to reach the Energy & Water Efficiencies and Waste Management as part of the Green Building Programme. • Generally, 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. Although this financial year, the Department is starting to experience some degree of coordinated activities.

33. Some Success Factors (DPW and PMTE) • Increased drive towards the achievement of EPW targets that cut across various units in the Department. This shows some degree of collaboration and a move towards a integrated value chain. • Implementation of a turnaround strategy coupled with continuous engagements with relevant stakeholders to improve performance of construction projects. • Continued engagement with contractors and setting parameters for non-performance, which may result in termination of the contracts & consultants and intervention meetings held with contractors to improve performance. • Overall, whilst the discussions are going ahead in terms of the Organisational Structure (DPW and PMTE), significant progress with identifying critical areas has been made. An informed strategy to capacitate the Department and PMTE is beginning to emerge. • Greater accountability through Governance structures that continuously seek innovative ways to improve performance.

34. Macro Service Delivery Model The service delivery model shows the key groups, how they will interact and how they will interface with internal and external service recipients in order to deliver the strategy

35. DPW FINANCIAL INFORMATION

36. Part B • Financial Information • DPW

37. Summary Expenditure per Economic Classification Summary Expenditure Report per economic classification – for the month ended 30 June 2015

38. Summary expenditure per economic classification for the month ended 30 June 2015

40. Notes to Expenditure Summary per economic classification

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

42. Summary Expenditure per Programme Summary Expenditure per Programme for the period ended June 2015

43. Summary expenditure per programme for the month ended 30 June 2015

44. Budget Allocation per Programme Chart - 2015/16

45. PMTE FINANCIAL INFORMATION

46. PMTE

47. PMTE Budget and Expenditure Report as at 30 June 2015 Guideline: 25%

48. Financial Performance of the PMTE

49. Summary Expenditure per Economic Classification

50. Summary Expenditure per Objective