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Portfolio Committee on Public Works 11 th March 2014 Cape Town

South Africa Works because of Public Works. Quarter 3 Report 2013/14 (Period October, November & D ecember 2013). Portfolio Committee on Public Works 11 th March 2014 Cape Town. I Public Works I CGO I Pretoria. Layout. Part A Performance Information Highlights of Programmes 1 - 5.

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Portfolio Committee on Public Works 11 th March 2014 Cape Town

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  1. South Africa Works because of Public Works Quarter 3 Report 2013/14 (Period October, November & December 2013) Portfolio Committee on Public Works 11th March 2014 Cape Town I Public Works I CGO I Pretoria

  2. Layout • Part A • Performance Information • Highlights of Programmes 1 - 5 • Part B • Financial Information • DPW • PMTE

  3. Purpose • Purpose of the Presentation by the Department of Public Works • To reflect on the 3rd Quarter Performance and Financial information of the Department of Public Works in the financial year 2013/14 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 3rdQuarter Performance and Financial performance of the Department for the financial year 2013/14.

  4. Methodology of Assessing the Quarterly Reports • 3 Phase Approach as per the Approved Department’s Policy Framework For Monitoring, Reporting and Evaluation of Performance Information 2013 and M&E Toolkit, PFMA and Framework for Strategic Plans and Annual Performance Plans • Phase 1 (Data Collection & Compliance) – 13th January 2014 – Submissions by all units • Phase 2 (Data Cleansing and Analysis) – 14th – 21st January October 2014 • Phase 3 (Accountability Process) – 23rd – 31st January 2014 • Key Focus • Adherence/Compliance to the Policy framework for monitoring, reporting and evaluation of performance information in the Department of Public Works • 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

  5. Programme 1 Administration (Pages 6 – 31) • 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 objective 6 of the Department of Public Works and has links with all four other departmental programmes. • Sub-Programmes • Internal Audit and Investigation Services • Strategic Management Unit • Monitoring and Evaluation • Intergovernmental Relations • Finance and Supply Chain Management • Corporate Services

  6. 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 • Fraud Awareness Workshops - (Internal Audit pages 7 - 9) • Functional Organisational structure that responds to the business of the Department (HRD– page 19) • Increased participation of employees in Employment Health and Wellness programmes such as • Screening for emotional and substance abuse • Debt Management • Physical Wellness (Gender – page 20) • Approved SCM policy accompanied by a series of workshops and consultations on the Framework for Acquisition and Contract Management (Finance and SCM – pages 29 - 31)

  7. Programme 2 Immovable Asset Management (Pages 32 - 56) • This programme is the largest programme of the Department of Public Works and appropriates at least 48 percent  of the departmental allocation budget. It provides and management government’s immovable property portfolio in support government social, economic, functional and political objectives. In line with the mandate of the Department of Public Works, this programme seeks to achieve the first four strategic objectives of the Department of Public Works • Sub-Programme • Strategic Asset Investment Analysis • Project and Professional Services • Inner-City Regeneration • Operations Management • Key Accounts management • Prestige Management

  8. 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 • Secondary Service Providers appointed in September 2013 to conduct physical verification on DPW's immovable assets resulting in 114% achievement in Q3 (Strategic Asset Investment Analysis – pages 34- 38) • Inspection reports (main & follow up inspections) for state and leased facilities and construction projects completed. A total of 1 943 or 109% (cumulative) inspections reports done for state and leased facilities and 279 or 196% inspection report done for construction projects. These over-achievements were a result of increased complaints from clients (Statutory compliance – pages 47 - 48) • Prestige Policy that spells all the standards and norms in their operations to fulfil its mandate completed - (Prestige management – page 55)

  9. Programme 3 Expanded Public Works programme (Pages 57 – 60) Programme 3 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. This programme focuses predominantly on the achievement of strategic objective 4

  10. Programme Three: EPWP • EPWP plays a critical role of : • Promoting an enabling environment for the creation of short and sustainable work opportunities that eventually contribute to the national goal of job creation and poverty alleviation. • Providing technical support to Municipalities in planning and implementing labour-intensive projects. • Highlights/Achievements • In the third quarter significant progress was made by municipalities in reporting their progress to the Department enabling the Department to reflect on a definite figure about the performance of the programme– 49% more that the planned quarter target(EPWP – page 58) • Also, a large number of work opportunities were created with substantial improvements in the EPWP participation among designated groups- however challenges are still being experienced in with People with Disabilities group (EPWP – page 59)

  11. Programme 4 Property & Construction Industry Policy Regulations (Pages 61 – 62) 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. This programme contributes to the realisation of strategic objectives 2, 4 and 5

  12. 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. Its function has huge impacts in the built environment. • Highlights/Achievements • The Built Environment Policy finalised and submitted for internal approval- (PCIPR – page 62) • Second draft of IDT Business Case developed - (PCIPR – page 62)

  13. Programme 5 Auxiliary and Associated Services (Pages 63 – 64 ) 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.

  14. Programme 5: Auxiliary and Associated Services • Highlights/Achievements • Infrastructure support provided to 2 planned & 6 unplanned Prestige Events - (AAS– page 64)

  15. General Remarks • While acknowledging the challenges in the Department, there is some improvement in the manner how the Department deals with performance information • 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

  16. Part B • Financial Information • DPW • PMTE

  17. CONTENT

  18. 1. Financial Performance Report 2013/14

  19. Summary Expenditure per Economic Classification

  20. Summary Expenditure per Programme

  21. Notes to the expenditure • The overall expenditure for the department as at the end of December 2013 is R4.3 billion and the expenditure is equivalent to 71% of the total adjusted allocation. • Compensation of employees’ expenditure for the month ended December is R1 billion and the amount spent is equivalent to 74% of the total adjusted allocation. Expenditure for compensation is within the guide line of 75% for the third quarter. • Goods and Services expenditure for the month ended December is R495 million and expenditure is equivalent to 57% of the total allocation. • Expenditure for Office Accommodation for the month ended December 2013 is R211 million, and expenditure is equivalent to 42% of the total allocation of R504 million. • Expenditure for transfers and subsidies for the end of December is R2.2 billion and expenditure is equivalent to 90% of the total allocation.

  22. Notes to the expenditure • Transfers and subsidies to the following institutions has been paid in full in line with the schedule: • Augmentation of Property Management Trading Entity R682 million • EPWP Non-state Sector R438 million • Construction Industry Development Board R72 million • Council for the Built Environment R37 million • Independent Development Trust R50 million • Commonwealth War Grave R18 million • Parliamentary Villages R8 million • Construction Education Training Authority R1.4 million • The following transfers have not been paid in full: • EPWP Integrated Grant to Municipalities R386 million • EPWP Integrated Grant to Provinces R327 million • EPWP Social Sector R239 million • The balance were paid between January and February 2014

  23. Notes to the expenditure • Infrastructure expenditure for the end of December is R279 million and expenditure is equivalent to 41% of the allocation of R 676 million. • Under spending of approximately R150 million is projected under the infrastructure budget. • A request for R50 million has been requested to be adjusted to Transfers and subsidies as additional funding to Independent Development Trust. • The request for the adjustment of funds to Independent Development Trust is in line with the financial constraints faced by the entity. • Machinery and equipment expenditure for the end of December is R50 million and expenditure is equivalent to 49% of the total allocation of R102 million .

  24. 2. Expenditure per programme

  25. Expenditure per Economic Classification: Programme 1

  26. Notes to the expenditure • The total expenditure for Programme 1 is R651 million and expenditure is equivalent to 56 % of the allocation for the programme. • Current payments • Compensation of employees expenditure is R173 million and expenditure is equivalent to 76% and the expenditure. The expenditure for compensation of employees is 1% higher than the guideline of 75%. • Goods and services expenditure is R247 million and expenditure is equivalent to 59% of the allocation of R385 million. • Expenditure for Goods and services under Office Accommodation is at R211 million which is 42% of the total allocation of R504 million • Transfers and subsidies • Transfers and services expenditure for R709 000 and expenditure is equivalent to 61% of the allocated budget of R1.1 million. • Payments for Capital Assets • Machinery and equipment expenditure is R19 million and expenditure is equivalent to 46% of the allocated budget of R40 million.

  27. Expenditure per Economic classification: Programme

  28. Notes to the expenditure • The total expenditure for Programme 2 is R2.1 billion and expenditure is equivalent to 65% of the allocated budget for the programme. • Current payments • Compensation of employees expenditure is R27 million and expenditure is equivalent to 74%. • Goods and services expenditure is R134 million and expenditure is equivalent to 50%. • Transfers and subsidies • The expenditure for transfers and subsidies is R855 million and expenditure is equivalent to 100% of the allocated budget. Funds to entities below have been paid in full in line with the drawings: • Council for the Built Environment R37 million • Commonwealth War Grave R18 million • CIDB R72 million • Aug Prop Man Trade Entity R682 million • Independent Development Trust R50 million • Parliamentary Villages R8 million

  29. Notes to the expenditure • Payments for Capital Assets • Infrastructure expenditure for the end of December 2013 is R279 million and expenditure is equivalent to 41% of the allocation of R676 million. • Under spending is projected in Infrastructure budget at the end of the financial year. • Adjustment of R50 million from Infrastructure to Transfers and subsidies for the Independent Development Trust has been made to National Treasury. • Machinery and equipment expenditure is R31 million and expenditure is equivalent to 52% of the allocated budget of R59 million.

  30. Expenditure per Economic classification: Programme 3

  31. Notes to the expenditure • Total expenditure for programme three is R1.6 billion and against the budget of R1.9 billion which is 80% of the allocated budget for the programme. • Current payments • Compensation of employees for programme three is R78 million and expenditure is equivalent 70%. Expenditure for compensation of employees is within the guideline of 75%. • Goods and services expenditure for the end of December is R86 million and expenditure is equivalent to 50% of the total allocation. A request to move R10 million from EPWP goods and services to Programme 2 for compensation of employees budget has been made to National Treasury. the requested funds is in line with the requested as per projected over spending on compensation of employees. • Transfers and subsidies • Transfers expenditures is R1.4 billion against the budget of R1.7 billion which is equivalent to 84% of the allocation. Expenditure for transfers and subsidies is in line with the payment schedule. • Payment for Capital Assets • Machinery and equipment expenditure for Programme 3 is R847 000 and expenditure is equivalent to 32% of the allocated budget of R2.6 million.

  32. Summary Expenditure per Economic Classification: Programme 4

  33. Notes to the expenditure • Total expenditure for programme four is R25 million which is equivalent to 69% of the adjusted budget allocation of R37 million. • Current Payment • Compensation of employees expenditure is R6.4 million and expenditure is equivalent to 60% of the total budget of R11 million. • Goods and services expenditure for December is R8.5 million and expenditure 33% of the allocated budget. • Transfers and subsidies • Transfers and subsidies expenditure is R10 million and expenditure is equivalent to 5213% of the allocated budget of R200 000. High expenditure relate to Agrement SA and expenditure is classified as irregular expenditure under transfers and subsidies since the budget is classified under goods and services. • Payment for capital Assets • Expenditure for machinery and equipment R39 000 and expenditure is equivalent to 31% of the allocated budget of R125 000.

  34. Summary Expenditure per Economic Classification: Programme 5

  35. Notes to the expenditure • Total expenditure for programme five is R39 million against the budget of R51 million which is equivalent to 77% of the allocated budget. • Current Payment • Goods and services expenditure for the end of December is R20 million and expenditure is equivalent to 73% of the allocated budget of R27 million. • Expenditure for goods and services relates to State Functions. • Transfers and subsidies • Expenditure for transfers and subsidies is R17 million and expenditure relates to payment made for Commonwealth Wargrave and Construction Education and Training Authority (CETA). • Payments for transfers and subsidies in this programme have been made in full.

  36. 3. Earmarked Budget and Expenditure

  37. Earmarked Budget and Expenditure

  38. Earmarked Budget and Expenditure

  39. PMTE: Financial Performance Report 2013/14

  40. Financial Performance of the PMTE

  41. Expenditure Analysis of the PMTE

  42. Expenditure Analysis of the PMTE • Expenditure trends against the overall budget are lower than the previous year, indicating that the budget may be underspent. • Cleaning and Gardening are at 51% expenditure against budget. • EPWP is busy with an initiative to spent an amount of R 15m before the end of the year in areas where it will have an impact on service delivery. • Leasing expenditure is slightly higher than the estimated budget for the year. This budget will be closely monitored to ensure that no over-expenditure takes place. • The Day-to-day maintenance budget is still under pressure. This will be closely monitored during the last quarter of the financial year and funding will be re-allocated from the Planned Maintenance budget if necessary.

  43. Expenditure Analysis of the PMTE • Expenditure against Planned Maintenance are lower than the guideline percentage of 75% • A straight line projection of the current expenditure level indicates a possible under-expenditure of R 359 m on this budget. • Funds will possibly be moved to the Day-to-day maintenance budget during the last quarter. • Expenditure against Property Rates (64%) this is not in line with the previous years’ trend. • The average expenditure for this time of the financial year is 75%. • The reason for the low expenditure is due to the R200 m added on this budget for the payment of arrears rates. • The expenditure against current accounts are in line with previous years and past trends • The amount allocated against “other” is mainly for the implementation of the Billing and Accounting system. The tender was awarded in November 2013 and expenditure will start during January 2014

  44. Planned Maintenance Budget per Region Planned Maintenance Budget per Region

  45. Planned Maintenance per Region • 83% of this budget is allocated to the Regional Offices. • The Head Office budget also includes the provision for Write-offs and Water Treatment plants (consumables) • The three main regions in terms of allocation are Cape Town, Durban and Johannesburg. They are responsible for 20%, 19% and 11% of the budget respectively. Combined, they manage 50% of the total Planned Maintenance budget. • These Regions are at 72% expenditure against budget as at 31 December 2013 (75% time lapsed)

  46. Accommodation Charges (State Owned) – Top 10 Clients

  47. Accommodation Charges (State Owned) • Total Invoiced amount issued for current year is R 2.316 billion • Dec 2013 Invoices were issued during Jan 2014, therefore do not form part of the issued invoices by end of Dec 2013 . • Total amount received is R 1.820b and 12% of it is towards the prior year balance. • 89% of current year invoices were paid at the end of Dec 2013. • 55% of the current month issued invoices were recovered. • 80% of the 30 days issued invoices were recovered. • 91% of the >60 days issued invoices were recovered. • Only 19% of prior year balance was paid at the end of Dec 2013 • Top ten clients represents 78% of all invoicing of the 52 clients. • An amount of R53m disputed in the previous year is now billed as per clients request and R42m recovered.

  48. Accommodation Charges (Private) – Top 10 Clients

  49. Accommodation Charges (Private) • Total Invoiced amount issued for current year is R 1.376b covering April 2013 to Aug 2013 only • Sept 2013 Invoices were issued during Oct 2013, therefore do not form part of the issued invoices by end of Sept 2013 • The total amount received is R 1.2b and 20% of this amount is towards the prior year balance • 70% of current year invoices were paid at the end of Sept 2013 • Only 20% of prior year balance was paid at the end of Sept 2013. Meetings will be scheduled with Clients to collect outstanding amounts based on the reconstructed balances • Top ten clients represents 77% of all invoicing of the 52 clients.

  50. Municipal Services – Top 10 Clients

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