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PRESENTATION TO THE SELECT COMMITTEE ON PUBLIC SERVICES ( NATIONAL COUNCIL OF PROVINCES) ON 2013/14 ANNUAL PERFORMANCE PLAN OF THE DEPARTMENT OF PUBLIC WORKS 14 May 2013. TABLE OF CONTENTS. PART A Strategic overview. INTRODUCTION AND STRATEGIC CONTEXT. Vision

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    1. PRESENTATION TO THE SELECT COMMITTEE ON PUBLIC SERVICES (NATIONAL COUNCIL OF PROVINCES)ON2013/14 ANNUAL PERFORMANCE PLAN OF THE DEPARTMENT OF PUBLIC WORKS14 May 2013

    2. TABLE OF CONTENTS

    3. PART AStrategic overview

    4. INTRODUCTION AND STRATEGIC CONTEXT Vision The Department of Public Works is a custodian of a significant portion of State immovable assets. Charged with the responsibility of effectively managing these immovable assets, as a Government Department we seek to discharge this responsibility in our vision towards being a world class Public Works Department. Mission The National Department of Public Works aims to promote the government's objectives of economic development, good governance and rising living standards and prosperity by providing and managing the accommodation, housing, land and infrastructure needs for national departments, promoting the national Expanded Public Works Programme and encouraging the transformation of the construction and property industries. In pursuit of this objective the Department of Public Works seeks to:- • Efficiently manage the asset life cycle of immovable assets under the its custodianship; • Provide expert advice to all three spheres of Government and state-owned entities on immovable assets;

    5. INTRODUCTION AND STRATEGIC CONTEXT • Contribute to the national goals of job creation and poverty alleviation through programme management, leading and directing of public works programmes nationally, of which the Expanded Public Works Programme (EPWP) forms an integral part; and, • Provide strategic leadership to the Construction and Property Industries. Values As a major custodian of the State’s immovable assets, the Department of Public Works acknowledges the authority of Parliament through whom we are accountable to the nation. As a department we are value bound to urgency in how we deliver services to user departments while ensuring all tasks are attended to timeously and with diligence. We value a client-focused approach to ensure that all aspects of our work are guided by the need to improve quality service delivery to clients, both internally and externally. Executing our mandate as a department with integrity is central to our work. We therefore reject any form of corruption and/or maladministration, and all employees vow to expose any actions undermining principles of good corporate governance. In doing so we, value teamwork, recognizing that every employee has a specific task and role to perform and the sum of all our actions defines our destiny as an organisation. In achieving these values, we will fulfil the faith that our nation has placed in us.

    6. INTRODUCTION AND STRATEGIC CONTEXT • Five outcomes form the basis of DPW’s Strategic Plan: • Outcome 4 - Decent employment through inclusive economic growth; • Outcome 5 - Skilled and capable workforce to support an inclusive growth path; and • Outcome 6 - Create efficient, competitive and responsive infrastructure network; • Outcome 8 - Sustainable human settlements and an improved quality of household life; • Outcome 12 - An efficient and effective development-oriented Public Service and an empowered fair and inclusive citizenship. • The following areas are relevant to the Outcomes in the Minister’s Performance Agreement: • Outcome 4:Focus areas: reducing youth unemployment, analysing the cost structure of South African economy including input costs in the construction sector, expanding the EPWP, DPW implementation of the state Building Programmes. • Outcome 8:Focus area: Release of land and properties for developmental purposes to the Department of Human Settlements and Land reform and facilitate the re-development of remote area precincts. • Outcome 12: Focus area:DPW as the custodian of all Immovable State Assets ensures that immovable assets utilised for delivering various government services yield functional, economic and social benefits to the state for improved service delivery .

    7. INTRODUCTION AND STRATEGIC CONTEXT • The following areas within the Department of Public Works are relevant to the National Development Plan: • The National Development Plan outlines interventions to put the economy on a better footing. The target for job creation is set at 11 million by 2030. Phase 2 of EPWP which covers the period 2009/10 to 2013/14 aims to create 4.5 million work opportunities. The Department of Public Works is a co-ordinator of EPWP programmes in the infrastructure sector. Other job creation projects include the young professionals programme, internship programme and learnership programme for graduates from sectors relevant to the department’s core business, and the resuscitation of regional workshops through the artisan training programme. • Transition to a low cost carbon economy: The Department of Public Works will continue to implement the energy efficiency programme, water efficiency programme and green buildings framework over the MTEF period in line with South Africa’s strategies to mitigate the effects of global warming, mandated by global protocols.

    8. INTRODUCTION AND STRATEGIC CONTEXT • National Development Plan continued …… • An inclusive and integrated rural economy: The Department of Public Works rural development programme focuses on the disposal of state-owned immovable assets in rural areas for developmental purposes and facilitates the re-development of remote area precincts. • Fighting fraud and corruption: The Department of Public Works is committed to improving internal controls aimed at rooting out tender fraud and corruption.

    9. INTRODUCTION AND STRATEGIC CONTEXT • The following areas within the Department of Public Works are relevant to the 2013 State of the Nations Address (SONA): • Tender fraud and price fixing in the infrastructure programme - The Department is undertaking a review of the Supply Chain System in DPW to align the system to more modernised approaches. The Department has invested huge effort into the development of decentralised database, allowing a wider span of control for DPW’s Regional Offices to determine acceptable suppliers. The code of conduct applicable to Supply Chain Practitioners as well as key stakeholders in the Supply Chain System will be closely monitored for compliance. Back office administration of the procurement function is being strengthened to ensure strict compliance to the SCM prescripts. • Absorption of young people into the EPWP - South Africa is plagued with youth unemployment, high levels of poverty and inadequate skills. The EPWP plays a key role in tackling unemployment and providing access to social services, especially to marginalized communities.  Through the EPWP our youth will acquire the necessary work experience and skills to set them on sustainable career paths.

    10. KEY MEDIUM-TERM PRIORITIES • Public Works is a significant player in the Presidential Infrastructure Coordinating Committee (PICC) and accorded the responsibility to co-ordinate SIP 1 (Strategic Infrastructure Plan 1), a project to unlock the Northern Mineral Belt with Waterberg as the catalyst. In addition to SIP 1, the Department is committed to deliver over 200 schools across the country. The Department of Basic Education has prioritised 30 schools to be built in the Eastern Cape in the current financial year. The IDT will be the implementation agent on this project. • Key challenges influencing the performance of the Department include: inadequate controls in Supply Chain Management (SCM) practices, poor lease management, lack of an appropriate accounting platform of the Property Management Trading Entity (PMTE), an incomplete Immovable Asset Register and lack of built environment and property management skills across the value chain. • A Turnaround Strategy focusing on improving the performance of the Department at 3 levels, has been developed. • The strategy deals with immediate challenges, strengthening day-to-day core business and moving the Department forward in strategic areas of long term transformation.

    11. KEY MEDIUM-TERM PRIORITIES • In implementing its Turnaround Strategy the Department’s focus is on the three overarching themes being: • Stabilisation; • Efficiency enhancement ; and • Sustainability and growth.

    12. KEY MEDIUM-TERM PRIORITIES The following projects are receiving priority attention under the Turnaround

    13. PUBLIC ENTITIES • There are four Public Entities reporting to the Department of Public Works. The Entities have identified, inter alia, the following key strategic programmes, for the MTEF period: • The Construction Industry Development Board (cidb): Growth and Contractor Development, Construction Industry Performance, Procurement and Delivery Management, Construction Registers Services; • The Council for Built Environment (CBE): Built Environment Academy, Centre for innovation and integrated planning, Public Interest; • The Agrément SA (ASA): the focus will continue to provide assurance of fitness of purpose for non-standardised construction technology; • The Independent Development Trust (IDT): Community mobilization and development, provide support to institutions such as NPOs, serve as programme management agency on government infrastructure projects.

    14. BUDGET ALLOCATION SUMMARY PER PROGRAMME

    15. BUDGET ALLOCATION SUMMARY PER ECONOMIC CLASSIFICATION

    16. POLICY ISSUES ON BUDGET • During the 2013 MTEF process, departments were requested to reprioritise and reduce the baseline without requesting any additional funding. • Under the reprioritisation of the allocation, funds were shifted from low efficiency/priority expenditures towards areas of higher efficiency/priority in determining new 2013 MTEF baseline expenditure estimates. • As part of reprioritisation, the departments were expected to also identify underperforming programmes that can be closed; as well as where funding taken from such programmes can be redirected towards.

    17. POLICY ISSUES ON BUDGET • Under baseline reduction departments were expected to reduce their estimates of spending by 1% in 2013/14, 2% in 2014/15 and 3% in 2015/16. • The funds emanating from these reductions will allow government to increase allocations to infrastructure projects, and to finance the impact of higher than expected wage increases.

    18. POLICY ISSUES ON BUDGET: REPRIORITISATION • Over the MTEF an amount of R1.1 billion was reprioritized with R1 billion being reprioritized from the infrastructure and the balance of R100 million from Transfers and subsidies (Municipalities) and machinery and equipment. • The reprioritisation of funds was intended for the following projects under turnaround: • Turnaround team • Special Investigating Unit • Clean Audit • Project management Support • Immovable Asset Register • Lease review • Internal Audit Support • Treasury Technical Support Unit (TAU)

    19. POLICY ISSUES ON BUDGET: REPRIORITISATION • The reprioritisation of funds for over the MTEF for turnaround is for both Programme 1 and 2 under the following economic classification: • Compensation of employees1 R329 million • Goods and services R508 million • Capital assets (Software) R5 million • Other reprioritized budget over the MTEF is for the following: • Independent Development trust R150 million • EPWP Incentives Non-State Sector R247 million • Council for the Built Environment R30 million • 1The allocation for Compensation of Employees does not include consultants. Consultants payments are categorised under Goods and Services.

    20. POLICY ISSUES ON BUDGET: BASELINE REDUCTION • Over the MTEF the budget for the Department was reduced by R8.407 billion and the reduction was under the following: • Infrastructure R1.810 billion • Devolution of Property Rates R6.487 billion • EPWP Integrated to Municipalities R110 million • Infrastructure budget was initially reduced by R810 million with R1 billion being further reduced in January 2013 in line with Cabinet decision of creating fiscal space through the implementation of further savings measure.

    21. POLICY ISSUES ON BUDGET: BASELINE REDUCTION • The reduced infrastructure budget includes R290 million being shifted to Department of Home Affairs for Land Ports of Entry infrastructure projects. • Devolution of Property Rates Fund to Provinces was reduced with the phasing out of the grant to Provincial equitable share. • The reduced EPWP Integrated grant to Municipalities was reduced in line with the expected reduction of 1% in 2013/14, 2% in 2014/15 and 3% in 2015/16.

    22. POLICY ISSUES ON BUDGET: ADDITIONAL BUDGET • The department received additional budget for compensation of employees of R124 million over the MTEF for higher than expected salary increase for salary level 1 to 12 in 2012.

    23. POLICY ISSUES ON BUDGET: PROPERTY RATES FUND GRANT • National Department of Public Works Oversight Role of Provinces relating to payment of municipal rates & taxes • The national Department of Public Works (NDPW) has no legislative powers over Provinces which the Department seeks to address via the envisaged Public Works Act; • National Treasury has acceded to our request that these funds that have been devolved to the Provinces be earmarked. As a result, Provinces cannot use the funds for any other purpose except to pay municipal rates and taxes; • Our oversight role will be through the following governance structures: • MinMEC – meetings of which take place quarterly; • Technical MinMEC – chaired by DG of the NDPW and meets prior to the political MinMEC to agree on technical matters for presentation to the political MinMEC; • Resuscitated DPW Sector CFO Forum – chaired by National Department of Public Works CFO to consider all financial and audit matters within the DPW family. Significant of which is the national and provincial debt for rates and taxes to municipalities. • Forum of South African Directors-General (FOSAD) has charged the responsibility of co-ordinating debts and settlement thereof for rates and taxes to the NDPW.

    24. MTEF ALLOCATION – EARMARKED FUNDS 1. Total budget per APP is R999 million and R837 million is the projected spend.

    25. PART BStrategic objectives

    26. NATIONAL TREASURY GUIDELINES FOR STRATEGIC PLANS AND ANNUAL PERFORMANCE PLANS • The Framework for Strategic Plans and Annual Performance Plans, issued in September 2010, provides a new format and revised timeframes for the compilation of the Strategic Plan and Annual Performance Plan. • National Treasury issued an Instruction Note (No. 33) in July 2011 on the full compliance to the mandatory requirements of the Framework for Strategic Plans and Annual Performance Plans. • The existing Chapters 5 and 30 of the Treasury Regulations dealing with Strategic Plans are in the process of being amended to ensure consistency with the requirements of the Framework. • A Strategic Plan covers a period of at least 5 years ideally from the first planning cycle following an election linked to the identified outcomes of the Presidency. • A Strategic Plan may be changed during the five year period it covers. However, such changes should be limited to revisions related to significant policy shifts or changes in the service delivery environment • The Annual Performance Plan sets out what the institution intends doing in the upcoming financial year and during the MTEF to implement its Strategic Plan.

    27. NATIONAL TREASURY GUIDELINES FOR STRATEGIC PLANS AND ANNUAL PERFORMANCE PLANS • The format of the APP (including the tables) is prescribed by the National Treasury Framework for Strategic Plans and Annual Performance Plans and aims is to link the plans, budget and performance of the Department.

    28. NATIONAL TREASURY GUIDELINES FOR STRATEGIC PLANS AND ANNUAL PERFORMANCE PLANS Strategic Objectives and Annual Targets (Table 1) Programme Performance Indicators and Annual Targets (Table 2) Quarterly targets (Table 3)

    29. PROGRAMME 1: ADMINISTRATION • PURPOSE OF THE PROGRAMME: • To provide strategic leadership and support services, including the accommodation needs and • overall management of DPW. • SUB-PROGRAMMES: • MINISTRY: • The Ministry sub-programme, consisting of the office of the Minister and Deputy Minister, provides political and administrative support and report directly to the political head. • MANAGEMENT: • OFFICE OF THE DIRECTOR-GENERAL: • The office provides strategic leadership, guidance and oversees the overall implementation of DPW’s Strategic Plans, across all functions. The following units are part of the office: • Strategic Management Unit • Intergovernmental Relations and Parliamentary Services • Monitoring & Evaluation • Internal Audit and Investigation Services

    30. PROGRAMME 1: ADMINISTRATION • FINANCE AND SUPPLY CHAIN MANAGEMENT: • The purpose of the sub-programme is to achieve financial effectiveness for both DPW and the PMTE through sound financial management, integrated financial planning, responsive and compliant supply chain management. • CORPORATE SERVICES: • Corporate Services is a partner in support of DPW’s service delivery objectives. It provides the following functions: • Human Resources • Information Services • International Relations • Communications • Legal Services • Security Services • Gender and Disability • * NB Quarterly targets in red are activities in the Business Plan that do not form part of the APP.

    31. PROGRAMME 1: ALLOCATION PER SUBPROGRAMMES

    32. PROGRAMME 1: ALLOCATION PER ECONOMIC CLASSIFICATION

    33. NOTES TO PROGRAMME 1 • Programme 1 allocation increased by R446 million over the MTEF period. The allocation was adjusted to fund the following: • R44 million for compensation of employees for Finance and SCM structural review under Turnaround programme. • R62 million under goods and services for Core support team review under Turnaround programme. • R81 million for Special Investigation Unit (SIU) review under Turnaround programme. • R37 million for Internal Audit Support review under Turnaround programme • R3 million for Technical Support Unit (TAU) review under Turnaround programme. • R110 million for Finance and SCM Clean Audit review under Turnaround programme. • R5 million for software and intangible assets under Turnaround programme. • R30 million for Supply Chain Management support under Turnaround programme • R75 million received for compensation of employees to cover higher than expected increase in 2012.

    34. PROGRAMME 1: ADMINISTRATION

    35. PROGRAMME 1: ADMINISTRATION

    36. PROGRAMME 1: ADMINISTRATION

    37. PROGRAMME 1: ADMINISTRATION

    38. PROGRAMME 1: ADMINISTRATION

    39. PROGRAMME 1: ADMINISTRATION

    40. PROGRAMME 1: ADMINISTRATION

    41. PROGRAMME 1: ADMINISTRATION

    42. PROGRAMME 1: ADMINISTRATION

    43. PROGRAMME 1: ADMINISTRATION

    44. PROGRAMME 1: ADMINISTRATION

    45. Additional strategic matters to note • Strategic Management Unit (Risk Management) • Risk champions will act as change agents in the risk management process; • They will intervene in and escalate instances where risk management efforts are being hampered; and • They will be expected to add value to the risk management process by providing guidance and support to manage problematic risks and risks of a transversal nature. • 19 Risk champions will be appointed collectively being 8 at Head Office and 1 in each of the Regional Offices. Key performance indicators with regards to management of risks will be set for the risk champions and effectiveness on implementation will be measured by regular reports and interventions on the escalated issues. • Strategic Management Unit (Knowledge Management) • The guideline for uploading of policies and procedures on Knowledge Base System will be developed and approved by 31 December 2013. • Implementation of the System will take place in Quarter 4 and continue into the next financial year.

    46. PROGRAMME 1: FINANCE AND SCM

    47. PROGRAMME 1: FINANCE AND SCM

    48. PROGRAMME 1: FINANCE AND SCM

    49. PROGRAMME 1: CORPORATE SERVICES

    50. PROGRAMME 1: CORPORATE SERVICES