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Towards Operational Efficiency

Towards Operational Efficiency. PORTFOLIO COMMITTEE 13 NOVEMBER 2001. Background. Poor Service Delivery Under- expenditure Inefficient Processes Inefficient Financial Management Capacity and Skills Budget Reform Business Model. Poor Service Delivery. Under Expenditure

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Towards Operational Efficiency

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  1. Towards Operational Efficiency PORTFOLIO COMMITTEE 13 NOVEMBER 2001 Transformation Programme

  2. Background • Poor Service Delivery • Under- expenditure • Inefficient Processes • Inefficient Financial Management • Capacity and Skills • Budget Reform • Business Model Transformation Programme

  3. Poor Service Delivery • Under Expenditure • Process Analysis • Skills Impact • Leasing • Proliferation of lease contracts within government Transformation Programme

  4. Under - Expenditure • History of under expenditure • Late confirmation of roll-overs • Reprioritisation of needs by departments. • Budget requests that are more than what the department can spend. • Allocation of budgets without projects Transformation Programme

  5. Process Analysis • No. of Process Steps • No. of documents required • Average time to tender • No. of planning steps • No. of handoffs • No. of decision points • No. of decision makers • 65 • 40 non – recurring 25 recurring • 75-95 weeks • 35 • 19 • 13 • 6 Transformation Programme

  6. Skills Impact • Ratio of Project Managers to Projects • 1-10 Project (Private sector depending on complexity) • 1-30 Projects(DPW) • Capacity skills of project managers • Level of skill of project managers Transformation Programme

  7. Budget Reform • Distinguish between ownership vs occupancy roles • Requirement of PFMA • Capital expenditure and maintenance reside on client departments budgets • Client departments service level agreements with DPW Transformation Programme

  8. BUSINESS MODEL CLIENT DEPARTMENTS NDPW/SPMC State Accommodation Advisory Services Transversal Policies Optional Municipal Services Management Lease Management Option Evaluation Custodian of State’s Fixed Asset Landlord role – Asset Register(B/S), Rates and Taxes, Acquisition and Disposal, Ensuring Compliance, Maintenance and Construction Planning, Lease Brokering and Lease Management Promoter of Construction Industry Promoter of Public Works Program Transformation Programme Monitoring and Benchmarking

  9. Current Initiatives • Asset Management Strategic Partner • Broad Portfolio Analysis, Classification and Strategy Formulation • Develop adequate and appropriate information systems • Establish building blocks for user pays • Training of asset management staff • Advise the department on asset management plan • Formulate the Asset Management Framework Transformation Programme

  10. Current Initiatives • RAMP (Repair and Maintenance Programme) • Risk transferred to private sector contractors • Multi year budgeting • Assessment of the state of disrepair – true life cycle costing • Predetermined cost of future maintenance • Correctional Services • Enhance safe custody • Improved humane incarceration • Improved state of readiness • 97 Contracts awarded or recommended – Total Value R910 million Transformation Programme

  11. Current Initiatives • Department of Defense • Improved state of readiness • Fixed leakages of jet fuel pipes that minimised fuel losses • Lifts Programme • Improved the functionality of buildings • Improved compliance with safety legislation • Instituted a call center for lifts(24hrs) • 720 lifts nationally • 27 contracts awarded – Total value R66 million Transformation Programme

  12. Current Initiatives • PACE • Comparative Expenditure as at end of October • 2000-2001: R362 530 • 2001-2002: R700 756 • For the whole of 2000-2001 we had spent R698 042 Transformation Programme

  13. Current Initiatives • Leasing • Negotiation and renewal of lease agreements • 80% completed and the remaining to be finalised by 30 December 2001. • Savings from the leasing project is R20 million as at the end of October 2001 Transformation Programme

  14. Rationale for SPMC • Formation of a responsive vehicle • Separation of the policy making and regulatory role from the delivery function • Unlocking the value of the State’s Property portfolio • Separation of commercial and non-commercial components of State Property • Considered application of commercial principles Transformation Programme

  15. Role of DPW and SPMC State Property Management Company(SPMC) National Department of Public Works Value Proposition • Ensure that the built environment is effectively regulated to the benefit of the South African public • Ensure that equity and empowerment occur in the construction industry • Provide a clear and transparent environment in which land issues are redressed • Leverage governments influence to impact the lives of the rural poor • Ensure that government is meeting its accommodation requirements in a cost effective manner while addressing social objective • Streamline service delivery by reducing the bureaucracy and leveraging best-of-breed skills and systems • Provide value-added advisory services to ensure that accommodations improve government’s service delivery Transformation Programme

  16. Role of DPW and SPMC National Department of Public Works State Property Management Company(SPMC) Mandate • To regulate the built environment • To transform the construction industry - CIDB • To create jobs, provide infrastructure, develop HR and empower communities through implementation of the Ilima/Letsima programme • To facilitate the delivery of government service through delivery of the asset and accommodation requirements in accordance with the prescribed legal frameworks Transformation Programme

  17. FUTURE NATIONAL DEPARTMENT OF PUBLIC WORKS Ministry of Public Works STATE PROPERTY MANAGEMENT COMPANY Accelerated Service Delivery Vehicle NDPW CBPWP, CIDP, ECDP Policy Formulation, Monitoring & Evaluation Information Sytems, Human Resources and Financial Management Customer Focus Transformation Programme

  18. ILLUSTRATIVE • The SPMC will provide the Government of South Africa with its core facilities and accommodation needs through • Cost-effective, value-adding management and maintenance of its owned portfolio • Structuring of leases with private sector owners • Construction of on-spec, on-time, on budget new facilities • Maximise the value of the property portfolio and minimise risk to the State • It will meet its mandate with a customer focused, information rich, commercially capable organisation that makes effective use of private sector capabilities Overall SPMC Charter Transformation Programme

  19. SPMC • To be established as a 100% government owned company • Possible alternatives • Fully funded entity • An entity that will be self sufficient after a monopoly period Transformation Programme

  20. Governance Minister IDT,CBE,etc Board of Directors(SPMC) Board of Directors(CIDB) NDPW SPMC CIDB Transformation Programme

  21. A continuum of legal entities Depart-ment Schedule 3A Schedule 3B Schedule 2 Company • Fully adheres to government objectives • Over regulated • Rigid remuneration • Internally focused • Regulated by PFMA • Established in terms of National legislation • No borrowing power • Mainly funded by NRF • Regulated by PFMA • Functions in accordance with ordinary business principles • Limited bridging finance • Mainly funded by means other than NRF • Regulated by PFMA • Commercially driven principles • Mainly self funded • Regulated by PFMA • 100 percent owned by government • Autonomous • Commercial principles • Free from policy constraints • Self funding • Tends to ignore government’s broad social objectives • Regulated by Companies Act Transformation Programme

  22. Core Functions of the SPMC • Asset Management • Key Account Management Principles • Project Management • Leasing Management Services • Property and Facilities Management • Alternative Forms of Delivery Transformation Programme

  23. SPMC Organisational Arrangements Key Account Manager Asset Management Center of Expertise Project Management Center of Expertise Leasing Center of Expertise P& FM Matrix Management Single Point Accountability Transformation Programme

  24. Core Functions of NDPW Policy Formulation - SPA and NPWP Poverty Alleviation Programme CBPWP National Department of Public Works Monitoring and Evaluation Transformation Programme

  25. Major Milestones 15 Oct Road Map Framework 29 Oct SPMC Act November B/Case Dec 2001 SPMC Act Apr 2002 Transition Oct 2002 Launch Transformation Programme

  26. Benefits • SPMC creates a sharply focused organisation • SPMC can be designed from a clean base • SPMC provides new degrees of freedom • People, Systems, Organisation, Compensation • Policy formation within NDPW separated from execution • SPMC will be accountable and transparent • NDPW - Policy focused organisation • Proper Monitoring and Evaluation by NDPW Transformation Programme

  27. THANK YOU Transformation Programme

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