DPW Turnaround Strategy & 7-Year Plan Presentation

1. DEPARTMENT OF PUBLIC WORKSPRESENTATION TO THE SACPCMPBUTCHER MATUTLEDEPUTY DIRECTOR-GENERAL: REGIONAL COORDINATION 13 JUNE 2013 BUILDING THE NEW DPW: FEEDBACK ON THE TURNAROUND STRATEGY AND SEVEN YEAR PLAN

2. Contents of this presentation Executive Summary Context for the Turnaround Strategy and 7-year plan Strategic Priorities and alignment with MTSF, NDP, SPP, APP High-Level approach and timeline Project structure and resourcing Change Management and organisational ownership Risk management and stakeholder relations Project plans Budget This presentation provides only a brief overview of the turnaround strategy and 7-year plan. It has been compiled using excerpts from the comprehensive documents. 2

3. Executive Summary

4. Executive Summary (1) • Driven by eight consecutive years of under-performance, evidenced by progressively worse audits, the DPW launched a turnaround project in 2012. The project aims to restore the department to organisational health across all perspectives. • Prior attempts at change have proved unsuccessful, largely owing to leadership instability and ineffective change management, resulting in a lack of ownership by the organisation. • The change required is significant and touches on all areas of the organisation as well as the way in which it does business. • The project has been structured in 3 phases, the first of which focusses on stabilisation. This is crucial to establish a stable base for subsequent far-reaching changes. This phase is already under way and runs until 1 April 2014. 4

5. Executive Summary (2) • In tandem with the Stabilisation Phase, a long-term view of the DPW is being developed. This process has already started and has structural implications. • The long-term view of the DPW will focus on the effective delivery of its core mandate, ensuring that both scope and capacity exist to respond to the requirements of the NDP and national infrastructure roll-out in terms of construction projects, job creation and skills development, as well as harnessing the significant property portfolio of the state for economic development. • The project is championed by the Director-General and supported by the Business Improvement Unit. BIU resources are mostly internal with external experts recruited-in to provide assistance and support as necessary. Where external resources are used, active skills transfer to DPW resources has been agreed. 5

6. Executive Summary (3) • Ownership of each of the 23 projects is vested in the organisation rather than in the project team. This ownership has been formalised and linked to the individual performance contracts of those concerned. • Significant additional support is provided by other Departments including National Treasury’s Technical Assistance Unit (TAU), DPSA and SARS. We are also working closely with client Departments across the various projects. 6

7. Context for the Turnaround Strategy and Seven-Year Plan

8. Context for the Turnaround Strategy and 7-year Plan (1) The issues and challenges facing the DPW are not new and the need for significant change was identified as early as 2000. Despite numerous attempts, little traction was gained in a large and dysfunctional organisation. 8

9. Context for the Turnaround Strategy and 7-year Plan (2) • The key reasons for failure of previous attempts can be summarised as follows: • High levels of staff turnover – including Leadership – leading to a lack of continuity • Inconsistency of buy-in, understanding and commitment – poor change management • Lack of implementation capability and capacity • Internal power plays and bureaucracy • Culture and attitude do not support or encourage change – organisational inertia • Objectives over-optimistic and undermined by inadequate resourcing and lack of systems support • Change fatigue • It is vital that the scope be clear, objectives are realistically achievable and the processes adopted are pragmatic for the turnaround project to have the best possible chance of success. 9

10. Strategic Priorities and Alignment

11. Strategic Priorities and Alignment (1) It is vitally important that any turnaround efforts should support not only the DPW’s own organisational performance but also National priorities. To this end, we mapped the proposed turnaround projects against the MTSF, NDP, APP and SPP goals and objectives. 11

12. The MTSF (2009-2014) aims to set the country on a higher and sustainable trajectory of economic growth • Infrastructure development will drive this process. • This is to be accompanied by an expanded and more diversified economic base, with unemployment, poverty and income inequality being reduced. Economic growth and development, including the creation of decent work and investment in quality education and skills development, are at the centre of government’s programme. • In this context, the thrust of the Department of Public Works’ Annual Performance Plan is based on the priorities set out in the MTSF, the manner in which national and international dynamics may influence the achievement of these priorities, and the mechanisms required to plan, measure, monitor and evaluate implementation and progress in these priority areas. There is a high degree of correlation between the DPW goals and those of the MTSF. 12 12

13. These goals are also very similar to those articulated in our existing Strategic Plan • To provide strategic leadership in effective and efficient immovable asset management and in the delivery of infrastructure programmes • To contribute to the building of a developmental state and a comprehensive rural development framework through state assets • To ensure improved service delivery in all DPW programmes to meet clients’ expectations and leverage stakeholder relations • To promote an enabling environment for the creation of both short and sustainable work opportunities, so as to contribute to the national goal of job creation and poverty alleviation • To ensure transformation and regulation of the construction and property industries to ensure economic growth and development • To ensure effective corporate governance and sound resource management 13

14. The DPW is fully-committed to supporting the NDP • The NDP is at the centre of our National strategic thrusts. It is a wide-ranging plan for reform that includes most of the organs of state. The DPW is fully-committed to supporting the NDPand the correlation between our strategic focus areas and the goals of the NDP is high. • Within the DPW, the Office of the DG, through the BIU, is tasked with delivering the turnaround of the DPW. The overarching goal of the Turnaround Project is to return the DPW to a state of competence in the delivery of its mandate. • Our turnaround is a critical element of our strategy, not an indulgence or a peripheral project. If we do not address the problems identified we will not improve. It directly affects all of us and requires active participation. With this in mind, support for the NDP will be through the various branches of the DPW rather than via the Turnaround Project. 14

15. While National priorities drive the DPW’s strategic goals, the DPW goals, in turn, drive the turnaround project’s focus areas • The turnaround project consists of 23 discrete projects. Our key focus in the short-term, however, has been on taking control of six key areas: • Developing a complete and credible register of state immovable assets • Conducting a comprehensive audit of Leases and the establishment of a Lease Management Framework. • Ensuring progressively improving audit outcomes for the DPW with particular attention to processes, systems and controls and better supply chain management • Actively reducing fraud and corruption in the DPW • Meeting the needs of our Prestige clients • Operationalising the Property Management Trading Entity (PMTE) in terms of the DPW’s mandate. These projects are necessarily underpinned by improvements in processes, systems and structures across the Department. 15

16. High-Level Approach and Timeline

17. High-level approach and timeline (1) We have launched 23 separate projects under the Turnaround umbrella. While many of these have a short lifespan limited to the Stabilisation Phase, others will continue for several years. 17

18. High-level approach and timeline (2) • STABILISATION: • Improved compliance of asset register • Improved GIAMA compliance • Systems support in place • Re-engineered lease processes • Optimal organisation design finalised (OFA) • 23 x Stabilisation project phases completed • Long-term DPW turnaround plan finalised • Unqualified audit with emphasis • EFFICIENCY ENHANCEMENT: • Majority of assets compliant • Expanded asset register • Effective property management trading account • Technology-based organisation • Fully-implemented new organisation design • Public Works Act in place • Unqualified audit • SUSTAINABILITY & GROWTH: • 95%+ of assets compliant • 100% of leases compliant • Listed PFMA property management trading entity • Municipal assets on asset register • Expansion to Provincial support • Sustainable and professional organisation STABILISATION 2012 - 2014 EFFICIENCY ENHANCEMENT 2014 - 2019 TRANSFORMATION AND CHANGE MANAGEMENT SUSTAINABILITY AND GROWTH 2019 + 18

19. Change Management and Organisational Ownership

20. Change Management and Organisational Ownership (1) • There are a few key considerations worth noting before embarking on a significant change project. Large and complex projects that require significant change often fail because of • A lack of understanding of the broader context and how it impacts the organisation • A lack of understanding of the changes contemplated • Insufficient communication • Poorly defined change roles and / or processes • Relationships which lack a strong foundation or commitment • A directive rather than a consultative approach 20

21. Change Management and Organisational Ownership (2) • With the above in mind, it is vital that the following elements are integrated into our change strategy: • Early attention to the organisational issues raised and Quick Wins identified. • Regular, simple and clear communication to the DPW staff regarding the scope, ambit and objectives of the change project • Constant reference to stakeholders and ensuring that their communications needs are being met • A clear plan, effectively implemented by a project team with sufficient capacity and capability • Clear executive ownership and championing of the change • Organisational issues that need to be actively managed have already been identified via roadshows, Ministerial visits and a workshop with Regional Managers and CFOs. 21

22. Change Management and Organisational Ownership (3) • The BIU Change Management team is now up to its full complement of five resources: Prof Paruk, Jacob Mamobolo, VuyoBavuma, Sibusiso Zondi and Fikile Hugo under the direct control of the Head of the BIU, Dhaya Govender. • Leadership interventions are planned to enhance the understanding of change management within the leadership levels of the DPW. • Project champions have formally taken ownership of the 23 projects • Change readiness assessments are in the planning stage. • A change plan has been formulated and tabled. • Regional issues are receiving attention. Branch Regional Coordination established. 22

23. Risk Management and Stakeholder Relations

24. Our project risk profile has improved. Organisational inertia and compliance remain key issues, however, and cannot be underestimated. Highly unlikely Unlikely Possible Likely Almost Certain Very High High Medium Minor Negligible 8 Project Risks • Failure of stabilisation • Phase 2 failure • Lack of stakeholder buy-in • Reputational damage of failure • Lack of senior management buy-in • Insufficient project resource capacity • Industrial action • Lack of technical support capacity • Disinformation and leaks of classified information • Lack of organisational capacity (vacancies) • Risk of retribution • Organisational non-compliance / non-cooperation • Inability to break organisational bad habits 10 Impact 4 1 6 3 5 11 12 2 13 9 7 Risks related to organisational inertia and compliance are highlighted in yellow. Probability • Project risks may be summarised into three key categories: Compliance, Capacity and Support 24

25. As an integral part of the development of our strategy, we identified the stakeholders involved in the contemplated change. • Stakeholders include both internal and external constituencies and are listed as the following(those highlighted in red text have yet to be effectively included): • Minister, DM, DG • DPW leadership • National Treasury • Unions • Cabinet • DPSA • AG • Portfolio Committee • Staff • Industry • Client Departments • Media • Entities • Project Team • General Public • While there may be many other stakeholders our view is that the above are the most important, or influential, in the change process. 25

26. Project Plans

27. Project Plans (1) • The following 2 slides present a draft representation of the likely duration of the 23 projects. • For the purposes of the graphic, we have adopted 3 colour codes: • Red = Stabilisation / fix the basics • Orange = Process enhancement / improve on the basics or extend the scope • Green = Maintain and apply continuous improvement principles 27

28. Project Plans (2) 28

29. Project Plans (3) 29

30. Budget

31. Turnaround Budget to 2015/16 • National Treasury approved project funding in the following annual amounts: • 2012/13 – R202 610 000 • 2013/14 – R357 547 000 • 2014/15 – R279 363 000 • 2015/16 – R200 601 000 • The above funding is reflected in the agreed 2012/13 MTEF. • Additional funding may be required for technology systems and infrastructure. Systems and funding requirements will be developed in consultation with National Treasury. • We have also asked National Treasury to approve roll-overs for several projects (IAR, Leases, Clean Audit) that started later than planned owing to protracted negotiations with Service Providers. 31

32. THANK YOU National Department of Public Works (NDPW) Head Office: Public WorksCGO BuildingCnrBosman and MadibaPretoria CentralPrivate BagX65Pretoria0001 Website: http://www.publicworks.gov.za