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Programme & Project Principles in Public Sector Planning, Budgeting & Financial Management in Implementing Publi

Programme & Project Principles in Public Sector Planning, Budgeting & Financial Management in Implementing Public Private Partnership In SA. IPMA Research Expert Seminar Cape Town 9 March 2010. Table of Contents. 1. Who we are & Our mandate.

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Programme & Project Principles in Public Sector Planning, Budgeting & Financial Management in Implementing Publi

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  1. Programme & Project Principles in Public Sector Planning, Budgeting & Financial Management in Implementing Public Private Partnership In SA

    IPMA Research Expert Seminar Cape Town 9 March 2010
  2. Table of Contents 1. Who we are & Our mandate 2.Public sector planning, budgeting and financial management 3.Public Private Partnerships in South Africa 4. Competencies, programme & project management 5. 2010 Focus, Challenges & Opportunities
  3. Who we are
  4. The Public Private Partnership Unit Minister: GCFO Director General DD General: Budget Office Head: PPP Unit Project Evaluation Financial Analysis Business Development Municipal Desk ICT Performance Monitoring & Evaluation Established by a Cabinet Memorandum in 2001 Mandate: Treasury Regulation 16.
  5. National Treasury Mandate Constitution: sections 213, 215, 216,217, 218 of Act 108 of 1996; The Public Finance Management Act (PFMA), Act 1 of 1999, gives effect to the 4 sections, 213: National Revenue Fund; Revenue, Appropriations, Direct charges, Division of Revenue Act (DoRA), 215: Budgets; Transparency and Accountability in Financial Management of; South African Economy, Debt, Public sector, 216: Treasury Control: Transparency and Expenditure Frameworks; Accounting practice, Expenditure classifications, Treasury norms & standards, 217: Procurement; Contracts for Goods & Services; Economy, efficiency, effectiveness, equity 218: Government Guarantees; Approvals, Annual reports on guarantees.
  6. South African Fiscus and Financial Institutional Frameworks Training Manuals Housing, Education, Health, Water, Food, Social security.
  7. May 2008 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 MTEF (3 years) MTEF (3 years) MTEF (3 years) MTEF (3 years) MTEF (3 years) MTEF (3 years) MTEF (3 years) MTEF (3 years) MTEF (3 years) MTEF (3 years) MTEF (3 years) MTEF (3 years) Year 1 Budget Year 2 Budget Year 1 Budget Year 3 Budget Year 2 Budget Year 1 Budget Year 3 Budget Year 2 Budget Year 1 Budget Year 3 Budget Year 1 Budget Year 2 Budget Year 2 Budget Year 3 Budget Year 1 Budget Year 3 Budget Year 2 Budget Year 1 Budget Year 3 Budget Year 1 Budget Year 2 Budget Year 2 Budget Year 3 Budget Year 1 Budget Year 3 Budget Year 2 Budget Year 1 Budget Year 3 Budget Year 2 Budget Year 1 Budget Year 1 Budget Year 2 Budget Year 3 Budget Year 2 Budget Year 3 Budget Year 3 Budget APP For Year 1 APP For Year 2 APP For Year 1 APP For Year 3 APP For Year 2 APP For Year 1 APP For Year 3 APP For Year 2 APP For Year 1 APP For Year 3 APP For Year 1 APP For Year 2 APP For Year 2 APP For Year 3 APP For Year 1 APP For Year 3 APP For Year 2 APP For Year 1 APP For Year 3 APP For Year 2 APP For Year 1 APP For Year 3 APP For Year 2 APP For Year 1 APP For Year 3 APP For Year 2 APP For Year 1 APP For Year 3 APP For Year 1 APP For Year 2 APP For Year 2 APP For Year 3 APP For Year 1 APP For Year 2 APP For Year 3 APP For Year 3 Public Sector Planning, Prioritization, Budgeting & Sequencing Fiscal Years Election Election Election 5 Year Election Mandate 5 Year Election Mandate 5 Year Election Mandate Electoral Cycle Planning & Budgeting 5 year Strategic & Performance Plan detailing Targets & priorities 5 year Strategic & Performance Plan detailing Targets & priorities 5 year Strategic & Performance Plan detailing Targets & priorities Five-year MTSF and Performance Plans 3 Year MTEF & Annual Performance Plans and Budgets
  8. Public Private Partnerships (PPP) A PPP is defined in South African law (PFMA & MFMA and their regulations): A government institution at national, provincial, local level or their agencies enter into a performancecontractwith a private party, The Private party then performs aninstitutional function and/or uses state property in terms of output specifications or service delivery specifications, The infrastructure project should be affordable to government, demonstrate value for money and substantial project risk (financial, technical, operational) should be transferred to the private party (regulatory tests) Private party benefits through: unitary payments fromgovernment budget and/or user fees
  9. Infrastructure Services Procurement Systems Government Pays Delays Overruns Government Pays Capex Tender Opex: Overruns Opex: Budgeted Time (years) 30 0 2 3 10 Private Party Pays Government Pays (plus CPI) Capex PPP Opex: Budgeted Time (years) 0 10 30 2
  10. South African Procurement Systems Public Finance (Tender) Private Finance (PPP) Government Government Long-term service contract PPP-Special Purpose Vehicle Finance contract Design & construction contractor Finance contract Maintenance contractor Operations contractor Design & construction contractor Maintenance contractor Operations contractor
  11. Generic PPP Contractual Structure Government The PPP Agreement Private Party (Special Purpose Vehicle) [SPV] Equity Debt Shareholding Agreement Loan Agreements Subcontracts Subcontractor e.g. Operations Subcontractor e.g. Construction
  12. Cash Flow & Project Finance Structure 2 1 3 Infrastructure Economy: Turnkey models
  13. PPP Practice: Project & Cash Flows Gov. No expenditure Gov. Unitary payment Private Party initial investment PPP cycle Private Party projected investment Investment Private Party projected expenditure Private Party projected earnings from unitary payment OPERATIONS,MAINTAINANCE, UPGRADE AND HANDOVER TREASURY AND ACCOUNTING OFFICER APPROVALS IMPLEMENTATION t2 t end Years t1 t0 1-3 Years 10 -30Years
  14. The Regulatory Cycle & PPP Project Cycle Output Activity Project Cycle Regulatory Activity INCEPTION Register Project National Registered Project Treasury Registration Letter FEASIBILTY Treasury Approval I Or TVR I Conduct Feasibility Study Project Feasibility Treasury Approval Letter Prepare RFQ Issued RFQ Treasury Approval IIA Or TVR IIA Prepare RFP Issued RFP PROCUREMENT Treasury Approval IIB Or TVR IIB Prepare Value for Money (VfM) Report VfM Report Treasury Approval III Or TVR III Engage in PPP Agreement Negotiation PPP agreement Prepare Construction Variations & Amendments Treasury Variation Approval Letter Variation Request CONTRACT MANAGEMENT & EXIT Prepare Operations Variations & Amendments Variation Request Treasury Variation Approval Letter
  15. State of PPPs in SA 25 projects with more than R13 billion private sectors investment Office accommodation Hospital infrastructure & Clinical services Correctional facilities (prisons) Fleet management Pharmaceutical supply chain services Eco-tourism facilities Private sector use of state land for commercial purposes Municipal solid waste management Municipal water services ICT Toll roads
  16. PPP Competencies Programme & project management competencies ICT competencies Public Sector & PPP competencies Data Information Knowledge Action Result Design Expertise Process Implementation Adapted from Venkatrama’s process-information continuum
  17. Elements of successful project management – concept – design – planning – costing – management – construction – monitoring – performance – delivery But who does what?
  18. Health vs Education Infrastructure Services
  19. Best Practice Norms & standards (KPIs): Educational infrastructure Services Number of schools, i.e. number of schools per number of residents, Number of learners, cost per learner, Number of teachers, number of teacher per student, Mixture of new & refurbishments, Construction times, NPV of unitary or school fees, or combination. Adapted IMF, 2007, PPP Pilot Studies: Brazil, Chile, Colombia, Ethiopia, India, Jordan & Peru, DTI survey of 90 PPP Schools projects in English Schools.
  20. ICT Services ICT Governance, Desktop & Data Centre, Intranet & Internet, Corporate applications, Telecoms (voice, data, video), ICT Security, Printing.
  21. ICT cost categories Hardware, Software, Network (voice, data, video), Data, Private Party, Consumables.
  22. Challenges to working: Faster, Harder, Smarter BEE & SMME access to PPP resources, both financial & non-financial, Government support, Programme, & project management, Project finance, technical assistance to facilitate financial close, contract management to extract efficiency gains in finance, design, construction, operation, maintenance & upgrade, (economies of scale & scope) Private sector Transaction advisory, “the same culprits syndrome”, & lack of capacity, Project finance, Efficiency in PPP feasibility study & best mix of funding, Competition on innovation, Co-financing & co-funding. Sector Public Private Partnerships
  23. Opportunities Health Chris Hani Baragwanath & George Mkhari: Gauteng 5 projects in Limpopo, KwaZuluNatal and Eastern Cape in pipeline, Watch other provinces, Education, Housing, Eco-tourism, public transport, portable water supply, liquid & solid waste, Public sector fleet management & office accommodation, Use of state property, ICT: supports, enables, & delivers service, Public Sector General Ledger, Economic Classification & Reporting.
  24. Contact Details CedrickMuleya PPP Unit National Treasury 240 Vermeulen Street Pretoria South Africa Tel: +27 12 315 5576 Cel: +27 84 608 9640 Fax: +27 12 315 5477 Cedrick.Muleya@treasury.gov.za www.ppp.gov.za www.treasury.gov.za
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