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PRESENTATION TO THE STANDING COMMITTEE ON APPROPRIATIONS

PRESENTATION TO THE STANDING COMMITTEE ON APPROPRIATIONS. Presented by Acting COO – MR. B. MATUTLE. 07 June 2011. 1. TABLE OF CONTENTS. MINISTER’S FOREWORD INTRODUCTION AND STRATEGIC CONTEXT OVERVIEW OF THE ACCOUNTING OFFICER

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PRESENTATION TO THE STANDING COMMITTEE ON APPROPRIATIONS

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  1. PRESENTATION TO THE STANDING COMMITTEE ON APPROPRIATIONS Presented by Acting COO – MR. B. MATUTLE 07 June 2011 1

  2. TABLE OF CONTENTS • MINISTER’S FOREWORD • INTRODUCTION AND STRATEGIC CONTEXT • OVERVIEW OF THE ACCOUNTING OFFICER 4.DPW PROGRAMME STRUCTURE AND BRANCH PROJECTS : • PROGRAMME 1: ADMINISTRATION • PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT • PROGRAMME 3: EXPANDED PUBLIC WORKS PROGRAMME (EPWP) • PROGRAMME 4: CONSTRUCTION AND PROPERTY POLICY REGULATION • PROGRAMME 5: AUXILIARY AND ASSOCIATED SERVICES 5. UNDER XPENDITURE 2

  3. INTRODUCTION AND STRATEGIC CONTEXT MANDATE: The mandate of the Department of Public Works is provided for in the Government Immovable Asset Management Act (GIAMA 2007). The objective of the Act is to ensure efficient and effective planning of immovable asset management within government, as well as to improve service delivery. The Department of Public Works is responsible for the provision of official accommodation for all national departments and all members of Parliament, and providing construction and property management services to client departments at the national level. The department is also responsible for providing leadership for and coordinating the Expanded Public Works Programme (EPWP). The Medium Term Strategic Framework (MTSF): Key policy priorities guiding medium-term planning: • Speeding up growth and transforming the economy to create decent work and sustainable livelihoods; • Massive programme to build social and economic infrastructure; • Comprehensive Rural Development Strategy linked to land and agrarian reform and food security; • Strengthening our skills and human resource base • Intensifying the fight against crime and corruption; • Pursuing African advancement and enhanced international cooperation; • Sustainable resource management and use; and • Building a developmental state, including improvement of public services and strengthening democratic institutions. 3

  4. INTRODUCTION AND STRATEGIC CONTEXT The Department's strategic goals were aligned to the MTSF (indicated in brackets). The goals are: • Provide strategic leadership in effective and efficient immovable asset management and in the delivery of infrastructure programmes (SP 2, 3, 6); • 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 (SP 1); • Contribute to the building of a developmental state and a comprehensive rural development framework through state assets (SP 3 & 10); • Ensure transformation and regulation of the construction and property industries to ensure economic growth and development (SP 1); • Ensure effective corporate governance and sound resource management (SP 9,4) and • Ensure improved service delivery in all Departmental programmes to meet clients' expectations and leverage stakeholder relations (SP 3). 4

  5. INTRODUCTION AND STRATEGIC CONTEXT Five outcomes: form the basis re Department’s Strategic Plan: • Create decent employment through inclusive economic growth; • Create efficient, competitive and responsive infrastructure network; • Efficient and effective development-oriented Public Service and an empowered fair and inclusive citizenship; • Skilled and capable workforce to support an inclusive growth path; and • Sustainable human settlements and an improved quality of household life. The Minister’s Performance Agreement and Service Delivery Agreements are central to the department’s planning. The Minster’s PA covers three (3) sector outcomes: decent employment through inclusive economic growth (outcome 4), sustainable human settlements and improved quality of household life (outcome 8), and an efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship (outcome 12). All branches have used the MTSF priorities and outcomes in their business plans. 5

  6. INTRODUCTION AND STRATEGIC CONTEXT Outcomes in the Minister’s PA – Outcome 4:Focus areas: reduce youth unemployment, analysing the cost structure of SA economy & expanding the EPWP. DPW Implementation/Building Programmes and input costs in the construction sector. Outcome 8:Focus area: DPW is required to contribute land for low-income housing to the Department of Human Settlements. Outcome 12: Focus area: DPW is expected to provide quality and accessible office accommodation that facilitates service delivery for all citizens. 6

  7. KEY MEDIUM-TERM PRIORITIES Key priorities over the medium-term: To create a balanced between the change and sustained agenda, more emphasis is on: • job creation and poverty eradication, empowerment, poverty eradication, skills development in the built environment and property management, service delivery improvement to client departments, enhancement of the asset register, cost effective infrastructure delivery and rural development. Emphasis of the Strategy for the next three years: • Improved service delivery in the provision of official accommodation for all national departments and all members of Parliament. • Promote intergovernmental cooperation to improve service delivery. • Providing construction and property management services to client departments at a national level. • Lead Expanded Public Works Programme (EPWP) - the custodian of the largest state immovable asset footprint, will expedite the investment in infrastructure to promote social cohesion, local economic development and job creation • New Growth Path directives • Poverty alleviation • Labour- intensive methodology – DORA procurement guidelines • Incentive grants – technical support to municipalities • Improve monitoring and evaluation. • Land disposal policy as the basis for development and cluster of government services 7

  8. KEY MEDIUM-TERM PRIORITIES Immoveable Asset Register enhancement: • Amnesty Call campaign - properties recovered to enhance our disposal strategy or contribute to the Inner City Regeneration. • Complete essential information for the asset register to align it with generally recognised accounting practice. Reclaim of the mandate • Projects – military bases and installations of the Department of Defence. • Skills Development and Capacity Building: • The scarcity of skills in the construction and built environment sectors requires targeted ongoing human capital development initiatives by the department. • The department is facing major challenges around operational resources and filling of strategic professional and technical skills in areas like project management, financial management and business analysis. • Invitation for artisans and engineers to partner in the interest of service delivery. • Rolling out a bursary programme to attract the necessary skills. • Internship and learnership programme in place for experiential training, and assisting qualified Young Professionals in the employ of the Department to get professional registration. These initiatives are complemented by those of Public Entities reporting to the DPW. • Expanded Public Works Programme (EPWP) in support of the New Growth Path • Poverty alleviation will utilize the existing budgets in the procurement of goods and services, using labour intensive methods to create jobs, deliver services, and build decent communities. • Support provinces and municipalities to invest in job creation in return to for cash incentives which can be (and must be) re-invested in further job creation opportunities and improve its monitoring and evaluation. 8

  9. KEY MEDIUM-TERM PRIORITIES DPW Contribution to rural development • Recent roll-out to communities includes – construction roads and bridges; and the construction of rural schools as a fundamental children’s right to education, health and safety. • Inner city regeneration – contribute to rural development and student accommodation. Building, maintenance and capital works programmes • Upgrading of facilities for disabled people; • Upgrading and construction of department’s offices; • Development of national government precincts; • Redevelopment of infrastructure related border post centres. • Dolomite risk management. Transformation and regulation of the property and construction industries • The Government Immovable Asset Management Act (GIAMA) 2007 – extend principles to local government. • Review of White Papers. • Implementation of PIP and CIP. 9

  10. KEY MEDIUM-TERM PRIORITIES 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): training and contractor development; procurement reform and research and development. • The Council for Built Environment (CBE): compliance with policies, regulations and standards within the built environment and building and monitoring skills development. • The Agrément SA (ASA): the focus will continue to provide assurance of fitness of purpose for non-standardised construction materials & technologies. • The Independent Development Trust (IDT): tasked to prioritise poverty reduction and to deliver social infrastructure, as an implementing agent of government programmes. 10

  11. PROGRAMME 1: ADMINISTRATION PURPOSE OF THE PROGRAMME: To provide strategic leadership and support services, including the accommodation and overall management of the Department. SUB-PROGRAMMES: MINISTRY: The sub-programme make provision for the financial resources for the Minister and Deputy Minister. MANAGEMENT: The sub-programme makes provision for all top management support functions within the Department. 1. OFFICE OF THE DIRECTOR-GENERAL: The office provides strategic leadership, guidance and oversees the overall implementation of the Department’s Strategic Plans, across all functions. The following units are part of the office: • Internal Audit and Investigation services • Monitoring & Evaluation • Strategic Management Unit • Intergovernmental Relations 11

  12. PROGRAMME 1: ADMINISTRATION (Cont…) 2. FINANCE AND SUPPLY CHAIN MANAGEMENT: The main purpose of the sub-programme is to promote operational effectiveness through sound financial policies and responsive supply chain management, integrated financial planning, budgeting and expenditure management: 2.1 FINANCIAL MANAGEMENT The purpose of this function is to ensure adequate financial planning and effective allocation and monitoring of resources in the Department. 2.2 SUPPLY CHAIN MANAGEMENT This function forms an integral part of the operations as it is responsible for the procurement of goods and services in the Department. Its key performance area includes providing strategic leadership in terms of the acquisition and sourcing strategies, as well as to ensure that the Department does not incur irregular, unauthorized or fruitless expenditure. 12

  13. PROGRAMME 1: ADMINISTRATION (Cont…) KEY PRIORITIES OVER THE MEDIUM-TERM • Effective Revenue Management (PMTE) & DPW • Effective Debtors Management • Effective Internal Controls & Risk Management • Effective budget mobilization and prioritization • Effective procurement of goods and services • Payments turnaround time • Effective empowerment strategy • Training of interns 3. PROPERTY MANAGEMENT TRADING ENTITY (PMTE): The main purpose of this function is to provide sound financial management to ensure the sustainability of the PMTE, financial planning of projects, cash flow and expenditure management, proper billing to clients, revenue collection and debtor’s management. 13

  14. PROGRAMME 1: ADMINISTRATION (Cont…) • CORPORATE SERVICES: Corporate Services is a partner in support of the Department’s service delivery objectives. It provides the following services: 4.1 HUMAN RESOURCE MANAGEMENT: The design and application of staffing and skilling solutions in support of an efficient, effective and development-orientated Public Works. 4.2 INFORMATION SERVICES: Provision of modern and appropriate information management systems and technologies, which are responsive to the key business requirements of the Department. 4.3 COMMUNICATION & MARKETING: Implementation of both strategic and developmental communication systems aimed at empowering the citizens and mobilizing public participation. 14

  15. PROGRAMME 1: ADMINISTRATION (Cont…) 4.4 LEGAL SERVICES: Interpretation of legal concepts and other precepts applicable to the Department in the daily undertaking of its business. 4.5 INTERNATIONAL RELATIONS: 4.5.1 Consolidation of the African Agenda • Finalizing bi-lateral cooperation frameworks. 4.5.2 South-South Cooperation • Cuban Ministry of construction • IBSA • BRICS 15

  16. TOTAL MTEF 2011 BUDGET

  17. BUDGET ALLOCATION PER BRANCH

  18. CONDITIONAL GRANTS & SPECIFICALLY & EXCLUSIVE APPROPRIATION

  19. PROGRAMME 1: ADMINISTRATION (Cont…)

  20. PROGRAMME 1: ADMINISTRATION (Cont…)

  21. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT PURPOSE OF THE PROGRAMME To manage national government’s immovable property portfolio in support of government’s social, economic, functional and broad policy objectives. EXPECTED OUTCOME (S) OF THE PROGRAMME • An efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship. • Sustainable human settlements and an improved quality of household life. KEY POLICY PRIORITIES • Building a developmental state, including improvement of public services and strengthening democratic institutions. • Comprehensive rural development strategy linked to land and agrarian reform and food security. • Building a developmental state, including improvement of public services and strengthening democratic institutions. 21

  22. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT (cont…) SUB-PROGRAMMES OF PROGRAMME 2: • Infrastructure (Public Works) • Strategic Asset Investment Analysis • Projects and Professional Services • Operations Management • Prestige Management • Property Management • Augmentation of the PMTE • Construction Industry Development Board • Council for the Built Environment • Agrément South Africa • Parliamentary Villages Management Board • Independent Development Trust 22

  23. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT (cont…) 1. SUB-PROGRAMME: INFRASTRUCTURE The acquisition of infrastructure for DPW, the prestige portfolio, land ports of entry, dolomite risk management, inner city regeneration programmes and accessibility programmes is funded from the Infrastructure (Public Works) allocation. Table: Infrastructure Budget 23

  24. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT (cont…) SUB-PROGRAMME: STRATEGIC ASSET INVESTMENT Ensure optimization and maximization of the state assets portfolio under its custodianship for economic, social and investment purposes. KEY PRIORITIES OVER THE MEDIUM-TERM • Asset Register/Amnesty Call/Vesting • Energy Efficiency • Buildings for People with Disabilities • Rehabilitation and Maintenance Programmes • Release land for land reform/housing/agric • Rural development/office precincts 24

  25. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT (cont…) SUB-PROGRAMME: PROJECTS AND PROFESSIONAL SERVICES KEY PRIORITIES OVER THE MEDIUM-TERM • Up-skilling of all project managers in the area of contract law and occupational safety. • General cleaning and horticulture projects at all Ports of Entries, using EPWP methodology. • Potholes repair program in focused area within the country. • Energy & water saving programmes. • Construction of Tzaneen Project that will accommodate 496 inmates. The project is expected to be completed by 2012/09/11. • Management of water & sewerage related projects in various prisons across the country where there are municipal services. • Refurbishment of accommodation and operational facilities projects for Department of Defence with construction having started in January 2011 at Doornkop 21 Battalion, Mafikeng 10 Battalion, and Simonstown Naval Base. 25

  26. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT (cont…) • Phase 2 of Waterkloof Air Force Base runway covering the secondary runway known as 0624 project commenced in January 2011. • Development of staff accommodation facilities at Skilpadhek Border Post and Lebombo Border Post (Komatipoort) • Development of Matola Monument/ Memoriam in Mozambique. • Resume the Construction of Pan African Parliament. • Implement facilities management contract for Civitas Building. • Refurbishment of mechanical and electrical services for Air Force Head Quarters Facilities. • Improved Customer Service. • Growth of Emerging Contractors through CIDB Register. 26

  27. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT (cont…) SUB-PROGRAMME: OPERATIONS MANAGEMENT REGIONAL OPERATIONS MANAGEMENT • The DPW’s eleven (11) regional offices fall under this sub-programme KEY PRIORITIES OVER THE MEDIUM-TERM • Capital Works Implementation Programme • Planned Maintenance Implementation Programme • Acquisition Programme • Leasing Implementation Programme • Property and Facilities Management & Maintenance Implementation Programme • Statutory Compliance Management Programme • Construction of maintenance projects • Procured leased and state owned accommodation • Property and facilities management and maintenance projects • Promote health and safety on Construction, Heritage and Disability projects 27

  28. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT (cont…) SUB-PROGRAMME: INNER CITY REGENERATION KEY PRIORITIES OVER THE MEDIUM-TERM • ICR initiated Tshwane precinct master plan. • Contribute towards revitalization and development of cities and rural towns to serve as service centres for rural economies. • Maximise utilization of State Properties within Major cities. • Rehabilitation and upgrading facility for student accommodation in Bloemfontein and Pretoria. SUB-PROGRAMME: PROPERTY MANAGEMENT KEY PRIORITIES OVER THE MEDIUM-TERM • Management of state property and leased portfolio. • Facilities management. • Acquisition of properties through leasing, expropriation, exchange, purchase and donation. • Optimal utilization of the state’s property portfolio. 28

  29. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT (cont…) SUB-PROGRAMME: PRESTIGE MANAGEMENT To facilitate and co-ordinate the provision and management of appropriate accommodation for Prestige clients KEY PRIORTIES OVER THE MEDIUM-TERM • Develop Maintenance Plan for Prestige assets • Optimally utilized Prestige buildings and acquisition of additional houses • Improve service delivery to Prestige Clients SUB-PROGRAMME: AUGMENTATION OF THE PROPERTY MANAGEMENT TRADING ENTITY (PMTE) The PMTE was established to facilitate accommodation related costs to client departments. This entailed the implementation of the “user charge” principle. The Department of Public Works Building Programme is implemented through the PMTE. The revenue generated by the PMTE is used to pay property rates, provide cleaning and gardening services and general maintenance of buildings. 29

  30. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT (cont…) SUB-PROGRAMME: PARLIAMENTARY VILLAGE MANAGEMENT BOARD To provide transportation for residents of the three Parliamentary Villages to Parliament and back as per the Parliamentary Villages Management Board Act No. 96 of 1998 SUB-PROGRAMME: PUBLIC ENTITIES • Council for the Built Environment (CBE) • Agrément South Africa (ASA) • Independent Development Trust (IDT) • Construction Industry Development Board (CIDB) 30

  31. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT (cont…)

  32. PROGRAMME 2: IMMOVABLE ASSET INVESTMENT MANAGEMENT (cont…)

  33. PROGRAMME 3: EXPANDED PUBLIC WORKS PROGRAMME (EPWP) PURPOSE OF THE PROGRAMME To ensure creation of work opportunities for poor and unskilled people in South Africa by coordinating the implementation of the programme and providing overall strategic leadership across the three spheres of government EXPECTED OUTCOME (S) OF THE PROGRAMME To create work opportunities through inclusive economic growth KEY POLICY PRIORITIES Speeding up growth and transforming the economy to create decent work and sustainable livelihoods KEY PRIORTIES OVER THE MEDIUM-TERM • Implement incentive scheme in the Social and Non-State Sectors • Implement NYS and increase DPW work opportunities targets. • Provide technical support to municipalities • Support Community Work Programme in partnership with COGTA. • NGO Pilot Programme • EPWP Infrastructure Incentive Grant for Provinces and Municipalities • Incentive Scheme in the Environment and Cluster Sector 33

  34. PROGRAMME 3: EXPANDED PUBLIC WORKS PROGRAMME (EPWP) (cont…) Table 8: Work opportunities – targets per year and sphere of government *To create 4,5 million short and ongoing work opportunities with an average duration of 100 days - for poor and unemployed people in South Africa so as to contribute to halving unemployment by 2014, through the delivery of public and community services. 34

  35. PROGRAMME 3: EXPANDED PUBLIC WORKS PROGRAMME

  36. PROGRAMME 3: EXPANDED PUBLIC WORKS PROGRAMME (EPWP) (cont…)

  37. PROGRAMME 4: CONSTRUCTION AND PROPERTY POLICY REGULATION PURPOSE OF THE PROGRAMME To regulate and promote growth and transformation in the construction and property industries. To promote uniformity and best practice in the construction sector and in the immovable asset management in the public sector. EXPECTED OUTCOME (S) OF THE PROGRAMME Efficient and effective development-orientated public service and an empowered fair and inclusive citizenship. KEY POLICY PRIORITIES • Speeding up growth and transforming the economy to create decent work and sustainable livelihoods. • Comprehensive Rural Development Strategy linked to land and agrarian reform and food security. • Sustainable resource management and use. • Building a developmental state, including improvement of public services and strengthening democratic institutions. 37

  38. PROGRAMME 4: CONSTRUCTION AND PROPERTY POLICY REGULATION SUB-PROGRAMME: CONSTRUCTION INDUSTRY DEVELOPMENT PROGRAMME KEY PRIORITIES OVER THE MEDIUM-TERM • Promote and monitor the implementation of construction policy. • Monitoring the implementation of policies in terms of performance in the construction industry to encourage and facilitate competitiveness. • Monitoring economic and performance trends in the construction sector, and formulate strategies. • Align the Contractor Incubator Programme (CIP) to the National Contractor Development Programme (NCDP). SUB-PROGRAMME: PROPERTY INDUSTRY DEVELOPMENT PROGRAMME KEY PRIORITIES OVER THE MEDIUM-TERM • Immovable asset life cycle management guidelines • Initiate a process of applying GIAMA principles to local government • Property Empowerment Strategy • Property Management Policies • Review of Expropriation Act • Strategy on Green Building 38

  39. PROGRAMME 4: CONSTRUCTION AND PROPERTY POLICY REGULATION (cont ….)

  40. PROGRAMME 4: CONSTRUCTION AND PROPERTY POLICY REGULATION (cont…) Business Plan

  41. PROGRAMME 5: AUXILIARY AND ASSOCIATED SERVICES PURPOSE OF THE PROGRAMME To provide various services, including; compensation for losses on government assisted housing scheme; assistance to organization for the preservation of national memorials; managing grants for the Parliamentary Village Management Board; and meeting protocol responsibilities for State functions. SUB-PROGRAMMES • Assistance to Non State Sectors for preservation of state assets. • State Functions • Sector Education Training Authority 41

  42. Measures put in place to address the 2010/11 under spending

  43. FINANCIAL PERFORMANCE PER ECONOMIC CLASSIFICATION

  44. EPWP INCENTIVE GRANT PERFORMANCE AS AT 31ST MARCH 2011

  45. EXPLANATIONS TO THE UNDER SPENDING • Current Budget: Compensation of Employees The under spending is due to additional funds reprioritized for the filling of vacant posts. Apart from the normal staff attrition, the department had commenced with the high drive of the recruitment process, however, the lag period between the interviews, appointment letters and the assumption of duties usually averages a two month period. • Goods & Services The savings under goods and services relates to commitments under the energy efficiency programme with the IDT. Roll over has been requested. Out of the R75 million transferred in February, R16,490 million was spent as the 31st March. An amount of R40,9 million was requested for roll over. • Measures put in place The department has already put in please aggressive measures of filling all the vacant posts. All the 641 vacant funded posts have been advertised. Almost 522 interview have taken place and the process of filling is proceeding exceptionally well.

  46. EXPLANATIONS TO THE UNDER SPENDING • Capital and Infrastructure: • The under spending of R120 million relates to funds committed through the IDT as an implementation agent for the transformation of mud schools. As at the 31 March, R18,9 million was spent resulting with a balance of R111 million which has been requested as a roll over. • Measures put in place • Focused manager for projects • Weekly expenditure reports • Close monitoring of budget allocation to projects • Management meetings • Enforce compliance and accountability • Fast track supply chain turnaround times • Machinery & Equipment: • The under spending largely relates furniture and IT equipment which was planned for the new premises that were going to be occupied by Public Works, (CGO building).

  47. EXPLANATIONS TO THE UNDER SPENDING • Transfers & Subsidies • The under spending of R483 million EPWP is largely attributable to the slow reporting of job created by municipalities and provinces. • The Department has put in place measures that include; recruitment of additional staff to provide additional technical support to Public Bodies to accelerate the creation of work opportunities and draw down of the incentive grant. • Intensify close monitoring • Develop new approaches to job creation including flexibility on the conditions of the grant. • Drive some of the projects from National Level • Intensify the awareness campaigns • Improve reporting

  48. Thank You

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