Infrastructure Development

1. Infrastructure Development Gauteng PPP conference 18 February 2010 Allyson Lawless Pr Eng DBSA : SiyenzaManje Engineering Support in Gauteng The South African Institution of Civil Engineering (SAICE)

2. Population served ~ 14 million • Civil engineering professionals ~ 2500 + • 21 + civil staff per hundred thousand population

3. Functions performed

4. Wall to wall local government since 2000 • Population served ~ 47 million • Civil engineering professionals in 2007 ~ 1300 + • ~2.8 civil staff per hundred thousand population

5. Successful local authorities

6. Functions performed Numbers and Needs in Local Government : Civil Engineering – the critical profession for service delivery – November 2007

7. Bleeding has taken place for a long time

10. Limited maintenance – waste, sanitation, stormwater challenges

11. The electricity challenge • Ageing distribution networks and equipment • High losses due to poor financial management, calibration and theft • Total lack of funds for maintenance • Vandalisation, cable & transformer theft for copper • 10% energy savings required by ESKOM • Limited engineering staff remain • Few GCC registered • Few artisans • No O&M – waiting for the REDs for the past 17 years!

12. Water losses Province ~ R 1,295 bn loss p.a. from leaks!

13. Leaking toilets What to do – new dams or fix leaks – huge cost benefit to fix leaks! Leaking pipes Leaking meters

14. Maintenance has become prohibitively expensive because of neglect Repair at 5 years = R0.1 m/km Repair at 8-10 years = R0.6m/km (x6) Repair at 10-15 years = R1.8m/km (x18)

15. Rough estimate of maintenance backlogs in Gauteng

17. Functions needed

18. To dos • Increase income • Re-prioritise spending to increase development, operations and maintenance • Increase engineering capacity • Harness private sector to break the back of development and upgrading needs, and assist with training

19. Increase income, address losses, • Correct tariffs (many municipalities selling way below cost) • Enforce developer contributions • Set up systems to determine who to be billed to increase income • Chase debtors – only about 20% of outstanding debt relates to indigents • Collect money from other consumers to cross subsidise indigents • Automatically debit public sector departments and employees • Repair water and electricity networks to reduce losses • Consider metering technologies

20. Innovate and invest in maintenance • Look at new technologies and life cycle costing for new projects and include maintenance budgeting as a condition of all future developments • Make equitable share conditional and ring fence maintenance funds • Need to calculate maintenance budget from zero base to determine actual need – 6% increase per annum has eroded effectiveness because • Staffing costs have increased beyond 6% • Operating costs have increase beyond 6% leaving little for spares and materials

21. Funding for turnaround • Need to reprioritise municipal spending, reducing expenditure on non-core activities • Need specific grant to restore non-income generating infrastructure • Need loans to restore income earning infrastructure, as savings from reduced losses will soon repay loans

22. Capacity - rebuild not restructure • Capacity levels at an all time low • Rebuild structures and develop meaningful organograms • Change terms and conditions to retain S57 staff unless inadequate performance, rather than terminate in the absence of performance reviews • Stop job hopping

23. Professionalise • Develop competence model • Appoint professional, registered, senior officials with sound track record (MM, CFO, Chief Engineer) • Review selection criteria guidelines from • Profession of Town Clerks Act (Act 75 of 1988) • Municipal Accountants Profession Act (Act 21 of 1988) • Engineering Profession Act (Act 46 of 2000) • Professional bodies to assist with interviews and selection

24. Develop technical team • Increase spend on technical staff – usually way below 32% - reduce staffing levels in non-core activities if necessary • Train engineering staff, with external mentorship if necessary • Implement career and succession planning • Involve students, graduates, inadequately trained in-house staff • Train and fund more artisans • Mandatory infrastructure asset management system for all municipalities • Train students/graduates and set up dedicated team to keep info up to date in order to adequately budget for and manage infrastructure • Implement real-time complaints log, repair process, reporting and costing for maintenance activities

25. Rebuild collapsing structures

27. Successes of support to date Students attend orientation course but no one employing them! Technical job description programme developed Electrical trainees meet the Minister of Minerals and Energy

28. Learning how to survey! Engineering students graduate as a result of experiential opportunities Supervising construction of various treatment works

29. External delivery mechanisms • Partnership with the private sector • PPP (Public private partnerships) • PPC (Public private cooperation) • Use communities a lot more for maintenance and increase job creation • Franchising • Short term support and training from private sector

30. Second young staff to consultants to be trained • Private sector to second experienced municipal staff to local government to rebuild capacity, offer structures and systems, and on-the-job training, or • Outsource rebuilding of municipal structures to consulting firms (S78 type of approach over say a 5 year period) – condition that senior engineers with municipal experience must be used to manage the rebuilding process • Work with the MM and be given authority to make the changes

31. An Engineering Corps: • Set up an engineering corps with experienced engineers to direct and attend to many strategic and planning issues (suggested by Professor Steven Kelman of Harvard, when the capacity problems were outlined in a meeting with National Treasury) Panel of consultants: • Appoint a panel of experienced consultants for specialist work that municipalities can harness without going to tender (Clause 32 of the MFMA) Develop standards and scopes: • Use pool to assist municipalities with tenders and scopes of work

32. Second engineering staff and apprentices to contractors to be trained • Harness contractors to train SMMEs and communities as part of each major contract so that they can be used for on-going maintenance thereafter • Adopt-a-town - private sector contracts to adopt-a-town in toto to: • Address backlogs • Refurbish and rehabilitate • Put operating and maintenance systems and processes in place • Address losses, increase income etc • Build capacity in all departments (technical, financial, HR etc) • Use powerful CEO type of person who has run large businesses in the past to set up

33. It has been suggested that O&M could largely be outsourced, but that service providers should be franchisees, set up and trained by recognised franchisors, to give municipalities the peace of mind that there is quality control and franchisees have access to expertise in case of challenges which arise beyond their level of expertise

35. Numbers and Needs in Local Government Contact details: Allyson Lawless allyson@ally.co.za SAICE (to purchase book) Angelene Aylward 011-805 5947 aaylward@saice.org.za