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Annual Report 2014/15 FINANCIAL YEAR

This presentation provides an overview of the Department of Public Works' mandate, ministerial priorities, historical perspective, and strategic realignment for the financial year 2014/15. It also highlights the department's performance and financial information.

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Annual Report 2014/15 FINANCIAL YEAR

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  1. South Africa Works because of Public Works Annual Report 2014/15 FINANCIAL YEAR Presentation to the Portfolio Committee on Public Works 14th October 2015 Office of the Director-Genera I Public Works I CGO I Pretoria

  2. Contents • Mandate of the Department Slide 3 • Ministerial priorities Slide 7 • Historical perspective Slide 9 • Strategic realignment Slide 11 • High Level Performance Highlights Slide 14 • Programme Performance Slide 17 • Financial Information Slide 26

  3. Purpose of the Presentation 1. Mandate

  4. 1. Mandate of the Department Constitutional mandate • The Constitutional mandate is provided for in Schedule 4, Part A, of the Constitution of the Republic of South Africa: Functional Areas of Concurrent National and Provincial Legislative Competence. Legislative mandate • The legislative mandate is primarily governed by the Government Immovable Asset Management Act, 2007. • The Department regulates the construction industry and built environment through the Construction Industry Development Board Act, 2000 (Act No. 38 of 2000) and the six Professional Council Acts that regulate the six Built Environment Professions (BEPs), and through the Council for the Built Environment Act (Act No. 43 of 2000)

  5. Mandate of the Department Cont. Policy mandates • DPW White Paper: Public Works, Towards the 21st Century, 1997 • DPW White Paper: Creating an Enabling Environment for Reconstruction, Growth and Development in the Construction Industry, 1999 • Construction Sector Transformation Charter, 2006 • Property Sector Transformation Charter, 2007 • DPW Broad-based Black Economic Empowerment Strategy, 2006 • Property Management Strategy on BBBEE, Job Creation and Poverty Alleviation, 2007 • Green Building Framework, 2011

  6. Mandate of the Department cont. Mission The Mission aligned to the mandate of the Department is to: • Provide quality accommodation and related services to our clients • Efficiently and effectively managing the immovable assets in our custodianship • Actively contributing to the national goals of job creation and poverty alleviation through the Expanded Public Works Programme • Provide expert built-environment advice to our stakeholders • Provide strategic leadership to the South African Construction and Property industries

  7. Purpose of the Presentation 2. Ministerial priorities

  8. 2. Ministerial Priorities • The creation of six (6) million work opportunities over a period of five (5) years for poor and unemployed people through the labour-intensive delivery of public services and infrastructure. • The operationalization of Property Management Trading Entity (PMTE) and the transformation of the core property business component of the Department. • The establishment of the Governance, Risk and Compliance Branch (GRC Branch) to drive anti-corruption and to spearhead the second phase of the Turnaround Strategy. • In consultation with all stakeholders, particularly the wider Public Works sector, a Policy Review must culminate in a Public Works Act. • In partnership with the Department’s entities, the Charter Councils and relevant stakeholders, a renewed and sustained Programme of Action to transform the built environment must be embarked upon.

  9. Purpose of the Presentation 3. Historical perspective

  10. 3. Historical Perspective • The Diagnostic Report of the Technical Assistance Unit (National Treasury), released in January 2012 revealed the following critical areas to be addressed within the Department: • Allegations of fraud and corruption • National Treasury approval for PMTE not implemented • Lack of adequate service delivery to user departments due to slow delivery of accommodation and poorly maintained accommodation • Incomplete immovable asset register • Lack of stability in leadership positions • Negative audit outcomes

  11. Purpose of the Presentation 4. Strategic realignment

  12. 4. Strategic Realignment To address the identified weaknesses, the Department: • Developed a Seven Year Turnaround Plan guided by the TAU Diagnostic report • Developed a strategy to operationalize the PMTE separating the regulatory function of the Department from the implementation functions of the PMTE based on • value proposition of the PMTE to improve service delivery • anti-corruption and anti-mal administration drive • best practice in the provision of accommodation and management of the immovable asset life cycle • an appropriate organisational structure for PMTE to attract and retain professionals • proper accrual based accounting for the PMTE

  13. Model of Delivery (DPW and PMTE)

  14. Purpose of the Presentation 5. Performance Highlights

  15. Improved Audit Outcomes Qualified Adverse Disclaimer

  16. Performance Highlights These are some of the highlights in the period under review: • Compilation of a substantially complete immovable asset register toward the March 2016 target • A credible lease data base with substantiating documentation that resulted in no material audit findings on leases within the year under review • Completion of construction projects within minimal variation • Operationalisation of PMTE achieved a critical milestone with the transfer of functions from the Main Vote to the PMTE • Successful accounting treatment of the complex transactions associated with the transfer of functions • Skills development and capacity to complement the skills requirements • Development of a service delivery model for DPW and PMTE • Strengthened the coordination and oversight of the Public Works Sector through effective intergovernmental engagements • Effective transition from Phase II to Phase III and the creation of 1,1 million work opportunities in 2014/15

  17. Purpose of the Presentation 6. Programme Performance

  18. Programme 1: Administration (Pages 88-99)

  19. Programme 1: Administration (Pages 88-99) Cont.

  20. Programme 2: Immovable Asset Management – (Pages 101-121)

  21. Programme 2: Immovable Asset Management – (Pages 101-121)

  22. Programme 2: Immovable Asset Management – (Pages 101-121)

  23. Programme 3: EPWP (Pages 121-122)

  24. Programme 4: Property and construction Industry policy regulation (Pages 123-125) .

  25. Programme 5: Auxiliary and Associated Services (Pages 126)

  26. Purpose of the Presentation 7. Financial Information

  27. DPW – PROGRESS ON AUDIT OUTCOMES Emphasis matters: 1. Immovable Tangible Assets 2. Restatement of corresponding figures 3. Material Impairment 4. Material under spending Emphasis matters: 1. Restatement of corresponding figures 2. Material Impairment 3. Material under spending

  28. Purpose of the Presentation DPW Main Account Appropriation Statement

  29. DPW SHIFTING / VIREMENT PER PROGRAMME (Page 219 to 281)

  30. DPW SHIFTING / VIREMENT PER PROGRAMME (Page 219 to 281)

  31. EXPLANATORY NOTES TO THE VIREMENT

  32. EXPLANATORY NOTES TO THE VIREMENT

  33. EXPLANATORY NOTES TO THE VIREMENT

  34. DPW ACTUAL EXPENDITURE AGAINST APPROPRIATION PER PROGRAMME (Page 219 to 281)

  35. DPW ACTUAL EXPENDITURE AGAINST APPROPRIATION PER PROGRAMME (Page 219 to 281)

  36. EXPLANATORY NOTES TO PROGRAMME VARIANCE

  37. EXPLANATORY NOTES TO PROGRAMME VARIANCE

  38. DPW ACTUAL EXPENDITURE AGAINST APPROPRIATION PER ECONOMIC CLASSIFICATION (Page 222 to 228)

  39. EXPLANATORY NOTES TO EXPENDITURE VARIANCE • Compensation of employees • Under-spending of R19 million is mainly due to vacant positions (EPWP) that were filled and those that became vacant in the latter part of the financial year. • Goods and services • Under-spending of R14 million relates to late receipt of invoices (R3 million) that could not be processed before financial year-end and the balance (R11 million) relate to the budget allocation for Agrement SA which was processed under transfers and subsidies. • Transfer payments • Provinces and municipalities – under-spending of R1.2 million relates to withheld funds for EPWP Social Sector (Limpopo Provincial Government) due to non-compliance to DORA requirements. • Non-profit Institutions – R11 million over-spending relates to transfer payment to Agrement SA (Programme 4) which was classified under the budget allocation for goods and services. • Payments for capital assets • Buildings & other fixtures – R71 million underspending due to delay in processing claim for expenditure relating to infrastructure projects (Programme 2).

  40. Purpose of the Presentation DPW Main Account Financial Statements

  41. DPW FINANCIAL PERFORMANCE (Page 282 to 283)

  42. EXPLANATORY NOTES TO EXPENDITURE VARIANCE • Annual appropriation • Reduced budget allocation compare to the previous financial year. • Compensation of employees • Annual inflationary salary increase (average of 7%) as well as the grading of positions. • Goods & Services • Year-on-year increase of R112 million for reclassification of maintenance and repairs from capital to goods and services. • Transfers and subsidies • R18 million decrease due to budget reduction under EPWP conditional grants for both Provinces and Municipalities (Integrated and Social Sector Grants). • Tangible capital assets • Year-on-year reduction in buildings and other fixtures of R195 million due to reduced allocation and increase in expenditure in the machinery and equipment. • Reclassification of the infrastructure budget during the adjustment from capital to goods and services. • Intangible assets • R15 million decreased expenditure due to less IT software acquired compared to 2013/14.

  43. DPW FINANCIAL POSITION (Page 284 to 285 )

  44. EXPLANATORY NOTES TO EXPENDITURE VARIANCE • Unauthorised expenditure • R6 million increase due to the honouring of contractual commitmentsof projects - expenditure of which was declared unauthorised in the previous years. • Prepayments and advances • Improved spending on advance payments compared to the previous financial year. • Less prepayment made for software licences compared to the previous financial year. • Receivables • Decrease in staff debts from R4.6 million in 2013/14 to R1.3 million at the end of 2014/15. • Outstanding debt Construction and Service SETAs’ increased from R7.7 million in 2013/14 to R14.6 million in 2014/15 • South African Institute of Architects (SAIA) debt increased from R5.6 million in 2013/14 to R8.1 million at the end of 2014/15 • Voted funds to be surrendered to the Revenue Fund • Reduction in the budget allocation and the balance unspent at the end of the financial year resulted in the reduced funds to be surrendered.

  45. EXPLANATORY NOTES TO EXPENDITURE VARIANCE • Departmental revenue to be surrendered to the Revenue Fund • Refunds from PMTE as an outcome of reconciliations received in the month of March 2014, surrendered later. No refund received in 2014/15. • Bank overdraft • Surrendered funds (R215 million) during the year against the net surplus of R115 million and the positive movement in working capital movement of R39 million resulted in the increased bank overdraft by R61 million. • Payables • Payables relates to R10 million received from Eastern Cape Provincial Department of Public Works for construction of bridges and R68 million received from the Department of Higher Education for National Skills Fund. R50 million was received in March 2015 from the Department of Higher Education for the new training projects.

  46. Purpose of the Presentation PMTE Financial Statements (Chapter 5 Part B)

  47. PMTE – PROGRESS ON AUDIT OUTCOMES

  48. PMTE FINANCIAL POSITION (Page 447)

  49. PMTE FINANCIAL POSITION (Page 447)

  50. PMTE FINANCIAL PERFORMANCE (Page 448)

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