PRESENTATION TO PARLIAMENT CONDITIONAL GRANTS AND CAPITAL EXPENDITURE 3 MAY 2006

1. PRESENTATION TO PARLIAMENT CONDITIONAL GRANTS AND CAPITAL EXPENDITURE 3 MAY 2006

2. Outline • Background • Allocations and transfers conditional grants • Actual expenditure - conditional grants • Actual expenditure – CAPEX • Monitoring capacity – 2005/06 • Service Level Agreements • Conclusion

3. Background • Report based on preliminary 2005/06 results • Spending on the majority of grants satisfactory • Spending patterns reflect improved capacity and effective monitoring mechanisms

4. Allocations and Transfers – Conditional Grants • Total amount of R1,434,939,000 allocated under grants from National Government • Total amount of R1,434,939,000 received

5. Actual Expenditure – Conditional Grants • Total budget of R1,434,939,000 • Total expenditure of R1,285,893,000 • Variance between budget and actual expenditure of R149,046,000

6. Actual Expenditure – Conditional Grants (Contd.)

7. Actual Expenditure – Conditional Grants (Contd.)

8. Actual Expenditure - CAPEX • Total capital budget of R1,031,952,000 • Actual expenditure of R943,216,000 • Variance of R88,736,000 • Variance mainly due to the following: • Under spending due to delays in project implementation as a result of appeals against the contract awarded for the high rise building at King George V • Delays in the acquisition of assets for the development of Forensic Pathology Services due to the late receipt of the grant

9. Monitoring Capacity – 2005/06 • Improved monitoring capacity during 2005/06 • Mechanisms included: • Monthly reports by relevant managers • Monthly meetings with external service providers (e.g. Public Works, Ithala, IDT) • Monthly project implementation reports by external agents • Monitoring focussed on progress with implementation of projects and the related financial implications • Project management capacity is being enhanced through the creation and filling of the relevant posts for further enhancements to the monitoring process

10. CONTRACT MANAGEMENT • The Department utilizes the following agents for infrastructure delivery: • KZN Public Works • Ithala Development Corporation • Independent Development Trust • The relationship with the above is through signed SLAs • The details of the SLAs are as follows:

11. CHALLENGES • Delays in implementation of projects due to appeals against tender awards • Delays in filling certain key project monitoring posts pending finalization of restructuring process • Delays in project implementation by the Public Works Department, resulting in continuous delays in addressing the infrastructure backlog especially in rural areas • Impact of the multi-year nature of projects on funding requirements and planning

12. Fast tracking infrastructure delivery • Department currently utilizes Dept of Works to undertake all • development of physical structures in the Province • Challenges of capacity due to countrywide skills shortage • Impact on delivery • Outsourcing of some of the infrastructure delivery services to alleviate • impact • Outsourcing through sourcing of skills and expertise from the Private • sector through PPP • Model to be introduced as a pilot with lessons learnt replicated to reduce • infrastructure backlogs during the 2006/07 financial year • Particular focus on construction of clinics, residential accommodation • and Revitalization projects • SLA with clear milestones and performance plans among DOH, Works • And Outsourced Service Providers

13. Conclusion Thank You