Portfolio Committee Presentation DEPARTMENT OF PUBLIC WORKS Turnaround Strategy 28 February 2012

1. Portfolio Committee PresentationDEPARTMENT OF PUBLIC WORKSTurnaround Strategy 28 February 2012

2. Purpose of the Presentation • Present the TURNAROUND STRATEGY of the Department in light of the prevalent crisis. When written in Chinese, the word "crisis" is composed of two characters-one represents danger, and the other represents opportunity.” JFK • Where we come from? • Where we are now? • Where we are going? Danger/Crisis Opportunity/Turnaround Portfolio Committee Presentation 28 February 2012

3. Size of DPW: Property Portfolio Compared to others Portfolio Committee Presentation 28 February 2012

4. Part 1 Where do we come from? Portfolio Committee Presentation 28 February 2012

5. CBPWP Sakahasonke ECD White Paper PW beyond the 21st Century. White Paper on Construction Industry Development Built environment councils Acts CIDBAct State Asset management Partnership CBE Built Environment Professionals CIDB Establishment White Paper on GIAMA Contractor Development Programme EPWP PMTE GIAMA ACT

6. Discontinuation of Workshops Introduction of Project Management Approach Organisation Review State Asset management Partnership Failed Restructuring Zimisele Performance Improvement Introduction of Accommodation Charges and PMTE Failed Implementation Corruption Investigations

7. Challenges • Increasing rate of change of executive and administrative leadership • Number of Acting DGs/DDGs and CDs over the years • Limited success in the implementation of policies (e.g. 1997 White Paper, Construction White Paper and Property and Construction Charters) • Inappropriate recording/systems/processes and M & E and reporting • Client’s dissatisfaction and allegations of corruption Portfolio Committee Presentation 28 February 2012

8. Part 2 Where are we now? Portfolio Committee Presentation 28 February 2012

9. Budget / Financial Challenges • Disclaimer • Uneven spread of budget - Bulk sits under programme 2 [Immovable Asset Investment Management] • Under-spending by the infrastructure and EPWP programmes • Opacity of budget, especially programme 2 on infrastructure • Shifting of funds by the department • March expenditure spike from delayed project implementation • Lack of technically sound budget proposals • Lack of technical capacity to plan, implement and report on projects • Lack of adequate finance skills, and poor financial management • Violations of the PFMA and Treasury Regulations, including supply chain management rules • Client’s dissatisfaction • Corruption • Escalation of construction costs through poor planning/policy / supply chain management • Slow delivery of accommodation and job creation • Low worker morale Portfolio Committee Presentation 28 February 2012

10. Service Area Challenges Portfolio Committee Presentation 28 February 2012

11. Service Area Challenges Portfolio Committee Presentation 28 February 2012

12. Part 3a Where are we going? The DPW Turnaround Strategy Portfolio Committee Presentation 28 February 2012

13. Some Characteristics of Turnarounds • “turnaround specialists’… mandate is to lead a significant change effort within a limited period of time – to turn things around as quickly as possible, all the while focusing not only upon immediate challenges but also on long-term planning and the bigger picture” (Takacs, Turnarounds, 2001) • “Turnaround literature stresses the importance of a change in the overall management team, not only the CEO” (Takacs, Turnarounds, 2001) • “Organizational change of any magnitude is unlikely to take place unless there is also significant change in many of the individuals who work for the organization” (Eadie1997) • “What is crucial here is the need to turn people around, along with the organization. Turning internal and external stakeholders, who may initially be cynical or even hostile, into enthusiastic contributors to the turnaround process is a key challenge for all leaders” (Khandwalla 1992, 162) Portfolio Committee Presentation 28 February 2012

14. Part 3b The DPW Approach to the Turnaround Strategy Portfolio Committee Presentation 28 February 2012

15. DPW: Turnaround Strategy Role Players MINISTER Inter-Ministerial Committee Simplified Version Technical Advisory Committee DG Support Team (Stabilisation & Transformation) COO DDG: Construction & Property Policy Regulation DDG: Asset Investment Management CFO DDG: Projects DDG: Corporate Services DDG: Expanded Public Works Programme DDG: Innercity Regeneration Programme Portfolio Committee Presentation 28 February 2012

16. Composition of Support Team • Full Time Core Team members: • Team Leader – Candidate has been identified and will be on board by 7 March 2012 • Change manager • Monitoring, Evaluation & Reporting • Strategic Content Advisor • Administrative support • Functional Specialists as an when required: • Supply Chain Management • Public Finance Management • Built Environment • Asset management/Property Management (lease mgmt) • Human Resources/Legal Portfolio Committee Presentation 28 February 2012

17. Purpose/Functions of the Support Team • Oversees the Stabilisation Projects • These projects have formal Terms of Reference • Specifically assigned Team Leader (DDG or CD ) • Set out Performance framework and timeframes • Provides structure for the Systemic (Introspective) Reviews in each business area • Business areas will be addressed • Responsibilities for performing the work • Framework to guide the work • Framework for documenting the results • Framework for the reporting of the results • Develop the framework for transformation based on further diagnostic, feedback and successes from the Stabilisation Process and Systemic Reviews Crisis and damage control. This is important because there will be recurring crises that should not side-track or dilute the Turnaround. Portfolio Committee Presentation 28 February 2012

18. Turnaround Capacity • Human Resources • Change management is central to success • Recognition of and building on capabilities of existing staff • As per Dpt. of Home Affairs, use embedded knowledge to optimise processes, controls, performance standards, reporting and management oversight. • Recruit qualified staff while training trainable current staff; open recruitment to the international market; direct budget to critical skills; develop focused training programmes with tertiary institutions; fill vacancies • Build an appropriate Corporate Services unit that recruits, serves and retains the right skills; develop a strong finance unit • Deal decisively with wrongdoers Portfolio Committee Presentation 28 February 2012

19. Combining operational support with organizational capacity building Required capacity of a department for delivery Ideally a Stabilisation Team providing operational support should be provided in the early stages of an intervention but should decreaseas organisational capacityincreases. Operational Support improves efficiency immediately… Capacity of a department … but often leaves the department worse off in the long run. The Transformation Team builds organisational capacity over time. Existing capacity of a department Time Portfolio Committee Presentation 28 February 2012

20. Turnaround Actions Strategic Direction Stabilisation Actions Systemic Reviews Transformation Agenda • Asset Register • Lease Advisory Team • Clean Audit • PMTE debt recovery • IDIP Support • Audit of areas of progress and challenges • Will be informed by and follow on from progress on Stabilisation and System Reviews in the long term • Structured review by staff in each business area • Determine options for immediate business improvement • Continuous system of reporting/feedback Portfolio Committee Presentation 28 February 2012

21. Stabilisation Actions • Purpose • Stabilisation intention has already been specified • Contribution to transformation been defined • Governed by a specific Terms of Reference • Responsibility • Oversight by the Director General and Support Team • Capacitation • Will have dedicated resources Portfolio Committee Presentation 28 February 2012

22. Systemic Reviews • Purpose • Structured discussions on challenges and opportunities • Focus on what individuals can do to improve performance • Governed by a specific approach to be confirmed by the Support Team • Responsibility • Oversight by the Director General and Support Team • Performed by the business unit heads • Reported back to Director General and Support Team • Capacitation • Staff participation in each business area Portfolio Committee Presentation 28 February 2012

23. Transformation Agenda • Purpose • Structured improvements to the way DPW delivers its services • Builds on Stabilisation and Systemic Reviews • Responsibility • Oversight by the Director General and Support Team Portfolio Committee Presentation 28 February 2012

24. Time lines (Matrix) Short-Term Medium-Term Long-Term Rapid Review of DPW Ongoing Q4 2011/12 Stabilisation Actions Asset 2012/13 Q1 Q2 Q3 Q4 Leases Disclaimer Systemic Reviews Improvements 2013/14 Q1 Q2 Q3 Q4 Options Reporting Ongoing 2014/15 Q1 Q2 Q3 Q4 Transformation 2015/16 Q1 Q2 Q3 Q4 Ongoing Sustain and Improve

25. Distinctive functional streams Service Area Outcome Policy / Regulatory Well functioning built environment (government & private sector) A Asset Management Optimised portfolio of assets (owned & leased) Property Management & Facilities Efficient records B Cost effective service delivery Construction Project Management Functioning Inner Cities Functioning industry Standards maintained “Special Functions” C Jobs created EPWP D Skills developed Corporate Services Functioning organisation -Proper Accounts -Internal capabilities -Efficient and effective SCM E

26. Summary • Crisis areas need to be addressed quickly • Short term solutions must enable longer term stability • Some improvements are dependent on fundamental transformation that will be time consuming to implement • Turnaround actions must not further reduce existing levels of operational performance • Turnaround actions must be based on adequate analysis and understanding of the problems and potential cost effective solutions • Prioritisation of critical actions in a logical sequence • Adequate resourcing of turnaround actions Portfolio Committee Presentation 28 February 2012

27. Summary • Staff must support and be part of the turnaround • Necessary external expertise must leave a legacy in the department • Turnaround effort must be resourced with dedicated capacity • Focus on the goodwill and positive contribution of all staff; • Maladministration, corruption and poor performance to be dealt with decisively Portfolio Committee Presentation 28 February 2012

28. Concluding Remarks • Under the guidance of the Minister, • The Department has a structured Turnaround Strategy • A dedicated Support Team that will plan, manage, monitor and report on the Turnaround actions which include • Stabilization actions • Systemic reviews • Medium term Transformation actions Portfolio Committee Presentation 28 February 2012

29. Enkosi Portfolio Committee Presentation 28 February 2012