1. REPORT TO THE NCOP ON HOSPITAL REVITALISATION GRANT PERFORMANCE AS AT END OF 2010/11 QUARTER 2 DR S DHLOMO MEC FOR HEALTH- KWAZULU NATAL AND Ms M GOVENDER MEC FOR HUMAN SETTLEMENTS AND PUBLIC WORKS- KWAZULU NATAL

2. CONTENT Spending on grant for first 2 quarters Projected 2010/11 Outcome Performance and monitoring by project and category Co-ordination of Hospital Revite projects Performance of contractors and consultants Reporting and co-ordination between Health and Public Works Capacity to implement programme Way forward 2

3. 2005/062006/072007/082008/092009/10 R'000 Adjusted AppropriationR 223,938R 317,300R 360,194R 330,404R 449,558 Actual OutcomeR 111,821R 225,900R 333,684R 330,404R 225,000 Nominal DifferenceR 112,117R 91,76R 26,510R 0,00R 224,558 % Variance-50.06%-28,93%-7,35%0%-49,95% TRENDS IN GRANT FINANCIAL PERFORMANCE 2005/06 TO 2009/10 HRG budgets have grown rapidly over the past five years Planning and project management has not kept pace, resulting in under expenditure due to delays – explained later 3

4. 2010/11 MTEF HRG ALLOCATIONS R'0002010/112011/122012/13 Main AppropriationR 500,815R 551,698R 572,560 Grant allocation increases by a nominal 27 percent from R449.5 million in 2009/10 to R500,8 in 2010/11 Projected allocations are expected to increase further than currently shown due to rescheduling on the 2009/10 under spent funds, currently negotiated with the National Treasury. To be finalised during Adjustment Estimates process 4

5. BUDGET REVISIONS (cumulative) The original budget was revised in conjunction with NDoH as part of the optimisation plan; Adjusted budget is as per DG (NDoH) directive, to be formalised in the Adjustments Estimates 5

6. QUARTER 2 FINANCIAL PERFORMANCE -by project InstitutionPIA 2010/11 MAIN BUDGET END OF Q2 ACTUAL VARIANCE% SPENT King George VDoPW 201,294,00043,812,238157,481,76221.77% Lower UmfolosiDoPW 22,903,0003,655,63919,247,36115.96% NgwelezaneDoPW 49,510,00010,477,45339,032,54721.16% RietvleiDoPW 26,877,0006,530,55120,346,44924.30% Dr John DubeDoPW 2,425,0000 0.00% EdendaleDoPW 59,427,0008,296,00051,131,00013.96% MadadeniDoPW 35,500,0000 0.00% HlabisaIDT 10,572,0001,245,4249,326,57611.78% Dr Pixley ka SemeIDT 28,010,000622,72127,387,2792.22% King Edward VIIIPPP 56,637,00024,079,53332,557,46742.52% Empangeni TertiaryDoH 250,0000 0.00% Grant ManagementDoH 7,410,0002,291,0005,119,00030.92% Total 500,815,000101,010,558399,804,44220.17% 6

7. QUARTER 2 FINANCIAL PERFORMANCE -by category INFRASTRUCTUREHEALTH TECHNOLOGY ORGANISATIONAL DEVELOPMENT QUALITY ASSURANCE GRANT MANAGEMENT InstitutionPIA 2010/11 MAIN BUDGET END OF Q2 ACTUAL 2010/11 MAIN BUDGET END OF Q2 ACTUAL 2010/11 MAIN BUDGET END OF Q2 ACTUAL 2010/11 MAIN BUDGET END OF Q2 ACTUAL 2010/11 MAIN BUDGET END OF Q2 ACTUAL King George VDoPW 93,257,00041,962,479106,000,000963,3351,815,000886,424222,000000 Lower UmfolosiDoPW 18,292,0001,407,814851,0003,7623,027,0002,052,315733,000191,74800 NgwelezaneDoPW 34,826,0008,826,04312,632,000417,8931,830,0001,233,516222,000000 RietvleiDoPW 21,770,0004,272,0032,200,000804,5832,597,0001,453,965310,000000 Dr John DubeDoPW 2,425,000000000000 EdendaleDoPW 44,323,0008,296,00015,104,0000000000 MadadeniDoPW 3,000,000032,500,0000000000 HlabisaIDT 7,071,00001,200,000504,6311,841,000740,793460,000000 Dr Pixley ka SemeIDT 27,710,000622,721300,0000000000 KE8PPP 47,637,00024,079,5339,000,0000000000 Empangeni TertiaryDoH 250,000000000000 Grant ManagementDoH 000000007,410,0002,291,000 Total 300,561,00089,466,593179,787,0002,694,20511,110,0006,367,0131,947,000191,7487,410,0002,291,000 7

8. QUARTER 2 FINANCIAL PERFORMANCE -Infrastructure INFRASTRUCTURE InstitutionPIA 2010/11 MAIN BUDGET END OF Q2 ACTUAL VARIANCE% SPENT King George VDoPW 93,257,00041,962,47951,294,52145% Lower UmfolosiDoPW 18,292,0001,407,81416,884,1868% NgwelezaneDoPW 34,826,0008,826,04325,999,95725% RietvleiDoPW 21,770,0004,272,00317,497,99720% Dr John DubeDoPW 2,425,0000 0% EdendaleDoPW 44,323,0008,296,00036,027,00019% MadadeniDoPW 3,000,0000 0% HlabisaIDT 7,071,0000 0% Dr Pixley ka SemeIDT 27,710,000622,72127,087,2792% KE8PPP 47,637,00024,079,53323,557,46751% Empangeni TertiaryN/A 250,0000 0% Grant ManagementDoH 0000% Total 300,561,00089,466,593211,094,40730% 8

9. QUARTER 2 FINANCIAL PERFORMANCE -Health Technology 9

10. QUARTER 2 FINANCIAL PERFORMANCE -Organisational Development 10

11. QUARTER 2 FINANCIAL PERFORMANCE -Quality Assurance 11

12. QUARTER 2 FINANCIAL PERFORMANCE -Grant Management 12

13. Q2 EXPENDITURE PERFORMANCE AGAINST REVISED BUDGET 13

14. PERFORMANCE AND COORDINATION MONITORING OF THE PROGRAMME Each project has a Joint Project Management Team which is involved with implementation and monitoring Programme Steering Committee meetings held quarterly Additional Operational and Strategic monthly meetings held for all infrastructure programmes Health Weekly Progress meetings held to ensure timeous interventions on each project DPW in the process of procuring a web-enabled project management tool by February 2011 to ensure effective management of project milestones – to interface with WIMS 14

15. PERFORMANCE OF CONTRACTORS AND CONSULTANTS Contractors –No contract terminations in 2010/11, however where necessary procedures will be followed –Delays experienced through tender appeals process have negative impact on expenditure (Lower Umfolozi War Memorial Hospital and King George V Creche) –Need to enhance tender technical evaluation process Consultants –Review of Professional Service Providers terms of appointment currently underway e.g. imposition of penalties –Introduction of Project Managers to manage professional disciplines within each project to eliminate risk & conflict of interest 15

16. REPORTING AND CO-ORDINATION BETWEEN DOH AND DPW Monthly Infrastructure Programme Management Committee meetings are in place with the DOH and Implementing Agents Monthly Progress Reporting through the Standard Reporting Format Co-ordination by provincial treasury through the IDIP Technical Management Committee in place Political Leadership will be involved through the establishment of the Provincial Programme Steering Committee. 16

17. CAPACITY TO IMPLEMENT PROGRAMME Health Lack of Project Management System by IAs make Grant management ineffective –Intervention: DPW in the process to source the web-based project management tool Limited Project Managers within Health. –Intervention: Process to fill the GM: Infrastructure and critical project managers posts including dedicated Health Technology and Quality Assurance specialists has started 17

18. CAPACITY TO IMPLEMENT PROGRAMME Public Works Lack of Project Management System by IAs make Grant management ineffective –Intervention: DPW in the process to source the web-based project management tool Limited Project Managers within Health. –Intervention: 11 project managers have been appointed with effect from 01 September 2010, 25 project managers interns to be appointed by January 2011 18

19. PROJECT UPDATES: PUBLIC WORKS King George V Hospital Outstanding variation orders and expansion of contracts approved 3 projects currently forwarded for advertising Creche project in Appeals process, Hearing scheduled for 26 October 2010 Lower Umfolozi War Memorial Hospital. Construction of the hospital has started Optimisation plan developed to ensure projected cashflows are met 19

20. PROJECT UPDATES: PUBLIC WORKS Ngwelezane Hospital 4 tenders in adjudication stage, contractors to be on site on December 2010 Rietvlei Hospital. Poor performance by contractor has resulted to poor expenditure, however, the contractor has been assisted to improve performance Phase 3B (Staff Accommodation) preparing for tender in Mid-November 2010 20

21. PROJECT UPDATES: PUBLIC WORKS Edendale Hospital Delays due to review of the Master Plan by National Department of Health. However National Health have committed to finalise this matter before end of October 2010 Dr John Dube and Madadeni Hospitals. Professional team to be appointed by end of October 2010. 21

22. PROJECT UPDATES: IDT Dr Pixley ka Seme Hospital Delays in approving design by National Health. National Health have committed to finalise this by end of October 2010 Hlabisa Hospitals. Construction of the Hospital suspended. Enabling works to proceed to construction in January 2011 22

23. WAY FORWARD Health –Weekly meetings are held to expedite decisions –The dept will make use of Health Technology service providers in the interim to expedite equipment purchases, until vacancies are filled –Stricter financial reporting is in place with all expenditures being closely monitored. –HR have been requested to fast track the recruitment of new staff. 23

24. WAY FORWARD Public Works –DoPW is currently in a process of procuring the Project Management tool and planned to be finalised by February 2011. –Effective implementation of IDIP and ensuring that infrastructure plans are submitted in July of the planning year to promote forward planning. –Interventions as presented in each hospital will be followed up. –Projection to be revised inline with fast-track plan by end of October 2010. 24