1. INFRASTRUCTURE PROGRAMME FOR DCS PRESENTATION TO PORTFOLIO COMMITTEE ON JUSTICE AND CORRECTIONAL SERVICES
DATE: 04 AUGUST 2015

2. 1. OBJECTIVES OF THE PRESENTATION
To Present to Portfolio Committee the Infrastructure Programme implemented by Department of Public Works on behalf of Department of Correctional Services
To provide an update on issues raised during the oversight visit conducted in Limpopo
The challenges in delivering the Programme
Options being Investigated to correct the situation and prevent future occurrences

3. 2. GENERAL PERSPECTIVE
Over the past years DPW experienced significant drop in performance in the delivery of infrastructure and this was attributed to various factors, amongst them:
Contractor disputes with their subcontractors,
General under-performance by contractors,
Contractors’ cash flow challenges.
Tedious process of liquidation and termination of non-performing contractors and subsequent delays in appointing the new contractors after termination.
Delays in decision making from the client’s side.
DPW remains responsible to maintain the existing facilities through service contracts under the Repair and Maintenance Programme (RAMP), and the more reactive means referred to as day-to-day maintenance
The Users are delegated attend to minor maintenance services to the tune of R100 000 per assignment (maximum).

4. 2. GENERAL PERSPECTIVE Cont…
DPW has been implementing a turnaround plan that has resulted in the establishment of Programme Management Office (PMO), the Ministerial Joint Task Team and has seen improved performance on expenditure from the 2014/15 Financial Year.
As part of the efficiency enhancement phase (phase 2) of the DPW turnaround plan, we are in the process of separating the Capital Programme and the Facilities Management Programme, as focused business centres to improve planning and accountability.

5. 3. DCS CAPITAL PROGRAMME
The NDPW implements construction projects and operation of facilities for DCS as per instructions issued and budgeted for. This includes the following:
Construction of New Correctional Facilities
Upgrading of existing facilities
Improvement of Security Measures
Improvement of Fire detection services
Upgrading and maintenance of Mechanical & Electrical Services
Provision of water to facilities outside municipal networks
Operate and maintain Waste Water Works, and contribute to recycling for irrigation
Operation and maintenance of Boilers
Repair and Maintenance of Kitchen Equipment
In providing these services DPW utilises the services of Consultants and Contractors appointed through the tender process.

6. 4. DCS CAPITAL PROGRAMME – PERFORMANCE MEASURES / REPORT
The Performance Measures the NDPW uses are mainly the following:
Expenditure of Allocation (Financial Measures):
DCS approves an annual capital allocation following the review process of Progress made in Planning Stages of Projects and Budget Estimates, as informed by Projected Cash Flows for Committed Contracts.
Delivery of Completed Projects/ Facilities:
Performance in Execution and Completion of construction projects is linked to the Delivery Date as informed by contract period. Each Project has its planned / projected date which Users use to plan their occupation.
Maintenance of Services (Facilities Management) :
Water Supply; Fire Fighting Equipment; Kitchen Fittings; Waste Water Management; Servicing of Boilers
The Financial Performance is discussed starting from 2013/14 – 2014/15

7. 5. DCS CAPITAL EXPENDITURE – END MAY 2014 (2013/14)
OFFICE
ALLOCATION R’
EXPENDITURE
B’ALANCE
% EXP
CORRECTIONAL SERVICES
47%
HEAD OFFICE
44%
KAM 0%
PROF SERV:TOWN PLANNING
164%
SPECIAL & MAJOR PROJECTS
41%
REGIONAL OFFICES
BLOEMFONTEIN
26%
CAPE TOWN
97%
DURBAN
48%
JOHANNESBURG
63%
KIMBERLEY
60%
MMABATHO
37%
NELSPRUIT
45%
POLOKWANE 6%
PORT ELIZABETH
18%
PRETORIA
82%
UMTATA
91 005 4%
TOTAL  

8. 6. DCS CAPITAL EXPENDITURE – END MARCH 2015 (FY 2014/15)
OFFICE
ALLOCATION R’
EXPENDITURE
BALANCE
% EXP
CORRECTIONAL SERVICES
81%
HEAD OFFICE
51%
PROF SERV:TOWN PLANNING 0%
SPECIAL & MAJOR PROJECTS
54%
REGIONAL OFFICE
83%
BLOEMFONTEIN
52%
CAPE TOWN
55%
DURBAN
JOHANNESBURG
46%
KIMBERLEY
88%
MMABATHO
77%
NELSPRUIT
145%
POLOKWANE
21%
PORT ELIZABETH
144%
PRETORIA
34%
UMTATA
 TOTAL

9. 7. DCS CAPITAL EXPENDITURE – END JUNE 2015 (FY 2015/16)
OFFICE
ALLOCATION R’
EXPENDITURE
% EXPENDITURE
SPECIAL & MAJOR (HO) 0%
BLOEMFONTEIN 8%
CAPE TOWN
116%
DURBAN
11%
JOHANNESBURG 6%
KIMBERLEY
MMABATHO
23%
NELSPRUIT
41%
POLOKWANE
2 214
PORT ELIZABETH
86%
PRETORIA
20%
UMTATA
83 434
 TOTAL
30%

10. 8. CONTRIBUTING FACTOR TO UNDER EXPENDITURE/ PERFORMANCE IN THE PAST TWO PERFORMANCE YEARS
Withdrawal of Security Projects from tender stage due to unhappiness expressed by DCS over dominance of the sector by one supplier.
Generally poor workmanship and inability to schedule the sequence of Work on Site properly by contractors leading to spending lower than the projections.
Six Prison Contracts (Ceres, Vanrhynsdorp, Kgoši Mampuru, Escort, North End, and Tzaneen) contractor experienced cash flow problems leading to liquidation and contract cancellations.
Shortage of Prison Window Supplies in the Market, implying that building works cannot continue without windows due to the installation method.
Because the Cash Flow Expenditure is linked to monthly work progress and acquisition of capital fittings (mechanical, Electrical), if this is not realised on site, Budget is not spent.

11. 9. TZANEEN CORRECTIONAL CENTRE
The Contractor for this project has been liquidated. The Liquidators identified new service provider (replacing contractor) to complete remaining portion of work. However the challenge with the proposal requires that the department have a direct contract with the identified service provider.
The legal opinion has been received, which indicates that another contractor can complete the works, however the original contractor will still be held accountable as per the conditions of the contract.
The DPW had successful engagements with the liquidator and started discussions with the guarantor. The guarantor will conclude negotiations with the new contractor on the 31st August The negotiations will include the new date for the new contractor to be on site. Assessment to recover any additional costs emanating from the delays, where applicable will be done once the project has reached final completion.

12. 10. PARYS CORRECTIONAL CENTRE
The project was advertised; however bids received were higher than the actual estimate. The DPW negotiated with CIDB to waive 6 month cooling period and re-advertisement is scheduled for 31 July We anticipate award by 31 October 2015.

13. 11. KGOŠI MAMPURU – C-MAX CORRECTIONAL CENTRE
The contract was terminated due to poor performance and this termination was done at 70% completion. However this contractor was subsequently liquidated. Consultants were appointed to conduct assessment and finalise the Final account. The processes to appoint the new contractor have commenced and the anticipated award date is mid-November 2015.
This project was visited jointly by DPW and DCS on the 15/07/205 as part of close monitoring and weekly report will be provided by the project manager and professional team. Assessment to recover any additional costs emanating from the delays, where applicable will be done once the project has reached final completion.

14. KGOŠI MAMPURU – C-MAX 1
Concrete Works Completed Prior To Termination of Contract 2
Concrete Walkways 3
Concrete & Structural Work Completed Prior Cancellation Of Contract

15. 12. VANRHYNSDORP CORRECTIONAL CENTRE
The initial contractor was liquidated. The guarantor started in February 2015 to complete the remaining works and the project is anticipated to be completed by October Progress to date is 99% on the work completed by the original contractor and currently finalising electrical compliance matters. Assessment to recover any additional costs emanating from the delays, where applicable will be done once the project has reached final completion.

16. VANRHYNSDORP CORRECTIONAL CENTRE1
Main Entrance to the Facility 2
Dining Hall 3
Laundry Facility 4
Visitors Facilities

17. 13. CERES CORRECTIONAL CENTRE
The initial contractor for this project was liquidated and the guarantor appointed a new contractor and the new contractor completed the project in April Final delivery taken in July There is no need to recover costs as there were no additional costs incurred.

18. CERES CORRECTIONAL CENTRE1
Main Entrance to the Facility 2
Kitchen Facilities 3
Laundry Facility 4
Training Facility

19. 14. ESTCOURT CORRECTIONAL CENTRE
The initial contractor for this project was liquidated and the guarantor has appointed the new contractor to complete the remaining work. Work progress on site is at 43%, however delays have been experienced due to lack of consistent supply of specialised (manganese) windows and door frames. Upon assessment, the realistic completion date is January 2017 given the above mentioned delays and weather inclination extension of time claims under consideration.

20. ESTCOURT CORRECTIONAL CENTRE

21. 15. NORTH END CORRECTIONAL CENTRE
Repair & Renovations of the Facility. The initial contractor for this project was liquidated and the guarantor appointed the new contractor in August 2014 to complete the remaining work. Progress is about 48% complete. The completion date as per contract is end of March 2016.

22. North End CORRECTIONAL CONTRE
Visitor Receiving Centre
Newly Constructed Dining Hall
Male Juvenile Toilet
Generator
Fencing

23. 15. MATATSHE (THOHOYANDOU) CORRECTIONAL CENTRE
First contract was terminated due to non-performance. The new contractor is already appointed and was handed over site on the 12th June Site establishment will be completed end of July Construction period is for 24 months, including maintenance.

24. 16. GLENCOE CORRECTIONAL CENTRE
The prison was burnt down in May An assessment was conducted and different options were proposed, including demolition and rebuilding of affected areas with brick and mortar and ensure that the existing corrugated facility is fire compliant. The proposal has been submitted to DCS for consideration.

25. Glencoe Correctional Centre

26. 17. PERFORMANCE REPORT ON DCS FOR 2015/16
The Capital budget allocation for DCS for 2015/16 is R
Expenditure as per end of June 2015 is R (representing 30% of budget allocated vs 25% time lapsed)
The programme has a total of 246 projects, with an allocation/budget of R for the 2015/16 financial year.
108 Projects are in planning and 138 projects are committed (status 5b-9) with a budget of R  563

27. 18. CHALLENGES
Construction of New Correctional Facilities is very complex and requires a longer sustained cash flow. We have realised that Contractors experienced cash flow problems when they are at about 60% of the contract because of the following:
At this stage of project most mechanical and electrical installations are required on Site and Suppliers require higher deposits to confirm orders.
These components in most cases are under-priced by contractors far below the Retail Costs, and contractors have to somehow source cross-subsidise the purchases from other projects, which leads to collapse of cash management.
Repetition of works due to correction of defective works
Idling resources or Labour on sites because of improper work scheduling which increases labour costs
Failure to pay Supplier / Creditors on time leads to applications for Administration or Liquidation
Specification for Security Contracts and Supplier Monopoly

28. 19. OPTIONS INVESTIGATED TO PREVENT THE RECURRENCE OF CHALLENGES
CURRENT CONTROLS
OPTIONS BEING IMPLEMENTED/ UNDER REVIEW
Appointment of Competent Contractors
Current Controls are based on SCM Policies linked to Points for Competitive Price & Preference, and Risk Assessment
The SCM evaluation method now include Functionality
Replacement of Defaulting Contractors
The Department still follows the open tender approach, which is far time consuming
Internal Policy development in consultation with National Treasury to allow for Nomination of Capable Contractors to submit bids to complete the remaining works
Poor Programming of Works
Contractors submit Programme of Works
Improve the condition of tender to include Appointment of Professional Construction Managers for specific value threshold of contracts

29. THANK YOU