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
Grant
Allocated
Received
R’000
Comprehensive HIV and AIDS Grant
251,468
Health Professionals Training and Development
192,373
Hospital Management and Quality Improvement
23,778
Hospital Revitalization
223,939
Integrated Nutrition Programme
26,954
National Tertiary Services
691,451
Forensic Pathology Services
24,976
Total
1,434,939

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.)
Allocated
Spent
Variance
Comments
R’000
Comprehensive HIV and AIDS Grant
251,468
239,550
11,918
Expenditure misallocated, to be allocated against grant
Health Professionals Training and Development Grant
192,373
180,090
12,283
Development portion not spent pending finalization of posts – rollover to be requested
Hospital Management and Quality Improvement Grant
23,778
19,514
4,264
Expenditure due to shortage of capacity at institutions, as spending on grant was decentralized
Hospital Revitalization Grant
223,939
125,710
98,229
Under spending due to delays in project implementation as a result of appeals against contract totalling R99 million – rollover to be requested
Integrated Nutrition Programme
26,954 -
National Tertiary Services Grant
691,451
Forensic Pathology Services Grant
24,976
2,624
22,352
Under spending due to late receipt of funding – rollover of funds to be requested
Total
1,434,939
1,285,893
149,046

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 KZN Public Works Yes 25 September 2003
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:
Agent
SLA in place
Date signed
KZN Public Works
Yes
25 September 2003
Ithala Dev Corp
22 March 2005
IDT
16 September 2004

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