1. 2017-2020 CORPORATE PLAN - Presentation PCoT-
3 May 2017
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2. Structure and Format: 2017- 2020 Corporate Plan
The 2017/18 – 2019/20 Corporate Plan for PRASA will cover the following
The PRASA Mandate
Legislative Mandate
Statement of Purpose
Vision, Mission, and Values
Group Operating Structure
National Government Imperatives
National Development Plan
Alignment with DoT Strategic Plan (MTSF) 2015 – 2020
Alignment to SONA
PRASA’s National Strategic Plan
Driving the Corporate Plan
Strategic Outcome Oriented Goals
Strategic Objectives / Targets
Budget and Capital Programme
AGSA recommendations and findings 2015/16
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3. THE PRASA MANDATE
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4. PRASA Mandate
PRASA, as the implementing arm of the National Department of Transport, the sole shareholder, is primarily focused on the mandate contained in the Legal Succession Act of South African Transport Services (SATS) Act of 1989, as amended.
The main objective and main business of PRASA is to:
Ensure that, at the request of the Department of Transport, rail commuter services are provided within, to and from the Republic in the public interest, and
Provide, in accordance with the Department of Transport, for long haul passenger rail and bus services within, to and from the Republic in terms of the principles set out in section 4 of the National Land Transport Transition Act, 2000 (Act No. 22 of 2000)
The second objective and secondary business of PRASA is that:
PRASA shall generate income from the exploitation of assets acquired by it, which include real estate and property portfolio.
A further requirement is that, in carrying out its objectives and business, PRASA shall have due regard for key Government, social, economic and transport imperatives and policy objectives.
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5. PRASA Mandate
As a public entity, the PRASA Corporate Plan finds expression through legislation, government policies and strategies such as:
National Transport Policy
National Development Plan
Legislation such as the National Land Transport Act
Public Finance Management Act
National Rail Policy Green Paper
Public Transport Strategy
Economic Strategy and Job creation initiatives
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6. Legal Operating Structure
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7. RAIL: THE BACKBONE OF PUBLIC TRANSPORT
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8. Responding to the Rate of Urbanisation
Urbanisation progressing at breakneck speed, particularly in developing countries
3% of earth’s population lived in Cities in the 1800s
30% by 1950
50% today
60-65% (two out of three people) by Additional 2 billion people
Effective / sustainable transport, energy etc. solutions required
Rail as the backbone of public transport address
Need for safe, efficient, reliable, affordable and customer focused public transport;
Reduction of congestion on SA roads and encourage modal shift toward rail;
Expand passenger rail and bus services and
Develop a modern integrated public transport service
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9. Benefits of Rail
Rail benefits cannot be ignored; capacity, environmental, less land required, reduce car & fuel reliance etc.
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10. National Government Imperatives
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11. Responding to the National Development Plan (NDP)
The Corporate Plan also responds to NDP which calls for Integrated, holistic, long-term perspective on all transport networks informed by growth priorities, the environment, inclusivity and access.
PRASA has noted from the NDP the following strategic focus areas and planning priorities focusing on the creation of workable urban transit solutions that will streamline an effective urban transport system, thus contributing to:
Increasing investment in public transport and resolving existing public-transport policy challenges
Provision of affordable, faster, reliable and safe transport
Transport plans that are aligned with spatial development
Devolving transport management to local government
Providing incentives for public transport use
Renewing the commuter train fleet
Broadband Connectivity
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12. Aligning with DoT 2015-2020 National Strategic Plan (MTSF)
The PRASA Corporate Plan is aligned to the White Paper on National Transport policy which seeks to provide safe, reliable, effective, efficient, and fully integrated transport operations and infrastructure which will best meet the needs of passenger whilst improving levels of service and cost in a fashion which supports Government strategies for economic and social development whilst being economically and environmentally sustainable.
The Corporate Plan also contributes to resolving prevalent problem areas as identified by the DoT within its next Medium Term Strategic Framework (MTSF), as identified below:
Improving the level of integration of transport infrastructure network and operations
Decreasing accidents and incidents (and fatalities) across all transport modes.
Improving infrastructure, access and mobility in rural and peri-urban areas.
Ensuring reliability, affordability, accessibility, efficiency, effectiveness and safety of public transport.
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13. Aligning with SONA (2017)
PRASA identified the following as its contribution to the SONA (2017):
Employment:
Around employees employed by PRASA
Job Creation:
± jobs (combination of Local Factory and Suppliers) expected to be created through the Rolling Stock Fleet Renewal Programme over 10 years.
Local Factory will directly employ approximately employees of which
99% of the labour force will be South Africans, with a target of employing 85%; historically disadvantaged South Africans and 25% females.
Progress to date, jobs created
Overall 1010 Jobs for Citizens;
Of which, 905 Jobs for Black Citizens;
Of which 520 Jobs for Skilled Black Citizens;
Of which 210 Jobs for Women; and
Of which 711 Jobs for Youth.
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14. Aligning with SONA (2017)
PRASA identified the following as its contribution to the SONA (2017):
Local Content and Industrialisation:
Rolling Stock Fleet Renewal Programme targets for Localization exceed the 65% minimum as designated by the Department of Trade and Industry.
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15. Aligning with PRASA National Strategic Plan
The Corporate Plan continues to advance PRASA’s National Strategic Plan which is aligned with the National Transport Masterplan 2050 and has a long-term horizon that is implemented on various phases of the MTEF Period(s).
The implementation and the roll-out of PRASA’s National Strategic Plan is dependent on agreements to be signed the relevant transport authorities as articulated in the National Transport policy/
It focuses on the following.
A prioritized list of rail service and network expansion interventions that:
provide more capacity to accommodate forecast growth,
transform the rail product on many corridors,
seek to make better use of the network, and
propose corridor extensions to new or growing settlement.
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16. Driving the Corporate Plan
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17. PRASA Strategic Outcome Oriented Goals
At the heart of the 2017 – 2020 Corporate Plan is the Turnaround Strategy and Action Plan in pursuit of the following strategic outcome oriented goals that seek to:
Deliver on the mandate of public transport through providing safe, reliable, clean, affordable and sustainable services resulting in customer satisfaction of more than 80% in five years.
Exploit PRASA’s assets that increase the patronage of the public transport mandate by bringing communities to stations and increasing income from real estate and other assets to R1.071 billion by 2020.
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18. MTEF Strategic Objectives
The development of the Corporate Plan for MTEF 2017/18 – 2019/20 is aligned with PRASA’s Strategic Plan which outlines the key priorities and steps to that will delivery and execution of the mandate, The steps that need to be taken to commence the journey to the implementation of the plan are as follows:
Improve the Customer Experience. A customer-centric superior performance that is safe, reliable; and provides a dignified travel experience based on end-to-end customer journey.
Improve Rail System performance. The realisation of the National Strategic Plan of is built on the assumption that operational performance is at acceptable levels and meets customer expectations.
Realign support functions to achieve an efficient Rail and Bus business. The alignment of various business units, including departments and subsidiaries in the delivery of the mandate is the foundation of the National Strategic Plan
Modernise the Rail System through investment programme of R173 billion investment programme for the Rolling Stock Fleet Renewal, Re-signalling, and modernization corridors and station investment.
Expand Rail network and services in line with the National Strategic Plan.
Exploit assets to support the primary mandate
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19. Re-organising the Corporate Plan for 2017-2020
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20. Aligning the Corporate Plan with Turnaround
The PRASA Corporate Plan is spread across three (3) distinct but overlapping phases:
The first phase focuses on getting the organisation back to the desired levels of performance and is driven by a Turnaround Phase – focusing on the next 12 months.
Significant improvement in the operational service and restored to 2008/09 performance levels
Improving the reliability, resilience, safety, security, and efficiency of the network
Ensuring organisational alignment and integration through effective planning, management and operation of assets
The second phase, the Stabilisation Phase for the next 24 months, is to maintain and improve on the desired performance level.
Predictable, safe and more frequent transport service for passenger
Accelerated journey within the integrated PRASA network
The last phase, which is medium to long-term, is Growth and Expansion whish also continues with Modernising the Rail System and Expanding Networks and Services to ensure that PRASA remains relevant becomes the backbone of public transport.
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21. Turnaround Key Focus Areas
At the heart of the PRASA Corporate Plan is the implementation of the Turnaround Plan, which focuses on:
curbing further decline in passenger patronage and is aimed at regaining confidence of our customers by committing to provide acceptable performance levels of service.
The Turnaround Plan also notes that retaining existing customers and in particular the commuters will be measured against stringent performance deliverables, which is:
a marked improvement in positive customer service experience,
a rail operation that is efficient, reliable and safe, and
is supported by a reliable long distance bus and feeder service, as well as
a robust real estate strategy.
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22. Turnaround Key Focus Areas
At the crux of the turnaround strategy is a dedicated focus on:
Addressing operational inefficiencies and improving service delivery,
Improving the financial position and reducing the cost of doing business,
Operational Performance
Human Capital Management
Support Systems and Processes (ICT And SCM)
Real Estate Solutions
Finance And Funding
The full implementation of the Turnaround Strategy should improve the financial position of PRASA based on the projected cost reduction of R1.285 billion and a project revenue increase of R555 million for the next financial year.
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23. Objective 1: Improving Customer Experience
Improving the performance of the rail system and ensuring that PRASA remains relevant in its endeavour to grow and expand its networks and services is centered on the ability to meet if not exceed customer expectations
The turnaround strategy and plan focuses on ensuring on a marked improvement in customer experience as measured against customer satisfaction and driven through the following Action Plans:
Functional communication platforms such as Integrated website(s), Prasa Smartphone Applications (APPs), Social Network, Public Address systems and Loudhailers
Integration of Railcom / ISAMS to provide commuters with real time service level information
Establishment of Customer Desks at Key Stations
Integration of Call Centers for Metrorail/MLPS and Autopax
Driving the total station management programme that ensures accountability at a frontline level for service performance.
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24. Objective 2: Improve Rail System Performance
The successful execution of Rail Operations’ turnaround plan should be able to reverse the current operational performance and improve service offering to the users of the rail system.
Marked improvement in operational performance levels to restore to the 2008/09 levels through :
Service Predictability by introducing a Regular/Clock-face timetable for peak/off-peak service, introducing inner / outer services.
Marked improvement in financial performance and sustainability through
Fare revenue collection by monitoring revenue budgets for high level corridor / stations, and reviewing the ticketing / tariff regime.
Fare evasion is being addressed by increasing the closure of the rail system through walling and fencing of stations and corridors, automation of ticketing and verification.
Marked improvement in passenger safety through
Reduction in crime related incidents involving passenger
Reduction in the number of passenger injuries and fatalities through improved service availability, reliability and predictability that addresses overcrowding on trains as well as order on stations.
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25. Objective 2: Improve Rail System Performance
The Engineering Turnaround has been developed to improve Reliability, Availability, Predictability and Safety of the service. The Engineering Turnaround Plan will be measured against the following: 
Arresting the decline in the operations by improving infrastructure reliability
Raising performance levels through interventions focused on improving service reliability
Improving rolling stock availability
Reducing infrastructure contribution to train delays and cancellations
Rolling Stock
The Rolling Stock target is to increase the number of coaches from to coaches in service (out of a total fleet of coaches); equivalent to 291 fully configured 12 coach set. The focus areas are:
Improve availability by recovering coaches that are out of service.
Improving reliability to prevent further loss of in-service fleet.
Infrastructure
The Infrastructure Target is to improve performance through the improvement of Infrastructure Availability, Reliability and kilometers under speed restriction
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26. Objective 3: Re-align Support Functions to Achieve an Efficient Rail Business
ICT is currently driving and implementing 22 projects that are meant to drive alignment across the organisation, whilst improving operational and organisational efficiencies and effectiveness.
The ICT turnaround strategy and action plan has been developed to enhance the organisation decision-making process as well as provide technology support in the procurement of goods and services, management of human capital, business communication, as well as business continuity and access to efficient and reliable record-keeping.
The focus areas for the ICT turnaround interventions are:
Enterprise Resource Planning (ERP)
Ticketing Programme
IT Systems Programme
ICT Governance and Compliance
ICT Innovation
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27. Objective 3: Re-align Support Functions to Achieve an Efficient Rail Business
SCM Turnaround Strategy is to ensure that the procurement of goods, services and works happen in a structured and focuses on driving down operational costs and maximizing efficiencies. A well-executed SCM strategy will results in value creation across the spectrum.
Adoption of a single SCM Strategy aligned to the PRASA strategy and business objectives (Completed)
Procurement plans aligned to the business demand plans through demand management.
Efficient contract management lifecycle
Effective application and implementation of business procurement processes through improvement in the efficiency of procurement from bid specification to contract award.
Achieve a SCM architecture that enhance business through
Proactively partnering with ICT to help the business to innovate and achieve the strategic objectives
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28. Objective 3: Re-align Support Functions to Achieve an Efficient Rail Business
The turnaround plan focuses on the Human Capital Management’s intervention and support in ensuring that the Turnaround Strategy and Plan takes into account the following:
Business Modernisation
Workforce Planning
Performance Management
HCM Governance and Controls
HCM Information System
Change Management
Leadership Development
The focus of Human Capital Management (HCM) turnaround strategy is premised against the need ensure that people with the right skills and competencies and with the right attitude are available and capable to carry out the Mandate of PRASA, in the most productive and efficient manner.
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29. Objective 3: Re-align Support Functions to Achieve an Efficient Rail Business
The Turnaround Strategy to improve the financial position of PRASA is based on the projected cost reduction of R1.285billion and a project revenue increase of R 555m for the next financial year.
The achievement of the above targets is based on implementation of the following measures:
A reduction in personnel costs
A reduction in energy costs
A reduction in security costs
A reduction in haulage costs
Increase in Fare Revenue
Increase on Other Revenue Streams
Furthermore, the Turnaround Plan also focuses on:
Improving spending on Maintenance and Material
Improve Treasury Management
Project Management
Identification of other funding sources
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30. Objective 4: Modernise the Rail System through investment programme of R173 billion
At the centre of PRASA creating a modern public entity is the modernisation readiness delivered through:
Infrastructure readiness
Rolling Stock Fleet Renewal
Deployment Corridor strategy
Future Skills and Capacity development
Marketing and communication of PRASA’s modernisation program
Stakeholder Engagement and Managing Expectations
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31. Objective 5: Expand Rail network and services in line with the National Strategic Plan
For PRASA to maintain relevance in public transport solutions it has to focus on:
Delivering on the Modernisation Program
Expanding PRASA Networks and Services
Delivering on National Government Imperatives
Integrated Network Planning aligned with other Transport Authorities
Growing the Revenue base
A viable Funding Model and appropriate Operating Model
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32. Objective 6: Exploit assets to support the primary mandate
The second objective is that PRASA shall generate income from the exploitation assets acquired by the organisation through Increase operating revenue by 10% in the first year and 15% in the subsequent years through
Real Estate
Facilities Management
Commercialisation
Acquisition of development leases
Development of PRASA properties
3rd Party Real Estate Development and Investment
Station Improvements and Upgrades
Telecommunications Infrastructure Commercialisation
Leasing of Optic Fibre
Commercialisation of Telecoms Towers
Provision of Value Added Services
ICT Value Added Services
Wi-Fi Solutions
Alternative Energy Generation
Renewable Energy exploitation
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33. Budget and Capital Programme
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34. Revenue Streams
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35. Expenditure
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36. Expenditure
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37. Expenditure: 2017/18
Original budget expenditure of R10.9 billion - resulted in a shortfall of R1.9bn before finance income & cost, depreciation & amortisation of Capex subsidy.
A cut of R1.1 billion on costs initiated through the Turnaround strategy:
Employee cost – R579 million – no process has started as yet; an independent external expert to be called to assist, employees still to be identified and processes to be followed i.t.o. LRA
Energy saving of R210 million – Negotiations with Eskom for new terms and rates & NERSA negotiations to be exempted on the rural subsidy levied on the energy rate.
R184 million on security through efficiencies & a new tender process.
Haulage cost of R53 million to be negotiated with Transnet on service delivery & rates.
Maintenance costs on “old” assets were increased by 48% to ensure lack on maintenance assets will be addressed.
New trains for 2017/18 will not add to a significant increase in revenue. Ticket price stays the same for the new trains, only through efficiencies will revenue show positive trend. The new trains however add additional R221million to maintenance cost for the year.
HCM Turn-around
Engineering, turnaround
Moderni-sation
If savings/cuts not realised PRASA will once again face a negative bottom line, leading to serious cash flow constraints.
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38. Capital Allocation Programme:
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39. 2015/16 Audit Outcomes: High Level Action Plans
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40. AG ACTION PLANS
Introduce and implement proactive assurance in key processes
SCM policy in line with Treasury regulation
Forensic investigations on irregular expenditure
Accounting expert appointed to advise on matters
Re-align current existing organisational structures to increase efficiencies and enhance control environment, SCM and Payroll moved to Finance
HCM policies are being reviewed
SOP for performance reporting enhanced and strengthened, expert to review annual performance report
Initiate ICT governance structure, policies to be reviewed
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