1. Portfolio Committee: Public Works
PRESENTATION
ON BUDGET 2002/2003
For
Portfolio Committee: Public Works
By Mr. Tami Sokutu
22 May 2002

2. OVERVIEW Medium Term Expenditure Framework
Medium Term Expenditure Framework
MTEF Allocation 2002/2003 – 2004/2005
Comparative Analysis Between 2001/2002 Allocation v/s Expenditure

3. MISSION
Provide And Manage In Accordance With Prescribed Standards And Directives The Accommodation, Housing, Land And Infrastructure Needs Of National Departments And To Promote National Public Works Programme And To Provide Associated Supporting Service

4. PROGRAMMES
1. Administration:
Provides Leadership, Management, Financial And Administration Support
2. Provision Of Land And Accommodation
Provides For Accommodation, Housing, Land And Infrastructure Needs Of National Departments

5. PROGRAMMES
3. National Public Works Programme:
Delivers Infrastructure To Meet The Physical, Social And Economic Needs Of The Population
4. Auxiliary And Associated Services Provide Financial Assistance To Organisation For Preserving Certain National Memorials And Training Facilitation, Compensation For Losses

6. ACTIVITIES INFLUENCING BUDGETING
Client Department’s Strategies And Output That Affect Infrastructure
Design And Implementation Of Capacity Building Programmes For The Construction Industry
Additional Accommodation Needs Informed By Government Wide Strategy On Infrastructure

7. ACTIVITIES INFLUENCING BUDGETING
Playing The Role Of Custodianship Of State Property
Completing The State Asset Register
Transformation Process Which Aligns Resources To Services Delivery Eliminating Unnecessary Costs And Duplication

8. ACTIVITIES INFLUENCING BUDGETING
Promote Public And Private Sector Infrastructure Delivery
Construct Public Assets For Disadvantaged Communities By Creating sustainable employment Opportunities

9. Allocations For 2002/2003 To 2004/2005 2002/03 2003/04 2004/05
2002/ / /05
Personnel
Major Cost Drivers
CBPWP
Auxiliary Services
Other
TOTAL

10. Analysis Of Major Cost Drivers
2002/ / /05
Capital
Maintenance
Leasing
Rates
Municipal
TOTAL

11. EXPENDITURE PER PROGRAMME AS AT 31 MARCH 2002%
101.53%
93.03%
96.89%
111.69%

12. EXPENDITURE PER STANDARD ITEM AS AT 31 MARCH 2002
100.84%
99.96%
105.34%
96.52%
132.59%
60.48%
94.14%
105.00%
865.25%
10383

13. CAPITAL WORKS AND PLANNED MAINTENANCE
CHALLENGES
Non alignment of building programmes to
MTEF allocations
Lack of prioritization by clients
Inadequate formulation of needs assessment
(Prototype Business case)
Maintenance backlog
 Inadequate funds to address maintenance
backlog

14. CAPITAL WORKS AND PLANNED MAINTENANCE
CHALLENGES (continued)
Historical/Tedious Planning & Procurement methods.
Insufficient use of Prof input & Project management principles
Lack of capacity / Inappropriately qualified project managers
Outdated & Unintegrated management info systems
State Tender Board’s onerous requirements

15. CAPITAL WORKS AND PLANNED MAINTENANCE
INNOVATIONS/ACHIEVEMENTS
High level interventions coupled with improved co-operation by clients.
Regular Strategic and operational management meetings confirming building programmes within time frames
High level professional input and advices on development of “Blue Prints”
Persuaded clients to undertake planned maintenance of a capital nature within their capital allocation.

16. CAPITAL WORKS AND PLANNED MAINTENANCE
INNOVATIONS/ACHIEVEMENTS
(Continued)
Introduced term contract eg RAMP to convert reactive to proactive maintenance
Adopted proactive pre-planning taking into account industry benchmarks
Introduction of project management occupational class
Re-defined relation-ship with private sector & commissioned latter to assist with project management

17. CAPITAL WORKS AND PLANNED MAINTENANCE
INNOVATIONS/ACHIEVEMENTS
(continued)
Manual integration systems albeit that integration has not been achieved
Challenged certain constraining regulations & obtained requisite approval to increase delegated authority.

18. UNPLANNED MAINTENANCE
CHALLENGES
Insufficient funding levels
 Reactive maintenance and timeous response
 Ineffective PMIS

19. UNPLANNED MAINTENANCE
INNOVATIONS/ACHIEVEMENTS
Proven track record to spend all funds for the first time ever – basis to motivate additional funds
Introduction of facilities management and term contracts
Forced reliance on management system

20. LEASEHOLDS ACQUISITIONS
CHALLENGES
Lack of alignment of budgets 
Unwillingness by clients to suspend funds for additional leasing requirements
Lack of awareness on part of clients w.r.t budgets & leasing in general
Lack of visibility of leasing portfolio to clients
Onerous/outdated lease contract
Outdated, ineffective property management information system
Backlog on renewal of leases

21. LEASEHOLDS ACQUISITIONS
INNOVATIONS/ACHIEVEMENTS
Created a mechanism to allocate & monitor expenditure
Agreed with clients that DPW will act as agent on their behalf &
Motivate for additional funds in future.
Detailed planning & prioritization
Developed specific reports with portfolio information

22. LEASEHOLDS ACQUISITIONS
INNOVATIONS/ACHIEVEMENTS
Developed new standard lease contract with max. risk transfer to landlord plus maintenance responsibility
Transitional measure implemented  
Strategic intervention of leasing project    

23. Internal staff inefficiencies
MUNICIPAL SERVICES
CHALLENGES
Ineffective PMIS
Internal staff inefficiencies
Complex invoicing by local Authority batch accounts etc.
Fragmented approach to payment of services

24. MUNICIPAL SERVICES
INNOVATIONS/ACHIEVEMENTS
Forced reliance of manual systems
Continuous training
Continuous consultations with local authorities
Introduction of integrated facilities management on limited scale

25. MUNICIPAL RATES AND TAXES
One of the key cost drivers relating to ownership / holding of fixed property is payment of municipal Rates & Taxes.
The expenditure for the past years were:
1998/ / / /02

26. MUNICIPAL RATES AND TAXES
The reason for increases in the municipal rates and taxes expenditure has been a combination of general increases in rates charged by municipalities on existing properties as well as the additional state owned properties that have been included on the department’s asset register as we get to know about their existence.

27. MUNICIPAL RATES AND TAXES
The Department of Provincial and Local Government is currently formulating a Property Rating Bill, which proposes that every state owned property would be ratable. At the moment, a large portion of state owned properties are not liable for payment of municipal rates and taxes as they are not located within municipal boundaries and our department is concerned that the implementation of this Bill might drastically increase the rates and taxes budget requirements

28. MUNICIPAL RATES AND TAXES
Another key challenge facing the department remains that of ensuring that the inventory list of fixed properties is kept up to date and that it contains the information that enables proper management of fixed properties.

29. MUNICIPAL RATES AND TAXES
The other key challenge that will be prominent in the forthcoming year is the requirement by the National Treasury to attach value to the state owned fixed properties for purpose of disclosing same in the financial statements.

30. HIGHLIGHTS OF THE CBPWP
JOB CREATION · Introduction of rapid delivery projects in order to increase the number of projects implemented as well as to ensure expenditure on the budget. · Full expenditure of the entire budget allocated in two previous financial years .

31. HIGHLIGHTS OF THE CBPWP
JOB CREATION · Furthermore, the success of the programme has generated a lot of expectation on the part of district municipalities and communities. The Department is always inundated with requests from communities and municipalities who are currently outside of the CBPWP targeted areas.

32. HIGHLIGHTS OF THE CBPWP
JOB CREATION · The MTEF allocation (in the order of R274 million per year) has become too small for the demand.

33. HIGHLIGHTS OF THE CBPWP
MASSIVE PUBLIC WORKS PROGRAMME
The strategy document for Massive Public Works Programme has been drafted and the unit is in a process of appointing consultants that will drive the process.

34. HIGHLIGHTS OF THE CBPWP
MASSIVE PUBLIC WORKS PROGRAMME
The terms of reference given to them are as follows:
Facilitate the development of a strategy document for partnership between the Department of Public Works and partners identified for the CBPWP

35. HIGHLIGHTS OF THE CBPWP
MASSIVE PUBLIC WORKS PROGRAMME
Co- ordinate the identification of partnership project for the expanded CBPWP
Facilitate the preparation of detailed business plans for the partnership projects
Between the CBPWP and its partners;
Mobilize the required stakeholders for the partnership projects and ensure their effective participation in the roll – out process;
Investigate existing systems and realign for the management and monitoring of

36. HIGHLIGHTS OF THE CBPWP
MASSIVE PUBLIC WORKS PROGRAMME
The projects;
Organise training, capacity and institution building process for the partnership Projects;
Develop and implement a communication strategy for the roll-out process of the Programme;
Create networks and linkages for the sustainable implementation of the partnership projects;
Develop sector-based models for the partnership projects in consultation with relevant partners;

37. HIGHLIGHTS OF THE CBPWP
MASSIVE PUBLIC WORKS PROGRAMME
Manage the identified partnership projects and report on progress to the Director (CBPWP) Implementation and Partnership Steering Committee (PSC); and
Continuously liaise with the District Councils on progress relating to the Implementation processes.
The outcome of this strategy will ensure that the unit plays a pivotal role in coordinating Public works projects.

38. AUDIT RELATED MATTERS
Audit Committee
The Department’s Audit Committee is fully functional and effectively supporting management in ensuring that there is good control environment upon which the financial information is developed and processed.

39. Internal Control AUDIT RELATED MATTERS
The accounting and Internal control systems within the Department have improved drastically during the last two years, despite the inherent limitations of the accounting systems currently in use. This movement towards good control environment is evident in the observation of the Auditor General’s audit report for the year ended 31 March 2001.
The department has ensured that all appropriate actions are taken to address irregularities and inefficiencies reported to management by both Internal Auditors and Auditor General.

40. AUDIT RELATED MATTERS
Internal Control
The Department is also engaged in discussions with the Auditor General on their audit approach with a view to ensuring that the audit is conducted in a manner that will help management in its public accountability function whilst also not compromising the independence of the Auditor General in its constitutional mandate. Essentially, management is keen to see an audit report that will assist in addressing the identified areas for improvement.

41. THE END