The Performance of the Department of Public Works (4th Quarter)

South Africa Works because of

Public Works

PRESENTATION TO THE PORTFOLIO ON PUBLIC WORKS PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA

CAPE TOWN 02 JUNE 2015

GRC - M&E

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Contents

1. Purpose

2. Methodology in the treatment of quarterly performance information

3. Programme Performance

4. Performance Challenges

5. General Remarks

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PurposePurpose

Purpose of the Presentation by the Department of Public Works

-To reflect on the 4th Quarter Performance and Financial information of the Department of Public Works in the financial year 2014/15 in order for the Portfolio Committee to advise on improving performance

Objective of the Portfolio Committee on Public Works

-To have an understanding and measure the 4th Quarter Performance and Financial performance of the Department for the financial year 2014/15.

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Methodology of Assessing the Quarterly Reports

Key Focus of quarter reports

•Adherence/Compliance to the Policy framework for monitoring, reporting and evaluation of performance information in the Department of Public Works and other statutory requirements•Effective use of the M&E toolkits to measure and judge progress (Actual versus Target) in order to learn, improve reporting, innovate and adapt to change•Encourage the use of quality performance information for decision making and resource management•Project the various related components of Performance Information (M&E System) - for example, the inputs, processes, activities, outputs, outcomes, and impacts that constitute projects, programmes, and services•To test the appropriateness of the indicators•To provide an assessment on the overall performance of the Department•To test the inputs – finance, capacity and policy on the functioning of the Department •Assist the oversight bodies such as parliament with up-to-date performance information that will assist in their oversight responsibilities

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5 year Strategic Goals & OutcomesVision - A service oriented Public Works Department delivering value and contributing to the national agenda for social and economic development

Strategic Goals and contributions to Government Outcomes

Strategic Goals Government Outcomes

An efficient, competitive and responsive accommodation infrastructure network

Outcome 6 (An efficient, competitive and responsive economic infrastructure network) and Outcome 12 (An efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship)

Strategic leadership and regulation of the construction and property sectors to promote economic empowerment and skills development

Outcome 5 - A skilled and capable workforce to support an inclusive growth path

Good corporate governance to support effective and efficient service delivery

Outcome 12 - An efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship

Decent employment through inclusive economic growth Outcome 4 - Decent employment through inclusive economic growth

Contribute towards comprehensive rural development Outcome 7 - Contributing towards Government’s objective to develop rural areas

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This programme serves to provide strategic leadership and support services, including for the accommodation needs and overall management of the Department of Public Works. It is responsive to meet strategic goal 4 – Good Corporative governance to support effective and efficient service delivery. Sub-Programmes

• Internal Audit and Investigation Services• Strategic Management Unit• Monitoring and Evaluation• Intergovernmental Relations• Finance and Supply Chain Management• Corporate Services

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Highlight/Achievement – Programme One: Administration The sub-programmes are largely supportive in nature and play a critical role in enabling the core business of the Department to achieve its objectives.

Highlights/Achievements

•Tabling of the Annual Performance Plan and Strategic Plan– these plans spell out the strategic and operational objectives of the Department. They serve to guide the deliverables of the Department.

•Updated Risk Registers - Progress made on the implementation of action plans in the risk registers – the registers detail all the risks, corrective actions and the extent to which risks are mitigated in the Department.••Governance Arrangement – Improved inter-governmental relations including meeting and discussions at NEDLAC of Public Works related matters. Also, the Department discussed the quarter performance of the Entities reporting to the Minister to reflect on the contributions to the mandate of the Department

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Cont.

• Reduction in Irregular Expenditure - 9% reduction against a 5% target. Irregular expenditure has been one of the major challenges in the Department for a long time. Efforts to significantly reduce irregular expenditure are now being realised.

• Payment of invoices within 30 days - 87% compliant invoices settled within 30 days for the DPW and 63% for PMTE. This is important not as a compliance requirement only but also as means strengthen and empower suppliers and boost the economy

• Skills development programmes - 776 beneficiaries participating in DPW skills development programme, 150 Young Professionals, 350 Interns, 69 Learners (Schools Programme), 157 Bursary Holders and 50 Management Trainees

• Approved HR Plan – the plan seeks to address the HR-related issues affecting the Department. This plan includes detailed action plans on recruitment and skills development initiatives

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This programme is the largest and core programme of the Department of Public Works and appropriates a large percentage of the departmental budget. It provides and management government’s immovable property portfolio in support government social, economic, functional and political objectives

Sub-Programme

•Strategic Asset Investment Analysis•Project and Professional Services•Inner-City Regeneration•Operations Management•Key Accounts management •Prestige Management

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Programme Two:Programme Two: Immovable Asset Management The strategic objective of this programme is to provide leadership in effective and efficient Immovable Asset Management and in the delivery of infrastructure programmes

Highlights/Achievements

•Land Parcels Vested - 2 750 land parcels confirmed ownership (vested). This achievement was realised despite the fact that a significant number of title deeds and Surveyor General Diagrams are not in a possession of DPW for properties to be vested

•ICR - Accommodation solution for Polokwane urban centre completed. This is part of the initiatives in providing accommodation solutions for project implementation in other metros and district municipalities (outside Tshwane)

•Service Level Agreements - 8 Service level agreements submitted to identified User Departments, i.e. DOD, STATS SA, SAHRC, DAFF, DWA, DRDLR, DSD, DEA.

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This programme ensures the creation of work opportunities and the provision of training for unskilled, marginalised and unemployed people in South Africa by coordinating the implementation of EPWP

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EPWP

The programme plays, largely, a policy and coordinating function with the rest of government. With a function of this nature, challenges such timeous and accurate data and information are a common element

Highlights/Achievements

•Work Opportunities (WO) – a total of 990 920 work opportunities were created through the labour intensive approach aligned to the EPWP business plan

•Work Opportunities (WO) created by Municipalities - 594 552 Work opportunities created in rural municipalities.

•Beneficiaries trained – a total of 1273 learners trained through the National Skills Fund.

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This programme promotes the growth and transformation of the construction and property industries, promote uniformity and best practice in construction and immovable asset management in the public sector

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Programme 4: Property and Construction PolicyProgramme 4: Property and Construction Policy

This programme ensures transformation and regulation of the Construction and Property industries to ensure economic growth and development.

It is a dependent programme and largely a process or chain-event driven in nature. It often experiences challenges such as delays in stakeholder feedback on a particular policy and political considerations. It also depends on the Parliamentary programme. Its function has huge impacts in the transformation of the built environment.

Highlights/Achievements

•The Department continues to participate in Parliamentary processes towards the enactment of Agrément South Africa (ASA) Bill and in addition participation towards enactment of Expropriation Bill is underway

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This programme provide for various services, including compensation for losses on the Government assisted housing scheme and assistance to organisations for the preservation of national memorials. Meet the protocol responsibilities for state functions.

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Programme 5: Programme 5: Auxiliary and Associated Services

Highlights/Achievements

•Infrastructure support - Infrastructure support provided to 6 Prestige Events against a target of 2 Prestige Events . This represents significant over achievement

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Performance ChallengesPerformance Challenges

• There are challenges with the appointment of service providers in areas where certain scarce skills are required. This then contributes to delays in achieving the set targets or under-performance

• In areas (example immovable Asset management) where there are dependencies from external stakeholders or departments , delays or non corporation is often a challenge resulting in non-achievements of targets. This is also applicable to policy and EPWP.

• The underperformance in projects was characterised by a number of delays during planning stage resulting in the extension of contract duration

• Capacity and Budget constraints in some areas continue to be a hindrance to performance.

• There are challenges with the current business model/value chain. This requires a review of the individual units’ value chains and craft an integrated business model that will address fragmentation and duplications. The value chain will also assist in addressing the skewness between core and support areas. This process is underway through the development of a Service Delivery Model as well as the implementation of the Infrastructure Delivery Management System (IDMS)

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General RemarksGeneral Remarks

• While acknowledging the challenges in the Department, there is some improvement in other programmes

•The Department has taken into consideration the recommendations by the Portfolio Committee on Public Works, Parliament of South Africa regarding the quality of the reports

Throughout the financial year, while taking these contributions into account, the Department continues to find ways of improving in areas of concern and effectively contribute to service delivery

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DPW Summary expenditure per economic classification

DPW Expenditure per Programme

Content

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Summary Expenditure per Economic Classification

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Summary Expenditure Report per economic classification – for the financial year ended 31 March 2015

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Summary expenditure per economic classification for the financial year ended 31 March 2015

Notes to Expenditure Summary per economic classification

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Current year Actual Exp. vs Appropriation Current year vs prior year analysis

Compensation of employees

Under spending of R22 million relating to vacant positions that were filled towards the latter part of the financial year.

EPWP (Programme 3) – R17 million Administration (Programme 1) R3.6 million Property and Construction Industry (Programme 4) R1 million

Average salary increase of 6 % Average number of employees increased from 5 710

(March 2014) to number of 5775 (March 2015).

Goods and services – Office accommodation

Increase on expenditure due to: Annual inflationary increase in lease rentals. Annual increase in municipal services

Goods and services – Maintenance

Reclassification of expenditure (maintenance and repairs) adjusted from capital infrastructure budget to account for it under current expenditure)

Actual expenditure as at the end of the financial year is R128 million

Goods and services – Other

Decreased on expenditure linked to exited and reduced commitments on expenditure relating to some of the turnaround projects compared to the previous financial year.

Notes to Expenditure Summary per economic classification

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Current year Actual Exp. vs Appropriation Current year vs prior year analysis

Transfers and subsidies

Transfers payments in line with the allocations Under spending of R1.2 million under Provinces and

municipalities for EPWP Integrated grant for Provinces. Withheld payments to 2 Limpopo Provincial Government department due to non-compliance to Division of Revenue (DoRA)

Over spending under Non-profit institution for Agrement SA (R11 million). Funds are allocated under goods and services whilst expenditure is accounted for under transfers.

Decrease on expenditure due to reduced allocation to Independent Development Trust. R50 million transferred in 2014/15 compared to R100 million transferred in 2013/14.

Buildings and other fixed structures

Under spent budget due to late receipt of invoices. Request for roll over submitted to Treasury.

Significant decrease in current year due to maintenance and repairs expenditure reclassified to current expenditure (Goods and services)

Machinery and equipment

Significant increase in current year due to payments of prior year accruals on IT infrastructure.

Notes to Expenditure Summary

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Transfers and subsidies relates to:

Summary Expenditure per Programme

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Summary Expenditure per Programme for the financial year ended 31 March 2015

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Summary expenditure per programme for the financial year ended 31 March 2015

Notes to Expenditure Summary per programme

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Programme 1 • Compensation of employees’ under spending of R3.6 million due to

vacant positions filled in the latter part of the financial year. Programme 2

• The under spending of R71 million in Programme 2 relate to late invoicing.

• The department is engaging with National Treasury for a roll over.

Notes to Expenditure Summary per programme

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Programme 3 • Compensation of employees underspending by R17 million due to vacant positions within

EPWP that were only filled in the latter part of the financial year.• Goods and services underspent by R2.8 million by the end of the financial year.

Commitments and accruals relating to unspent funds were reported at the end of the financial year.

• Transfers and subsidies under-spent by R1.2 million, and relate to transfer payments to Provinces for EPWP Integrated Incentive Grant. Funds were withheld for 2 Limpopo Provincial Departments due to non-compliance to the Division of Revenue Act by the provinces. Approval for the withholding of funds was granted by National Treasury.

Programme 4 • Compensation of employees underspending of R1 million due to vacant positions within the

branch of which some of the posts were only filled in the latter part of the financial year. • Goods and services underspending of R12.7 million include an original R11 million budget

allocation to Agrement SA which was subsequently paid from transfers and subsidies.• Transfers and subsidies over spending of R10.8 million is attributable to the payment made

to Agrement South Africa.

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PMTE Budget and Expenditure Report as at the end of the yearGuideline: 100%

Financial Performance of the PMTE

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Budget Claimed to date

% Budget vs Claimed

Actual Received/ Paid

% Actual Received / Claimed

R’000 R’000 % R’000 %

Revenue 8 201 857 8 441 266 103% 7 814 538 92%

State Accommodation Charges 3 631 172 3 631 172 100% 3 578 353 99%

Private Accommodation Charges 3 706 930 3 954 640 106% 3 398 275 86%

Management Fees (Municipal) 190 383 182 082 96% 164 538 90%

Augmentation 673 372 673 372 100% 673 372 100%

Expenditure 8 158 831 8 158 831

Cleaning and gardening 186 815 186 815

Private Leases 3 808 838 3 808 838

Rehab, Repair and Maintenance 3 211 320 3 211 320

Property Rates 801 817 801 817

Municipal Services (Arrears) 244 244

Other 149 796 149 796

Profit Vs Net Cash Movement:31 March 15 282 434 -344 293

Cumulative Bank Balance: 31 March 15 -660 549

Summary Expenditure per Economic Classification

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2014/15 2013/14

Classification % of total budget

Allocation R’000

ExpenditureR’000

Exp. % Exp. %

Current Payments Including Cleaning and Gardening, Operating Leases, Maintenance, Repair and Renovations

77% 6,432,706 6,394,824 99% 94%

Capital PaymentsRehabilitation, Repair and Renovations of a Capital nature

12% 973,758 962,190 99% 84%

Transfer PaymentsProperty Payments

11% 960,162 801,817 84% 73%

Total 8,366,626 8,158,831 98% 91%

Summary Expenditure per Objective

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204/15 2013/14

Objective* % of Total

AllocationR’000

ExpenditureR’000

% Exp % Exp 2013/14

Cleaning and Gardening Services 2% 202,073 186,815 92% 70%

Operating Leases 45% 3,801,034 3,808,838 100% 100%

Repair and Renovations 25% 2,126,646 2,101,253 99% 84%

Rehabilitation, Repair and Renovations (Capital) 12% 973,758 962,190 99% 84%

Repairs and Renovations (Current) 14% 1,152,888 1,139,063 99% 84%

Maintenance 13% 1,110,067 1,110,067 100% 100%

Property Rates 11% 960,162 801,817 84% 73%

Corporate Services 2% 166,644 150,041 90% 37%

Total 8,366,626 8,158,831 98% 91%

* Note that the PMTE 2014/15 budget is reported on per Objective and not per Programme in accordance with its published ENE structure

Notes to the expenditure

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• Guideline expenditure as at the end of March 2015: 100%

• Cleaning and gardening: The expenditure was lower than expected at the end of the fourth quarter (although it was significantly better than the previous year) due to some contracts being awarded later than originally planned. The expenditure will improve in the next year due to contracts now being in place

• Operating leases: The budget was fully spent

• Repair and Renovations: This budget is based on projects on different levels of implementation. This include planning, procurement and construction. Measures have been put in place to monitor these projects, identify any actual or potential blockages and to resolve it. The expenditure on this item improved significantly compared to the previous financial year

Notes to the expenditure - continued

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• Maintenance: This expenditure item represents maintenance of a current nature and consists mainly of day-to-day repairs and service contracts (repeated maintenance to installations). The allocation was fully spent.

• Property Rates: Expenditure on this item has improved significantly due to interventions to identify and process outstanding claims from municipalities. Not all claims were processed before year-end, hence the under-expenditure. All outstanding claims will be settled early in the new financial year.

• Corporate Services: This expenditure item relates mainly to computer services. Some of the ordered equipment was only delivered after the financial year-end.

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PMTE Debt and Revenue Management Report

Debtors Age Analysis – 2014/15

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Categories

Current 30 Days >60 Days Total 2014/15

Prev Years Total

R’000 R’000 R’000 R’000 R’000 R’000

Accommodation (State Owned) 0 0 52,818 52,818 14,293 67,112

Accommodation (Private) 237,197 106,352 208,544 552,093 774,879 1,326,972

Municipal Services 216,531 4,359 131,378 352,268 97,907 450,175

Client Capital Recoveries 306,236 37,147 45,622 389,007 -96,812 292,195

Client Current Exp Recoveries 58,614 4,525 27,939 91,078 269,807 360,885

Total 818,578 152,383 466,301 1,437,262 1,060,074 2,497,336

Percentage 33% 6% 19% 58% 42%

Department of Public Works (National )Head Office: Public WorksCGO BuildingCnr Bosman and MadibaPretoria CentralPrivate BagX65Pretoria0001Website: http://www.publicworks.gov.za

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Thank You