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Estimate costsPrivate Security Industry Regulation

Bill,2012

7 November 2012

Estimate costsPrivate Security Industry Regulation

Bill,2012

7 November 2012

PRIVATE SECURITY INDUSTRY REGULATORY BILL 2012

IntroductionThe cost estimation tabled in Parliament on 30 October 2012 with respect to the implementation of the Amendment Bill, took into account the following factors:

• Renewal of registrations post implementation of the Bill, in order to give effect to section 9 and 11 (limitation of foreign ownership and control);

• Capacity building in the law enforcement and compliance functions;

• National footprint, by establishing provincial offices in North West, Free State and Northern Cape;

• Design and implementation of an ERP software to support, operations, revenue management, decision making and reporting;

• Capital expenditure estimates with respect to procurement of business tools for the law enforcement and compliance unit, such as a fleet of vehicles used by inspectors in operations;

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• Clauses 9 and 11 of the Bill deal with limitation of ownership and control by non- citizens of South Africa.

• Post implementation of the Bill, there will be a need to renew registrations of both security officers and security service providers (businesses).

• Section 22 of the principal Act provides as follows:

• “The Minister may prescribe procedures and principles in respect of periodic applications for the renewal of registrations by registered security service providers and the conditions and requirements for the granting of such applications”.

• To this end, capacity building, capital expenditure, national foot print of the Authority flows from implementation of clauses 9 and 11

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Baseline expenditure and revenue (R’000)

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Total Expenditure per Programme

2012/2013 2013/14 2014/15 2015/16 2016/17

Programme 1Law

Enforcement 66,030 73,950 80,750 85,375 89,593

Programme 2Finance &

Administration 60,247 55,772 54,929 55,977 59,195

Programme 3Communications

& Training 25,984 27,544 29,394 30,765 32,222

Programme 4Corporate Services 20,876 22,045 23,540 23,699 24,520

Total Expenditure 173,136 179,310 188,613 195,817 205,530

Revenue * 178,124 181,131 190,176 198,289 206,958

Surplus 4,987 1,821 1,563 2,472 1,428

* Including SO annual fees


Estimated costs of Bill Implementation (R’000)

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Total Expenditure per Programme

2013/14 2014/15 2015/16 2016/17 2017/18

Programme 1Law

Enforcement 6,541 117,395 105,891 115,410 118,415

Programme 2Finance &

Administration 15,540 18,418 12,825 8,390 9,027

Programme 3Communications

& Training 6,156 20,331 25,497 28,774 30,502

Programme 4Corporate Services 0 956 1,032 1,115 1,204

Revenue foregone

Supplemented by State - - 44,123 46,329 48,646

Total State funding required 28,237 157,100 189,367 200,018 207,794


Estimated costs of Bill Implementation (R’000)

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Total Expenditure by Economic Classification

2013/14 2014/15 2015/16 2016/17 2017/18

Compensation to employees 0 52,449 75,002 95,872 103,542

Lease payments 0 6,517 7,141 7,828 8,610

Goods and services 6,427 26,493 27,755 43,976 46,996

Project expenditure (Renewal of Registrations) 0 50,268 24,283 0 0

Total Current Expenditure 6,427 135,727 134,182 147,676 159,148

Capital expenditure 21,810 21,373 11,062 6,014 0

Total expenditure 28,237 157,100 145,244 153,689 159,148


Consolidated budget incl. Bill (R’000)

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Estimates of revenue and expenditure

2012/13 2013/14 2014/15 2015/16 2016/17

Baseline expenditure 173,136 179,310 188,613 195,817 205,530

Amendment Bill estimated costs 0 28,237 157,100 145,244 153,689

Total expenditure 173,136 207,548 345,713 341,061 359,219

Baseline revenue 178,124 181,131 190,176 198,289 206,958

Less: Revenue foregone 0 0 0 -44,123 -46,329

Surplus / (Deficit) 4,987 -26,417 -155,537 -186,895 -198,590

Proposed State funding 0 28,237 157,100 189,367 200,018


Baseline revenue

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Implementation approach and plan• As at October 2012, the PSIRA database had 2 112 636 registered security

officers and 27 450 security businesses.

• Due to the large number of renewals that will be undertaken, the process is envisaged to take 24 months, from the date the Bill is put into operation.

• There are two approaches that can be adopted. i.e. registration will lapse on the month of birth of the security officer, or the month which the security officer’s registration was so registered prior to the Bill implementation.

• The above approach will ensure that there is proper scheduling of renewals and avoid influx of renewals.

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Benefits for renewal process

• Currently, security service providers are not classified and categorized in terms of section 2(1)(d)(i) of the Private Security Industry Levies Act, 23 of 2002 which provides as follows:

Council may determine the amount of levies for different categories or classes of security service providers by having regard to th training level, position, functions or other classifications

• The renewal process will be an opportunity to classify security service providers to give effect to categorization and classification

• Improve operational efficiencies with respect to monitoring and control of criminality in the industry

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Resources required for renewal project

• Capacity building in the law enforcement and compliance functions;

• National footprint, by establishing provincial offices in North West, Free State and Northern Cape;

• Design and implementation of an ERP software to support, operations, revenue management, decision making and reporting;

• Capital expenditure estimates with respect to procurement of business tools for the law enforcement and compliance unit, such as a fleet of vehicles used by inspectors;

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Renewals project plan

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Objective Start date Completion date Responsibility Outcome

Renew

registrations of

security officers

(2.1 million)

April 2014 September 2015

(April –

September 2015

being grace

period)

PSIRA

Security Officers

PSIRA has a

credible and

updated database

of security service

providers

Renew

registrations of

security

businesses (27

450 businesses of

which 9 770 are

actively operating)

April 2015 March 2016 PSIRA and

Security

businesses

PSIRA has a

credible and

updated database

of security service

providers


Renewals project assumptions

• 50% of the total Security officers and businesses on the registrations database will respond to the renewal process.

• The total number of renewals for security officers is estimated to be 1 056 318

• The total number of renewals for security businesses is estimated to be 13 725

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Renewals project estimated costs (R)

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Activities Cost driver Resources 2013-14 2014-15 2015-16

Renewal of registration for

Security Officers

Number of

security

officers

Registration

personnel,

ERP

software,

Provincial

offices,

Inspectors,

Fleet of

vehicles

0 50,267,533 24,283,405


Renewals project estimated costs

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Activities Cost driver Resources 2013-14 2014-15 2015-16

Printing and Issuing of new ID Cards 0 3,961,193 1,320,398

Printing and Issuing Certificates 0 7,922,385 2,778,045

Criminal records verifications 0 38,383,955 12,794,652

Travel, subsistence and accommodation (Infrastructure

assessment) 0 0 7,390,310

Total project costs0 50,267,533 24,283,405


Capacity building

• Lack of capacity mainly on human capital has been a deterrent to the Authority’s effectiveness to regulate the private security industry.

• Lack of capacity is best illustrated by the ratio of inspectors to security service providers that are actively operating in the industry.

• The following table depicts number of inspector geographically, relative to the number of security service providers in a particular province.

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Current Ratio

Current number of inspectors

Number of registered businesses *

Number of registered SO's *

Current Ratio Inspector to Businesses

Current Ratio Inspector to Security Officers

Gauteng 7 3,471 173,269 496 24,753

Limpopo 3 1,193 29,375 398 9,792

North West 3 406 26,189 135 8,730

Free State 2 290 16,804 145 8,402

Northern Cape 1 125 4,378 125 4,378

Mpumalanga 3 693 28,250 231 9,417

Kwazulu Natal 8 1,624 70,995 203 8,874

Eastern Cape 6 723 36,379 121 6,063

Western Cape 8 1,017 41,293 127 5,162

Total 41 9,542 426,932 233 10,413* Excludes registered security service providers that are registered but not actively participating in the industry


Capacity building• Firstly statistics show that on average for each inspector currently employed

by the Authority, there are 233 security businesses

• Secondly, for each inspector currently employed, there are 10 413 security officers in the industry

• The consequence of such a large ratio, is that very few businesses are inspected annually, which increases the risk of non-compliance, exploitation of labour, and criminality in the industry.

• Lack of visibility by the law enforcement division also has an impact on revenue collection, since some businesses misrepresent their payroll numbers in order not to pay the appropriate annual fees to the Authority

• Without the capacity proposed, the Authority cannot implement sections 9 and 11 of the Bill

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Proposed additional inspectors and prosecutors

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Proposed additional inspectors 2014/15 2015/16 2016/17 TotalGauteng 17 18 18 53Limpopo 6 6 5 17North West 2 1 1 4

Free State 2 1 1 4Northern Cape 2 0 2Mpumalanga 3 3 3 9Kwazulu Natal 7 7 6 20Eastern Cape 4 2 1 7Western Cape 4 3 3 10Total 47 41 38 126Proposed additional prosecutors 9 5 3 17


Cost of compensation per programme

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Programme 1 - Law Enforcement in Rand 2014/15 2015/16 2016/17 2017/18 2018/19

Compensation to employees

38,156,085

57,429,978

76,618,468

82,747,946

89,367,781

Additional employees including administrative staff 155 51 43 0 0

Incremental head count 155 206 249 249 249

Average cost per unit 246,168 278,786 307,705 332,321 358,907



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Programme 2 - Finance & Administration 2014/15 2015/16 2016/17 2017/18 2018/19

Compensation to employees 5,965,803 6,443,067 6,958,513 7,515,194 8,116,409Additional employees including administrative staff 27 0 0 0 0





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Programme 3 - Communications & Training 2014/15 2015/16 2016/17 2017/18 2018/19

Compensation to employees 7,381,031 10,107,396 11,191,874 12,087,224 13,054,202Additional employees including administrative staff 25 5 1 0 0





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Programme 4 - Corporate Services 2014/15 2015/16 2016/17 2017/18 2018/19

Compensation to employees 946,113 1,021,802 1,103,547 1,191,830 1,287,177Additional employees including administrative staff 4 0 0 0 0




National foot print• Additional provincial offices in North West, Free State and Northern Cape

are proposed to be established.

• Furthermore, Limpopo and Mpumalanga provinces which currently have walk in centres are proposed to be capacitated in order to provide a fully fledged service which includes the law enforcement functions.

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Objective Start date Completion

date

Responsibility Outcome

Establish provincial offices in

North West, Free State and

Northern Cape, Limpopo and

Mpumalanga

September

2013

March 2014 PSIRA

Supply Chain

Facilities

Management

PSIRA has

national foot

print


Estimated costs of National foot print (R’000)

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Province 2014/15 2015/16 2016/17 2017/18 2018/19

Mpumalanga 1,440 1,584 1,742 1,917 2,108

North West 960 1,056 1,162 1,278 1,406

Northern Cape 960 1,056 1,162 1,278 1,406

Limpopo 1,920 2,112 2,323 2,556 2,811

Free state 960 1,056 1,162 1,278 1,406

Rental of Multi Function Devices 277 277 277 305 305

Total rental costs 6,517 7,141 7,828 8,610 9,441


Capital expenditure (Rand)

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Capital Expenditure 2013/14 2014/15 2015/16 2016/17 2017/18

Fleet (Motor vehicles) 6,270,000 5,583,600 5,260,464 5,265,596 0

Number of vehicles 29 24 21 19 0

Average cost per unit 216,207 232,650 250,498 277,137 0

IT Infrastructure 1,540,050 0 0 0 0

Computer hardware 0 963,792 801,783 748,143 0

ERP Software 14,000,000 11,000,000 5,000,000 0 0

Office equipment 0 250,250 0 0 0

Office furniture 0 3,575,000 0 0 0

Total Capital Expenditure 21,810,050 21,372,642 11,062,247 6,013,739 0


ERP software development (Rand)

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ERP Development costs 2013/14 2014/15 2015/16 2016/17 2017/181. Estimated Application (ERP/CRM)

R 7 000 000

2. Software development and Customization

R 3 000 000 R 1 500 000

2.1 Integration*** included Included

2.2 Data Conversion** included Included

3. Testing R 900 000 R 2 000 000

4. Implementation and Training Costs

R 4 500 000 R 1 500 000

5. Project Management Cost @ R1500 per hour

R 900 000 R 1 600 000 R 2 500 000

6. Business Process alignment R 800 000

7. Hardware Costs (Server 6 TB of HDD + 32GB of RAM, 8 core processor)

R 1 500 000 R 600 000

8. Hardware Support Fee 4*24*7 included Included Included included included

9. Software License Support Fee R 320 000 R 336 000 R 352 800 R 370 440

10. Sundries R 700 000 R 600 000 R 400 000

Total Cost per year R 14 000 000 R 11 320 000 R 5 336 000 R 352 800 R 370 440

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Documents

bill deal

amendment bill

security officers

implementation of clauses

baseline expenditure

total expenditure28

total expenditure173

revenue r000