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Presentation to the Portfolio Committee on Public Works 16 th September 2014 Cape Town

South Africa Works because of Public Works. Quarter 1 Report 2014/15 (Period April, May & June 2014). Presentation to the Portfolio Committee on Public Works 16 th September 2014 Cape Town. I Public Works I CGO I Pretoria. Layout. Part A Performance Information

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Presentation to the Portfolio Committee on Public Works 16 th September 2014 Cape Town

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  1. South Africa Works because of Public Works Quarter 1 Report 2014/15 (Period April, May & June 2014) Presentation to the Portfolio Committee on Public Works 16th September 2014 Cape Town I Public Works I CGO I Pretoria

  2. Layout • Part A • Performance Information • Highlights of Programmes 1 - 5 • Part B • Financial Information • DPW • PMTE

  3. Purpose • Purpose of the Presentation by the Department of Public Works • To reflect on the 1st 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 1st Quarter Performance and Financial performance of the Department for the financial year 2014/15.

  4. Importance of Quarter Reports • Key Focus of quarter reports • Ensure that the quarter and annual performance improves annually and lead to the achievement of the 5 year strategic goals • Assist the oversight bodies such as parliament with up-to-date performance information that will provide some form of basis for their oversight responsibilities • 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

  5. 5 year Strategic Goals & Outcomes • Vision - 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

  6. Programme 1 Administration (Pages 4 – 14) • 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

  7. 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 • Completed Audit Reports – these assist as a tool of control to measure and evaluate the effectiveness of the working of the Department primarily with accounting, financial and operational matters (page 5) • Updated Risk Registers - Progress made on the implementation of action plans in the risk registers – this is also informed by the high operational risks that need to be mitigated (page 6) • 100% Investigations on allegations – these have been initiated on reported allegations within 30 days – this links directly to the call by the Minister on Fraud and corruption – this also links with the concerted effort to deal with fraudulent transactions detected in the IT procurement process (page 5 & 9)

  8. Cont. • Reduction in Irregular Expenditure - 15% reduction based on the 2012/13 baseline of R3, 6 billion. Total of R 515 875 million reduced of the R 3.6 billion for DPW and PMTE • (page 8) • Payment of invoices within 30 days - 85% compliant invoices settled within 30 days. This is important not as a compliance requirement only but also as means strengthen and empower suppliers and boost the economy (page 9) • Skills development programmes - 755 beneficiaries participating in the DPW skills development programme and 229 Artisan trainees participating in the Artisan Trainee Development Programme (page 12) • Approved HR Plan – the plan seeks to address the HR-related issues affecting the Department. This plan includes detailed action plans on recruitment plan and skills development initiatives (page 12)

  9. Programme 2 Immovable Asset Management (Pages 15- 31) • 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

  10. 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 • Asset Register - 22 514 properties against a target of 14 214 properties in immovable asset register populated with information fields that are compliant to GRAP. This represents 158% progress (page 16) • Value of Immovable Assets - 29 496 Immovable Assets valued to determine deemed carrying amounts. This compares with the quarter target of 28 432 and represents 104% progress (pages 16) • Budget Variations on completed projects - 29 projects were completed with less than 15% budget variance(page 22)

  11. Cont. • Lease Agreements – of the 100% target, 97% of leases were signed within 30 days of finalization of the open bid process for the quarter (page 23) • Tshwane Inner City Development – the Department has contributed through the development of the Salvokopspatial framework (page 28)

  12. Programme 3 Expanded Public Works programme (Pages 32– 34) 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

  13. Programme Three: EPWP • 423 387Work opportunities created through EPWP. This is against a quarter target of 262 000 Work opportunities translating into 162% progress (page 33) • 898 Beneficiaries trained through the National Skills Fund (page 33) • 318 089Work opportunities created in rural municipalities (page 34)

  14. Programme 4 Property & Construction Industry Policy Regulations (Pages 35 – 37) 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

  15. Programme 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 • Agrѐment South Africa Bill - Draft ASA Bill finalised for submission to Cabinet. ASA supports and promotes the process of integrated socio-economic development by facilitating the introduction, application and utilisation of satisfactory innovation and technology development (page 36) • Built Environment Professions (BEPs) - Consultation has commenced with the development of the Draft amendments to legislative framework for the Built Environment Professions (BEPs) developed- (page 36)

  16. Programme 5 Auxiliary and Associated Services (Pages 38– 39) 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.

  17. Programme 5: Auxiliary and Associated Services • Highlights/Achievements • Infrastructure support - Infrastructure support provided to 9Prestige Events such as SONA, Cabinet Lekgotla(page 39)

  18. Challenges • Throughout the 1st quarter period some of the challenges include: • New Administration – the election period and the new administration and Parliament programmes could not be determined up-front as some of the targets followed the statutory requirements and deadlines • SCM Processes - Delays in the procurement processes – this is however being addressed in order to support the core business of the Department • Capacity Constraints - The Department still experiences in some respect challenges relating to capacity. Through the HR plan and some interventions, a plan of action is in place to address this issues. These include the identification and prioritisation of critical vacancies by through a prioritization spread sheet (part of the HR plan) • Budget Constraints – as the Department’s budget continues to shrink, it is often not aligned to the increasing demand for DPW services. However, this challenge is also being addressed through a number of initiatives such monthly interrogation of expenditure patterns and adjustment processes and prioritisation of programmes/projects

  19. General Remarks • While acknowledging the challenges in the Department, there is some improvement in the manner how the Department deals with performance information • 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

  20. Part B • Financial Information • DPW • PMTE

  21. Content

  22. Summary Expenditure per Economic Classification Summary Expenditure Report – 2014/15

  23. Summary Expenditure per Economic Classification

  24. Summary Expenditure per Programme

  25. Notes to Expenditure Summary • The overall expenditure for the department as at the end of June 2014 is R1.8 billion, and the expenditure is equivalent to 29% of the total allocation of R6.1 billion. • Compensation of employees’ expenditure is R386 million and expenditure is equivalent to 23% of the total allocation. Expenditure for compensation is within the guide line of 25%. • Goods and Services expenditure is R258 million and expenditure is equivalent to 30% of the total allocation of R804 million. • Office Accommodation is R82 million, and the expenditure is equivalent to 17% of the of R497 million allocation. • Expenditure under transfers and subsidies is R974 million and the expenditure is equivalent to 38% of the allocated budget of R2.6 billion. • Transfers and subsidies expenditure is in line with the payment schedule and drawings.

  26. Notes to Expenditure Summary Bulk of Transfers and Subsidies expenditure relates to:

  27. Notes to Expenditure Summary • Infrastructure expenditure is R79 million and expenditure is equivalent to 16% of the allocation of R 510 million. • The table below present Infrastructure expenditure per project: • Machinery and equipment expenditure is R21 million and expenditure is equivalent to 25% of the total allocation of R85 million. • High expenditure under machinery and equipment relates to R16 million for computers procured during 2013/14 but could not be paid before the end of the financial year.

  28. Departmental Expenditure per Programme

  29. Expenditure per Economic Classification: Programme 1

  30. Notes to Expenditure: Programme 1 • The total expenditure for Programme 1 is R284 million and expenditure is equivalent to 24% of the total budget of R1.1 billion • Current payments • Compensation of employees expenditure is R69 million and expenditure is equivalent to 25% of the allocation. • Goods and services expenditure is R114 million and expenditure is equivalent to 31% of the total allocation of R371 million. • Expenditure for Goods and services under Office Accommodation is at R82 million which is 17% of the allocated budget of R497 million. • Transfers and subsidies • Expenditure under Transfers and subsidies is at R886 000 equivalent 74% of the allocated budget of R1.2 million and the expenditure relates to leave gratuity. • Payments for Capital Assets • Machinery and equipment expenditure is R16 million and expenditure is equivalent to 67 % of the allocated budget of R25 million.

  31. Expenditure per Economic Classification: Programme 2

  32. Notes to Expenditure: Programme 2 • The total expenditure for Programme 2 is R876 million and expenditure is equivalent to 31% of the allocated budget of R2.9 billion for the programme. • High expenditure relates to payments made under Transfers and subsidies. • Current payments • Compensation of employees expenditure is R287 million and expenditure is equivalent to 23% of the allocation of R1.2 billion. • Goods and services expenditure is R48 million and expenditure is equivalent to 24% of the allocation of R201 million. • Transfers and subsidies • Expenditure under transfers and subsidies is R457 million and the expenditure is equivalent to 53% of the allocated budget of R859 million, with R405 million relating to transfer payment to departmental entities. • Payments for Capital Assets • Infrastructure expenditure is R79 million and expenditure is equivalent to 16% of the allocation of R510 million. • Machinery and equipment expenditure is R4.3 million and expenditure is equivalent to 8% of the allocated budget of R57 million.

  33. Expenditure per Economic Classification: Programme 3

  34. Notes to Expenditure: Programme 3 • Total expenditure for programme three is R543 million and expenditure is equivalent to 28% of the total allocation of R1.9 billion. • Current payments • Compensation of employees for programme three is R27 million and expenditure is equivalent 21%. Expenditure for compensation of employees is within the guideline of 25%. • Goods and services expenditure is R23 million and expenditure is equivalent to 17% of the total allocation. Expenditure includes R10 million payment for Non-state Sector support to Independent Development Trust. • Transfers and subsidies • Transfers and subsidies expenditure is R491 million and expenditure is equivalent to 29% of the allocated budget of R1.7 billion. • The expenditure of R240 million relates to the transfers made to the Provinces and municipalities, while R251 million relates to the Non-state Sector Incentive. • Payment for Capital Assets • Machinery and equipment expenditure for Programme 3 is R438 000 and expenditure is equivalent to 16% of the allocated budget of R2.7 million.

  35. Expenditure per Economic Classification: Programme 4

  36. Notes to Expenditure: Programme 4 • Total expenditure for programme four is R13 million which is equivalent to 32% of the budget allocation of R41 million. • Current Payment • Compensation of employees expenditure is R1.8 million and expenditure is equivalent to 13% of the total budget of R14 million. • Low spending on compensation of employees relates to vacant positions in the branch including the DDG and CD: Property Policy. • Goods and Services expenditure is R11 million equivalent to 41% of the allocated budget of R27 million. • Transfers and subsidies • No expenditure under transfers and subsidies. • Payment for capital Assets • Expenditure for machinery and equipment R29 000 and expenditure is equivalent to 22 % of the allocated budget of R132 000.

  37. Summary Expenditure per Economic Classification: Programme 5

  38. Notes to Expenditure: Programme 5 • The total expenditure for the programme is R66 million which is 72% against the budget of R91 million. • Current payments • Goods and Services expenditure is at R43 million and the expenditure is equivalent to 64% of the allocated budget of R68 million. High expenditure relates to inauguration of the President. • Transfers and subsidies • Expenditure for Transfers & Subsidies expenditure is R22 million, and the expenditure is equivalent to 95% of the allocated budget of R23 million. • Transfers and subsidies expenditure relates to Commonwealth War Graves Commission, and the allocation has been over spent due to exchange rates. • Funds offsetting the over spending will be requested through the adjustment process.

  39. Earmarked Budget and Expenditure

  40. Earmarked Budget and Expenditure Note: * First payment to Municipalities is due in the second quarter in line with the beginning of the financial year for Municipalities.

  41. Earmarked Budget and Expenditure Note: ** Commonwealth War Graves is over spending due to exchange rates, and adjustment to be made during the adjustment period.

  42. Turnaround Budget and Expenditure

  43. Earmarked Budget and Expenditure

  44. PMTE Budget and Expenditure Report

  45. Summary Expenditure per Economic Classification

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

  47. Regional expenditure: Planned Maintenance

  48. Client Capital Infrastructure: Expenditure per Client

  49. Regional expenditure: Client Capital Budgets

  50. Notes to the expenditure • Cleaning and gardening: The expenditure was low at the end of the first quarter due to some contracts being awarded later than originally planned. Expenditure is expected to improve during the year • Operating leases: This objective is showing satisfactory expenditure trends and all funds should be spent by the end of the financial year. The budget will be monitored closely • 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 this to ensure full expenditure by the end of the financial year. • 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 expenditure level is satisfactory at this stage and will be monitored continuously • Property Rates: Although expenditure is only at 1% as at the end of June 2014, this is normal as property rates are paid annually to local municipalities. Invoices are issued at the beginning of their financial year which starts on 1 July of every year. Expenditure increases significantly from August to November of every year after invoices have been verified for correctness

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