07 APRIL 2005

1. BUDGET PREVIEW PRESENTATIONTO THE SELECT COMMITTEE ON PUBLIC SERVICES 07 APRIL 2005 JAMES MASEKO DIRECTOR-GENERAL

2. Presentation Outline • Achievements • Value Plan and strategic drivers • Expanded Public Works Programme • The budget trends • Challenges

3. Achievements 2004/05 (Cont…) • Process instituted to clean up Asset register and speed up the vesting process • Identification of unutilized properties for disposal – cost implications re rates and taxes • Evaluation and review of ECDP and RAMP to enable improved future design and planning • Development of a holistic maintenance plan • Recruitment process of young graduates underway • Launch of EPWP and meeting of targets

4. DPW strategic objectives/drivers • Grouped into three main objectives • Asset Management • Service • Capacity

5. Value Plan & Strategic Drivers SERVICE • Service Delivery Improvement Programme • Transformation • Leadership way • Custodian of National Government’s fixed property assets • Provide accommodation & facilities to National Government • Coordinate EPWP • Regulate construction & property industry CAPACITY ASSET MANAGEMENT • People • Business Systems/processes • Budget • Asset management information system • Asset lifecycle management/return on investment • Policy

6. Asset Management

7. Asset Management (Cont..) • Holistic maintenance plan – this is a plan for all state assets costing about R12,5 BN to repair assets to operational efficiency. • Private-Public-Partnership – to facilitate PPP transactions. • PICP – in partnership with Tshwane Municipality - provide accommodation for all government departments downtown. • Client service level agreements and clients specific value proposition.

8. Asset Management (Cont..) • Government wide immovable asset management Act will be tabled which requires every accounting officer to prepare asset management plans annually • Performance standards – space and cost norms for buildings under review to improve service delivery. • Improving quality of data in the Immovable Asset Register – to improve data integrity of asset register and enhance property management function. • Risk management plan for immovable assets being drafted.

9. Service

10. Service • The key initiative is the launch of the service delivery improvement programme, SDIP andLeadership Way initiative • It has the following components; • Customer relationship management • Management of core facilities management services • Project and contract management • Core facilities management services

11. Service - The leadership Way • Leadership Way is a new initiative aimed at implementing Batho Pele • It focuses on issues such as • Defining minimum standards of behavior for staff and managers • Defines the preferred management style • Disciplinary action against non performance • Seeks to align DPW to Batho Pele initiative • All staff to sign and recommit themselves • Will be included in the performance contracts for managers

12. Transformation • Industry transformation will be dominated by the finalisation of BEE Charters for the Construction and Property industries • DPW is expected to develop construction industry strategy to be incorporated into MERS (January Cabinet Lekgotla) • Transforming the DPW culture to a more service and client oriented culture

13. Capacity

14. Capacity -People • An internal skills and competencies audit has been conducted and completed • Skills shortages experienced in the asset management and built environment skills-Graduates initiative launched • DPW needs a comprehensive HR strategy to address capacity shortages (Recruitment, training and development, retention • HRD Director has just been appointed • The CBE is assisting HR to establish strategic partnerships with tertiary institutions and Technikons to procure built environment skills

15. Capacity- Systems and Business Processes • Systems • Public Works systems to be integrated to enable seamless delivery under the auspices of SITA and National Treasury • Business Processes • Public Works re-engineering business processes • The reengineered processes are meant to define the “To-be” business process architecture of Public Works

16. Budget

17. Budgeting Programmes • Programme 1: Administration • Overall management of the National Department of Public Works – for example, policy development, implementation strategies, and providing support services • Programme 2: Provision of Land and • Accommodation • Provision of Land and development, management and maintenance of accommodation to ensure that national departments and institutions have a built environment that meets their financial, social, and technical requirement

18. Budget Programmes (continued) • Programme 3: National Public Works • Programme • Promotion of sustainable growth of Construction and Property Industries whilst fast-tracking their transformation and development; • Custodial function of national state property portfolio under NDPW; and • Address poverty and unemployment through EPWP

19. Budget Programmes (continued) • Programme 4: Auxiliary and Associated • Services • Provision for various services, including: • Losses incurred in State housing guarantee scheme; • Maintenance of war graves & national memorials; • Decorations for public functions such as State funerals and inaugurations; • Acquisition of vehicles for Departmental use; • Skills Development Act levies; and • Financial assistance to Parliamentary Villages Management Board

20. KEY FOCAL AREAS • The Department’s budgetary allocation is inadequate to fund the Department’s critical programmes as would be demonstrated • This is demonstrated by the Over-expenditure trend which amounted to R34m in 2001/02 and increased to R227 million in the 2002/03 financial year, decreased to R30 million in 2003/4 • Capacity to spend has been built and is no longer a concern • In order to curb of overspending, the department had to stop certain services e.g. maintenance • Much stricter measures were implemented in the financial year (2004/2005) to ensure that the department does not exceed the approved allocation.

22. Allocations

23. COMPARISON OF REQUESTED BUDGET WITH APPROVED ALLOCATION AT PROGRAMME LEVEL

24. ENE allocation comparison 04/5 vs 05/06

25. Cost of maintenance backlog • Maintenance backlog is estimated at R12,5b • NDPW has a budget of R949m to maintain 100 972 facilities around the country, translating to about R9400,00 per building per annum • We require funding levels at R2.5 Billion a year for maintenance • This leaves us with a funding deficit of R1.5 Billion for recurrent maintenance per annum

26. IMPLICATIONS • The implications of under-funding as they relate to the main cost Items are: • Leasing: We will not be able to meet the accommodation needs of our clients e.g. SAPS requires more accomodation for the new recruits • Rates on State Property and Municipal Services: Services have to be paid to prevent termination which could have catastrophic results to public facilities like hospitals etc. In addition, this sphere of Government’s service delivery efforts will be greatly compromised • Maintenance: May result to non compliance with Occupational Health and Safety Act as some buildings are already in dilapidated state.

27. EPWP • As a co-coordinator, our responsibility is as follows: • Create a supportive and enabling environment for the implementation of EPWP • Coordinate activities of public bodies involved in the programme • Facilitate learning between the various stakeholders • Monitoring, evaluating and reporting on the EPWP • Assist with the identification of opportunities to implement EPWP projects

28. Challenges • Co-ordination of the EPWP • Implementation of the Leadership way • Repair and maintenance of public buildings • Improving service delivery • Clarifying our role

29. President’s state of the nation/POA • Improving working spaces for government • Implementing the EPWP • Supporting provinces to better implement the classroom building programme • Improving service delivery

30. THANK YOU