Department of Public Works on its 2011 Strategic Plan with Minister and Deputy Minister

Public Works and Infrastructure

18 April 2011
Chairperson: Ms M Mabuza (ANC)
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Meeting Summary

The Minister said it was time for the Department to stop out-sourcing expertise, when the necessary skills were already available in-house, as this led to a slowdown in service delivery and an increase in costs. Many of the “consultants” benefiting from tenders were former municipal employees.

Challenges facing the Department in achieving its job creation targets came under the spotlight, with members suggesting that the Extended Public Works Programme (EPWP) target of 4,5 million job opportunities in the five-year period from 2009 was unrealistic. The introduction of the incentive grant aspect in Phase 2 of the EPWP seemed to have reduced the effectiveness of the programme, and needed to be reconsidered.

Lack of transformation in the building and property development industries remained a challenge.

The DPW had a total of 108 562 properties (35 746 land and 72 816 structures), and complete details were needed on each in order for its asset register to be credible. The Department was currently adjudicating a tender, calling for a service provider to collect, verify and update data on all immovable assets over a 24-month period. This would involve the appointment of about 150 graduates, so there was an intensive job creation component in this initiative.

DPW warehouses containing unused furniture needed to be emptied, and the furniture allocated to areas of need, such as NGOs and orphanages.

The Department had established an inspectorate function to handle irregular expenditure identified in the Auditor-General’s report, and all the necessary checks and balances were now in place. The Chairperson said the situation needed to be cleared up before the DPW could move forward. The Minister agreed that “the slate is very far from being clean”, and she felt very uncomfortable about this. The Deputy Minister said the Acting Director General had submitted a full and detailed response to all the queries raised in the Auditor-General’s report to Parliament, and although this meant that the audit clearance was late, she requested that discussion on the issue should take place as soon as it had been officially tabled. This was agreed by the Committee.

Afternoon session

discussion between Members of the Portfolio Committee on Public Works, Departmental Officials, as well as Ms Mahlangu-Nkabinde, Minister of Public Works and Ms Hendrietta Bogopane-Zulu, the Deputy Minister of Public Works, was held on the Department’s Strategic Plan and Budgets.

Members noted that the plans often lacked specific detail. They asked questions about the vacant posts in the Department, the escalation of prison costs, discrepancy in the Department’s energy efficiency targets and the asset register. The non-performance of the Department’s internal audit system, the disposal policy and the poor maintenance and unproductive usage of property were also topics that were discussed.

The Minister promised written responses to all queries by April 21 2011.

Meeting report

The Minister said the strategic plan focused on several key performance areas, among which were service delivery, skills development, job creation and the Extended Public Works Programme (EPWP). These were activities of the Department which would restore dignity to people who lived in disadvantaged circumstances.

She suggested it was time for the Department to stop out-sourcing expertise, when the necessary skills were already available in-house. It seemed that the culture of out-sourcing was a strategem for making money, but this not only added to cost but also slowed down service delivery. Maintenance bills were too high, and this could be addressed by establishing workshops all over the country, staffed by trained local people, to handle maintenance work timeously. Transformation still posed a problem, as entry into the building industry was still controlled by the “old order.” This deterred students from following a building career path, as they had no guarantee of finding a job after four years of study.

The Acting Director-General, Mr Sam Vukela, introduced the DPW’s presentation. The strategic goals, aligned to the Medium Term Strategic Framework (MTSF) were to:
▪ Provide strategic leadership in effective and efficient immovable asset management and in the delivery of infrastructure programmes.
▪ Promote an enabling environment for the creation of both short and sustainable work opportunities, so as to contribute to the national goal of job creation and poverty alleviation.
▪ Contribute to the building of a developmental state and a comprehensive rural development framework through state assets.
▪ Ensure transformation and regulation of the construction and property industries to ensure economic growth and development.
▪ Ensure effective corporate governance and sound resource management.
▪ Ensure improved service delivery in all departmental programmes to meet clients’ expectations and leverage stakeholder relations.
▪ Key priorities in the medium term were to place more emphasis on job creation and poverty eradication, skills development in the built environment and property management, service delivery improvement, enhancement of the asset register, cost effective infrastructure delivery and rural development. These initiatives would be complemented by public entities reporting to the DPW, such as the EPWP, the DPW contribution to rural development, and its building maintenance and capital works programmes.

Ms Thembi Hlatshwayo, Acting Deputy Director General: Corporate Services, provided an overview of the support services provided to the DPW in the fields of human resource management, information services, communication and marketing, legal services, gender, international relations and security services. The various outputs, performance indicators and targets were covered.

Ms Sasa Subban, Acting Deputy Director General: Asset Management,
said it was considered essential to have an asset register management unit, as the DPW had a total of 108 562 properties (35 746 land and 72 816 structures), and complete details were needed on each in order for the asset register to be credible. The Department was currently adjudicating a tender, calling for a service provider to collect, verify and update data on all unmovable assets over a 24-month period. This would involve the appointment of about 150 graduates, so there was an intensive job creation component in this initiative.

The Planned Maintenance Implementation Programme (PMIP) would provide 30 384 work opportunities from prioritised and funded projects. The Department was targeting a 7% reduction in electricity usage on identified state-owned buildings, and a 4% decrease in water use. Three rural office precincts were planned, to bring government services closer to the community.

Mr Rachard Samuel, Deputy Director General: Inner City Regeneration, said that the DPW’s 11 regional offices fell under the operations management sub-programme, and the target was 100% completion of planning and maintenance projects. A key priority was the revitalisation of Capital City, which required precinct planning for Pretoria Inner City and completion of the Salvokop precinct design.

Mr Mandla Mabuza, Deputy Director General: Projects, said his department aimed to complete the bulk infrastructure for government accommodation precincts in Pretoria and other prioritised rural towns. A minimum of 35% of the department’s infrastructure capital projects, worth a total of R1,4 billion, should be subcontracted to Affirmative Business Enterprises (ABEs), thus assisting the growth of emerging contractors.

According to the Parliamentary Villages Management Board Act, the DPW was required to provide transportation for residents of the three Parliamentary Villages to Parliament and back. Both the Board and the Portfolio Committee had expressed the view that the chairperson of the Board should be a Member of Parliament, rather than a director general of the DPW, and that MPs should not stay with sessional officials. This would require an amendment to the Act.

Dr Devan Pillay, Deputy Director General, described the purpose of the DPW’s construction and property policy as the regulation and promotion of growth and transformation in the construction and property industries. The key priority areas were to speed up growth and transforming the economy to create decent work and sustainable livelihoods, a comprehensive rural development strategy linked to land and agrarian reform and food security, sustainable resource management and building a developmental state.
Mr Stanley Henderson, DPW Deputy Director-General: EPWP (Expanded Public Works Programme), said the key priorities of the programme was to speed up growth, transform the economy and create decent work and sustainable livelihoods. The target was to create 868 000 work opportunities and 361 739 full time equivalents (FTEs) in 2011-12, with this rising to 1 210 000 in 2012-13 and to 1 650 000 the following year. This would contribute to halving unemployment by 2014, through the delivery of public and community services.

Ms Cathy Motsisi, Chief Financial Officer of the DPW, outlined the key priorities of the finance and supply chain management sub-programme. Among these were effective revenue management, with a 95% collection rate targeted, a 50% reduction in the debtors’ book, a reduction in the payments turnaround time (from 30 days to 14 days), and implementing an effective empowerment strategy. The DPW’s total budget for 2011-12 was R7,819 billion, rising to R8,061 bn and R8,9 bn in the next two years.

Ms P Ngwenya-Mabila (ANC) criticised the presentation for its lack of consistency, as some of the activities referred to were not mentioned in the strategic plan document, budget allocations were not always clearly shown, and quarterly time frames were needed to allow for performance measurement. The Committee would face problems in trying to carry out its monitoring oversight role. She was supported by the Chairperson, who pointed out disparities in budget figures, such as the dolomite risk management project.

Ms C Madlopha (ANC) said that while she acknowledged the Minister’s apology for the late submission of the strategic plan, members of the Committee wished to express their dissatisfaction and unhappiness over the failure of the Department to meet the 9 March deadline set for all departments. She agreed that the plan was not consistent, and did not tie in well with previous plans. She pointed out that the President had stated that Parliament should receive reports on:
Operation Re Ya Patala, which was aimed at clearing the backlog of payments to service providers that had been waiting for settlement of their invoices for more than 30 days.
The implementation of the Infrastructure Development Programme.
The Department’s progress in improving its procurement systems.
The implementation of enterpreneurship programmes aimed at the youth and rural communities.
The outcome of Phase 2 of the EPWP, and its impact on improving the lives of women, young people and people with disabilities.
These were focus areas for the Committee to exercise its monitoring responsibility.

She questioned the job creation targets of the EPWP, which had created 2,4 million job opportunities since 2004. The target had now been increased to 4,5 million. The previous strategic plan had shown a decline in the performance of the EPWP during the 2009-2011 period, so she wanted to know what changes the Department had in mind in order to meet this new target, particularly as the Government was relying on the DPW to create most of the jobs needed in the country. She suggested that the change in the system, involving incentive grants, had led to the decline. Local authorities were being asked to use their capital budgets to create jobs, and then to apply for the grants, but many of the “poorest of the poor” municipalities in the rural areas were unable to use this system. The EPWP had worked well in the past, and it seemed unnecessary to have changed it. She supported the Minister’s comments on outsourcing, saying that the system made it easier for municipalities to outsource projects, and former municipal employees were benefiting from the tenders. In the past, when everything had been done in-house, the system had been successful, and as the Committee was very worried about the EPWP, she asked the Minister to revisit the incentive grant policy.

Turning to youth employment, Ms Madlopha said the previous plan had indicated a target of 10 000 youths to be trained by Eskom. However, no progress report had been received on this initiative, and now new targets were being put forward. The Committee did not know how this was to be achieved, and questioned whether the Minister had “the warriors” to take forward her vision on job creation

On the issue of procurement, and the DPW’s qualified audit in 2009-10, she said eradication of corruption was a Government priority, and she welcomed the Minister’s view that the DPW should reduce its reliance on consultants, and make greater use of its own expertise. It was unacceptable that employees with a certain level of expertise would put the work out to consultants with equivalent expertise, thus doubling the cost of the project. And when consultants, who should be transferring skills, understood the Department better than the employees themselves, this was a cause for concern.

The Auditor-General’s report for 2009-10 had identified areas such as fronting, misuse of state vehicles, conducting business while employed by the DPW, the unauthorised sale of government houses, allegations of overpayments and delays in payments, and the irregular awarding of tenders. It was not clear how far the Department had gone in addressing these problems, so that the Minister could start with “a clean slate.”

Ms Madlopha said there was a great deal of furniture lying unused in State warehouses, which could be stolen, and it was unknown what was being done in this regard.

She also expressed concern about the DPW’s planning process, as the Integrated Development Planning (IDP) model was designed to prevent departments planning “in silos” by allowing local governments to provide input at stakeholders’ forums. The “big brother” approach of telling municipalities what to do, would not produce the same results as planning together.

The Minister responded that she had held a meeting with the Deputy Directors General, at which she had stressed that she needed “foot soldiers” to achieve the department’s goals. She believed this Ministry should be different from its predecessor, and that the focus should move from policy and planning, to implementation. The DDGs had undertaken to support her objective of working faster and smarter to provide a five-star service to the community. Without promising miracles, it was possible for the Department to reduce the number of mud schools and provide the President with 5 million jobs by 2014.

Referring to the EPWP, she suggested that the Committee should have quarterly workshops, or video conferences, to discuss progress on the programme, as well as how problems could be tackled.

She said the Department was working on a number of changes to the procurement system, which she had personally not liked when she became Minister of the DPW.

The Operation Re Ya Patala programme still faced challenges, because although the DPW was able to pay its contractors on time, the payments often did not reach the small sub-contractors within the targeted time, and this delay needed to be addressed.

She said the warehouses containing unused furniture needed to be emptied, and the furniture allocated to areas of need, such as NGOs and orphanages. She would like the Minister of Women, Youth, Children and People with Disabilities, and the Minister of Social Development, to assist in identifying suitable areas where the furniture could be used.

The Deputy Minister, Ms Hendrietta Bogopane-Zulu, said she welcomed the Committee’s positive criticism about inconsistencies in the DPW’s report, and would take members’ comments back to the Department to ensure better quality control in future. More details would also be given in the budget vote on the youth development and entrepreneurship programmes, so that proper monitoring and performance measurement would be possible.

Mr Vukela said he had taken note of the inconsistencies, and would take the necessary action.

Referring to the investigations into irregularities being conducted at the Department, he said the majority had been concluded, but up-do-date details would have to be provided later.

He acknowledged that the EPWP did not seem to be working, as the branches were not able to disburse funds, and these were returned to the Treasury. He felt that the current framework did not assist the DPW in implementing the programme, and it would be helpful to have a meeting with Treasury on the matter.
Underperforming municipalities, who were unable to benefit from the programme, had been identified so that they could be provided with hands-on support to help them perform better. This could included attracting retired professionals to assist.

Ms Motsisi said the Department had established an inspectorate function even before the Auditor-General’s report on irregular expenditure, and all the necessary checks and balances were now in place. Training was continuing at both headquarters and branch offices. She undertook to provide the Committee with a written response to the issues surrounding the R30,8 million unauthorised expenditure.

The Chairperson said the situation regarding the unauthorised expenditure needed to be cleared up before the DPW could move forward. The Minister agreed that “the slate is very far from being clean”, and she felt very uncomfortable about this.

Ms Bogopane-Zulu said the Acting DG had submitted a full and detailed response to all the queries raised in the Auditor-General’s report to Parliament, and although this meant that the audit clearance was late, she requested that discussion on the issue should take place as soon as it had been officially tabled. This was agreed by the Committee.

Afternoon session
The Committee continued with the discussion.

Ms November (ANC) requested clarity on the vacant posts in the Department. She queried the word ‘other’ on Page 32 and said this did not seem to be the correct format. She expressed concern at the escalation of prison costs, especially for the prison being constructed in Kimberly, as well as a hospital in Upington that had yet to be completed.

Mr Mandla Mabuza, Deputy Director General: Special Projects, DPW, responded that the ‘other’ on Page 32 referred to areas such as Kokstad and Balfour. Mr Mabuza added further details to the presentation on the budgets and projects that the Department was involved in.

Mr Rachard Samuel, Deputy Director General: Inner City Regeneration, added that the escalation was in line with expectations and inflation. The estimation did not originally take into account certain aspects of the construction including earth moving and overall design. The lesson learnt was that estimates should include all aspects of construction.

The Chairperson noted that the same mistakes should not happen and cited the example of the prison in Brandvlei. Escalations should not be abnormal.

The Chairperson referred to ‘unfunded posts’ and wanted clarity on why this was included in the presentation. Page 66 of the Strategy Plan was referred to, asking why there were members of staff who had not been correctly vetted. The Chairperson requested an elaboration of the Departments goal of reducing legal cases by 40%.

A Departmental official replied that unfilled posts were being filled. The 374 unfunded positions needed to be funded, or the positions abolished. The official commented that pre-screening was done by the Department for all new employees.

Mr Mabuza responded that legal cases were normally the result of non-performance and termination of service providers who would then seek legal routes to challenge these decisions.

The Chairperson noted a discrepancy in the Department’s energy efficiency targets.

The Department confirmed the typing error and stated that this should equal a 7% saving.

The Chairperson asked why there was no internal audit plan until now.

Ms Cathy Motsisi, DPW Chief Financial Officer, replied that the internal audit process was reviewed every year and that the audit committee was fully functional.

Ms C Madlopha (ANC) commented that it seemed as if the public were not getting value for money from the Department, especially the internal auditing system that was often flawed and found to be flawed when the Auditor General investigated on an annual basis.

The Chairperson asked for more details on the four foreign and 37 national properties, as well as 20 properties identified for land reform, which the Department planned to sell, especially considering the fact that there was no proper asset register in the Department.

The Chairperson noted that the date set by the Department for the asset register to be completed was 2013. He queried the fact that the register still had not been completed. He asked for information to be given to the Committee on profitable wine farms in the Western Cape, St Johns in the Eastern Cape, Hout Bay, a Panel Shop that was being leased for R1 or R10, 35 farms in the Free State, especially whether those properties had been included in the asset register.

Ms Motsisi, CFO, confirmed the asset register was being addressed. It was noted by the Department that procedures have been followed. Most of the 37 properties were related to state owned entities and projects. A comprehensive list regarding all properties would be provided to the Committee as soon as possible.

Ms Motsisi also commented on Operation ‘Bring Back’ stating that it would be in the public eye and media in the following two weeks.

The Chairperson queried a certain parcel of land in Limpopo which had been leased out to an unknown person, but a government department had been paying rent for that land.

Mr Mabuza clarified that in 2002 SANRAL leased these premises for border related activities. SANRAL subsequently entered into a lease with another private company called Micromatique. Activities unrelated to the border were occurring at this site which resulted in a breach of contract. Two units of the Department were currently investigating the matter.

The Chairperson referred to buildings in Limpopo that had not been maintained, but were not being used for a productive purpose. She had visited buldings in Cape Town and Arcadia in Pretoria that were warehousing furniture, cupboards, blinds and so on that were still wrapped in plastic, gathering dust. Clarification was also sought regarding how often furniture was replaced in the Parliamentary Villages.

Ms Hendrietta Bogopane-Zulu, the Deputy Minister of Public Works, clarified that the furniture was for the new Cabinet Ministers and new ministries which had been created in the past year. The furniture was not new, but was wrapped in plastic to protect it. Old furniture was currently being redistributed to new Ministers and Ministries and other areas in the country.

Mr Mabuza added that various employees such as interior decorators constantly monitor the condition of this furniture in Parliamentary Villages and then make the necessary recommendations.

The Chairperson cautioned Mr Mabuza not to play with words. It was noted that a clear policy should be in place on evaluating those assets, especially beds.

The Chairperson requested a strategy from the Department to reduce debt so that it would not have to be written off.

Ms Motsisi responded that the Department was addressing this by first reconciling accounts. When these were correct, National Treasury would work with other government departments. Private entities were dealt with through the normal legal channels. Monthly reconciliations had improved to approximately 98% from between 60% and 70% previously. Staff had been hired to look at this aspect.

Mr Magubane (ANC) commented on poverty alleviation and emphasised the Department’s role in monitoring rural spending. ‘Mud schools’ were also still prevalent, and should be done away with by 2014.

Mr Samuel clarified that schools were built out of the Minster for Public Works’ budget. The Minister hoped that through this initiative other schools would be built to eradicate the problem of ‘mud schools’.

In reply to Ms Ngcengwane asked if the Department had a policy for disposing property at national level, it was noted that a Disposal Policy was currently being developed.

Ms Ngcengwane (ANC) requested information on legal cases that the Department was involved in. The use of consultants should be thoroughly reviewed. There would hopefully be a meeting between the Departments of Public Works and Education to look further into this concern.
Ms Ngcengwane asked how the Department had gone about achieving its energy efficiency targets.

Ms Ngcengwane noted that there was not a quarterly plan for legislation in the forthcoming year and wanted to know when these bills would be promulgated.

Ms Ngwenya-Mabila (ANC) emphasised that the Department’s presentation lacked detail and requested that the Department provide specific measures on how and when targets would be achieved. The Chairperson echoed the Members’ concerns that some of the Department’s presentations were not in the correct format.

Ms Hendrietta Bogopane-Zulu noted that the Department needed to firm up and consolidate all their documents going forward and that all monies need to be accounted for going forward in their presentations before the 1 June 2011.

The Chairperson rebuked the Deputy Minister and the Department stating that the Committee had previously requested organograms, annual performance plans, and operational plans on numerous occasions and said that the Committee would not meet the Department without those documents. This would be enforced in future.

Mr Mabuza added that the “Engineers Partnership Project” had received about 9000 CVs from various Engineers. The Human Capital Unit had analysed these CVs and developed a spreadsheet to pair candidates with retired professionals. Two areas, Limpopo and the Pretoria Regional Office, had been identified to conduct pilot projects in this regard.

Mr Devan Pillay provided the Committee with further details on various pieces of legislation. The Expropriation Bill was expected to be in Parliament by December 2011. The establishment of Agrimark South Africa as a public entity was expected, once a business case was approved by National Treasury, in November 2011. The Built Environment Professions Bill was envisaged to be in Parliament by the start of 2012. The Government Immovable Asset Management Act was also being worked on.

Mr Stanley Henderson, Deputy Director-General: EPWP, noted that statistics on the performance of the Extended Public Works Programme would be provided to the Committee. Targets were consistently achieved.

He commented that the rationale behind the incentive grant was that if a performing or implementing body was creating work opportunities beyond a certain level, a wage component would be paid back to that body. This would help to implement more labour intensive projects to help with job creation.

Mr Mabuza commented on the work that the Department was doing to help military veterans. He alluded to projects and discussions being held about security for projects in the Western Cape.

Ms C Madlopha (ANC) raised questions about the controversy of the South African Police Service Headquarters. However, the Chairperson and other Members noted that this was a sensitive issue that was not being dealt with in the current discussion on the Strategic Plan and Budget for the Department.

The Chairperson noted that there were government entities where employees in these entities earned more than the President and that these entities were not performing. This should be addressed.

Ms Mahlangu-Nkabinde, Minister of Public Works, commented that the Committee was working well and was proactive in their oversight role and monitoring the work of the Department. However, communication between Department and the Committee was a problem which should and could be improved.


The Minister noted that beds in the Parliamentary Villages were changed often. The Minister also noted that there were too many unfilled vacancies at the Directorate level for a Department the size of Public Works. The Minister commented on the fact that emerging contractors were constantly disappearing and the problem needed to be addressed. The Expanded Public Works Programme was emphasised to give meaning to the Department.

The Minister further commented that work was being undertaken in rural areas beyond the cities, especially in Willowvale and deeper into the Eastern Cape.

The Minister noted that the Department was operating on Facebook and was asking the public for suggestions to celebrate Construction Week.

The Minister requested that committee members should specialise to help the Department to perform its work.

The Minster agreed that the internal audit system needed to work better and needed to pick up problems. Lawyers in South Africa ‘loved’ the Department of Public Works. Hence, the legal unit in The Department needed to be strengthened.

The Minister noted that all the queries raised in the Committee would be replied to writing before the Parliamentary break.

The Chairperson noted that the Strategy Plans had not been tabled and requested that that be done before the parliamentary break.

The meeting was adjourned.


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