Department of Public Works 1st Quarter 2012 Performance Report

Meeting report

The meeting opened on a cheerful note, with members of the Committee and the Department of Public Works (DPW) delegation singing “Happy Birthday!” to Mr M Magubane, of the ANC.

Ms Manisa Fatyela-Lindie, Acting Director-General (ADG), DPW, said an analysis of some of the projects indicated that the Department was not doing very well. The reason for this was a lack of planning on time for projects, capacity issues and other related challenges. However, the financial performance adhered broadly to Treasury’s 25% guideline for the quarter for its various programmes and sub-programmes. The expenditure for infrastructure projects had been very low, and she had been in contact with the DPW’s clients – mainly from the “security cluster” – who were unhappy with the under-expenditure, and a turnaround strategy had been jointly developed so that both the DPW and its clients understood each others’ situation.

To help overcome the lack of internal capacity within the Department, which had to be bolstered by outside contractors, a “huge” advert would appear in the media next week with the aim of attracting professionals such as engineers, architects and project managers to work in the DPW. The Department needed to rebuild its internal capacity to its previous levels. At present, the DPW was dealing with the situation by employing outside firms to assist with project delivery while it embarked on its recruitment drive.

Discussion
Mr K Sithole (IFP) asked what criteria were being applied to prospective candidates being recruited.

Mr L Gaehler (UDM) said the problem in attracting professionals such as engineers and quantity surveyors, was that the remuneration package was insufficient. He suggested emphasis should be placed on recruiting retired professionals and young graduates.

Mr M Swathe (DA) supported Mr Gaehler’s view, and asked if the DPW was offering support to students to encourage them to join when they completed their studies.

The Chairperson said she had learnt of the existence of “groupings” within the Department who were resisting progress, and asked what was being done to deal with the leaders of these groupings.

Ms Fatyela-Lindie said the Department’s challenges required action, but this could not happen before it was clear what steps should be taken, nor could service delivery be disrupted. The problem needed to be discussed with the Minister.

The criteria for candidates were not easy to establish, because there was a shortage of the relevant professionals throughout the country. However, it was essential that candidates should be registered and meet the criteria of the professional bodies reporting to the DPW. She acknowledged that remuneration had to be sufficient to attract the type of people required. At a recent MinMec meeting, the DPW MEC’s had called for more capacity in all provinces. There were already some retired professionals employed by the DPW. The aim was for young graduates to be absorbed into the Department, and for the retired professionals to mentor them.

Minutes
Ms Sue Mosegomi, Acting Chief Financial Officer, DPW, reported on the Department’s financial performance during the first quarter, broken down by programme and by economic classification. The annual budget was R7,993bn, of which R2,169bn (27%) had been spent in the March to June period (see presentation).

The five programmes covered were Administration (R234m expenditure, or 26% of budget), Immovable Asset Management (R1,587bn, or 29%), Expended Public Works Programme (R317m, or 19%), Property and Construction Industry Policy Regulation (R13,9m, or 37%) and Auxiliary and Associated Services (R26,9m, or 68%).

The economic classifications were Compensation of Employees (R327,2m, or 26%), Goods and Services (R161,7m, or 27%), Office Accommodation (R129,5m, or 28%), Transfer and Subsidies (R1,399bn, or 34%), Infrastructure (R146,3m, or 10%) and Machinery and Equipment (R5,4m, or 6%).

Discussion

Ms P Ngwenya-Mabila (ANC) noted that expenditure on the Extended Public Works Programme (EPWP) had been 19% of budget for the first quarter, compared with only 9% for the same period last year. While this was an improvement, she was concerned at the level still being low, as the EPWP was a key factor in creating jobs and transferring skills. On the other hand, the Auxiliary and Associated Expenditure figure was 68% of total budget, and she asked if the DPW expected to over-spend in this area. While overall expenditure was good, at only 2% above the targeted limit, it was important to ensure that the DPW was getting value for money. There appeared to be a problem with regard to infrastructure spending, which seemed to be due to a lack of capacity.

Ms C Madlopha (ANC) also criticised the lack of spending on infrastructure, and said the issue of planning seemed to be a problem. She asked whether the fact that only 6% of the Machinery and Equipment budget had been spent was related to capacity challenges, as the lack of capacity had been referred to over a long period, and progress needed to be seen.

Mr Swathe asked if the budget for the EPWP could be fully used this year, as expenditure stood at only 17% so far. He did not understand why so little had been spent on machinery and equipment, as Members of the Committee had been told, during an oversight visit, that there was a major shortage of tools and machinery.

Mr Gaehler asked if maintenance projects were included in infrastructure expenditure, and if so, at what stage were they?

Mr Sithole referred to EPWP grants to the provinces, and asked the Department to provide a breakdown by province and indicate how expenditure was monitored.

Ms Mosegomi said the high auxiliary and associated expenditure was due mainly to the cost of state funerals. As these could not be budgeted for ahead of time, the procedure was to spend funds and then apply for a funding adjustment later.

The Chairperson asked why the DPW allowed these extra demands to be placed on it, “dancing to the tune” of those making the demands.

Ms Ngwenya-Mabila asked if there was a policy in place, so that there could be a consistent approach to the funding of funerals.

Ms Fatyela-Lindie said the problem the DPW faced was that funerals were often requested by the President, while memorial services were unplanned.

Ms Madlopha said it was clear there was no policy at this stage, and it was therefore necessary to fast-track efforts to remedy the situation. The issue was sensitive, and consistency was important.

The ADG commented that it was not fair for the Department’s expenditure on funerals to be described by the Auditor-General (AG) as “irregular expenditure,” as it was not wasteful or fruitless. Arrangements had to be made at short notice, and there was often not time for normal tender processes, involving three quotations, to be followed.

Ms Ngwenya-Mabila disagreed. The Public Finance Management Act (PFMA) needed to be followed, and if it was not, the AG would be right to classify it as irregular expenditure.

The Chairperson suggested that this issue should be raised at the next Director-Generals’ forum meeting, so that functions could be properly planned to avoid irregular expenditure.

Ms Madlopha said any new policy should take into account those whose faiths required them to be buried soon after death, compared to those whose funerals might be held a week after their death.

Minutes
Ms Mosegomi then reported on the Department’s performance in regard to the five programmes.

Under the heading of Administration, satisfactory progress had been made in the areas of Internal Audit and Investigation Services, Inter-Governmental Relations and Parliamentary Services, and Strategic Management, but Monitoring and Evaluation was regarded as “unsatisfactory.” Only one target out of three had been achieved, and challenges existed because of over-lapping targets, the need for quarterly reporting and effective reporting systems, and the capacity constraint of having only four people in the unit.

The ADG commented that as part of the DPW’s turnaround strategy, a request had been made for the establishment of a proper monitoring unit. The assistance of the Presidency had been sought, and it was hoped that results would be forthcoming in the second quarter. Concerns had also been expressed about the capacity of the internal audit unit, particularly the Fraud Unit, which had a high staff turnover for various reasons, including intimidation.

Ms Mosegomi reported on the Immovable Asset Investment Management programme, stating that more work needed to be done on the asset register, although 21 448 land parcels had been verified through desktop analysis and updated with deeds’ website information.

Ms Fatyela-Lindie added that while Ernst & Young had assisted with the updating of the asset register, she had met with the Chief Surveyor-General, as his work was linked to the completion of the register, mainly because of the work he had done in the former TVBC states. The DPW needed to receive data on surveyed land available from this source, for updating purposes, and so that it could be included with the data already compiled by Ernst & Young.

Discussion
The Chairperson said she had read the DPW’s 1988 report (when it was part of Rural Development), in which it had been clearly indicated that all the assets were in the system, and stated that if one wanted to verify the assets, this could be done at the Deeds Office and the office of the Surveyor-General. Why, after all these years, was the Department spending millions of Rands trying to come up with an asset register, when the information was already available at these offices.

Ms Fatyela-Lindie said the issue now was about the accuracy of the title deeds in the Deeds Office. She conceded that the Deeds Office should be “the final port of call,” but one could not run away from the fact that, during the transition to democracy, there were assets that could not be accounted for. The Surveyor-General was now busy with the verification process, dealing with the inconsistencies, and the data would be available when the process had been completed.

Mr Swathe said he was under the impression that if someone owned an asset, it had to be registered. If there was no title deed, the government could retrieve the asset. The completion of the asset register was due in 2014, and those being paid were not coming up with something tangible that could be relied on.

Ms Fatyela-Lindie replied that Ernst & Young were regularising those areas where there were inaccuracies and inconsistencies.

The Chairperson said there should be agreement that the DPW and Rural Development should have a special meeting to discuss the asset register.

Minutes
Ms Mosegomi reported next on the Expanded Public Works Programme.

Fair progress had been achieved with the National Youth Service (NYS) Learners project, although delays in awarding projects had resulted in only 847 learners being recruited, against a target of 1200. There had been satisfactory progress in supporting municipalities who implemented projects, with 157 municipalities reporting on EPWP projects against a target of 120.

The programme dealing with Construction and Property Policy Regulation had encountered delays related to the Agrément SA Bill and the Expropriation Bill, mainly through lack of planning and capacity constraints.

Ms Fatyela-Lindie said that because of the huge infrastructure programme being implemented under the guidance of the Economic Development Department (EDD), the DPW had been asked to become involved with the Department of Rural Development and Land Affairs to see what the common issues were that might influence the success of the programme. What was important in the Expropriation Bill was that its provisions should go hand in hand with spatial planning and rural development, and that it should be passed by Parliament this year.

The Projects and Professional Services Programme had recorded some degree of progress in the area of completed construction projects, although only 31 had been completed against a target of 50.

Discussion
Ms Ngwenya-Mabila expressed concern at the low level of completed construction projects, and said this should be investigated, as it might be due to the fact that projects could be delayed by planning starting only in March.

Mr Gaehler supported this view, saying the Department started its planning process only after receiving its budget, instead of planning in advance so that when the budget was approved, there would be no delay in implementation.

Ms Fatyela-Lindie said the challenges facing the DPW in respect of planning, were related to the large number of projects involved versus its planning capacity, as well as the skills required to support the process.

Ms Ngwenya-Mabila said that after 18 years of democracy, there was still talk about “lack of capacity.” How much longer would this persist, as it was affecting service delivery..

The Chairperson referred to large-scale vacancies existing within the Department, and asked when these would be filled. The Committee had been told it would cost R200 million to fill these posts.

Ms Fatyela-Lindie said the reality of the matter was that the DPW had thousands of employees, but their placement in the different units was not even. Some areas were bloated, but the core – where built environment professionals were needed to run an efficient operation -- had been ignored. Without them, delivery would always falter, so this was now being addressed.

The Chairperson said claims that the DPW was reviving its workshops did not seem to be correct.

She was supported by Ms Madlopha, who said when a site visit had been conducted at Robben Island, there had been complaints that the workshop employees were doing nothing because there were no tools to work with.

Ms Fatyela-Lindie said the situation at all of the workshops would be investigated, and reported back to the Committee. One of the issues hampering progress was the work ethic in the workshops.

The Chairperson asked if this meant that the workshop employees were not able to operate efficiently and with urgency, without white supervision.

Ms Fatyela-Lindie said this scenario was a government-wide issue, and it all boiled down to performance management, and management generally.

Mr Magubane said he doubted whether those employed to monitor projects were doing their jobs, otherwise there would not have been so many municipalities failing to perform.

Mr Swathe asked why people in those jobs had been appointed in the first place – and why they were still there.

Mr Ignatius Ariyo, Chief Director, DPW, explained why only R3,6m of the R599,2m EPWP incentives to municipalities had been paid out in the first quarter. It was all a matter of timing, and 40% of the funds would be released to the municipalities on August 15.

Ms Madlopha queried this timing, pointing out that the financial year of municipalities started on 1 July, and the delay in receiving funding would hold up implementation.

Mr Ariyo said it was necessary to first verify the information on the project lists before releasing funds. This was often delayed through lack of technical capacity at local government level.

The Chairperson introduced a new subject to the discussion by asking what action was being taken to resolve a long-standing personnel problem at the DPW’s Mthatha office. After a brief discussion, it was agreed to await the outcome of an investigation being carried out by the Special Investigating Unit.

The Chairperson thanked the delegation for its presentation and closed the meeting.