Department of Public Works on its 2014 Strategic Plan

Meeting report

Chairperson’s opening remarks
The Chairperson welcomed the Minister, the Deputy Minister together with the Director-General and all other delegates from the Department of Public Works (DPW). He thanked the Minister for availing himself and said the Committee would be grateful if there would be a senior representative from the DPW at all Committee meetings. All delegates from the DPW were asked to introduce themselves seeing that it was the first meeting between the Committee and the DPW.

Strategic Overview: DPW
Minister Thembelani "Thulas" Nxesi thanked the Committee for inviting the DPW and assured Members that there would always be a political representative in the Committee meetings at all times. If the Minister was unable to attend a meeting, the Deputy Minister would attend the meeting. The engagements with the Committee were of great value to the DPW. The DPW’s strategic overview would include the vision and priorities of the DPW together with the DPW’s progress report on its turnaround.

In 2012 the DPW had developed a seven year plan to rebuild the DPW. This was done with the support from National Treasury. The plan envisioned three phases; the stabilization phase, the efficiency enhancement phase and the sustainable development phase. The first phase was necessitated by the poor performance of the DPW and the lack of adequate management and financial controls, culminating in high years of fraud and corruption which were evident in reports from the Public Protector, the Special and the Auditor-General. The DPW was in its second year of the seven year plan and the department’s core business areas have been stabilized, these are leases, immovable asset register and finances.

Together with National Treasury, the DPW has conducted 100% audits of all the leased property and more robust systems have been created to manage the leasing portfolio. This exercise has also helped the DPW identify areas of possible collusion for forensic investigation. The DPW has also been able to produce a reliable record of all state owned property though the immovable asset based register, which is 95% complete. The DPW accounted for 107 000 properties throughout the country, and 30 000 land bursaries; 95% of these properties have been physically verified. On the clean audit projects he said a cleaner audit outcome from the DPW could be expected. Imposing proper control of the DPW’s finances however has been a huge task. The DPW was also able to stabilize the department by in-sourcing skills that the department lacked. The DPW has implemented a programme to ensure the transferal of skills and build capacity in-house. The DPW has also been making use of a lot of interns on a contract basis.

The efficiency and enhancement phase was the DPW looked to improve the business model and the processes of the department. This phase involved operationalising a structure which was aligned with the mandate of the DPW. The property business needed to be ring-fenced and professionalized. The governance risk and compliance portfolio also needed to be strengthened to drive away fraud and corruption within the property industry. In the construction project and management environment, the lack of planning over the years has led to a lot of under-spending and the subsequent delays in the delivery of projects. The DPW was addressing these matters by enforcing more coordination between branches along the construction value chain and through the introduction of a proper planning methodology in the form of an infrastructure delivery management system. Officials would also be trained on the systems of National Treasury. An information technology plan was also being developed for the second phase of the DPW’s turnaround. He explained that outsourcing and privatization were costing the DPW a great deal, not only financially but also because a number of DPW staff left the department and came back as consultants.

Minister Nxesi explained that the third phase; sustainable development was fundamental in reviewing the mandate and responsibility of DPW together with the different spheres of government. The DPW was busy with a process of consulting with various stakeholders around the creation of a White Paper, which would culminate in a Public Works Act. He said it was very worrisome that there was no legislation specifically for the DPW; rather the department was being run with different pieces of legislation strung together. Legislation was one of the key focus areas of the DPW for the next five years. Policy review would be carried out in partnership and consultation with the entire public works “family”. He said over the years the National Department of Public Works together with provincial departments have been engaged in a number of projects such as the roll out of the Extended Public Works Programme (EPWP).

The relationship between the national department and the provincial departments could best be described as mutually dependant; there was no legislation which forced these two entities to work together. The DPW was committed to create 6 million work opportunities for the poor and the unemployed through labour intensive delivery of public service infrastructure. Public works programmes needed to facilitate public participation and provide tangible benefits for the society and the community at large. These objectives have been elevated to a Commission in the Presidency called Public Employment Programmes, and this involved a number of ministries. The EPWP was being expanded, both qualitatively and quantitatively in order to create long term, sustainable jobs.

 Another core focus for the DPW was the operationalising of the property management trade entity and the transformation of the core property business, including construction management. Therefore technical and professional skills within the DPW needed to be rebuilt. The DPW would be growing these skills while trying to recruit skills from the private sector. The work and performance culture within the DPW needed to be changed and unions needed to be engaged. In consultation with all stakeholders the DPW would develop a renewed sustained programme of action to transform the build environment and the construction and property sector as part of the second and most radical transmission to democracy. Support for black and female constructors needed to be increased as well as the production of the black professionals and artisans on the built environment discipline. It was not acceptable that only 25% of the construction company owners were black after 20 years of democracy. The DPW would only enforce transformation conditions when giving contracts to companies; people must train young black professionals to be qualified built environment specialists. 

Presentation: Department of Public Works 2014-2019 Strategic Plan and 2014/15 Annual Performance Plan
Mr Mziwonke Dlabantu, Director-General, DPW, thanked the Minister for the introduction and for providing the Committee with the DPW’s strategic vision for the next five years. He explained that the Strategic Plan was a five year plan; the Annual Performance Plan looked at the current year while the Medium Term Expenditure Framework (MTEF) covered the first three years of the Strategic Plan.

The regulatory requirements for the DPW’s Strategic Plans and Annual Performance Plans were in accordance with the National Treasury Framework. The Framework for Strategic Plans and Annual Performance Plans, was issued in September 2010 and provided a new format and revised timeframes for the compilation of the Strategic Plan and Annual Performance Plan. Annual targets are broken up into quarterly targets where possible to ensure effective monitoring of performance on a quarterly basis. The legislative mandate was primarily governed by the Government Immovable Asset Management Act, 2007.

The mission of the DPW was to provide quality accommodation and related services to clients, to efficiently and effectively manage the immovable assets in the DPW’s custodianship, to actively contribute to the national goals of job creation and poverty alleviation through the Expanded Public Works Programme (EPWP), to provide expert built-environment advice to stakeholders and lastly the DPW provides strategic leadership to the South African Construction and Property Industries.

These were the DPW’s priorities, which were informed by the ruling party’s manifesto and the National Development Plan (NDP):

•Create decent employment through inclusive economic growth. Phase 3 of the EPWP aims to create 6 million work opportunities between the period 2014/15- 2018/19. R 1 951 billion has been allocated.

•The DPW would provide for an efficient, competitive and responsive infrastructure network. The DPW would continue prioritising infrastructure requirements at the Land Ports of Entry to facilitate cross border trade and to strengthen socio-economic development. R 233 million has been allocated.

•The DPW would provide further support to the National Infrastructure Maintenance Strategy to deal with the infrastructure maintenance for different sectors. R 3 million has been allocated.

•The DPW would be collaborating with sector departments and rural municipalities to coordinate infrastructure planning and to ensure maximum impact in rural areas. R 2 million has been allocated.

•The DPW would be providing accommodation to user departments through strategic planning instruments to promote integration, accessibility, sustainability, economic growth and social empowerment. R 510 million has been allocated.

•The DPW has a number of development programmes such as young professionals programmes, internship programmes, learnership programmes and artisan programmes in order to provide valuable job experience. R 3 million has been allocated.

•The DPW has also been working with the Department of Basic Education in replacing inappropriate structures at 36 schools and making aesthetic improvements to 915 schools.

Mr Dlabantu explained that the DPW launched a Turnaround Strategy in 2012 to address multiple issues of underperformance that ultimately resulted in progressively negative audit reports by the Auditor-General. For reasons of impact and strategic importance, 10 projects have been conceptualised from the 23 key stabilisation projects, as essential drivers of Phase 2 for the rebuilding the Department.  These projects are:

The development of a Service Delivery Framework

Operationalisation of Property Management Trading Entity and establishment of the Government Component

Developing a complete and credible register of State immovable assets

Conducting a comprehensive audit of leased properties and the establishment of a leasing management framework

Restructuring of Supply Chain Management (SCM) to better meet business requirements

Improving internal efficiencies to meet the service delivery requirements of Prestige clients

Developing an Information Technology strategy, architecture and platform as a key enabler

Improving infrastructure delivery through the application of best practice in terms of processes, structures and systems (IDMS)

Actively combating fraud and corruption, both within the Department and in the construction and property sectors, holding transgressors accountable for their actions

Development and implementation of an effective change management strategy that enables a performance driven culture

With regard to the DPW’s budget; Programme 1 (Administration) was allocated R 1 175 million and Programme 2 (Immovable Asset Management) has been allocated R 2 861 million, Programme 3 (Expanded Public Works Programme) has been allocated R 1 951 billion, Programme 4 (Property and Construction Industry Policy Regulations) has been allocated R 41 million while Programme 5 (Auxilliary and Associated Services) has been allocated R 92 million for the 2014/15 financial year.

 The DPW has reviewed the organisational structure which will be approved and implemented over the MTEF. The DPW has approved the establishment of 6 818 posts of which 5 560 were filled. The Department was however experiencing challenges in producing the wide range of skills required in the construction and engineering fields, in order to meet longer-term infrastructure delivery objectives. For the 2014/15 financial year the Department has an allocation R1.660 billion for compensation of employees to deliver on its key priorities. In total, the DPW has received a total allocation of R 6 121 billion for the 2014/15 financial year. There are four Public Entities reporting to the DPW; the Construction Industry Development Board (cidb), the Council for Built Environment (CBE), the Independent Development Trust (IDT) and the Property Management Trading Entity (PMTE). The Entities serve as an extension of and assist the Department in delivering on its mandate.

Mr Dlabantu said the acquisition of infrastructure for DPW’s own accommodation needs as well as for the prestige portfolio, land ports of entry, dolomite risk management, inner city regeneration programmes and accessibility programmes in terms of the disability policy was funded from the Infrastructure (Public Works) allocation.

Discussion
The Chairperson thanked the DPW for the presentation. He said it was a concern that the DPW had been running on White Papers dating back to 1997; it was 2014 now and those White Papers were surely outdated. What timeframes did the DPW have in place to transform these White Papers into Acts? 

Mr E Makue (ANC; Gauteng) thanked the Minister for providing direction to the Committee on the DPW’s strategic vision. He thanked the DPW for the houses made available to Members at Pelican Park. He raised a concern about the stipends which EPWP beneficiaries were receiving, which were more than what was paid to people in another programme. What was the DPW doing to create more job opportunities? He agreed with the Minister that there were still a lot of challenges in the construction industry, especially with regard to transformation of the sector. This was a matter of serious concern to the Committee and Members would assist in whatever way they could. He said the allocations stipulated in the DPW’s turnaround strategy budget were worrisome as the amounts were declining each financial year.

Ms E Van Lingen (DA; Eastern Cape) also thanked the Minister for the accommodation provided to Members at Pelican Park. However some of the houses were not yet renovated, Members were using old furniture. Some Members still did not have accommodation. She asked that the DPW provide more details on the 39 schools which were being renovated. What did these renovations entail? The DPW had 1285 posts however the vacancy rate within the department was at 25%, this high vacancy rate was worrisome. She reminded the DPW that municipal property rates were not the province’s responsibility; how was the department monitoring this?

Ms M Dikgale (ANC; Limpopo) thanked the DPW for the temporary arrangements made for Members while their accommodation was being sorted out. She asked about the DPWs involvement with basic education projects, especially in Limpopo. The province had serious challenges around basic education and the provision of proper toilet facilities for learners, as a result a child died in that province while using a toilet facility at school. How could the DPW intervene? She argued that people in rural areas lived very far from economic activity and the direct implication of this was that people were being encouraged to migrate to cities. Economic activity within rural areas needed to be promoted and strengthened. She also agreed that there had been very little transformation within the construction and build sector; what solution did the DPW have in place for addressing the issue?

Mr Jeremy Cronin, Deputy Minister, DPW responded to the Members’ concerns around the DPW’s use of White Papers and agreed with the Minister that the DPW was moving towards a Public Works Act. He said there was a lot of confusion around the role of the public sector and the role of the DPW. He said the internal structure of the DPW needed to be improved seeing that there have been seven Director-Generals’ within the DPW in the last five years. The turnaround for the DPW had already begun and senior leadership within the DPW would be stabilized. The DPW was also not happy with the number of White Papers within the DPW, however by the end of the five years policy would be reviewed to ensure that the relevant legislation was developed.

On the EPWP he said the fact that PCO’s were paid less was a matter which needed to be raised with the African National Congress. It was however important to note that the DPW did not provide stipends but rather wages; community development workers were not part of DPW. On social cohesion and nation building he said the DPW was busy with a programme within Tshwane of integrated city development. The DPW was a huge owner of property within Tshwane and the city needed to be turned into an economic hub. On rural development, he said the EPWP was not the same as the Community Public Works Programme, therefore the inputs and outputs of these programmes were not the same. However working in collaboration, the two were capable of building community cohesion.

Mr Cox Mokgooro, Chief Financial Officer, DPW explained why the budget for the compensation of employees was decreasing, he said the turnaround budget for the DPW was only there to stabilize the environment of the DPW, therefore as the environment became more stable, the budget allocation would also decrease. The actual allocation for the compensation of employees was actually increasing per financial year according to the MTEF allocations.

Mr Clive Mtshisa, Deputy Director- General: Corporate Services, DPW explained that the norm for the vacancy rate was set by the Department of Public Service and Administration was 10% and DPW was at 18% and this was not an outrageous percentage. He said the DPW was moving towards making use of lesser consultants but rather in-sourcing and enhancing the skills capacity within the department.

The Chairperson commended the DPW for their commitment in contracting less and less consultants within the department; consultant fees were exorbitant.

Mr J Londt (DA; Western Cape) asked whether the DPW could, at a later stage come back to the Committee to brief Members on the progress of the EPWP and how the funds allocated to this programme were being used, among other things. He asked that the DPW be more transparent and honest about ministerial upgrades; he made an example about Nkandla but conceded that the platform was not a fitting one for that particular discussion. He emphasized that the DPW needed to own up for all expenditure it approved.

Mr B Nthebe (ANC; North West) said synergy between the DPW and the various provinces was necessary, especially in the area of education. He said the responsibility of providing school transport was with the DPW but the responsibility of ensuring that learners attended school was with the Department of Basic Education. However education was not an isolated priority, there were many other factors which contributed to the progress of the education sector such as school infrastructure and roads, and these were the responsibility of the DPW.

Dr Y Vawda (EFF; Mpumalanga) made mention to the Minister’s reference to the Public Works Act which was currently in the pipelines; what would this Act entail and how soon would it be on the table. Capacity within the DPW concerning skills? One of the DPW’s outcomes was that in collaboration with the Department of Basic Education, the DPW would be replacing 36 schools and making aesthetic improvements to 915 schools. Which provinces were these schools? He also asked whether the DPW would be involved in the monitoring of the two new universities. What was the relationship between DPW and the provincial departments of public works? He extended a warm thank you to the Minister for the accommodation which has been made available to new Members at Pelican Park.

Ms Van Lingen asked that the DPW provide more detail on the asset investment management and how rural communities would benefit from this. What were the DPW’s plans to improve its audit reports?

Ms Dikgale asked about the DPW’s gender equity; how many women were part of the DPW’s senior management?

Mr Makue raised a concern about the assets and/or vacant properties owned by the DPW; these were not being monitored and as a result more were depreciating in value. What plans did the DPW have to monitor and provide maintenance to these vacant properties?

The Chairperson agreed with Members that the matter of state assets abroad was a complex one, together with the state property which was not in use and was therefore depreciating in value. He asked whether the DPW had the capacity to monitor these properties. He thanked the Minister for the DPW’s plans to inspect all lease agreements; the Committee was looking forward to the outcome of these investigations. He said the DPW’s qualified report from the Auditor-General needed to be improved. The Committee was also interested to know what the DPW’s strategy was for addressing the skills shortages within the department. He said there seemed to be no coordination within the build environment and asked whether the CIBD had the necessary technical skills to maximize the organizations capacity.

Minister Nxesi said the DPW held the work of the Committee in very high regard. He thanked the Committee for their interactions with the presentation of the DPW and said the Ministry was looking forward to even more fruitful engagements with the Committee.

The Chairperson thanked the Minister, the Deputy Minister together with the Director-General for their presentation and interaction with the Committee.

The meeting was adjourned.