Independent Development Trust and Deputy Minister on IDT's way forward

Meeting report

The Chairperson welcomed the visiting delegation and the Deputy Minister of Public Works, Jeremy Cronin.

Independent Development Trust Board Chairperson briefing
The IDT Chairperson, Mr Samadoda Fikeni, noted that the IDT was established in 1990 and had since grown to deliver R20 billion worth of infrastructure to the nation. He highlighted the key issues facing the IDT. They were going through a process of redefining their mandate in collaboration with the Department of Public Works and Treasury and thanked the department for their support. He said that they used to have cash reserves however those reserves had depleted and they had had to approach Treasury and the department for assistance with bridging finance. He said the IDT is primarily concerned with the delivery of government programs on behalf of Public Works which they had done until recently through direct interaction with provinces and departments. However this process had changed and moving forward they would only interact with the Department of Public Works and not with the provinces and other departments. Until the financial crisis, they implemented their projects in a socially cohesive manner meaning they would involve communities in identifying what needed to be done. This mode of operation had been successful in that all the property developed in collaboration with the community had thus far been safeguarded from vandalism. However the challenge in this has been that this is a time consuming process and for this reason the aspect of social facilitation is often viewed as not critical. This is what differentiated them as an organisation and while it meant it may take longer to complete the programs implemented in this fashion, working with the community had fostered a greater sense of trust and cohesion with the community. IDT both managed and developed infrastructure on behalf of government and they attended to this by way of social facilitation and alternate methods of construction, and project management was one of the stronger aspects of IDT.

He outlined the vision and mission and values of the IDT and alignment to the National Development Plan and the State of the Nation address. It is self-evident that the IDT had made an impact by the fact that their portfolio grew in the space of seven years to R10 billion and they are confident that they will maintain this in their new arrangement with the Department of Public Works. They have however been in transformation mode without any level of certainty over the last three years and this had lost them skills and human resources. This is a cause of concern for them and they had communicated this to their shareholders and mother department. The uncertain status of the IDT had resulted in some departments questioning their continued sustainability. This had negative repercussion and they must therefore progress with speed. They were currently developing a business plan from which the mandate could be generated however around the time that they were beginning this process, the country was going into elections just as changes were about to be made. However fortunately most of their principals had stayed on and they did not need to start the process over again. The term of the CEO ended in April, she had been CEO for ten years but she went on to join the government of Limpopo so they were now looking to fill the position with the support of a professional recruiting agency. They are determined to make a good appointment and the process was being carried out in a completely transparent manner.

He asked the Chairperson’s permission to not go through all the slides. The Chairperson granted his request due to the fact that the documentation was delivered to the Committee well in advance and called on the members for questions.

Discussion
Ms P Adams (ANC) asked about the business plan asking how far it is in the development process, how much it will cost and when the plan will be implemented. She asked about the recently departed CEO, saying there had to have been a transfer of skills and asked if the person who worked under that CEO was equipped to take over. She stated from a personal perspective that she felt the presentation was sketchy

Mr Sithole (IFP) thanked the IDT for the presentation commenting that it was very short. He asked how many staff was in the IDT and what was meant by transformation and skill development in the industry. He asked how many jobs they had created and in which provinces. Mention is made of a 40 person staff increase and asked whether they had budgeted for this increase?

Mr Masango (DA) asked if the IDT intended to make a fuller presentation.

Mr S Fikeni said they would be happy to make a fuller presentation and that he could ask the acting CEO to go into detail and would do so if the members requested it.

The Chairperson says if the introductory presentation was too succinct they may need to continue with their presentation.

Mr Masango (DA) said he felt IDT needed to make a fuller presentation because that is why they were there to engage them on the presentation of their strategic plan.

Ms Mjobo (ANC) spoke in Zulu and said she would hold off asking questions until the presentation was over.

Mr Jafta asked why the tradition as held by the IDT to engage with the community in carrying out their projects was diminishing.

Mr Filtane asked whether in the new business plan they had incorporated the use of social facilitators and advised that if they had not, they should.

Mr Mubu (DA) asked about the diminished cash reserves and asked what had changed to allow for that. He commended their involving the community in their projects and asked why the government did not follow the example of the IDT.

The Chairperson determined that they would allow the IDT to give the fuller presentation before engaging in another question and answer session.

Mr S Fikeni thanked the Chairperson and addressed the members saying that the IDT would attend to each and every one of their questions in due time. He handed over to the acting CEO of the IDT, Dr Stanley Bhebhe to give the full presentation.

Independent Development Trust CEO on IDT Strategic Plan & Annual Performance Plan
Dr Stanley M. Bhebhe, Acting CEO of the IDT, commenced the presentation by outlining where the IDT as an organisation was at the moment. They commenced 2014/15 with two key strategic objectives but primarily to see timely delivery of infrastructure, however in order to achieve this they needed to become efficient.

He emphasized the point that the IDT occupies space for a public entity focused on the development of social infrastructure. In order for the IDT to continue their work they would need to remain relevant and they continue to seek innovative ways to deliver social infrastructure, in a manner which involves the community to ensure continued access to services for the community. They wanted infrastructure-building to be seen as a process in order to achieve governmental mandates and that they were looking to empower and develop communities. In terms of the 2014/15 plan around these objectives, there are a number of issues to be addressed and they are currently looking to solve those. He reiterated the words of Mr Fikeni regarding the need for greater financial support and said they needed a better funding model than their current one.

The Key Performance Measures and Indicators (KPMIs) they feel are critical to IDT are the ‘Value and Business’ portfolio which entails the development of a business portfolio by the IDT. ‘Management Fees’, which is negotiated with clients and stipulated in agreements and is set at 7%, anything lower would jeopardise the organisation’s continued sustainability. The ‘Going Concern’ assumes that the organisation will be able to remain in operation for, at the very least, 24 months on its remaining cash reserves. ‘Certainty of Mandate and Long-Term Sustainability’ requires the shareholders to formally consider and provide certainty on the organisation’s mandate and long-term sustainability. ‘Attract and Retain Right Skills’ looks to the on-going uncertainty that has increased the risk of flight of skills resulting in a high vacancy rate of 17% in 2013/14, impacting on the organisation’s ability to recruit and retain appropriate skills. The IDT had invested in education, social housing and health and this became the kind of things the IDT became involved with. The 1997 Cabinet determined the IDT would be remarketed to become government’s program management asset in the process of job creation to address the chronic problems of inequality and poverty. Over time the IDT ran out of funds. The organisation had been funded by a R2 billion well invested endowment which had now run out. It is critical that they continue to attract and maintain the right skills in the organisation and this requires a reshaping of their investments and policies. There had been uncertainty in the organisation over the last few years leading to a number of critical skills leaving the organisation and a vacancy rate now of 18%. As regards their strategic choices, they feel it would be of value to continue to look on them in the manner they had been thus far.

He emphasized that the greatest challenge currently facing the organisation is the uncertainty surrounding the financial sustainability of the organisation. He asked for further assistance from National Treasury and Public Works. They had R150 million commitment from Treasury split over three years. They believe the business case is coming along nicely and is being prepared in conjunction with the Department of Public Works (DPW) and would address issues of the structure, form and resourcing required for it to become self-sustainable over the MTEF period, the clearly identified target market for the organisation and the management fees structure required to provide for funding of the organisation.

He discussed the Integrated Development Approach, saying their focus was to build vibrant communities and this required multilateral input. The development of vibrant communities was the aim and programmes such as community development, enterprise development and infrastructure support, the means. The 2014/15 business plan showed steady growth in its programme delivery as opposed to the quantum growth rate of the past three years. Growth was predicted to reach R7 to 8 billion over the next three years and the increase in management fees to ensure longer –term financial viability was a plan with substantial potential. The other source of income had traditionally been investment income but the coffers had depleted over the years due to an increase in overhead costs coupled with a reduction in the level of interest rates. Currently their major if not only source of income was management fees charged to client departments. The level of fees budgeted for the 2013/14 period was 4% and management had implemented a process to increase the average level of fees to 6.3% and they would seek to increase the fees over the coming years. He discussed their risk management and fraud prevention plans…

Mr Masango (DA) interrupts to say that he is worried about the meeting's time constraints.

The Chairperson responded that the members requested a fuller report and so they are getting one and the IDT would be allowed to continue

Dr S Bhebhe explained the purposed of the Audit and Risk Committee, the Fraud Prevention Plan. The IDT operates an externally managed hotline for the reporting of fraud and corruption, and it makes use of forensic expertise for the investigation of reported cases when such intervention is required in addition to its internal audit services. He spoke on the Materiality and Significance Framework, their Environmental, Communication, and Knowledge Management Plans and IT Management Framework, Corporate Knowledge Strategy and Human Resources Strategy.

With staff occupancy at 367 there was a 17% vacancy rate which may increase over the coming months. The IDT plans to embark on a streamlining process to address its financial solvency challenge and to improve the service offering of the organisation. This process required a structure review aimed at increasing the built environment technical capacity to strengthen the social infrastructure programme management while reducing the social and community development staff contingent as part of de-investment in functional areas not aligned with the new mandate.

This process required that the IDT bring about a healthy balance in the ratio of core and support staff through increasing the total direct programme staff while reducing staff in administration, corporate services and governance positions and to increase capacity at regional level and reduce staff at head and so address the top-heavy concern visible in the existing structure.

He concluded the presentation by requesting that the Portfolio Committee recommends to Parliament the IDT’s 2014/15-2018/19 strategic plan, the IDT’s 2014/15-2016/17 budget and the 2014/15 Annual Performance Plan and that they sustain their support for the IDT to the extent that they are able to maintain and accelerate their distinctive role in delivering social infrastructure in marginalised communities on the behalf of government.

Discussion
Ms Mjobo (ANC) thanked the IDT and made some comments in Zulu. She asked why they had delayed in recruiting a new CEO.

Mr Mubu (DA) asked the IDT chairperson and the acting CEO if the IDT was in crisis and whether company morale was low. With respect to the intended retrenchments, he asked when this would be implemented and asked how they planned to conduct this turn-around when there were going to be retrenchments. He asked why there was uncertainty amongst the staff when the organisation was constructed by legislation and could only be brought down by legislation,

Ms Mathebe (ANC) asked for clarity on the IDT focus which was presented as community development in social infrastructure, poverty alleviation, and inequality reduction and job creation. She asked what progress had been made in this regard.

Mr Filtane (UDM) asked about the funding model. He asked what was significantly different in the current model from their former model, he asked what would be done going forward to ensure their continued existence so that the IDT does not experience in the future the same troubles they are currently experiencing. He asked the department what would replace IDT should they close down. Why were there late fund transfers and what strategy was in place for managing fraud prevention. He asked if there was any collaboration between themselves and the Construction Industry Development Board (CIBD) and if so to what extent.

Mr Jafta (AIC) asked how the 441 employees of the IDT are structured and spread out within the organisation.

Mr Sithole (IFP) asked about sustainable human settlements in rural areas. Had the IDT monitored its work quality because the work performed by another organisation was of a much higher quality?

Ms Sonti (EFF) thanked the delegation for their presentation and asked about those protests which lead to buildings being vandalised - asking if the IDT had a strategy to bypass this.

Mr S Fikeni responded that they had wanted to immediately appoint a new CEO but were advised to wait for the new government to be elected. They had two or three people who were ready to take-over should the CEO step down so it was easy to appoint an acting CEO however they are almost at the end of the process of trying to select a new CEO and would have one very soon. They did have a succession plan which catered to the issue of skills hand over.

When IDT was self-funded it was easy to fund social facilitation from the hearth of their own kitchen but with their stores diminishing it had become almost impossible to do this. Social facilitation takes time. It would often take months to get the community to participate. However the client would not always have the patience to wait for this. This was why they needed the support of the committee, to ensure they were not forced to phase out such an integral aspect of their process. On the question of vandalism, communities left to maintain the buildings that they had been consulted on during the process of development were more inclined to be protective of these buildings. On their diminishing funds, they as the IDT had been assigned extra responsibilities without receiving any extra funding and so they had had to draw from their own reserves. Further, often departments that they worked with refused to pay the management fees claiming that as government, utilising a government agency, they were not required to. This issue had partially been addressed by way of a practice note issued by Treasury, which had been their saving grace in terms of their financial sustainability. He added however, that this income is insufficient and that they have put an extensive amount of pressure on management to cut costs because they are currently living hand to mouth.

They had tried their best to hold on to all their critical skills, however their best was not enough in an environment of uncertainty, professionals required certainty going forward. They had instilled a security measure which would allow them to restructure if the situation did not change. The Auditor General had cautioned against this as they would not want to be seen as trading recklessly. He emphasised that the department, Minister and Deputy Minister had been extremely supportive and that it all came down to counting on Treasury to join in as they were the ones that housed the funds. The new business plan was being worked on in collaboration with the department and Treasury and he said the deputy minister may be better suited to answer when the new mandate may be completed as they had compiled all the necessary data for the mandate to be completed.

Mr Mubu (DA) repeated his question, asking whether the IDT was in crisis

Mr S Fikeni responded that no, they are experiencing challenges but are not an entity in crisis. In comparative terms they were better off than certain other entities in terms of capacity to deliver. In terms of the measures put in place to address the situation even at a time of financial crisis one of those measures was to employ people against projects so that the project funds the people directly. When the program concluded, so did the contract.

Dr S Bhebhe added to this by saying that the IDT is working to bring the overhead costs within the budget however when the organisation was started in 1997 a different model was followed unsuitable to the new economic environment. They had made significant progress in this. With respect to keeping the best of their human resources, it was a critical issue and they had found it useful to be transparent about strategic thinking. They engaged unions and staff continually on this topic. Whilst they could not say for certain what the outcome of their organisation will be they remain committed to their objective and as long as there is a need for service delivery, there is a future for the IDT. The mandate and business plans would determine the future of the IDT. They were managing their natural attrition in a much better way, as they had to make difficult decisions in light of their diminishing financial resources and that in a cost containment environment when a person stepped down to retire they would have to seriously consider the continued need for that position and whether they should seek a replacement. IDT is constantly reviewing and restructuring the usage of their human capital. The IDT is a national organisation with offices in all nine provinces. Their programs were present and involved in all nine provinces. The degree of activity depended on a variety of factors such as availability, need and commitment within the provinces. Their nationwide footprint was one of the more unique aspects about the organisation.  They had a vigorous monitoring system and that the person in charge of these systems were part of the present delegation and could speak to this.

The Chief Operating Officer of the IDT, Mr Ayanda Wakaba, added that they contribute to the empowerment of emerging previously disadvantaged contractors and they spend on average $4 billion on this initiative. They were the largest organisation engaging black contractors in the construction industry. They also play a significant role in alternative building technologies, working closely with the CSIR in researching the sustainability and the possibility of using these. They see themselves as a reservoir for built environment skills within the public sector, having the capacity to develop in an area which is challenged. Subject to their current financial constraints, they could assist in bursaries in terms of built environment programs. They create job opportunities in the infrastructure realm. They had never measured their impact on this but they are certain that the IDT had a huge influence.

The Chairperson interrupted to ask how long the job opportunities created by the IDT last.

Mr Wakaba replied that the average is 9 months. On the provinces in which they were doing well, he said it depended on the amount of work required in a province. They were a government owned support agency in social infrastructure delivery so they did the most work wherever they were most needed. The IDT had done significant work in North West, Limpopo and KZN and their work is growing in Northern Cape. He addressed the question about the new versus the old model. The old model was that they would use public funds to service clients free of charge. However this model was no longer sustainable because their overheads had grown and they can no longer provide free support to government as their coffers had depleted. The new model requires them to charge their clients for their work. This would be a more sustainable model aided by the practice note issued by Treasury. On the question on the late funds transfer, the IDT had been battling this issue for a while. This was a planning issue. Often it was the case of a department commissioning a project worth a billion rand however they would only have a R600 million budget. Thus there was currently attempts to align budget to the practical running on the ground because often projects ran over the course of a number of years and if they requested the full billion in the first year they would wind up returning quite a bit of it and so be reprimanded by Treasury for not having spent the budget. In the following year the budget would be reduced as a consequence. Due to these planning challenges,  which had resulted in departments being unable to pay the IDT fully, IDT had been unable to pay its service providers. The intervention with National Treasury would allow them to make progress on this issue. They do work closely with the CIBD, that they have a formal forum at which they meet and debate on issues affecting them and other entities within the Department of Public Works. He added that they do have a strategy to combat vandalism and that strategy is their social facilitation approach to development due to its proven effectiveness. He emphasized that this aspect of their mode of operation was what differentiated them from other similar entities, they foster community participation and mobilisation, they facilitate local business empowerment and job creation and through all this they build communities. However, they could only implement this strategy within the confines of their budget.

The Deputy Minister of Public Works, Mr Jeremy Cronin, commented on the question by the Chairperson about the length of time that people were recruited into these IDT initiatives and were employed. He said that the majority of construction workers are not employed full time so the IDT and the Public Sector are not committing an unworthy practice. He stressed that the reality of the construction industry is that the projects worked on and built required a finite amount of time to be built and so eventually the work would come to an end. Regardless of this, it is real work and the short term aspect of it is something they need to address strategically as government. This part of the reason that there are strikes because workers know the project is coming to an end and it is in their interest to slow it down. He wanted to make this comment generally because this work opportunity issue was a pervasive issue throughout the construction industry. The Department fully supported the IDT and the critical work that they do, and the value that they add to the critical area of social infrastructure through the social facilitation process.

The Deputy Minister added to the points made by the IDT that their work assumes costs because they take longer, especially those projects that assumed social facilitation and the support of the community. Across the public sector, there was often a resistance to this approach. However this was a process that was abundant in jobs, artisanal jobs, contracting and subcontracting and the like. But it was very important to use social facilitation because in the grander scheme of things the value added to the community would not just be in the form of the completed project. He understands that departments may be under financial pressure however he had to stress the importance of the aspect of social facilitation practised by the IDT.

The Deputy Minister said that the IDT will not close down as it is a critical agency. However it does need to change and that is what they are working on. They are not yet ready to announce to the Committee what the new business plan needs to be. It did need to change its name which was wrong. It was named ‘independent’ by the old apartheid government who was trying to hide the fact that they were behind the organisation. It still had the structure of a trust. It was given a R2 billion endowment initially and recapitalised in 1997but this approach was unsustainable. It's scheduling as an entity would change. One of the challenges they faced was trying to retain their critical skills. He commented on a point raised by the COO about the business plan, and said that before his time as deputy minister, there was a sense that there was some bloating in the organisation and these concerns were raised by Treasury. That is why the containment issue is so big. So Treasury is resistant to some of the changes that they are trying to implement. As a department they are pleased with the Board of the IDT and the senior management, acting as they may be, who had driven an effective cost containment approach. They needed to get the balance right and curb unnecessary expenditure while not affecting the critical developmental approach. They as the department are working closely with Treasury and the IDT. They need to consider the broader mandate of Public Works and its property management capacity which needed to be professionalised. They do not have an integrated approach in their construction side and as a result they have to ask themselves how project management and construction go hand in hand with their aims. He stressed that the business plan model being developed needs to be aligned to the broader goals of the IDT as well as the department. He emphasized again the full support of the department for the IDT and the way they had been doing things.

Mr Jafta (AIC) asked the IDT to clarify the uncertainty at the IDT resulting in a high turnover of their human resources and the IDT losing necessary skills in light of the retrenchments discussed. He asked if they meant that the IDT had retrenched a lot of people or if these people are actually leaving of their own free will.

The Chairperson referred to page 37 where the IDT had budgeted 20 million. The 2014/15 budget speaks of an approval for 400 staff yet a few pages later it mentions 440 staff.

Mr Masango (DA) commended the restructuring of the IDT and asked if this restructuring will address the CEO’s salary as previously discussed in 2009.

The Chairperson interrupted to say that if the issue of the CEO salary was raised in 2009, he would need to provide background because many of committee members were not present at that time.

Mr Masango (DA) said that at the time the issue was raised, the CEO salary was over R2 million, higher than the President’s and he would like to know how the salary is determined

The Chairperson said they had received a response to that and there were surely clearer guidelines on this now.

The Deputy Minister added that when he previously spoke of ‘bloating’ this is exactly what he was referring to. This was the sort of thing that Treasury had taken issue with.

The Chairperson joked that now that the cat was out of the bag.

Mr Masango (DA) asked for clarity about the direct and indirect employees asking exactly when and for what the indirect employees were hired. Further he asked about the 15 million budgeted for consultancy, he asked if they recruited external consultants on top of the departments that they had in the department. On the issue of the 20 million for retrenchments, the IDT could not complain about losing staff when they were also preparing for retrenchments on the side. He asked why they budget for deficit and surplus. He also asked why there is 7 million in brackets for carpets. He also asked for further clarity on the departments they are going to work with moving forward, and their quarterly targets so that they know who they are working with. On the schools being built, he asked for clarity on the schools being built, saying that if they are building 50 school a year there should be no issues of school shortages and he asked for the list of schools to be built. With respect to the BBBEE markers, that the IDT should provide numbers instead of percentages because percentages can often be misleading and they need clarity on some of the percentages presented. He also asked about their strategic goals which were stated as delivery, on time and on budget seeking clarity on the actual achievement of these goals.

Mr S Fikeni responded that from the time the board commented that senior manager salaries were a concern to the extent that a study was done to determine the basis. They approached the Department of Public Enterprises for guidelines on remuneration and received a notification by the department to freeze the salaries and those salaries had been frozen. Senior management was aggrieved, those below were now encroaching the higher ones. They had determined that the new CEO will not be at the same level as the previous CEO. They had determined to slow down growth of senior management while staying mindful of inflation. Whilst this was a difficult process it was one that the board felt was necessary. They had wanted to use the guidelines as a framework but had not received them on time. Once Cabinet approved the practice according to the framework they would adhere to that. They are also restructuring their management positions. As IDT had such a wide pool of highly skilled individuals not many entities could boast of having staff that would leave and become MPL or a DG and some people had gone into Public Works and the Presidential Infrastructure Coordinating Programme. Some of these skilled persons had been lured to greener pastures and some had left due to uncertainty. When unemployment levels are so high they do not want to retrench people but it may be necessary to avoid trading recklessly. They could replace percentages with actual figures if it is that what the Committee would like. He stressed the the volume of projects implemented by the IDT and invited the members to visit some of their flagship projects such as the multipurpose centre in the KZN, where there are no buildings of that scale and some of their buildings are a model in many instances. Whilst there are exceptions such as the Mpumalanga hospital, it does not speak to the majority of its work. The IDT always strives to do better, holding management to account and revising and developing their approach. Although they were looking at a model of sustainability supported by management fees there remained a case for capital injection. He emphasized that the R2 billion afforded them lasted them nearly 20 years due to a well deliberated investment approach. Without a war chest they cannot continue to do their work in the manner done in the past. They will have to await complete payment from the client departments with whom they work before they can complete or even hand over the work.

The Audit and Risk Committee Chairperson, Ms Seipati Boulton, addressed the question on categorisation of staff as indirect and direct. Direct staff address the services offered and work done by IDT, such as project accounting staff, programme management staff and they produce the commodity that they sell to the client department. The indirect staff cater to the regulated environment in which the IDT operates and provide services such as accounting and compliance, staff not critical to the product they offer. The budget for consultation was derived mindful of the fact that they may need external or extra consultants. However before bringing on these external consultants, they consult the note from Treasury that when they do analysis they must provide an explanation as to why the specific skill needed cannot be employed. About the budget including deficit and surplus, she said this is determined by the drivers to the budget. On page 37 there is a budget with the bridging finance and on page 38 it is without bridging finance. The one without the bridge merely reflects cash flow implications if they do not receive the bridging finance. The bridging finance as a principle has always been outcome rather than output based. Thus as a result, the IDT portfolio is determined by what the government budgeted. The IDT aimed at charging management fees to ensure the organisation remains sustainable but before they can get to that point there needs to be bridging finance. She addressed the question about the bracketed R7 million saying it is bracketed because it is an outgoing expense but it is an expenditure which will be derived for more than a year.

Mr A Wakaba spoke about the targets of the Annual Performance Plan. The targeting has to be incremental, the quarter targets must equate to the year-end targets. This has come through over the last four years that there would be difficulties when they budget according to each quarter. However, the incremental approach is more appropriate. He was highlighting this to indicate that where the number of government departments differed, for example, where the target might say 35 and then later it indicates that that there was an increase in government departments from the one quarter to the next. On the use of percentages, this is used when they do not have firm control of the actual unit targeted, the actual programme may be higher than the target of R7 billion. So what they are trying to indicate is that whatever is spent at the end of the day they are aiming for a minimum of 65%. This does not take away from what was said earlier that they could provide concrete figures if requested by the Committee. On listing government departments and actual schools, whilst government would contract with IDT and indicate which schools they would be working on, when it came to finalising the plans, the way forward may look very different from what was initially proposed. The IDT often would agree on a number of schools to work on but rarely would they formulate a formal list of these schools.

He confirmed that the IDT they had a robust Monitoring and Evaluation system benchmarked against the government-wide M&E framework. They have three key instruments, two of which are the M&E strategy and the Corporate Knowledge strategy. These instruments constitute their machinery towards M&E. They monitor and evaluate the entire chain of programmes from conceptualisation and planning to implementation to the completion of the programme. Additionally, post program closure they undertake system evaluation. He indicated that some of the key elements that they monitor are issues of growth, other input, outcome, efficiency, and implementation. However they do have targets and indicators which demonstrate their empowerment and development focus as an organisation which go over and above this and which looks at factors such as the level of participation of the youth, women and the disabled. These indicators also look to their impact on job creation and of the number of people trained and certification in the areas trained.  Lastly their M&E is aimed at three or four critical areas such as the strategic position of the organisation but mostly the M&E is meant to contribute to the continuous operations improvement so that they offer a service that is cost effective, timely and adds well to the government. Lastly the M&E is meant to enhance knowledge sharing within the broader sphere of public service. He added that the M&E area had been heavily affected by the skills flight that they had gone from 12 M&E practitioners to four and this can have an effect especially in an area where government places such emphasis on M&E.

Mr Motswaledi Thlotse, Deputy Chairperson of the IDT addressed a question on whether IDT outsourced a component of its work, the critical skills that the IDT brought to the public sector in programme management. He defined programme management as the process by which the IDT managed the conversion of resources into a product. In the value chain the IDT would engage a contractor, a quantity surveyor and an architect. The IDT as an establishment has a limited contingent of technical skilled persons of this kind to do the oversight and monitoring but they do not take on the architectural work for their projects. They would mostly outsource these functions. As part of the transformation process they are working to strengthen and build this component such that they will be able to attend to these services from an in-house pool of employees and so save on costs. He reiterated the statement made by the COO on the process by which they determined what they would be working on and how this related to providing concrete lists of projects. He confirmed that they can compile the list of schools for 2013/14 so that at the end of the financial year they can analyse what they actually ended up with as opposed to what they sought to achieve.

Mr Masango (DA) said that he is not satisfied because he does not understand why they set KPI’s when they lack the power to achieve them. Their targets were not real but were rather a wish list of targets. In light of their approach to incremental targets, he raised the issue of the number of work opportunities created by IDT which were reflected as 35, they were 5 during the first quarter, 10 during the second quarter and 15 in the third quarter and in the fourth quarter they might just go an employ 15 000 people just for the sake of finishing the money. He suggested other examples of this kind saying that that was his issue, that they did nothing for the first few quarters and then only stepped up in the last quarter to finish the money.

Mr S Fikeni said that he agreed with the point made but that the context was perhaps not clear. If they were servicing client departments who would bring projects and request that they be completed by a certain time, that is to say the last quarter, one should appreciate the dependencies in the structural framework of their relationship. Similarly with their moving targets, he felt the Committee could assist them with ensuring the value chain is consistent across the four quarters. He once served with a development finance entity where departments would come a few weeks before the end of March and hand over money. There is an element of fiscal stampeding and he would often turn away projects on the grounds that these people had come late or that he would accept the project but insist on a realistic approach to their time constraints. It is not something they are happy with and in the Committee’s oversight function if they wanted to whip the entities including the IDT into shape they would be happy to comply.

The Chairperson asked the Deputy Minister if he would like to add anything to what has been said.

The Deputy Minister said the Chairperson had responded well and emphasized that they did not want IDT to set targets only for what they can do. They should set ambitious targets so that they can advance and continue to aim higher. While he understood Mr Masango’s concerns, he felt that the IDT should be encouraged to set realistic but ambitious goals. The IDT was playing the market and were dependent on a number of other players such as client departments. He says the problem with budgeting is that one gets stuck on annual budget limits but that this is limiting for infrastructure programs which are often multi-year programs. The big spending in these programs, is often towards the end of the project whereas in its early days there is often limited spending.

The Chairperson said the approach the Committee must take moving forward is to have a constructive, frank ongoing relationship marked by steady communication so that the Committee would be able to properly assist the IDT. A relationship of sharing and discussion and analysis, focused on how best to assist government entities to create jobs, and provide opportunities for students to gain skills. Thus need to be guided by what is best for the people and how they can achieve this mandate. It is their responsibility to support, guide and to criticise organisations such as the IDT so that they continually improve.

Meeting adjourned.