Immovable Asset Register move to ARCHIBUS, with Deputy Minister

Public Works and Infrastructure

20 November 2018
Chairperson: Mr H Mmemezi (ANC)
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Meeting Summary

The Deputy Minister did not see what the Committee Chairperson was seeing. This was the view of the Committee Chairperson when he was not getting satisfactory answers from the Department of Public Works (DPW) on why it was letting foreign properties belonging to South Africa to deteriorate after 21 years into the new dispensation. What irked the Chairperson was the Department’s reply that the assets were the responsibility of the Department of International Relations and Cooperation (DIRCO).

This surfaced during debate when the Committee was briefed by the DPW on steps it had taken to move the Immovable Asset Register (IAR) from an Excel programme to Archibus. The Deputy Minister came to the defence of his officials, insisting they were serious about what they said because DIRCO was the custodian of foreign properties or assets. The Deputy Minister told the Chairperson not to conflate matters and said that there were no foreign properties listed in the DPW’s asset register, and that the Department was not selling or disposing properties on its own.

During the briefing, the DPW reported it was managing an extensive property portfolio that comprised of 29 644 land parcels on which 89 626 improvements were located across 52 client departments countrywide, in order to make a contribution towards the state’s service delivery objectives. It was releasing suitable vacant land parcels to the Departments of Rural Development and Land Reform and Human Settlements for the land reform programme, and to address the housing backlog in the country.

The DPW said that the IAR was serving as the primary source of data for all property-related activities or transactions. The Property Management Trading Entity (PMTE) had initiated the migration of the rebuilt IAR data into an integrated asset management solution. The IAR was of strategic importance in the state’s drive to obtain the best functional, social and economical returns from its property portfolio.

Continuous enhancements on the DPW’s IAR were required to ensure compliance with Section 13 (d) of the Government Immovable Asset Management Act (GIAMA); the provision of reliable immovable asset information in order to meet the business requirements of the PMTE and service delivery objectives of the state; proper accounting of immovable assets in line with the Public Finance Management Act (PFMA); and compliance with the applicable generally recognized accounting principles (GRAP) and National Treasury guidelines.

Members asked if there was a full recovery for rates, municipal resources and taxes; wanted to establish if assets were revalued in totality or if a historical cost of valuation was used; remarked that Excel was easily manipulated and misunderstood, and doubted if this middle step was desirable; and asked the Department to give the Committee a rationale for the transfer of property to the DPW and reasons that the DPW advanced for giving the property to another state department. This would give the Committee a better understanding of how things were done.

 

Meeting report

Immovable Asset Register: DPW briefing

Mr Siboniso Sokhela, Acting Chief Director: Department of Public Works (DPW), informed the Committee the Department was managing an extensive property portfolio that was comprised of 29 644 land parcels on which 89 626 improvements were located across 52 client departments countrywide, in order to make a contribution towards the state’s service delivery objectives. The DPW was releasing suitable vacant land parcels to the Departments of Rural Development and Land Reform (DRDLR) and Human Settlements (DHS) for the land reform programme and to address the housing backlog in the country.

He said the immovable asset register (IAR) was serving as the primary source of data for all property-related activities or transactions. The Property Management Trading Entity (PMTE) had initiated the migration of the rebuilt IAR data into an integrated asset management solution. The IAR was of a strategic importance in the state’s drive to obtain the best functional, social and economical returns from its property portfolio, in line with the National Development Plan’s (NDP’s) socio-economic objectives.

A complete and accurate IAR underpinned the successful implementation of the Government Immovable Asset Management Act (GIAMA), compliance to the Public Finance Management Act (PFMA), applicable generally recognised accounting principles (GRAP), National Treasury regulations/guidelines and the PMTE immovable asset management policy. The DPW had made a significant contribution to the G20 balance sheet project, where the deemed cost valuation model eliminated assets ,recorded at R1 values, assets valued at R126 billion as at 31 March 2018. The extent of the land and buildings under the custodianship of DPW was 5.4 million hectares and 36.8 million m², respectively.

Mr Sokhela said the IAR was not a static inventory. Continuous enhancements to the DPW’s IAR were required to ensure compliance with Section 13 (d) of the GIAMA, such as the provision of reliable immovable asset information in order to meet the business requirements of the PMTE and service the delivery objectives of the state, proper accounting of immovable assets in line with the PFMA, and compliance with the applicable GRAP standards and National Treasury guidelines.

In 2013, the DPW had appointed Professional Mobile Mapping to develop a mobile application for data collection which included a geographic spatial representation of the assets on the ground. The software tool and mobile solution was used to verify land, buildings, significant components and infrastructure assets. The collected data went through a quality assurance process involving service providers, IAR project managers, regional property management staff, and asset registry staff at head office. Once all the above activities were completed, the data was saved on the Oracle database located at the State Information Technology Agency (SITA).

Lastly, he mentioned eight practical steps that had been taken to migrate data to ARCHIBUS:

  • Project Inception:  A decision was taken to acquire a new enterprise resource planning (ERP) solution as per the mobilisation of the PMTE and the requirement to be GRAP compliant.
  • DPW Requirement Specification: The DPW developed a requirement specification which detailed minimum requirements  for an Immovable Asset Register to comply with the PFMA, GIAMA and GRAP.
  • ARCHIBUS Inception: Archibus was the software of choice after a critical review process.
  • URS/FRS Preparation: User requirements specification (URS) and functional requirement specification (FRS) was developed.
  • System Configuration and User Acceptance Testing: System configured, and user acceptance testing conducted for functionality.
  • Migration of IAR data from Oracle server to ARCHIBUS: Exported IAR data from Oracle database to Excel , and mapped data and migration to Archibus structured query language (SQL).
  • Data Testing and Training: Background verification of migrated records to test completeness, data verified on the system for correctness, updated exceptions on the system, training of users, and mapped data and migration to Archibus (SQL)
  • Production/Live: Moved data from test to production/live environment, immovable asset data maintenance, call centre (unscheduled maintenance), and movable asset maintenance.

Discussion

Dr M Figg (DA) wanted to know if the 89 626 improvements were on land parcels. He also asked if there was a full recovery for rates, municipal resources and taxes. He further wanted to establish if assets were revalued in totality or if a historical cost of valuation was used.

Mr Eric Ramsamy, Director: Real Estate Management Services (REMS): DPW, explained they were not recovering total costs because many of the leases were historical and needed to be uploaded on the system. He said they recovered minimum costs associated with state properties.

Mr Sokhela reported the 89 626 improvements were on land parcels. Some of these improvements were built on non-state land and various categories like tribal land. As a result, the Department had started a development facility network because it realised it was a risk to build a structure on private land. This matter was being addressed because some of the structures were on tribal land.

He informed the Committee they had deviated on valuations because they could not afford the expensive revaluation model. They had decided to use a costs model to look at the total value of assets. To trace historical costs became a challenge. That was why they decided to apply the fair value model suggested by National Treasury. He said the Department of Defence was not verified because they realised that Defence recognised carports, which it included in the database. The DPW did not recognise carports in terms of business routes.

Mr D Ryder (DA) said the concern of the Committee was around Excel and the migration of information to ARCHIBUS in terms of the Department’s end reports, and he wondered if that would be acceptable to the Auditor-General (AG). Excel was easily manipulated and misunderstood, and he doubted if this middle step was desirable.

The Chairperson remarked they had received a report from the Department about nine properties that were in Namibia, belonging to South Africa. The new High Commissioner in Namibia, on the other hand, said there were 20 properties with title deeds. The Committee had seen those properties during the oversight visit in Namibia, but the Chairperson could not understand what the Department had planned to do with the 11 missing properties, because it was clear there was somebody who was being fooled. The statements were conflicting. The Committee was concerned about these neglected properties. It had also gone to Germany and seen two SA properties in Bonn which had been left to degenerate for 21 years. In terms of value, these properties were close to the Union Buildings, and were on prime land.

Mr Sokhela said the Department was not the custodian of foreign assets, and that function had been transferred to the Department of International Relations and Cooperation (DIRCO) to be the custodians of all foreign assets or properties.

The Chairperson rejected this answer, and insisted the properties were “babies” of the DPW.

Mr Jeremy Cronin, Deputy Minister: DPW, said the official was not playing games or running away from responsibility. His Department was dealing with immovable properties or assets that were in its portfolio. Foreign properties/assets were the responsibility of DIRCO.

The Chairperson said he understood the Deputy Minister’s response, but the Deputy Minister was not seeing what he was seeing. During the visit to Namibia, they had received a report from a DPW official who told them the DPW was selling SA property in Namibia. When the Portfolio Committee on International Relations introduced a new Bill, they would always take into consideration the foreign properties. Ownership of those foreign properties remained with the DPW.

The Deputy Minister explained that on their asset register one would not find German or Namibian properties. Those foreign properties were in the property portfolio of DIRCO. The DPW did not dispose or sell foreign properties on its own.  It was DIRCO which was dealing with that, and the DPW had always told DIRCO to decide what to do with the declining properties, because DIRCO were the custodians. The matter of disposing local assets/properties was in some cases sorted out with the Department of Rural Development and Land Reform, because they needed those assets for the land reform programme.

The Chairperson said he did not understand why the Deputy Minister said the officials must not answer on the deteriorating properties which had been under the custodianship of the DPW. He asked the Department why it was letting property deteriorate after it was used by another department.

The Deputy Minister asked the Chairperson not to conflate matters.  Sometimes the Department was not informed of properties that were not in use. DIRCO was the custodian of foreign properties, and it was their duty to dispose of, or sell, these properties. They were disappointed that DIRCO has not speeded up the process of selling or disposing those properties. The robust engagement must be done appropriately.

The Chairperson remarked that ministers come and go, but officials remain behind and were left with valuable properties that were degenerating. The Directors General (DGs) were supposed to advise the Cabinet about such matters. It was not understandable that senior officials of the Department had failed to tell the Minister about properties that were not used.

Adv Sam Vukela, Director-General: DPW, told the Committee they would need to report back on the matter, and said there was a memo signed in 1999 about foreign properties/assets.

The Chairperson maintained that the memo did not allow the DG to keep quiet about properties that were degenerating. This was not helping people who needed more money for various things, especially if there were valuable properties that were deteriorating.

Mr Vukela said that administratively, they needed to find a way of taking this matter forward, taking into account the 1999 memo regarding foreign assets. They would report back to the Committee.

The Chairperson wanted to know if the report was going to talk of foreign properties or internal ones.

Mr Vukela replied the report would be on the management and disposal of foreign properties of SA, including properties meant for land reform.

Mr Ryder asked the Department to give the Committee its rationale for the transfer of property to the DPW, and reasons that the DPW advanced for giving the property to another state department. This would give the Committee a better understanding of how things were done, and this meant the 1999 memo should be gazetted.

The Chairperson indicated the concern of the Committee was that there were many properties that had been dumped by other state departments. SA had many homeless people who could be accommodated in these buildings in order to put them to good use instead of letting them rot. There was a view that most departments were anti-DPW, and this meant the DPW should try do things better. The DPW should check properties that belonged to the government, and if they were not in use, it should do something about them.

The meeting was adjourned.

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