The Portfolio Committee on Public Works and Infrastructure met on a virtual platform to receive an update on the progress of projects to refurbish the Telkom Towers building complex in Pretoria to house the SA Police Service headquarters and to refurbish houses in the parliamentary villages in Cape Town.
Members expressed concern about the inability of the Department of Public Works and Infrastructure to adhere to its timelines for the projects. They noted significant delays in the Telkom Towers project as well as allegations of wasteful and unnecessary refurbishment done by the contractors in the parliamentary villages. The long delays in the Telkom Towers project meant that government was not only incurring expenses in refurbishing the buildings, but the SAPS was also paying rent for the commercial buildings it was currently leasing. Members asked whether government or the contractors were responsible for such significant delays.
Members enquired about a public-private partnership in which the Department proposed to raise additional funding and the impact of personal preferences on the parliamentary villages’ project. They enquired about alternative building methods. They sought further information about the economic empowerment status of subcontractors.
Members did not understand why refurbishment of the three parliamentary villages could not take place simultaneously, given that the lump sum budget had already been allocated. They raised concerns about houses which had asbestos roofs.
The Chairperson greeted Members and departmental officials on the platform. She noted that June was Youth Month. She was glad to announce that the President had appointed a 32-year-old person to be the CEO of the Construction Industry Development Board (CIDB), one of the entities under the Department of Public Works and Infrastructure (DPWI). Given that the country’s population was getting younger each day, this was a move in the right direction.
The Chairperson indicated that the Committee was to receive an update on refurbishment of the parliamentary villages and the Telkom Towers building complex.
She recalled the Committee’s first oversight visit in August 2019 to the Telkom Towers site in Pretoria. Members were unhappy about the lack of progress on the project despite the huge amount of money that had been spent. Three years later, the Committee needed an update on the project.
The Chairperson acknowledged the presence of the Deputy Minister and departmental officials.
Deputy Minister’s remarks
Ms Noxolo Kiviet, Deputy Minister of Public Works and Infrastructure, informed the Committee that the Department had conducted a site visit to Saldanha Bay to inspect the upgrading of the 13 proclaimed small harbours. She was excited to see the excitement about those projects within communities. As a result of the initiative, 925 jobs were created. One female owner of a small business was particularly overjoyed as the exposure to the project was now getting her company another contract of a bigger scale in another government department.
Deputy Minister Kiviet reassured the Committee that the Department was hard at work despite the economic challenges.
She informed the Committee that the Minister, Ms Patricia de Lille, had sent an apology as she had fallen very ill the previous day and had to be taken to a doctor in Saldanha Bay. Deputy Minister Kiviet said she would be multi-tasking as she was also attending a meeting of the Select Committee on Economic Development at the same time. She assured the Committee that when she was not with the Committee on the virtual platform, the acting Director-General would be there to respond to Members’ questions
Telkom Towers project
Dr Alec Moemi, acting Director-General, Department of Public Works and Infrastructure (DPWI), outlined the background to the Telkom Towers project.
He informed the Committee that the project had been significantly delayed and said the Department was working tirelessly to ensure that the migration of the SA Police Service (SAPS) into the complex was finalised. The Department had experienced some challenges during phase 1. It was currently working on sub-phase 2 - migration to the other tower which required refurbishment.
He highlighted two key critical issues that had deterred the migration process. The first was the ageing ventilation system and the second was the dampness in the second tower which made it unsuitable for immediate utilisation.
Further, there was no direct funding to carry out the work, which also delayed the migration. The Department proposed that the best solution would be to allow private sector funding to assist the refurbishment of the second tower.
SAPS migration into Telkom Towers
Mr Batho Mokhothu, Deputy Director-General: Construction Project Management, made a presentation on the background, feasibility study, financial implications and project timeline of the migration project.
The requirements and challenges that the Department faced in phase 1 were outlined.
The IT building project was outlined.
The Department informed the Committee of the four existing leases between the SAPS and owners of private commercial buildings.
(See slide presentation for details.)
Parliamentary villages refurbishment
Mr Mzwandile Sazona, Chief Director: Prestige Policy, DPWI, briefed the Committee on the progress of the project to refurbish the parliamentary villages.
The project consisted of the refurbishment of 245 units across three villages - Acacia Park, Laboria Park and Pelican Park.
In the 2019/20 financial year, the project expenditure was R3.7 million. The funds were spent on planning stages and no houses could be renovated as the contractor had not yet been appointed
In 2020-21, the expenditure was R10.6 million. The expenditure was on six months of construction works, including consulting fees and implementing agent management fees.
In 2021/22, R36.1 million was spent on construction works, consulting fees and implementing agent management fees.
Total expenditure on the project currently stood at R50.4 million of the budgeted R105.6 million.
At the end of April 2022, the overall progress on the project was 47 percent.
The challenges that the Department faced were in obtaining state security clearance, unavailability of units for refurbishment and finding enough transit units for relocation of occupants. Solutions to those challenges were provided.
Members were referred to the socio-economic impact report on the project.
(See slide presentation.)
Ms S Van Schalkwyk (ANC) said she was extremely worried about the situation at Telkom Towers. The original plan was that the six phases would be completed by April 2022 but so far only phase one had been completed. The project had started way back in 2015. It was unacceptable that only one phase had been completed after seven years. When would all six phases be completed?
It was a cause for concern that the fifth and sixth floors were currently unoccupied. Problems might arise from those unoccupied floors.
Ms Van Schalkwyk said she understood that the future plan for the refurbishment depended on financial viability. She wanted the Department to give a clear indication of how the matter was being addressed. What was the outcome of the Department’s engagements with the private sector to secure funding?
She was glad that the Department had lowered its planned refurbishments to 50 units in the parliamentary villages. The presentation showed that an amount of R50 million had been spent against 47 percent of completion. She wanted the Department to indicate whether it might have overspent the budget or if it was in line with what had been planned. She noted that there were occupants who had indicated preferences such as bath versus shower and wanted to know how many units had been affected by such individual preferences.
When would the refurbishing of prefab buildings be addressed as this was not covered by the current project? Did the Department consider alternative building methods for fast-tracking the construction of new buildings?
Was an intercom system part of the project?
Ms Van Schalkwyk remarked that the presentation was too broad and did not assist members in their oversight work. She sought clarity on which professional service providers (PSPs) were responsible for which category of works, which of the PSPs were the main contractors, which were subcontractors and what the grading of those PSPs was. She wanted to know the BBBEE status of subcontractors.
Did the Expanded Public Works Programme (EPWP) workers receive certification to enable them to seek employment elsewhere?
Ms A Siwisa (EFF) highlighted the financial implication of the lengthy period taken in the refurbishing of Telkom Towers. It meant that the SAPS was also paying unnecessary rent to the owners of the buildings it currently occupied.
Was it contractors or the Department who were responsible for the delays? Had there been a meeting between the Department and the SAPS to discuss the migration and the timeline for when the process would be completed?
Ms Siwisa noted that the public often caused project disruptions. Was the public not involved and informed when projects took place in their communities? She highlighted the importance of such communication, particularly in informing people of the benefits of such projects.
She did not accept that the COVID19 lockdown was being scapegoated for every project delay. The Committee had visited the Telkom project site in 2020 and questioned the Department about why contractors had not purchased materials in bulk and moved on with the project. They were now using the lockdown as a scapegoat for their lack of progress.
Ms Siwisa sought clarity from the Department about partners in the private sector and how much funding the Department was expecting from them.
Since the lump sum budget for the refurbishment of the parliamentary villages had already been allocated, why was the refurbishment still being done one village at a time?
Some Members were not satisfied with the refurbishments as they saw that as wasteful expenditure. She asked the Department to explain why its team was replacing things which could still be used.
She deplored the poor condition of some of the houses in which Members stayed and called them temporary structures. Members were being moved out and informed that some of those solid-brick houses would be demolished or refurbished. How much had been spent on refurbishing houses that would, later on, be demolished? She did not understand the logic behind this.
Ms M Hicklin (DA) said the delay and cost overrun of the Telkom Towers project showed that the Department was lacking in total facilities management (TFM). The BDO report had accurately pointed out the Department’s inability to plan a project from its beginning to end, and the consequence of that was unreliable cost estimate information.
She found it unacceptable that the Department was spending money on the refurbishment while paying an extra amount to rent a building for the SAPS. She criticised the Department for dragging the project on and wasting public funds. She urged the Committee to do an oversight visit to Telkom Towers in order to understand the latest situation.
Ms Hicklin said that she was confused about the struggle to obtain security clearance for contractors at Acacia Park. The facility management contract had begun in the 2019/20 financial year which meant that the Department should have had a whole year to call contractors and ensure that security clearances were obtained.
Ms L Shabalala (ANC) remarked on the futile exercise of oversight as there had been no improvement in the Telkom Towers project.
She wanted to know how much the overrun was for Telkom Towers. She was uncertain what had taken place in the initial planning stage between the SAPS and the Department as she believed that the time that had been spent on Telkom Towers was way too long.
Ms Shabalala pointed out that joint venture agreements had not been mentioned in either of the presentations. Much of the presentation had focused on subcontractors but they were at the mercy of the main contractor. She highlighted the importance of monitoring the labour standards as well as the remuneration packages of subcontractors.
The presentation did not mention the Department’s graduate engineer programme. She had heard that some engineers in the Department were not registered and asked if the Department was aware of that and how it assisted them to get registered.
Ms S Graham (DA) asked the Department what would happen to the central building which was marked as condemned in the presentation.
She pointed out that the Committee had been informed by the Office of the Auditor-General that the final account for Telkom Towers was R872 million, whereas the presentation showed only R159 million. She asked the Department to explain the difference.
Ms Graham said that she did not understand why the renovate, operate, transfer (ROT) model was being used as a pilot project. To her understanding, since the project had already been signed off and agreed to, it should have been budgeted for already. The ROT model should be used on unoccupied buildings, but this was a project which the Department was doing on behalf of a client department.
She enquired about the procurement procedure and any legislation that would hinder the private-public partnership that the Department envisaged.
She enquired about the interface between total facilities management (TFM) and day-to-day maintenance and repairs. How would ROT work play into this?
Ms Graham questioned the value for money obtained from consultants on the parliamentary villages. She wanted to know whether there was sufficient monitoring of the repairing and refurbishment work of contractors. What happened to the stuff that had been replaced?
Mr T Mashele (ANC) asked the Department whether it got value for its spending in the refurbishment of Telkom Towers. He enquired about the department’s competitiveness in relation to its counterparts in the private sector.
He found it disappointing that it had to take the Department seven years to complete a building whereas the University of Mpumalanga had turned itself from a university that only had 169 students in 2014 to a fully-fledged university in 2018. The low productivity of the Department was unacceptable. If the Department could not do the job it must get the private sector to come in and get the job done.
Mr Mashele said he refused to believe any excuses that were given by the Department for the delays in projects. He asked why the refurbishment of the parliamentary villages could not be done concurrently.
Since the Department had noted the challenge of getting security clearance, why it had not approached the Committee earlier for assistance? He needed an update on what the Department had done to try to fast-track the process.
Mr E Mathebula (ANC) said he understood the upward trend in the cost estimation, given his own experience working in the public sector. However, he concurred with his colleagues that some refurbishment work was just unnecessary and wasteful. For example, in his house, the contractors changed his kitchen tiles from a cream colour to grey when there was nothing wrong with the cream colour.
When it came to empowerment, he had not noticed that many of those contractors were owned, headed or managed by youth, women or people with disabilities.
The Chairperson concurred with her colleagues’ views. She reiterated that the Telkom Towers project had started in 2015 and reminded the Committee that it was now 2022. She found it shocking that only one tower had been finished in seven years with such escalating costs. She said that the Department had failed the South African people.
She was concerned about a possible partnership with the private sector on Telkom Towers. Given that the newly-refurbished buildings would house the SAPS headquarters, she believed that there was a need to look into the security concerns.
She said she did not find anything in the presentation about the demolition of units with asbestos roofs, which were a health hazard and illegal.
Mr Moemi acknowledged that the Department had failed to complete the refurbishment of Telkom Towers in a timely manner. He assured the Committee that the rest of the project would not take as long.
The Department had discovered during the phase 1 process that it did not have the capacity to do the project on its own. It reached out to state entities for assistance. As a result, the Development Bank of South Africa (DBSA) was appointed as the implementing agent. The Department was now looking to work with the private sector in a newly-envisaged private-public partnership model which would give the Department an opportunity to work with whomever it could bring to its own team to run the ROT process. He assured the Committee that the Department would ensure the appointed private sector partner would meet the deadline within the given budget.
Mr Moemi referred to the nature of the construction industry. Prices in the industry fluctuated with an upward trend. The challenge the Department faced in its budgeting was the same one that a quantity surveyor faced - unpredictability of the industry. Although the Department had recruited professional companies to assist on timelines and cost estimates of the project, the Department’s poor project management capacity ultimately affected the efforts to mitigate this volatility. This resulted in cost overruns and the project running beyond the originally planned schedule.
Mr Moemi agreed with Ms Graham’s remark on the importance of appropriate budget planning for projects in advance. He explained that the Department’s initial idea at the planning stage was that the SAPS would finance the refurbishment of Telkom Towers with the savings on the rent it paid for privately owned buildings. The migration plan had still not been signed by the SAPS. There had been no clear indication from the SAPS on when its headquarters would begin to move and from which building. This affected the prioritisation of the project. A meeting between the two departments was scheduled for 23 June. He was confident that the migration would be signed after that meeting and the Department would ensure that the SAPS committed financial resources to the project.
Mr Moemi clarified the interface of TFM and ROT. He said ROT itself had an inbuilt TFM package. The Department would take a phased-out approach. As soon as the term of the TFM contract expired, the management of the property would be then handed over to the ROT process.
He acknowledged to Mr Mashele that the Department was not that competitive compared to the private sector. The private sector had much better capacity in project management skills. That was why the Department was exploring the alternative model utilising existing sources in the private sector to assist it to complete its work.
Mr Moemi highlighted the necessity to re-interpret and amend the Department’s own supply chain policy where it stated that accounting officers could seek other means of procurement if the resource needed could not be procured in a normal process. However, the Chief Director of the Department still needed to interpret what this other means would look like. The Department was amending its procurement policy to cover the ROT programme and had finalised the concept note. The newly-amended procurement policy was due to be rolled out and implemented.
Mr Moemi responded to the questions about the parliamentary villages.
He explained that when the original idea of refurbishment emerged, this concept was circulated to the management team of Parliament. There was a view that the state of Members’ houses in the villages was not uniform. Some were more modernised and others were quite dated. The Department was well aware of the competition for those houses with better conditions. The refurbishment was the department’s effort to try to bring uniformity among the houses. In response to the concern about the Department doing unnecessary refurbishment work, Mr Moemi said that he would meet with the construction team and conduct a review of those issues. The Department would also do site visits to see where that unnecessary refurbishment took place.
Mr Moemi envisaged that there would be no further over-expenditure on the parliamentary villages. Under the ROT model, the risk of a cost overrun would be significantly shifted to the private partner doing the project. But there would be no over-expenditure going forward.
Mr Moemi noted Ms Hicklin’s irritation with the Department’s inability to do proper planning. He had already highlighted the Department’s lack of capacity to plan projects properly. But if the Department employed the ROT model in the interim period, it would provide time for the Department to address its capacity challenges. The Department was in the process of building its skills set and insourced many skilled professionals due to the nature of its work. However, Members must also be mindful of what the public purse could afford. The Department was not able to offer attractive remuneration packages to attract the best and most brilliant skills.
Mr Mokhothu explained that an investment analysis was conducted on the Telkom Towers project and a feasibility study ensued in 2015. Between 2015 and the actual commencement of the work, there was a phase in which no real activities took place. The attributed cost for that period of time and other information was outlined in slide 7. When the project actually commenced in 2019, the estimated cost was R159 million for the final account.
The Department had made a commitment that phase 1 would have been completed by December 2021 and the next project involving the IT building would be completed by August 2023.
The Department had developed a social facilitation framework for public comments on construction projects. The framework was in its piloting phase. It was important to capture issues close to the hearts of community members such as employment, the promotion of SMMEs and so on.
Mr Mokhothu assured Ms Shabalala that the Department had a young engineers programme. Young professionals were involved in running 66 projects. The young architects had done well and gained practical experience. The Department assisted them and as a result, the majority were registered architects. In the Telkom towers project, the Department was also utilising young professionals. They were led by senior professionals.
Mr Mokhothu explained that tenders usually put together joint venture agreements with the purpose of satisfying the requirements for a project. He believed that there were contracts between the main contractor and subcontractors but those would not be joint venture contracts.
The central building marked condemned was in a bad condition and thus could not be utilised. The Department did not intend to do any work on it but had received no instructions from the SAPS on what it should do about that building.
Mr Sazona reacted to the concern about unnecessary refurbishment. During phase 1, there were complaints that when one tile was changed it did not match the other tiles in the house. As some had been installed ten years ago, ones with a similar pattern were no longer available in the market, so the contractors had to change all the tiles. But he assured members that the issue had his attention. He had already instructed the project manager that the Department needed to physically conduct a site visit before any refurbishment could take place. If the issue is related to minor or unnecessary things, the Department would not need to do refurbishment.
The Department was still within the budget for the work that had been done. It did not envisage any overrun at this stage. However, there might be claims from the contractors if occupants did not move as requested. The Department had had meetings with party chief whips and they were assisting in this regard.
An intercom system was part of the project and would be installed at the end of the project.
Mr Sazona requested that he be allowed to send the information on the question around the grading of subcontractors, PSPs and BBBEE to the Committee in writing.
He informed the Committee that 17 learners would be certified by the Department And 15 learners would be certified through TVET colleges.
Mr Sazona agreed with the Chairperson that the Department needed to put together a presentation on its demolition project. However, since this presentation was on the refurbishment aspect, the Department had not thought that the Committee wanted to hear about the demolition. However, it would provide a presentation on the demolition project within a week.
Mr Sazona explained that the Department had only provided information on the three main contractors to the State Security Agency (SSA) for clearance. The issue was about getting security clearance for their subcontractors. The usual turnover time at SSA was about three months and the Department was working with the SSA to fast-track the clearance process.
The two contractors which needed security clearance were those dealing with the refurbishment project and the total facilities management contract respectively. In line with the BDO report, the Department had aligned its TFM with all of its parliamentary villages project.
Ms Hicklin suggested that since the Council for the Built Environment (CBE) was an entity under the Department, it should be a logical conclusion that should the Department need subcontractors for refurbishment, the CBE should be the first one on the list which the Department turned to.
Ms Siwisa said that she did not get all the responses from the Department officials because of the unstable network.
Mr Moemi reiterated what had been said on the financial implications of the refurbishment of Telkom Towers. He reassured the Committee that the funding for phase 1 had already been allocated. Additional funding would be needed to complete the project. The Department had originally envisaged that the primary funding sources would come from the SAPS.
He explained that delays were caused by both the government and contractors. There was a delay on the side of the Department when the project was handed to the DBSA. The contractors also delayed the completion process. In the planning phase, ensuring that the Department obtained the funding from the SAPS also took a very long time.
Items taken away from the units in the villages were disposed of in line with the Department’s disposal policy.
Mr Sazona explained to Ms Siwisa that the reason that the Department was not doing all three villages at the same time was purely because of the limited availability of alternative accommodation for Members living in the village. As Acacia Park was in a very bad condition, the Department decided to start its work from there.
The Deputy Minister noted members’ concern and frustration about the lengthy time for the refurbishment of Telkom Towers. She shared their concern and fully agreed that the project had taken too long.
She informed Members that the Portfolio Committee on Police had convened a meeting between the two departments with both ministers in attendance. Out of that engagement, the timelines for completion and decisions were made and both ministers were committed to monitoring the progress. A meeting was scheduled the following week between both Ministers to receive a progress update.
Both departments had been playing this blaming game for far too long. If the SAPS did not have sufficient funds to complete the project, the Department would have to look for alternative funding sources.
The Chairperson noted the scheduled meeting times as mentioned by the Deputy Minister. She reiterated the importance of completing the work on Telkom Towers.
She highlighted the importance of the CBE and believed that they could play a huge role in providing contractors. Some of the innovative ideas on construction from the CBE could be an asset to the Department’s work.
The meeting was adjourned.
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