ATC190904: Report of the Portfolio Committee on Public Works and Infrastructure on an Oversight Visit to Gauteng, Dated 11 September 2019

Public Works and Infrastructure

REPORT OF THE PORTFOLIO COMMITTEE ON PUBLIC WORKS AND INFRASTRUCTURE ON AN OVERSIGHT VISIT TO GAUTENG, DATED 11 SEPTEMBER 2019

 

The Portfolio Committee on Public Works and Infrastructure, having undertaken an oversight visit to Gauteng from 26 to 30 August 2019, reports as follows:

 

ATTENDANCE

  1. Ms N Ntobongwana, MP (Leader of the Delegation)
  2. Ms L Mjobo, MP
  3. Ms L F Shabalala, MP
  4. Ms S R Van Schalkwyk, MP
  5. Mr E Mathebula, MP
  6. Mr T Mashele, MP
  7. Ms S Graham-Maré, MP
  8. Ms M B Hicklin, MP
  9. Ms M Siwisa, MP
  10. Mr W Thring, MP

 

INTRODUCTION

At the start of the five-year term (2019-2024), it is important for the Committee to gather knowledge of, and gain insight into the Public Works and Infrastructure Sector.

 

During this oversight visit, the Portfolio Committee on Public Works and Infrastructure visited the entities of the national Department of Public Works and Infrastructure in Gauteng. The aim was to gather first-hand knowledge of the workspaces of the Department of Public Works and Infrastructure (DPWI), the Property Management Trading Entity (PMTE), and each entity that reports to the Minister of Public Works and Infrastructure. The entities are the Agrément South

¶Africa (ASA), the Independent Development Trust (IDT), the Council for the Built Environment (CBE), and the Construction Industry Development Board (cidb).

 

Each of these entities act as implementing agencies of different facets of the mandated tasks of the DPWI. Amongst these mandated tasks are the testing and certification of innovative, fit- for-purpose building material and systems (ASA), the project management, and construction of social infrastructure (IDT), regulatory control over built environment professional councils (CBE), and registered construction sector (cidb).

 

MANDATES AND FUNCTIONS

 

The Mandate of the DPWI - the relationship with the PMTE

 

 

The DPWI is the custodian and manager of governments’ immovable assets. This includes the acquisition, maintenance and disposal of such assets. The DPWI is further responsible for the determination of accommodation requirements, and rendering expert built environment services to client departments.

 

As part of the turnaround strategy that started in 2011/12, the former Department of Public Works (DPW) operationalized the Property Management and Trading Entity (PMTE) in the 2014/15 financial year as an internal component within the Department. With this establishment, the responsibility for the Immovable Asset Register, and the key tasks of the DPWI as the custodian and landlord of state property were transferred from the DPWI to the PMTE.

 

After the operationalisation of the PMTE, the DPWI has the responsibility for developing policy and regulations to ensure standards and uniformity in the public works, infrastructure, construction, and professional built environment sector.

 

The Constitution, including Schedule 4 (that describes public works as a concurrent function), the Public Finance Management Act (PFMA, Act 1 of 2009) and the respective Acts of the Independent Development Trust, Agrément South Africa, Construction Industry Development

¶Board, and Council for the Built Environment, describes the mandate, and regulatory and governance relationship between the entities, the DPWI and the Minister.

Since the PMTE has taken over the core functions related to the GIAMA, it exercises a property management, maintenance and trading function in respect of government properties. While in the past, the DPWI acted as regulator as well as property manager of government immovable assets, since undergoing a turnaround strategy from 2011/12 onwards, the function of property management, maintenance and trading has been devolved to the PMTE. As custodian of vast immovable assets, there is substantial opportunity to generate income and the PMTE would be responsible for this aspect of the public works function of government. This aspect lagged behind for many years due to the incompleteness of the Government Immovable Asset Register (GIAR) that is managed by the DPW1 as regulator and custodian department.

 

The implementing entities

 

 

The Agrément South Africa (ASA)

 

 

The ASA works with the Council for Scientific and Industrial Research (CSIR) on research related to innovative fit for purpose materials and systems used in the building construction, road construction, transport infrastructure development, transport operations, modelling and planning, and hydraulic infrastructure. Together, these components serve to create an efficient, high performance construction and built environment in South Africa.

 

During meetings with the ASA on its annual performance plans, the entity shared with Members that over the next five years, it planned to create new platforms through innovative building technologies, the construction of smart roads, the creation of a transport modelling and costing platform, as well as an advanced integrated planning and modelling platform.

 

ASA also collaborates with other entities such as the South African Bureau of Standards (SABS) and the National Home Builders Registration Council (NHRBC) to ensure higher

 

 
 

 

 

1 Referring to the Department’s former name here purposely as stated in Section 4 of the GIAMA. This section of the Act makes the Minister of Public Works the custodian of all “immovable assets that vests in the national government, except in cases where custodial functions were assigned to other Ministers by virtue of legislation before the commencement of this Act;” The GIAMA states that the establishment and management of the GIAR across the three spheres of government is the responsibility of the DPW as custodian department.

¶standards of construction, that more effective building material are used and that faster methods are developed that makes efficient, safe construction of infrastructure possible.

 

Independent Development Trust (IDT)

 

 

The IDT was established by Government in 1990 through a Government endowment of R2 billion, as an independent temporary grant-making agency.

 

Between 1990 and 1996, the organisation, in its capacity as a grant-making agency, allocated and disbursed resources (through community-based organisations and structures) to poor and disadvantaged communities. It offered programme management and development advisory services to Government departments and other development partners.

 

In March 1997, the IDT was constituted as a development agency and public entity to support all spheres of government. Cabinet then endorsed a recommendation of a Cabinet Advisory Committee that, inter alia, “The IDT must be transformed into a government development agency that will implement projects which are commissioned by government departments. It must cease to be a civil society organisation, an independent agency or funding agency.”

 

The IDT was integrated into the public service delivery system in 1999 with the promulgation of the Public Finance Management Act (PFMA) (Act 1 of 1999), as amended, and listed as a Schedule 2 Major Public Entity. The 1997 mandate of the IDT remains in place.

 

The Shareholder Compact between the Government (i.e. Executive Authority) and the IDT is in keeping with the provisions of the PFMA, and the Regulations promulgated in terms thereof.

 

During the previous administrative term (2014 to 2019) the IDT entered a phase of redefining the business case and mandate of the entity. This would include:

  • Strategically positioning the IDT as a premier social infrastructure programme delivery entity;
  • Regaining the confidence of the Shareholder, client departments and stakeholders;
  • Ensuring financial sustainability, prudent financial management and accountability for the IDT as well as for client funds;
  • ¶Attracting and retaining appropriately qualified, committed and motivated personnel; and
  • Dealing effectively with the Auditor-General findings by developing and deploying effective and efficient business systems.

There is consensus that the entity plays a project management role in developmental projects. The IDT established a tried and tested manner of social engagement to ensure collective ownership of projects and the social infrastructure it completed in communities. This was crucial at a time when public discontent may lead to the destruction of facilities that were constructed for developmental purposes.

 

The Construction Industry Development Board (cidb)

 

 

The DPWI has a regulatory function over the construction professions through the implementing work of the cidb. The Construction Industry Development Board Act (Act 38 of 2000) provides the mandate for the entity. The Minister plays an oversight and regulatory leadership role over the cidb. The cidb manages a register of construction contractors with level one being the entry level and level nine being the highest level of contractors.

 

The entity was mandated to develop contractors so that they are able to progress through the different levels of the register. This development function is one of the pillars that through which the construction industry must be transformed. Much engagement is required on this matter to make the current legislation and regulatory framework applicable to the challenges of transformation that constrains the sector and the economy at large. During this oversight visit, the Members had significant contact and engagement with the cidb on these matters.

 

The Council for the Built Environment (CBE)

 

 

The DPWI has regulatory and oversight function over the built environment professions through its work with the built environment councils (BEPCs). The CBE was enacted through the Council for the Built Environment Act (Act 43 of 2000). It regulates the following BEPCS:

  • Engineering Council of South Africa (ECSA)
  • South African Council for the Architectural Profession (SACAP)
  • South African Council for the Landscape Architectural Profession (SACLAP)
  • South African Council for the Property Valuers Profession (SACPVP)
  • ¶South African Council for the Project and Construction Management Professions (SACPCMP)
  • South African Council for the Quantity Surveying Profession (SACQSP)

 

The CBE Act mandates it to drive transformation among the six BEPCs and the built environment sector. This aspect has stagnated in the sector. In the previous parliamentary term, the Committee found that there was a need for a structured pipeline along which built environment graduates are developed towards professional registration. It also noted that while there was a policy on recognition of prior learning (RPL), the sector as a whole did not seem to believe in it. There was no alignment between the BEPCs on a uniform RPL programme that would assist the transformation project of the sector.

 

As stated above, in relation to transformation in the construction sector, much engagement is required on this matter. It may be that the lack of the review of the White Paper, 1999 called “Creating and Enabling Environment for Reconstruction, Growth and Development in the Construction Industry” did not yield the amendments to the CBE and cidb Acts. This means that the current legislation and regulatory framework requires discussion on the transformation challenges that constrains the sector.

 

The Mandate of the Portfolio Committee on Public Works and Infrastructure

 

 

The Committee does oversight over the programmatic deliverables of the Department of Public Works and Infrastructure (DPWI) and its entities to implement the policies made by the Minister of Public Works as per the mandate of the DPW. The Constitution, and Government Immovable Management Act (GIAMA, Act 19 of 2007), describes the mandate of the DPWI.

 

 

 

MAIN PURPOSE OF THE OVERSIGHT VISIT: GATHERING FIRST-HAND KNOWLEDGE OF PRACTICAL REALITIES OF THE DPWI AND ITS ENTITIES

 

The main purpose was to get the Committee as close as possible to the public works entities that act as implementing agencies of the department. The objective was to create the space for

¶Members to gather first-hand knowledge of how the entities were governed, administered, and what the operational status of each one was at the time of the visit.

 

The methodology followed on each day was to, during the morning of each day of the week, meet with each entity. Presentations were made and Members deliberated to gather in-depth insight into the governance, and workplace realities of each of the entities. This allowed Members to engage with the Minister, the DPWI and PMTE, the Boards, and the senior management of the Department and each entity. The deliberations focused on key matters such as challenges emerging from their strategic plans, their previously tabled annual reports, and the audit opinions of the Office of the Auditor-General on their financial statements. These meetings were a continuation of discussions that the Committee had with the DPWI, PMTE and the entities on matters that emerged during the budget vote process for the 2019-2020 financial year.

 

In the afternoons, Members visited actual project sites, including laboratories where materials were tested for fitness of purpose, and certification. This included a visit to the research laboratory of Agrément SA and the Eric Molobi Housing Innovation Hub in Soshanguve. This visit assisted the Committee to gather insight into the crosscutting, intergovernmental matters of the Public Works and Infrastructure sector. It was an opportunity to get first-hand insight into how innovative building materials and systems were tested. The Housing Innovation Hub then allowed Members to question whether, and how such materials and system could be used to construct and maintain government buildings.

 

This visit was important to network with officials, service providers, and public works and infrastructure sector stakeholders. This networking is an important aspect of oversight work that enables Members to set up future oversight activities with sister committees related to human settlement, infrastructure maintenance, and infrastructure projects. With the infrastructure component added to its portfolio, the focus shifts to more collaborative oversight activities that is required for future integrated spatial and infrastructure development that aimed at redress and land reform.

1.¶MONDAY, 26 AUGUST 2019

 

1.1.Visit to the Head Office of the Department of Public Works and Infrastructure

 

 

  1. Message from the Minister

 

 

The Minister expressed her belief that the separation of powers between the Executive and the Legislature lies at the heart of a healthy democratic dispensation. She emphasised her commitment to collaborate with the committee. She referred to oversight activities as a partnership through which the work of the department and its output was improved. The result of such a partnership would be increased service delivery and good governance. The Minister stated that, within the DPWI and public works sector, there might be a need for policy. However, that in addition to sharpening public works policy during the sixth parliament she wanted the DPWI to strengthen the implementation of policy. The Minister was committed to monitor and track progress of projects to ensure that implementation was a major focus of her tenure.

 

The Minister emphasised that the DPWI was not yet functioning as the reconfigured Department as announced by the President. The Infrastructure component was in the process of being transferred - that is, the Infrastructure Development Management System (IDMS) would be transferred from the National Treasury, and the Secretariat function of the Presidential Infrastructure Coordinating Committee (PICC) that used be with the former Department of Economic Development, would be transferred from the Department of Trade and Industry (where it was currently held). The President stated a deadline of December 2019 for these transfers to properly reconfigure the DPWI.

 

The Minister promised to brief the Committee on progress with this process of conceptualising and ensuring that these new function were properly incorporated within the DPWI to be fully functional.

 

Department had to pay service providers within 30 days as stipulated in the Public Finance Management Act (2009). The Minister stated that she removed the lower-end percentages mentioned in performance targets of the DPWI’s Annual Performance Plan 2019/20, and stated

¶it as 100%. This meant that all properly issued invoices from service providers must be processed and paid within the 30-day period in compliance with the law. This resulted in the DPWI paying 84% of invoices received as at 22 July 2019. The Minister arranged for the officials to demonstrate the processing of invoices to the committee. The analysis of companies affected showed that small medium and micro enterprises (SMMEs) were all negatively affected when properly processed invoices were not processed at 100%. Such a situation was the root cause of job losses that had a negative impact on the economy. The Minister further announced that in the month of July 2019, the DPWI calculated that it injected R1.2 billion into the economy just by paying invoices.

Public spaces where the public interact with government on a daily basis to receive services had to be improved. These collective experiences had a determining effect on the public perception of government. As the custodian of all government property and as accommodator of service delivery departments, the DPWI had a major role to play in improving the public perception of government. Government buildings and spaces where service delivery implementation takes place must be improved. With regards to courts where the delivery of justice takes place on a daily basis, the DPWI held meetings with court managers and regional offices of the national DPWI across the country. It also held meetings with all the presiding officers including the Chief Justice. The key question was what is the impact on the dispensing of judicial services to the public when the public space, the buildings, and property, was not conducive to that function? The Minister stated that the process of gathering information from the coalface of delivery, was important. She emphasised that this process would be continued. She announced that she would soon visit Mthatha in the Eastern Cape to hand over a court to the Department of Justice where the lifts services and security were improved. She also announced that the next meeting with provinces would take place in Durban.

 

Regarding the performance of the Department, the Minister was aware of the briefing that the Department made on its fourth quarter performance report to the Committee. She referred to the problems and challenges that was evident in the performance report. These included but were not limited to poor performance in the Expanded Public Works programme (EPWP). This had to be understood as related to poor recording and verification capacity of EPWP projects in especially municipalities. This matter of capacity constraints that prevented the EPWP from getting a clean audit report from the Auditor-General’s Office. It might lead to a matter of

¶emphasis and prevent the DPWI from improving its audit opinion in the Annual Report for this financial year.

 

The Minister communicated with the Minister of Cooperative Governance and Traditional Affairs (COGTA) about municipalities that were not performing. The communication shared with the Minister of COGTA that the Auditor-General (AG) issued an audit query to the DPWI’s EPWP branch. Accounting weaknesses in municipalities may prevent the transfer of Incentive Grants to some of the 258 municipalities, provinces, national departments and non- governmental sector bodies. Whenever they are unable to account and verify employment opportunity numbers, the EPWP and DPWI will get an audit query. This might lead to it being unable to progress to a clean audit for the financial year. This area needed to be monitored as it might prevent the Department from reaching the target of creating 5 million jobs. It was necessary to work in a collaborative way with the Department of COGTA to find ways of dealing with this problem. The EPWP branch was doing very well in terms of ensuring standardisation and uniformity across the municipal, provincial and national spheres and in the social, infrastructure and non-governmental sectors. However, there were pockets of underperformance in the municipalities and some provinces.

 

The quarterly performance report also showed evidence of under-expenditure in the PMTE. The challenge of debt management and getting clients to pay what is owed within the financial year led to the AG issuing an audit query.

 

The matter of corruption led to the DPWI to put systems in place to ensure consequence management and contract management. It was work in progress and over the three months, the Minister and Deputy Minister committed themselves to a partnership with the Portfolio Committee to progress to improved audits, an end to corruption and non-compliance, and a Department that delivered its mandate.

 

While concluding her remarks, the Minister alluded to the new implementation model of service delivery announced by the President, referred to as the District Model. This was aimed at involving the public in the services provided by different departments through each Ministers’ presentation of their own portfolio. The three spheres of government would be embarking on these visits together. Each Minister would be given a chance to inform the people

¶at a district level, what their Departments were doing with the allocated funding. These District Visits would take place to all 44 districts across the country. It was deliberately visiting rural and urban districts to share government’s deliverables in both contexts. The first visit to be used as a prototype was scheduled to take place on 17 September 2019 in the rural OR Tambo District Municipality and thereafter move to an urban District namely EThekwini and later to the Waterberg District (a more peri-urban district).

 

1.1.2.Presentation by the Director-General

 

 

During his presentation, the Director-General indicated that sixth Administration was in the process of developing the Medium Term Strategic Framework (MTSF). The MTSF needed to be completed before the Department could develop its five-year Strategic Plan. The DG stated that the Minister and Deputy Minister as the Executive Authority would guide the Department in this process. Once completed, the Department and the PMTE would present this to the Committee.

 

The DG referred to the legal requirement for him as Accounting Officer, to present the organogram to the Committee. This would be quite relevant in the light of the Infrastructure component that had been added to the mandate of the Department. It had to be kept in mind, that as the process of transferring the IDMS and PICC Secretariat functions to the Department would only be completed by December 2019, changes would be made to the organogram that was presented to the Committee during the time of the oversight visit. The DG explained that the process involved the Department of Performance Monitoring and Evaluation, and National Treasury. The DDG, Governance, Risk and Compliance, Mr Imtiaz Fazel, represented the Department in the process. The Committee would be kept updated once this was completed.

 

The DG further explained that the Main Vote for public works was split between the DPWI and the PMTE. The programme budget structure of the two parts of the main vote (DPWI and PMTE) shared services for Finance and Supply Chain Management (SCM); Corporate Services; Governance, Risk and Compliance; Professional Services; and Internal Audit.

¶The DG further explained that the Intergovernmental Cooperation (IGC)2 branch situated within the DPWI organogram played an important role to ensure synergy in the operations of the entities, the DPWI, and the PMTE. It also interacted with the regional offices that were situated in each province. He warned that these regional offices were easily confused with the provincial departments of public works. They were actually the regional offices of the national Department.

 

1.1.3. Input by the Acting DDG IGC, responsible for the entities to be visited

 

 

With regards to the entities themselves, the Acting DDG of the IGC explained that the main function of the IGR branch was to assist the Minister with the appointments of Board members and Chairpersons. In terms of the six Built Environment Professional Councils (BEPCs) that function under the Council for the Built Environment (CBE), the IGC also assisted the Minister with the proper appointment of the six Councils.

 

The Acting DDG for IGC further stated that the entities formed part of the DPWI and PMTE’s Strategic Planning sessions. They developed their own Annual Performance Plans (APPs) that had to be aligned with the policy direction, with targets and key performance indicators (KPIs). These would be presented to, and signed with the Minister and the Deputy Minister. Accordingly, they had to report to the Minister on a quarterly basis on the targets and key performance indicators that were stated on their APPs. This meant that the Office of the Minister and Deputy Minister had the first-level responsibility of oversight over the entities that implement public works and infrastructure policies. It had to be kept in mind that this also happens with the Portfolio Committee on Public Works and Infrastructure. While the Committee did not play any role in appointments to Boards, it played the second level of oversight over how transferred funds were used to the perform towards targets and KPIs.

 

It had to be kept in mind that the funding relationship of the CBE, cidb, and ASA was described in Schedule 3 A of the PFMA - this meant that they received allocations from the Department for their operations. The IDT was a Schedule 2 public entity which meant that it had to be self-

 

 

 

 
 

 

 

2 This branch was previously referred to as the Intergovernmental Relations (IGR) branch. It might have been referred to as such at meetings during the oversight visit.

¶sufficient by collecting fees charged after they constructed or maintained properties on behalf of client departments.

 

It had to also be noted that the IGC branch contributed to the improvement of coordination of the public works and infrastructure sector so that policy development and implementation issues could be identified and addressed for accelerated service delivery. Consultative sessions were regularly held with provinces and public entities to review sector experiences over the MTSF.

 

The IGC governance structures were regularly reviewed to monitor effectiveness. These structures included the MinMEC3, Technical MinMEC4, CFOs Forum5, etc. The review of the structures is undertaken to give effect to the revision of the Terms of Reference for implementation.

 

The IGC further develops a Five-Year review report and that was endorsed by the Technical MinMEC and considered by the MinMEC. The report highlighted key challenges and opportunities with regards to, amongst others, the mandate, capacity, IDMS, budget allocation.

 

In strengthening and implementing an integrated planning approach, the Sector Programme of Action was under review (at the time of reporting) aligning it to the Five-Year Review Report. The revised document had to be endorsed by the Technical MinMEC for implementation.

 

The IGC further reported that it signed protocol agreements with other spheres of government for service delivery intervention. At the time of the oversight visit, fourteen such protocol agreements were signed. Where challenges were identified, the Department intensified stakeholder management strategies to ensure improved results. The fourteen protocol agreements referred to in the presentation were related to the construction of Bailey-type bridges that required permission, assistance, and participation of sister departments at

 

 
 

 

 

3 The monthly meeting structure of the Minister with the members of the Executive Committees (MECs) of provinces.

4 This consists of the DPWI’s DG meeting with the Heads of Departments (HoDs) of provincial departments of public works. The technical MinMec may also include DDGs and Chief Directors.

5 A forum of the financial officers (Chief Financial Officers) of the national and provincial departments. Given the coordinating nature of the work of DPWI with regards to EPWP, this may include meetings with the CFOs in municipalities where most EPWP projects take place.

¶provincial and municipal spheres of government. These bridges were needed in rural areas where communities struggled to access services if these were not constructed and maintained.

 

The Committee further received information regarding the Professional Services branch that had the mandate to strengthen state technical capacity through the implementation of the National Technical Capacity Building programme. It supported infrastructure departments, including state-owned entities (SOEs) and provincial and municipal departments. The National Technical Capacity Building programme was implemented by:

  • Establishing the Public Works and Infrastructure Academy.

 

  • Attracting appropriate/scarce skills in the built environment (80:20 ratio) as per the preferential procurement framework (PPF). The challenge was that the formulas within this PPF was creating a skewed and unequal terrain that disadvantaged emerging professional built environment companies.
  • Engaging DPSA on the Occupation Specific Dispensation (OSD) that is not implemented effectively across all job families.
  • Creating opportunities for trainees (inclusive of young professionals, artisan trainees, interns, learners), and employees to gain adequate workplace experience through artisanship, supervisory and professional capabilities.
  • Leveraging capacity through insourcing (build internal capacity) to improve inefficiencies and reduce outsourcing.

 

 

1.1.4.The following matters emerged from deliberations:

  1. The Minister announced that the Deputy Minister (DM) had been delegated to deal with all Intergovernmental Relations (IGR) matters.
  2. The DM would lead work on Prestige Programme deliverables, related to the Parliamentary Precinct, the Parliamentary Villages, the Presidency, and accommodation for the Executive.
  3. The DM would further lead work on the entities, the boards of entities, and oversight over them as implementing agencies of the DPWI.
  4. The Minister further announced that with regards to the financial performance of the DPWI and the PMTE, the first and second quarter financial performance reports of the

¶current financial year was completed. The first quarter performance report was ready for engagement, while the second was being processed.

  1. Regarding payment of registered invoices within 30-days (in compliance with financial regulation), the Minister reported that she had taken this on as a personal campaign. She took the Committee to the DPWI offices where Members engaged with officials that showed the steps of processing invoices for payment to service providers within 30-days of receiving invoices. The Minister said that the rate of successful payment ensured that service providers who were emerging businesses needed the percentage to be 100 percent. She communicated these results online on a weekly basis.
  2. Capacity weaknesses in provinces and municipalities lead to underreporting of job opportunities created. The R2,3 billion Incentive Grant was available to provinces and municipalities but could often not be accessed due to late and unverified and underreporting of results. This was often the reason why the Auditor-General had matters to emphasise on programme three (EPWP) of the main vote.
  3. The review of the DPWI White Paper 1997, should be completed and result in the publication and tabling of the Public Works Bill. The Public Works Bill would spell out its mandate in stronger terms and could create an enabling environment for the DPWI and PMTE to collect project management fees, and enforce its legal mandate as landlord of the state.
  4. The Expropriation Bill B-2019 had been published in December 2018 for public comment. The Department stated that over 40 000 submissions were received from the public. The legal drafting team assisted by Geoff Budlender SC were processing the submissions. The Minister stated that the Expropriation Bill B-2019 would be tabled in Parliament in 2020 for the Committee to process.
  5. The review of the DPWI White Paper dated 1999 must be accelerated as per the recommendations of the reports of the former Portfolio Committee on Public Works. This would strengthen the transformation of the cidb and CBE as the implementation agencies that must drive transformation of the construction sector and the professional built environment sector.
  6. The new phase of the Expanded Public Works Programme (EPWP) was almost completed. This followed the development of a new policy and dispensation for EPWP. The DPWI would present this to the Committee.
  7. ¶The PMTE had to address its capacity challenges to do scheduled maintenance of state buildings. The current modus operandi of reactive maintenance created fertile ground for corrupt practices to flourish.

 

 

2.Visit to the CGO Building

 

 

At the time of reporting, the CGO Building served as the Head Office of the national Department of Public Works and Infrastructure.

 

The delegation visited the following areas:

  1. The “Re a patala” (We are paying) office, where the processing of invoices was demonstrated, from the point of submission to registration, and submission to the Finance Department for actual payment.
  2. The legal Department where all tenders over the value of R500 000.00 were being processed. Tenders below R500 000 were managed through quotations and were managed through the DPWI and PMTE shared services SCM.
  3. The library that served as a knowledge management hub and a place of study and relaxation for employees. It housed public works material, in manual and electronic format.

 

2.1.The following matters emerged from deliberations

 

 

  1. Members commented that using an electronic system to process tenders might make the process more corruption proof. The example was made that if a PDF format was used, with security systems to prevent unauthorised access, the documents would be more tamper-proof, and could be processed in a safer environment.

The Minister referred to on-going discussions with the University of Cape Town and the University of Johannesburg about the matter. Some of their students were doing studies on supply chain management (SCM) systems. She stated that once the Department made a decision on this, a presentation would be given to the Portfolio Committee on this matter.

  1. ¶Members requested information from the legal department on the number of cases that the DPWI was involved in. These would be for cases pending against the Department, or where the Department was charging other parties.

The Department stated that it would make the litigation statistics, the companies involved, and the nature of the issues, throughout the country involving the eleven Regional Offices available.

The Minister reported to the Committee that she had the statistics and mentioned that 258 open litigation cases were pending. Some were default judgments, some that the Department had to respond to as the first respondent. She promised to send the draft to the Chairperson for the Committee to have the information.

  1. At the Re a Patala Office, the administrators explained that invoices were received manually, captured electronically, and were then routed to line function for the project manager to verify specifically which work had to be completed, the amount charged for the work stipulated, over the period of the project. Once this had been done to invoices, they were registered as processed for payment. This would be sent to SCM where they would be placed in order, with proof that services had been rendered to the satisfaction of project managers. After this process, registered invoices would be sent to finance for payment. Importantly, as part of compliance to the PFMA, and National Treasury Practice Notes, the Re a Patala Office kept record of the information used to register the invoices for auditing purposes.
  2. The Minister stated that she received a print-out of the daily processing of invoice payment and put it out on social media. She invited Members of the Committee to do the same. She was thankful to the team for the hard work they were putting in. She admitted that she was putting a lot of pressure on them, but it was necessary to ensure that small and medium enterprises that do business with the Department were paid on time.
  3. Members questioned why there were instances when buildings that were constructed remained vacant and could not be used as payment remained due. On the other hand, there were instances when contractors got paid, but the work remained incomplete. The Department stated that that aspect was on the side of project management. The Re a Patala Office was part of the Finance and SCM branches. Their interaction with project managers was to verify and sign-off specific phases of buildings for contractors to  be  paid.  If  buildings  remained  vacant  after  completion,  or  sections remained

¶incomplete, this had to do with the manner in which construction projects were compartmentalised into phases by the construction project management team as per the contract with the construction companies.

  1. Members stated that there may be a need to do things differently. It was becoming important that when a project was completed, and payment was made, an infrastructure that was completed, had to be useful to the community. The Minister stated that often problems were created in the planning phases, with the user or client department, agreements were made on contracts. Often, client departments added conditions on a construction project that cause delays. Sometimes, they left out critical aspects such as the building site selected not having sufficient bulk water services. Sometimes it might be that local government permission for an access road was not granted timeously. These often cause police stations, and courts to remain unused after completion as there were aspects of the contract that could not be honoured. All of these were not always the responsibility of the DPWI and its entities alone. Client departments had a role to play. Of course, it was easy, and it had become a feature, that client departments blamed the DPWI and its entities for such cases. The DPWI was looking at ways to regulate stronger so that when buildings are completed, they should be in a state to be used by the communities that they should serve.
  2. Members questioned why the Regional Offices of Cape Town and Pretoria struggled to pay invoices within the 30-day period. These were two of the largest Regional Offices. It had to be kept in mind that these were responsible for daily maintenance of client departments in the respective regions as well as for the Parliamentary Precinct and the three Parliamentary Villages and the bus-services. The Pretoria Regional Office was also responsible for the Unions Buildings and the residences of the Executive at Brynterion Estate on top of the normal daily maintenance and construction projects. That makes it very difficult to register and pay all invoices on time. The measures that was put in place was to capacitate the Regional Offices. They worked over-time and this resulted in the payment of invoices having improved from its previous state.

3.¶Visit to the Telkom Towers construction site

 

 

The Telkom Towers had been unused for several years. The Minister stated that the South African Police Service (SAPS) had been without a Head Office for the last six years. When the Committee arrived at the Telkom Towers, the DPWI had to date spent R1.6 billion over the six years on the building and she could unfortunately not report that the SAPS occupied the building or any of its floors.

 

The contractors had been appointed in June 2019 to renovate and get the building ready for SAPS to move in. There had been several challenges that delayed the project. The Development Bank of South Africa (DBSA) was the implementing agency. The plan was on track complete the project on 15 April 2020. the SAPS should occupy the building by the end of April 2020. The Minister stated that the DPWI and PMTE was monitoring it very closely to ensure that by the stated deadline the SAPS would occupy their own Head Office.

 

Members questioned what exactly caused the delay and what the nature of the challenges were that the Minister referred to earlier. She stated that there had been problems during the planning stages, and there were refurbishment aspects that remained incomplete. She stated that the SAPS paid between R400 000- R500 000 per month to keep the building secure. She wrote to the DBSA to get more detail and the initial information was that here was an investigation into the reasons for the delay. The DPWI also had a report on the delay that would be shared with the Portfolio Committee at a later stage.

 

4.Tuesday, 27 August 2019:

 

4.1.Visit to the Independent Development Trust (IDT)

 

 

The presentation by the Chief Executive Officer (CEO) outlined several policy review matters and a number of challenges that the IDT faced.

¶Policies and legislation for review were:

  • The Expropriations Bill
  • White Papers 1 and 2 that would lead to the enactment of the Public Works Bill.
  • Amendment of the CBE and cidb Acts

 

The IDT since 1990, had been a schedule 2 entity that was supposed to be self-sustained but its R2 billion base had been depleted.

The entity had its own governance challenges, which were acting positions that led to the instability of the entity.

These matters were in the domain of the policy leadership of the Department and were receiving attention.

 

4.2.Visit to the Booysens Magistrate Court

 

 

The Committee visited the Booysens Magistrates court in Turffontein in the south of Johannesburg. The construction of the court showcased the capacity of the IDT as government’s project management agency.

The reality was that the entity was struggling financially in spite of the best-practice model that it established to ensure community participation in the construction process of facilities.

 

 

 

Matters that emerged:

  1. The IDT struggled to collect management fees for projects that it completed for client departments. This was similar to the challenge faced by the PMTE.
  2. The origin of this phenomenon was situated in the devolution of the construction and maintenance budgets from the Department, to the Capital Expenditure (Capex) sections of the main votes of 42 client departments.
  3. These components were not ring-fenced to be used for its intended purpose. In a climate of fiscal constraint, client departments used it for a variety of their mandated responsibilities.
  4. When projects were completed, they would then pay the IDT and PMTE late which had over the years caused the PMTE and IDT (but specifically the latter), to run high debt

¶and overdrafts. The IDT was running into a deficit over the last few years and the DPW used to bail it out with further transfers.

  1. The situation was untenable and for this reason the IDT had to be restructured to operate as a solid business concern.
  2. During the 2014-2019 administrative term, the Executive stated an intention to restructure the entity into a relevant project management agency that would deliver social infrastructure projects across the national, provincial and municipal spheres.
  3. The IDT faced increased competition from other project management entities of government such as Coega Development Corporation (Coega), and the Development Bank of South Africa (DBSA).
  4. The Justice Department’s Facilities Management announced at the visit to the Booysens Magistrates Court that the DBSA would maintain the court once the IDT had completed its contractual obligations.

 

 

4.3.Visit to the Thaba Tshwane Dolomite Site

 

 

The visit to the South African National Defence Force (SANDF) Joint Operations base situated at Thaba Tshwane exposed the Members to features of the PMTE Dolomite Reclamation Programme.

The presenters showed Members the geographic features of dolomite rock formation that caused sinkholes at the base and endangered the operations of the joint operation forces of the SANDF.

Members were shown that long-term water ingress caused deterioration of dolomite formations deeper under the surfaced and caused sinkholes.

The civil engineering team of the PMTE showed Members the system they used to identify the mouth of a sinkhole and how they plugged, and secured it.

 

The site visit and the observation of the concrete steps enabled Members to understand the background and the practical aspects of the Dolomite Reclamation programme. Without this, it might have been easy for Members to argue that the allocated amounts for the programme could not be justified.

 

5.Wednesday, 28 August 2019:

 

 

  1. Visit to Agrément SA

 

 

The Committee visited the Agrément South Africa (ASA) offices situated at the Council for Science and Industrial Research (CSIR) campus.

 

The ASA Board Chairperson explained the difference between the ASA mandate and that of the South African Bureau of Standards (SABS) in terms of building material and systems. The difference had to do with the ASA focusing on innovative fit-for-purpose building material and systems that had never been tested and was not available on the market.

 

The ASA took Members through the process of innovators approaching the entity, paying a fee, having their products and systems tested, and when these passed these tests, it certified and registered such products.

 

Once innovative fit-for-purpose building material and systems were registered, it could be used in the built environment and public works infrastructure development, and construction sector. The ASA reported that by its very nature, innovative material and systems enabled construction contractors to erect buildings faster, they were more durable, and while initial cost may be higher, the time saved, meant cost recovery.

 

They further reported that innovative fit-for-purpose materials and systems had the potential to accelerate social infrastructure delivery that in turn could have a positive, progressive impact on service delivery.

 

Matters that emerged:

  1. The Committee made it clear that the entity had to market its services wider so that all levels of government could use innovative materials and building systems to deliver human settlement, water and sanitation, and social service infrastructure that was urgently required across the country.
  2. ¶The Committee visited the testing laboratory of the ASA and were exposed to stress testing, impact testing, and fire testing systems that were used to check whether building materials adhered to National Building Regulations and South African National Standards (SANS) 10400 standards.
  3. The Committee raised the importance of the ASA collaborating with the cidb to train the lower graded construction companies in the use and technological aspects of using fit-for-purpose innovative building materials and systems.
  4. The Committee’s visit to the sanitation laboratory enabled insight into the different types of waterless toilets, structures, and water-saving measures that exist for the different climates and geographies out of which the country consists.
  5. Members noted that the Water Research Commission (WRC) actually no longer funded the sanitation laboratory but that private companies were marketing their products. There was a lack of black, female and companies owned by young people amongst the marketers.

 

 

6.Thursday, 29 August 2019:

 

 

6.1.Visit to the Construction Industry Development Board (cidb)

 

During his presentation, the CEO stated that the entity was established through the CIDB Act 38 of 2000. The presentation also covered how the entity aligned its focus with the seven priority areas as announced during the 2019 State of the Nation Address.

The entity was pleased to announce the launch of the online registration for Grade 1 contractors to enhance accessibility of the cidb to contractors through technological disruption.

 

Another announcement made was that of the Tender Value Adjustments as at 07 October 2019. On fraud and corruption, the cidb will be publishing a statement soon in collaboration with the State Investigative Unit (SIU) regarding irregular grading after consideration by the Minister of PWI.

 

Matters that emerged:

  1. ¶The entity needed to draw attention to some client departments that would cluster big projects to benefit a higher grading contractor instead of unbundling it to benefit more lower grade contractors.
  2. There were projects that were not completed but payment was made to contractors.
  3. The cidb reported that there was a framework for Contractor Development Programmes (CDP) for Potentially Emerging (PE) contractors earmarked for emerging contractors.
  4. A partnership was forged with the Small Enterprise Development Agency (SEDA) that has a Contractor Incubation Programme and the contractor management guidelines were published on the website.
  5. Clarity was given regarding incomplete projects, in that this was not always because of problem at a contractor level. The Committee needs to probe more into the reasons why such things happen because it has been often found that the problem lies within the government departments, it is often found that it is the mismanagement of funds or virements that lead to insufficient funds to pay the contractor.
  6. There was a concern regarding massive collusion within the construction sector that reduces project rollouts and service delivery.
  7. Due to the current policies, the cidb is unable to intervene in dispute resolutions between main and sub-contractors.
  8. The cidb is currently exploring ways to improve the current status to a point where some tenders are strictly earmarked for women and the advert would be crafted in a manner that depicts the same.
  9. The leadership challenge is that new board members must go through a recruitment process whenever there is a change in political leadership of the Department.
  10. Regarding foreign -owned contractors operating in the country, the cidb stated that all companies must register in terms of the Companies Registration Act and the cidb registration requirements.

 

6.2.Visit to the Eric Molobi Housing Hub and laboratory situated in Soshanguve

 

The Eric Molobi Housing Hub has been in existence for 15 years. It is managed by the National Home Builders Regulatory Council which is an entity of the Department of Human Settlements. Its mandate is to assure quality homes.

¶The site had superstructures that were built with innovative non-standardised construction material. These structures would be under research for the duration of their lifespan because the study would mainly be about the durability and structural integrity of the material used.

 

Members were able to experience the climatic conditions inside some of the human settlement structures that were constructed with bottles. They observed how light concrete slabs and other innovative building material were used to construct houses that could withstand extreme conditions. Members were taken into the laboratory where different tests were carried out to ensure that the material and systems used to construct houses complied with the NHBRC regulations. They also observed how building materials were tested to withstand high temperatures, and various types of stress tests and how these were documented for certification purposes.

 

Some structures were built outside the boundaries of the Innovation Hub and donated to communities so that the reaction of building material may be observed in a live setting for a period of 30 years and more.

 

In terms of empowerment, 400 learners per annum were enrolled on an Artisan Development Programme, most of whom were female participants.

 

7.Friday, 30 August 2019:

 

7.1.Visit to the Council for the Built Environment (CBE)

 

 

Matters that emerged:

 

  1. The CBE needed to have a footprint across the provinces and regions to ensure it could play its role in the transformation of the professional built environment more successfully.
  2. The issue of irregular expenditure was of great concern to the Committee as this may lead to negative audit outcomes of the entity. According to the CBE, this was due to non-compliance to the PFMA and finance regulations. It stated that controls had been put in place to ensure that the matter was corrected. It was reported that the reason for

¶the 2016/17 high irregular expenditure rate was because of a travel contract that was not advertised on time.

  1. The Committee noted that there was a challenge regarding opportunities given to professional built environment candidates to get their professional registration. For any graduate to become a candidate, they had to be employed and mentored.
  2. It was also important to ensure that what the CBE presented as “a pipeline for built environment professionals” had to get the participation of private built environment companies.
  3. Some of the BEPC reported that transformation seriously lacked and that it was impossible for black professional built environment companies, to participate on an equal footing with white counterparts. The result was that the sector remained unequally skewed.
  4. It was almost impossible to advise young people to enter the terrain as there were few chances of them being treated on an equal footing.
  5. It was necessary for the Committee to note that established private companies had to do much more to assist with transformation. One area that needed to be addressed was that candidates took too long to get professional registration. Another was that government had to find ways of incentivising or penalising established companies to do more to get the sector transformed.
  6. The Build Environment Professional Councils faced challenges that are summarised as follows:
    1. Professional registration was previously outsourced to 40 voluntary associations; currently the registrations were accelerated because virtual panels did the registrations.
    2. Some employers did not want to give the candidates the necessary experience as per key competencies required.
    3. Promotions were not linked to registrations.
    4. Most regulatory policies came directly from the National Treasury so the Built Environment Professional Councils had no influence over the policy formulation (such as building in incentives or penalising non-participation in reaching transformation targets), which might assist in accelerating the transformation agenda.
    5. ¶Gatekeeping continued at the entry level at institutions of higher learning where racism was rife and the system was deliberately designed to exclude the previously disadvantaged learners.

 

 

9.Findings:

 

 

  1. The SAPS had not been accommodated in its own head office for at least five years. They continued paying to secure the Telkom Towers building while the renovation project was taking place. This matter had to be addressed urgently as the project deadline was 15 April 2020.
  2. The EPWP branch continued to face audit queries from the Office of the Auditor-General as some of its key performance indicators were outside of its own control. This matter required urgent attention as the DPWI’s progression to a clean audit must be achieved as soon as possible.
  3. The DPWI and PMTE faced challenges with collecting management fees from client departments. The review of the White Paper dated 1997 entitled “Public Works Towards the 21st Century” remains incomplete since the 5th parliamentary term. This review should result in a Draft Public Works Bill that could enhance the DPWI and the PMTE’s powers to collect management fees from client departments, and exert its legally mandated powers as landlord and custodian of government property as per the Constitution and GIAMA.
  4. The CBE and cidb faced challenges with efforts to transform respectively the professional built environment, and construction sectors. The Committee found that transformation lagged behind the needs of the South African society, and had a constraining effect on the economy. The DPWI did not complete the review of the White Paper dated 1999 called “Creating and Enabling Environment for Reconstruction, Growth and Development in the Construction Industry”. This policy review had to be urgently driven to completion so that the transformation challenges that constrains the sector could be addressed.
  5. The entities reporting to the Minister of Public Works and Infrastructure worked in silos. This affected a joint effort that was required to address urgent transformation challenges in the construction and built environment sector.
  6. The innovative, fit-for-purpose building material and systems that the Agrément South Africa tested and certified, held the promise of effectively addressing the challenges and

¶backlogs related to social infrastructure in South African society. These products were, however, unknown to infrastructure departments and the public. This had the effect of funds being allocated to ASA that did not have the impact that was required. This matter required the urgent attention that the Ministers of Public Works and Infrastructure had to address with relevant colleagues in the Cabinet.

  1. The challenges of unemployment and transformation required policy urgency and all social infrastructure delivering departments and municipalities had to address the skills gap that existed. There was a need to consider the establishment of a national skills plan that would popularize artisanship as a career-choice in South Africa.
  2. The Boards of entities required urgent attention as positions remained vacant and governance is negatively affected. All leadership positons had to be filled. All acting positions had to be finalised. This would strengthen the entities to govern effectively and make policy adjustments to drive their respective mandates, and government’s transformation targets.
  3. The Committee found that there were too many acting positions in key leadership positions. The PMTE head and several DDGs in the DPWI continued to be acting. This needed urgent attention.
  4. The Committee found that the process of reconfiguring the IDT remained incomplete and that uncertainty about the entity had the consequence of competing project management organisations such as the DBSA and Coega taking over its projects.
  5. The statistics and information on all legal cases involving the DPWI had to be made available to the Committee.
  6. The impact of austerity management measures from National Treasury meant that client departments did not
  7. The PMTE remained busy with reactive maintenance rather than a properly scheduled maintenance programme that were costed and planned.

10.¶Recommendations:

 

Having considered the findings that emerged from, and are evident in the deliberations, the Committee recommends that the Minister of Public Works and Infrastructure:

 

  1. Submits a quarterly report of the Telkom Towers construction project so that the Committee may closely monitor progress to assist the Department to keep to the project- scope, budget, and completion date of the project.
  2. Provides an update on the new policy on which the next phase of the Expanded Public Works Programme will be based. This update should form part of a fully detailed presentation by the EPWP directorate on the manners in which it coordinates the programme across the national, provincial, and municipal levels of government. It has to include the manners in which the directorate ensures uniformity of beneficiary selection, the standardisation of data verification, the formula through which job opportunities are translated into actual jobs, skills development and certification, and how, in the next phase of the programme, these aspects are going to be improved.
  3. Reports to the Committee before the end of 2019 on the process to complete the Review of White Paper (1997) entitled “Public Works Towards the 21st Century”. This was part of the process to accelerate the Public Works Bill that will enhance the DPWI’s enforcement powers to collect management fees from client departments, and exert its mandated powers as landlord and custodian of government property as per the Constitution and GIAMA.
  4. Reports to the Committee within 30 days of this report being adopted, on progress with getting the public works entities to collaborate on efforts to unify their mandates to transform and improve the professional built environment, and construction sector of the country.
  5. Convenes a Transformation Indaba to be held for the public works and infrastructure entities before the end of the 2019/2020 financial year. One of the outcomes should be a transformation charter with mechanisms to make the professional built environment pipeline an implementable programme across the private and government professional built environment with set targets to assist previously dispossessed groups to graduate and reach professional registration.
  6. ¶Initiates a stakeholder outreach programme across all infrastructure and construction departments of government and municipalities in different regions of the country to assist with the popularisation of innovative, fit-for-purpose building material and systems of Agrément SA.
  7. Instructs the cidb and the Agrément SA to collaborate and develop a programme to train contractors on its register to use innovative, fit-for-purpose building material and systems. The DDG of the Intergovernmental Cooperation (IGC) branch with the cidb and Agrément SA should report on a quarterly basis to the Committee on progress regarding this programme.
  8. Instructs the cidb, and CBE with the Professional Built Environment Councils (PEBCs) to initiate discussions with the infrastructure delivering departments and municipalities to bridge the skills gap through the establishment of a national skills plan that leads to artisanship as a career-choice.
  9. Ensures that all built environment professional councils adhere to policies of Recognition of Prior Learning (RPL) so that it is implemented as part of the career pipeline in the professional built environment and construction sector.
  10. Reports to this Committee during the Strategic Planning and Annual Performance Plan of 2020, on progress to fill all vacant and acting positions in the DPWI and the PMTE.

 

  1. Instructs the IDT and the DDG of the IGC branch to provide a fully detailed presentation on the plans to reconfigure the entity into a properly capacitated, relevant social infrastructure management entity that works with the PMTE and its mandated functions. The PMTE and DPWI to collaborate on this presentation on why the Development Bank of South Africa and Coega continues to be appointed as infrastructure maintenance and construction agencies instead of the IDT.

 

  1. Ensures that relevant steps are taken to fill all vacancies of the Boards of all the public works entities so that the process of having fully functional entities is completed. The Minister to provide a full report on this by 31 December 2019.

 

  1. Instructs the PMTE to report to the Committee on its capacity challenges to put in place a properly costed, scheduled maintenance plan for government buildings. The report should address this matter urgently as this often led to non-compliance and corruption.

¶In order to address the on-going challenge of the PMTE and IDT to recover debt and management fees from client departments, this report should include the construction and maintenance cost in the Capex part of each of the 42 departments, and show the annual projected annual maintenance cost that the PMTE would spend on each building (if it had a scheduled maintenance plan in place).

 

Report to be considered.

 

 

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