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ATC241113: Portfolio Committee on Public Works and Infrastructure’s report on an oversight visit to Gauteng, dated 13 November 2024

Public Works and Infrastructure

Portfolio Committee on Public Works and Infrastructure’s report on an oversight visit to Gauteng, dated 13 November 2024

 

The Portfolio Committee on Public Works and Infrastructure, having undertaken an oversight visit to Tshwane and the City of Johannesburg (Gauteng), from 10 to 11 October 2024, reports as follows:

1 ATTENDANCE

  1. Committee Members

  1. Ms CM Phiri, MP (ANC, Leader of the Delegation)

  2. Ms EN Nkosi, MP (ANC)

  3. Mr M Dlelanga, MP(ANC)

  4. Mr S Mahlangu, MP (ANC)

  5. Mr EM Bath, MP (DA)

  6. Mr EJ Marais, MP (DA)

  7. Mr V Reddy, MP (MKP)

  8. Mr N Nxumalo, MP (MKP)

  9. Mr S Gama, MP (MKP)

  10. Ms LG Mokoena, MP (EFF)

  11. Ms M Kobe, MP (Action SA)

 

  1. Committee Support

 

  1. Ms N Matinise (Committee Secretary)

  2. Mr S Denyssen (Content Advisor)

  3. Ms S Letlhake (Committee Assistant)

  4. Ms I Stephney (Researcher)

  5. Mr J Majozi (Communications Officer)

  6. Mr A Ndlela (Broadcasting)

  7. Ms S Tshomela (Camera Operator)

  8. Mr P Jikelo (Official Photographer)

 

2 INTRODUCTION

Section 5(4), of the Money Bills Amendment Procedure and Related Matters Act (Act 9 of 2009), provides that the Committee should report on and make recommendations on the annual performances of the DPWI and its entities in the Budgetary Review and Recommendation Report (BRRR). This should be completed before the Minister of Finance delivers the Medium Term Budget Policy Statement (MTBPS). The intention was to deliberate and make recommendations on the annual performance of the department and entities for inclusion in the BRRR. Due to disagreements between the AGSA, the department and some entities on the audited financial statements, the Minister could not sign off on the Annual Reports and table it to the Speaker of Parliament. While the committee could receive and deliberate on the reported information related to the performance of the current financial year, it could unfortunately not make recommendations to complete recommendations to process its BRRR.

During the first meeting, the Minister of Public Works and Infrastructure, and the Deputy Minister of Police participated in discussions. The Deputy Minister of Police further joined members of the Committee on the physical visit and deliberations at the Telkom Towers with the Development Bank of South Africa as contracting agent, and project managers. Apologies were registered and noted by the Minister of Police, the Deputy Minister of Public Works and Infrastructure and the National Police Commissioner.

The oversight visit was preceded by a 3-day capacity Building session where members of the Committee were empowered to thoroughly conduct effective oversight over the Department and its entities. The oversight visit to the project sites allowed Members to apply the knowledge gained through practical engagement in meetings and the project sites. This training session was reported on separately.

3 MANDATES AND FUNCTIONS

3.1The 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 and maintenance services to client departments.

As part of the turnaround strategy that started in the 2011-2012 financial year the former Department of Public Works (DPW[1]) operationalised the Property Management and Trading Entity (PMTE) as an internal component within the Department in the 2014-2015 financial year. With this establishment, the responsibility for the Immovable Asset Register, and the key tasks of the DPW were transferred from the DPW 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 public works mandate is provided collectively in the Constitution, Schedule 4 Parts A and B which provide public works as a concurrent national, provincial, and local government 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. This legislative and regulatory frame further provides the 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 of government properties. While in the past, the DPWI acted as the regulator as well as property manager of government immovable assets, since undergoing a turnaround strategy from 2011-2012 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 income-generating trading aspect lagged for many years due to capacity challenges and the incompleteness of the Government Immovable Asset Register (GIAR) which is managed by the DPW[2] as regulator and custodian department.

It is important to note that PMTE is still an unregistered entity with the National Treasury, despite it being described as “operationalised”, and furthermore is yet to generate revenue that is sufficient to make itself sustainable or profitable.

 

3.2The Mandate of the Portfolio Committee on Public Works and Infrastructure

The Committee does oversight over the programmatic deliverables of the DPWI and its entities to implement the policies made by the Minister of Public Works as per the mandate of the DPWI. The Constitution, the Government Immovable Management Act (GIAMA, Act 19 of 2007), and the Infrastructure Development Act (IDA, 2014) with the respective legislation of the entities, provide the mandate of the DPWI.

4DAY 1 OF THE VISITS: THURSDAY, 10 OCTOBER 2024

The Committee received briefings on three broad matters: first, on challenges to complete the Telkom Towers as the Head Office of the SAPS; second, on the precinct development project that related to inner city renewal and improving service delivery to the public; and third, presentations on the annual performance of the Department of Public Works and Infrastructure (PWI) and the entities that report to the Minister of PWI. The entities are the Agrément South Africa (ASA), Construction Industry Development Board (CIDB), Council for the Built Environment (CBE) and Independent Development Trust (IDT). The Committee deliberated with representatives from the Department of Public Works and Infrastructure (DPWI), the South African Police Service (SAPS), the Office of the Auditor General of South Africa (AGSA), and entities of the Department of PWI on achievements and challenges which were to be reported in the 2023/24 BRRR.

After the briefings in the Minister’s Boardroom, the Committee physically visited the Telkom Towers and Salvokop projects to gather first-hand information from the responsible Directors-General, officials, contractors, and project managers.

The Committee first dealt with the AGSA report on the PWI Sector achievements and challenges - the Department and entities as collective - for the 2023/24 financial year

4.1AGSA Briefing on the PWI Sector - 2023/24

The audit outcomes showed an improvement from the previous financial year. As the number of clean audits increased from one to two, the Construction Industry Development Board (CIDB) joined the Council for Built Environment (CBE) in achieving clean audits. This improvement was attributed to appropriate accounting for revenue generated through the B.U.I.L.D. (Build Unity in Leadership Development) programme in the financial statements of the CIDB.

 

  • Incomplete Audits:

 

At the time of the visit and preparing this report, the audits of the PMTE, IDT, and Parliamentary Villages Board audits remained incomplete and outstanding for this year. These are very concerning. All three contain significant risks. The Committee indicated that it needed speedy completion of these audits because this delayed the completion and adoption of the BRR Report. The Committee stated that it would need to meet every quarter with the Minister, the Accounting Officers and DDGs to get this sorted out for the following year.

  • Performance Against Targets:

The DPWI achieved 59% of targets and the CIDB achieved 95% targets.

 

4.2Briefing by the DPWI on 2023/24 performance (including entities)

  • Strategic Infrastructure Projects

 

In 2024, the value of SIP (Strategic Integrated Projects) grew from R340 billion in July 2020 to R540 billion.

In 2024, a total of 89 infrastructure projects were completed.

  • Maintenance of Government’s Immovable Property

The total budget for maintenance in 2024 was R2,851,079,000. R2.9 billion was spent.

The main reasons for the maintenance budget variance were:

  1. Reclassification of Projects: There was a reclassification of projects between capital and operational after the financial year-end. This reclassification caused overspending which was offset by underspending on capital items where these projects were initially budgeted for.

  2. Delays in Client Responses: Delays in client approval of budget allocations and project costs led to under-expenditure. Clients are expected to sign off on their available allocations before the start of the financial year, but some only made the allocations available during the first quarter, causing further delays.

  3. Defaulting Contractors: Delays on site by defaulting contractors and other contractors not delivering in accordance with the projected project expenditure also contributed to the variance.

Measures to improve client response times: Based on general practices in project management and public sector operations, potential measures that could be implemented include:

  1. Clear Communication Channels: Establishing clear and efficient communication channels between the PMTE and client departments to ensure timely information exchange and approvals.

  2. Regular Follow-ups: Implementing regular follow-up mechanisms to remind clients of pending approvals and to expedite decision-making processes.

  3. Defined Timelines: Setting defined timelines for client responses and approvals, with agreed-upon deadlines to ensure accountability.

  4. Client Engagement: Increasing client engagement and collaboration through regular meetings and updates to keep clients informed and involved in the project progress.

  5. Escalation Procedures: Establishing escalation procedures for delays, where unresolved issues can be escalated to higher authorities for quicker resolution.

The department’s project management and operations specialists should use these broad measures as a basis to develop specifics.

 

4.3Briefing by the DPWI and SAPS on the Telkom Towers and Salvokop government precincts

4.3.1Introduction

 

The Department indicated that the Telkom Towers Complex was owned by the Telkom Retirement Fund (TRF) and leased to Telkom Ltd Pty. After Telkom relocated to Centurion in early 2015, the property became available for purchase. The complex includes 10 buildings with a gross lettable area of 115,480m² and 2,234 parking bays. One of these was sold back to Telkom and two others leased

The DPWI considered acquiring the complex as a permanent accommodation solution for the South African Police Service (SAPS) under the Inner-City Regeneration Programme. Only two of the remaining seven buildings were put out to tender for maintenance, with no indication as to what the other five buildings would be earmarked for.

 

4.3.2Key events:

 

  • March 2015: DPWI conducted the first site visit.

  • May 2015: A feasibility study and market valuation were completed, valuing the property at R645,160,815.65 excluding VAT.

  • June 2015: SAPS was identified as a potential user, and numerous site visits were conducted.

  • June 2015: SAPS confirmed interest in the property.

  • August 2015: The offer to purchase was signed.

  • April 2016: The property was transferred to the National Government.

Financial considerations included an asking price of R1,087,560,000.00 (including VAT), a purchase price of R694,260,000.00 (including VAT), and an estimated refurbishment cost of R150,000,000.00. The feasibility study concluded that purchasing the complex was viable due to potential cost and lease savings.

 

4.3.3Funding and Acquiring Telkom Towers

 

The funding and acquisition process for the Telkom Towers Complex involved several key steps and financial contributions:

  • National Treasury Involvement: DPWI approached National Treasury for funding assistance. A meeting on 7 July 2015 recommended that SAPS and DPWI explore funding within their own portfolios.

  • Financial Contributions: The total purchase price of R694,260,000.00 (including VAT) was settled by March 2016. Contributions were as follows:

  1. SAPS: R543,958,855.00

  2. DPWI: R150,301,145.00

  3.  Conveyancing Fees: ENS Africa Inc. attorneys initially charged R2,483,100.92, which was negotiated down to R575,270.00, saving R1,910,820.92. DPWI covered these fees.

  4. User Charges: Preliminary user charges included facility management costs and the estimated refurbishment amount of R150,000,000.00. These charges were structured to allow SAPS to recover their capital investment over 10 years.

  5. Offer to Purchase: Signed on 21 August 2015, with addendums in February and March 2016. The property was transferred to the National Government on 7 April 2016.

  • Access and Preparation: SAPS was given access to the complex from 1 September 2015 to prepare for migration.

The acquisition was deemed a viable alternative to leasing office accommodation, providing a permanent state-owned solution for SAPS.

 

4.3.4DPWI Handover Process

 

A key question that the Committee put was: What is the DPWI’s standard operating procedure for procuring and handing over immovable assets? 

The migration plan was reported as having taken place through several key steps that included multiple challenges:

  • Initial Planning: DPWI provided SAPS with all necessary drawings and information on 20 July 2015 to assist with migration planning. A strategic meeting on 15 September 2015 resolved to finalize the migration plan by the end of September 2015.

  • Draft Migration Plan: Expected from SAPS on 5 October 2015, following a resolution from the Telkom Towers Steering Committee meeting on 2 October 2015.

  • Progress Reports: Sent to the National Commissioner on 8 September 2015, covering various aspects like occupational rent, leases, and facility management.

  • Urgency and Delays: DPWI requested SAPS to occupy the facility by 1 April 2016. However, the migration plan for phases 1 & 2 was only supplied on 7 April 2017.

  • Facility Management: A contract with Bidvest was signed on 6 November 2015 to ensure a smooth transition and continuity.

  • Management Changes: The original intention for SAPS to start relocating by December 2015 was interrupted by the suspension of Police Commissioner Riah Phiyega on 14 October 2015.

The migration process was significantly delayed due to changes in SAPS management and the need for a comprehensive migration plan.

4.4Site visits

Having heard presentations from the DPWI and SAPS on the Telkom Towers, the Committee visited the Telkom Towers and Salvokop government precinct sites.

4.4.1Telkom Towers

 

At North Wing of Telkom Towers, the Committee established the following:

 

  • The 24th Floor that was previously occupied by Telkom Executives was handed over as it was for use by the Executive Authority of the SAPS, therefore, no works were done as the floor was in good working condition.

  • The Department of Labour (DoL) conducted an assessment and established that the electric wiring was not in order, fire extinguishers and HVAC system used for air conditioning had not been maintained in a long time then issued a report on the safety hazards. Thereafter, the DoL issued a prohibition certificate, which meant that the building had to be evacuated as it was a safety hazard. The SAPS was evacuated in February 2024.

  • At the time of the visit, there was a current contract with a facilities management service provider for the upkeep of the Telkom Towers North Wing, despite the building being unoccupied.

  • On the 20th floor that houses SAPS officials, it was discovered that the floors and electric wiring needed maintenance, windows were not opening while the HVAC system was also dysfunctional, which made the temperatures unbearable for the officials working in the area.

  • The Coega Development Corporation was appointed by the DPWI to refurbish the next two Towers in the North Wing.

  • A representative from the Development Bank of Southern Africa (DBSA) stated that the entity was employed to implement a process to obtain a compliance certificate for the building. On 31 August 2024, a compliance certificate for practical completion was achieved and final completion was achieved in December 2021. This was only for the Telkom Towers North (TTN) and Annex Building.

  • The Annex Building could not be occupied due to non-compliance, despite the certificate having been issued.

  • The fire detector system was also installed in the TTN building.

 

4.4.2Salvokop

 

The Salvokop government precinct project is being implemented by the DPWI and Infrastructure South Africa (ISA). The 535000 square metres mixed use development will be utilised to house government departments, residential complexes and commercial space.

The DPWI looked at the leasing portfolio of government departments and targeted those that have a big leasing portfolio for initial occupation through a Public Private Partnership (PPP) arrangement. The government is currently paying R2.5bn toward leases for departments.

Currently, the following departments have committed to utilise the space:

  • Department of Higher Education and Training (DHET), 120 000 square metres

  • Department of Home Affairs 9DHA), 35 000 square metres

  • Department of Correctional Services (DCS), 30 000 square metres

  • Department of Social Development (DSD), 80 000 square metres

  • Statistics South Africa is currently operating from the space, which is phase 1 of the 3-phased development programme.

 

Phase 2 & 3 of the programme will include commercial and residential development.

The DPWI is currently looking at R30bn in PPP investment in the first 5 years.

In the current 1st phase rollout, 390 jobs have been created through the Expanded Public Works Programme (EPWP).

Phase 1 is 25% complete within project time frame.

 

4.5Visit to the Independent Development Trust (IDT)

At the IDT Head Office, on the entity’s 2023/24 annual performance, the Committee noted that:

  • The current head office building was non-compliant as it showed massive visible cracks at the lower level of the building, which meant that the foundation of the building seemed to have shifted. This poses a significant danger as it could possibly collapse at any given time, putting lives of employees of the IDT in danger.

  • The reconfiguration of the IDT has not yet been finalised.

  • The entity generated a business portfolio of R9bn

  • Management fee collection is currently at 92% performance

  • Adherence to the 30% invoice payment within 30 days is sitting at 88%

5 DAY 2 OF THE VISITS: FRIDAY, 20 OCTOBER 2024

 

As a continuation of the BRRR engagements, on the second day of its oversight visits, the committee visited the Council for the Built Environment (CBE), Construction Industry Development Bord (CIDB), Agrément SA and Infrastructure South Africa (ISA).

 

5.1Visit to the Council for the Built Environment (CBE)

On the second day of its visits, the committee commenced its visits with a visit to the CBE.

The entity has again achieved a clean audit for the 8th consecutive year.

The Council for the Built Environment briefed the committee on its governance, performance, and future vision. It also shared insights from its review of the past 20 years and key focus areas for improvement.

  1. The key achievements of the Council for the Built Environment (CBE) in the 2023/24 financial year included:

  2. Built Environment National Logbook (BENL): Launched in March 2024 as a comprehensive and centrally located electronic database.

  3. Built Environment Climate Change (BECC) Indaba: Convened to address climate change issues within the built environment sector.

  4. Appeals: All appeals received were completed within statutory requirements.

  5. Clean Audit: Achieved a clean audit for the eighth consecutive year.

  6. Built Environment Women Network (BEWN): Established to support and empower women in the field.

  7. Built Environment Recognition Awards (BERA): Held to acknowledge excellence in the Built Environment Professions.

  8. Professionalisation and Skills Development Strategy: Developed for the public sector to enhance professional skills and capacities.

  9. Advocacy for Universal Design and Access: Promoted inclusive design and accessibility standards.

These achievements highlighted the CBE's commitment to improving the built environment through various initiatives and maintaining high standards of governance and professional development.

Twenty Year Review -Recommendations

The Built Environment 20-year Review recommended the following strategies for better communication between the Council for the Built Environment (CBE) and the Councils for the Built Environment Professions (CBEP):

  1. Clarification of Functions: Clear delineation of functions between the CBE and its member councils to avoid misunderstandings and overlaps.

  2. Improved Communication Strategies: Developing and implementing improved communication strategies to ensure consistent and effective information flow.

  3. Coordination Strategies: Enhancing coordination strategies to promote joint and coordinated actions on matters of national importance.

  4. Regular Engagement: Establishing regular engagement platforms to facilitate ongoing dialogue and collaboration.

  5. Policy Consistency: Ensuring consistent application of policies across the councils to maintain uniformity and coherence in operations.

These strategies aim to foster better collaboration, understanding, and efficiency between the CBE and CBEP.

 

Initiatives for climate-resilient infrastructure:

  1. Advocating for Climate Resilient Infrastructure: Promoting the importance and implementation of infrastructure that can withstand climate-related challenges.

  2. Revision of Design Codes: Updating design codes to incorporate climate resilience principles.

  3. Built Environment Climate Change (BECC) Indaba: Convening events like the BECC Indaba to discuss and address climate change issues within the built environment sector.

  4. Professional Built Environment Professionalisation and Skills Development Strategy: Implementing strategies to ensure that professionals in the public sector are equipped to handle climate resilience in their projects.

  5. Investigations of Health and Safety Incidents: Conducting investigations into incidents like the George Building Collapse to learn and improve safety and resilience standards.

 

Budgetary challenges

Budget cuts have significantly impacted the Council for the Built Environment's (CBE) operations in several ways:

  1. Limited Funds for Program Implementation: Reduced budgets have left CBE with limited funds to implement programs and build on the successes of previous projects.

  2. Operational Expenditure Pressure: The mandate of the CBE remains the same, but the Consumer Price Index (CPI) averages 5.72%, increasing operational costs.

  3. Personnel Remuneration: Cost of living adjustments required for personnel remuneration have added financial pressure.

  4. Committed Contracts: CBE has ongoing expenses such as rental, municipal rates, and ICT infrastructure that must be met, further straining the budget.

  5. Capacity Challenges: Budget reductions have exacerbated capacity challenges, impacting the CBE's operational effectiveness due to vacant executive and management positions.

  6. Reduced Ability to Address New Mandates: The budget cuts have limited CBE's ability to expand its mandate and address new responsibilities effectively.

Overall, the budget cuts have constrained CBE's ability to deliver on its mandate and implement key initiatives, affecting its operational efficiency and capacity to drive transformation in the built environment sector.

To address the budget cuts, the Council for the Built Environment (CBE) undertook the following initiatives:

  1. Sponsorship Policy Compliance: Implemented a sponsorship policy to secure additional funding.

  2. Levy Payment by CBEP: Ensured compliance with Regulation 915 and encouraged levy payments by the Councils for the Built Environment Professions (CBEP), despite their financial struggles.

These initiatives aimed to mitigate the financial constraints and ensure the continued implementation of CBE's programs and mandates.

Financial sustainability:

 The Council for the Built Environment (CBE) took the following steps:

1. Sponsorship Policy Compliance: Implementing a sponsorship policy to attract additional funding sources.

2. Levy Payments by CBEP: Ensuring compliance with Regulation 915 to secure levy payments from the Councils for the Built Environment Professions (CBEP).

These measures are designed to supplement the CBE’s budget and support its ongoing operations and initiatives despite financial constraints.

 

Other issues that were highlighted were that:

 

  • There are institutions of higher learning in various provinces that do not offer some of the built environment qualifications, eg. EC does not have any BSc. Engineering, Mpumalanga and Limpopo have none, meaning aspiring learners must migrate their provinces to acquire the desired built environment qualifications.

  • Regarding the George building collapse incident, there has been an outcry from the communities for an investigation into the built environment councils to be pursued but unfortunately the CBE does not have enough funding to implement its investigative mandate.

  • The built environment profession is aging. Women and the youth must be a target to curb the aging profession problem.

 

5.2Visit to Agrément SA (ASA)

The 2023/24 Annual Report of Agrément South Africa (ASA), highlights performance, financial results, and mandates for the current financial year.

The main objectives of Agrément South Africa (ASA) are:

  1. Provide Assurance: To assure specifiers and users of the fitness-for-purpose of non-standardised construction-related products or systems.

  2. Support Socio-Economic Development: To support and promote the process of integrated socio-economic development in the Republic as it relates to the construction industry.

  3. Promote Certified Products: To support and promote the introduction and use of certified non-standardised construction-related products or systems in the local or international market.

  4. Support Policymakers: To support policymakers in minimizing the risk associated with the use of non-standardised construction-related products or systems.

  5. Impartial Assessment: To be an impartial and internationally acknowledged South African center for the assessment and confirmation of the fitness-for-purpose of non-standardised construction-related products or systems.

Performance Highlights

ASA’s performance highlights were as follows:

- 20 new applications were received.

- 12 certificates were issued.

- 25% (1/4) market and usage analysis report produced.

- 56% (116/207) of quality and compliance inspections conducted on valid certificates in use.

- 58% (7/12) of Agrément certification projects managed and finalized within agreed timeframes.

- 99% (R40.7m paid and R10.4m commitments out of a budget of R51.8m) of the expenditure spent against the approved budget.

- 100% (705 invoices amounting to R18.7m) paid within 30 days.

- 62% (R5.3m out of R8.6m) of irregular expenditure removed through Board approval.

- 100% (R149,825) of fruitless and wasteful expenditure written off through Board approval.

- 125% (5/4) pieces of training conducted in developing SMMEs.

- 49% (R9.1m out of R18.7m) on procurement spent directly on the designated group (Youth: R5.4m and Women: R3.7m).

- 100% (14/14) training interventions delivered in line with the approved training plan and budget.

- 6% (32/34) vacancy rate achieved.

Revenue

ASA’s revenue sources for the 2023/24 financial year are broken down as follows:

- Grant income: R34 million (88%)

- Other revenue: R4.6 million (12%)

- Interest earned: R1.9 million (5%)

The total revenue includes grant income, other revenue, and interest earned.

Expenditure Categories

The main expenditure categories for ASA in the 2023/24 financial year are:

- Employee-related costs: R22.42 million (85% of total expenses)

- Operating expenses: R15.29 million (8% of total expenses)

- Leases: R504,000 (2% of total expenses)

- Non-cash (accounting) expenses: R1.39 million (5% of total expenses)

Employee-related costs are the primary cost driver, accounting for 85% of the total expenses.

Leases

ASA spent R504,000 on operating leases in the 2023/24 financial year.

Budgetary Expenditure

ASA spent 99% of its approved budget, which amounted to R40.7 million paid and R10.4 million in commitments out of a total budget of R51.8 million.

Challenges

The main challenges faced by ASA in the 2023/24 financial year include:

1. Declining Applications and Revenue:

   - A decrease in the number of applications, suspensions, withdrawals, and cancellations of certificates impacted revenue streams.

2. Technical Expertise:

   - Difficulties in sourcing technical experts affected the number and turnaround times of issuing certificates.

3. Eco-Label Scheme:

   - No Eco Labels were issued due to delays in appointing a conformity assessment body, as there were no responses to the initial tender advertisements.

4. Certification Projects:

   - Only 58% of Agrément certification projects were managed and finalized within agreed timeframes due to challenges in finding technical experts.

5. Market and Usage Analysis:

   - Only one out of four planned market and usage analysis reports was produced due to a high number of resignations.

6. Promotion of Non-Standardised Products:

   - Only one agreement was entered with specifiers to promote non-standardized construction-related products and systems, due to delays in concluding agreements.

7. Quality Assurance:

   - Only 56% of quality and compliance inspections were conducted on valid certificates in use, due to difficulties in concluding validity reviews requiring retesting and expert opinions.

 

8. Audit and Compliance:

   - ASA received an unqualified audit opinion with compliance issues, including irregular expenditure and non-compliance with supply chain prescripts.

9. Procurement and Contract Management:

   - Some construction contracts were awarded without ensuring contractors were registered with the CIDB and had suitable grading for the contract value.

10. Financial Recovery:

    - Challenges in recovering annual license fees and other fees levied against customers.

 

5.3Visit to the Construction Industry Development Board (CIDB)

The 2023/24 CIDB Annual Report outlined the organisation's performance, achievements, and strategic goals.

The key performance achievements for the 2023/24 financial year are:

5.3.1. Overall Performance:

  • Achieved 94% of the targets (17 out of 18 targets).

  • The only target not achieved was the % B.U.I.L.D funds spent on development due to low contractor uptake on Contractor Management Training.

    1. Performance per Programme

Programme 1: Administration:

  • 87% of audit issues resolved (target: 70%).

  • 100% of invoices paid within 30 days.

  • 99% system uptime (target: 97%).

Programme 2: Research & Development:

  • Conducted 2 research studies (target: 2).

Programme 3: Construction Industry Regulation:

Issued 100% of contravention notices within 30 days (target: 80%).

         Registered 99.95% of Grade 1 to 9 contractors within 21 working days for compliant applications.

Programme 4: Construction Industry Performance:

Produced 4 industry monitoring reports (target: 4).

Submitted 1 industry performance standard to the Board (target: 1).

Programme 5: Procurement and Development:

Developed 4 construction industry transformation procurement guidelines (target: 4).

Developed 2 construction industry development guidelines (target: 2).

Spent 37% of B.U.I.L.D funds on development (target: 40%).

Programme 6: Provincial Offices:

Conducted 95 industry capacitation sessions on CIDB prescripts (target: 72).

  1. Audit Outcome:

Achieved a clean audit, an improvement from the previous year's qualified opinion.

  1. Financial Management:

Maintained a healthy financial position with R288 million in positive cash resources.

Increased B.U.I.L.D receivables from R166 million to R271 million.

Increased surplus for the year due to higher B.U.I.L.D revenue.

  1. Other Highlights:

Hosted ERWIC awards spotlighting the excellence of women in construction.

Maintained a lead role in construction-related skills competition, WorldSkills South Africa.

Established Centres of Excellence with two universities.

Increased B.U.I.L.D Programme spend to 100% for the current year based on available funds.

These achievements reflect the CIDB's commitment to improving the construction industry through effective regulation, strategic interventions, and partnerships.

 

The Committee commended the cidb for having acquired its own property for its headquarters but raised a concern about the entity’s accessibility and visibility in rural areas.

It noted that the Broll Property and Facilities Management company signed an MoU with the CIDB during the Empowerment and Recognition of Women in Construction (ERWIC) Awards. As it has been awarded a Total Facilities Management contract with the Robben Island Museums, the company committed to ensuring that all smaller contractors on the cidb contractors' database for their micro and medium maintenance jobs can move up the grades.  

 

Please indicate that the CIDB offered its vacant office space to other entities which all refused to take up the offer.

 

5.4Visit to Infrastructure South Africa (ISA)

The committee concluded its 2-day oversight visit with a visit to ISA headquarters in Sandton.

ISA is a new entity that should consolidate its infrastructure mandate, operational budget, inclusive growth, legislative program, and national infrastructure plan for 2050.

It originated in the International Investment Office (IIO) in the Presidency that collaborated with the Presidential Infrastructure Coordinating Commission (PICC). The PICC operated without legislation for some time and the Infrastructure Development Act of 2014 was promulgated to streamline its work.

Since the President amended the Department of Public Works into the Department of Public Works and Infrastructure (DPWI), ISA was then housed inside this newly created department.

5.4.1. Infrastructure Development

Infrastructure impacts inclusive growth in several ways:

  1. Economy: High-quality infrastructure development boosts economic output increases construction activity, and enhances productivity.

  2. Health: Improved infrastructure leads to better healthcare facilities and services, contributing to overall public health.

  3. Education: Enhanced educational infrastructure provides better learning environments and resources, promoting educational attainment.

  4. Employment: Infrastructure projects create jobs, both directly in construction and indirectly through improved business environments.

Strategic infrastructure development catalyses growth by:

  • Creating jobs

  • Improving accessibility and market access

  • Attracting investment

  • Fostering equitable growth

Overall, infrastructure-led investments are crucial for robust economic growth and equitable development.

 

5.4.2. Infrastructure Funding and Financing

The purpose of the Infrastructure Funding and Financing document is to outline the strategies and mechanisms for closing the investment and funding gap in infrastructure development. It aims to:

  1. Improve Private Sector Confidence and Investment: By working together with the Infrastructure Fund (IF) to create a sustainable infrastructure development ecosystem.

  2. Provide Thought Leadership: Through high-quality, evidence-based, innovative economic research, statistical data analytics, and the promotion of best practices.

  3. Accelerate Infrastructure Development: By providing technical support for planning, preparation, and implementation of infrastructure projects.

 

5.4.3. The Infrastructure Fund

The role of the Infrastructure Fund (IF) includes:

  1. Closing the Investment and Funding Gap: By improving private sector confidence and investment and creating a sustainable infrastructure development ecosystem.

  2. Collaboration with ISA: Working together with Infrastructure South Africa (ISA) to prepare and submit applications for funding critical infrastructure projects.

  3. Supporting Project Preparation: Assisting in the preparation of bankable business cases for infrastructure projects.

  4. Facilitating Funding: Helping secure funding for various infrastructure projects through mechanisms like blended finance, grants, and commercial finance.

The IF plays a crucial role in ensuring that infrastructure projects receive the necessary financial support to move from planning to implementation.

5.4.4. Budget

The ISA presented its 2024/25 budget allocation as follows:

  • Operations Budget, total: R102.8 million

  • Staff Costs: R78.5 million

  • Travel (Domestic and International): R3.1 million

  •  Office Costs (Rent and Connectivity Allowance): R3.4 million

  • Computer Costs (IT Hardware and Software): R5.7 million

  • Information Resource Cost (Consultation and Library): R9.1 million

  • Corporate Marketing Costs: R600k

  • Debt Recovery & Legal Cost: R1.5 million

  • Statutory Costs (Skills Development Levy and Unemployed Insurance Fund (UIF): R879k

  • Project Preparation Budget, total: R179.1 million

These budgets are allocated to cover all operational and project preparation needs of ISA under the Presidential Coordinating Commission Technical Task Team (PICC TTT) unit of the Independent Development Corporation (IDC).

 

6 RECOMMENDATIONS

Having considered the deliberations, notes and findings that emerged, the Committee recommends that the Minister of Public Works and Infrastructure:

  1. 1. Appears quarterly before the Committee to brief its Members on the performance of the DPWI/PMTE and entities.

  2. 2. Submits a report on the forensic investigation initiated by the previous Minister of Public Works and Infrastructure into the Telkom Towers project and all relevant sub-components within 30 days of the tabling of his report.

  3. 3. Initiates an independent forensic investigation into the procurement, refurbishment, and failed accommodation of SAPS at the Telkom Towers. This report is to be tabled to the Committee in the 2024/25 financial year. The objective is to establish all costs, initial scope of works, amended scope, amended cost, time delays, security expenditure per month, vacant floors and spaces, and outstanding elements that lead to continued delays.  

  4. 4. Investigates the use of private accommodation by SAPS as opposed to using government buildings that were reported as available during the 2024/25 financial year.

  5. 5. Ensures that the Parliamentary Villages Board is constituted during the 2024/25 first quarter and submits financial statements as mandated. Reports on this by April 2025.

  6. 6. Has bilateral engagements with the State Information Technology Agency (SITA) to establish whether the agency can assist with the development of the Immovable Asset Register and Enterprise Resource Planning (ERP) systems during the 2024/25 financial year.

  7. 7. Ensures that the IDT is properly reconfigured into a profitable entity that will be able to carry out projects to be sustainable.

  8. 8. Prioritises the finalisation of legislation, including the Public Works Bill for tabling to Parliament within the 2024/25 financial year. If not, a report on the department’s legislative programme for the 7th term to be made to the Committee before March 2025.

 

Report to be considered.

 

Documents

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