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14 MARCH 2007

STRATEGIC PLANNING AND BUDGET

PREVIEW PRESENTATION

TO THE PORTFOLIO COMMITTEE ON

PUBLIC WORKS

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Context of the Strategic plan

• The department’s strategic plan is premised on the Government’s renewed pledge to foster partnership in the fight against poverty pronounced in the 2007 SONA.

• To complement SONA, the strategic plan gives expression to the strategic pillars pronounced by the Minister to the Department’s Lekgotla held in November 2006 namely:

1. Transformation and regulation of the construction and property industries to yield economic growth and development

2. Optimise effective strategic asset management over the State property portfolio as well as private sector properties utilised by Government

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Context (cont.)

3 Identify and infuse job creation opportunities in all its programmes. To this end, the department has committed itself to employing 5000 young people under the auspices of the NYS, whilst also ensuring that labour intensive methodologies will be applied in all its building programme in future (where applicable). The department is also piloting an LED project in Uitenhage – the results of which are yet to be established

4 Fostering relationships with sector entities and other stakeholders towards the realisation of the department’s mandate

5 Maintenance of sound relations with Parliamentary structures and other Government spheres.

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Situation AnalysisIn reflecting on its mandate, the department sees itself as:• The “handy man” of the State• The leader of the EPWP• The regulator of the industries and associated professions falling under its

jurisdiction• The asset manager for and on behalf of the State

These will now be discussed in turn:

DPW AS THE “HANDY MAN” OF THE STATE

• The department is acutely aware and committed to ensuring that its accommodation provisioning function meets its clients’ operational, technical and social needs.

• In recognition of this imperative as well as the observation of the poor

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DPW as the" Handy Man of the State” (CONT.)

state in which public assets are in, the department developed a National Infrastructure Maintenance Strategy (NIMS) that was approved by Cabinet in July 2006.

• The vision of NIMS is that infrastructure is adequately maintained and operated, resulting in sustained service delivery, growth and employment creation, thus contributing to the goals of ASGISA and the EPWP.

• NIMS is founded around four thrusts namely:

1. Strengthening the regulatory framework governing planning and budgeting for infrastructure maintenance

2. Assisting institutions with non-financial resources

3. Developing the maintenance strategy

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DPW as the “Handy Man” of the State (cont.)

4 Strengthening monitoring, evaluation and reporting and feeding this into a process of continuous improvement

• This strategy gives substance to PFMA Act, which places an obligation on accounting officers “for the management of the assets of the entity, including the safeguarding and maintenance of those assets”.

• The department has since established an Intergovernmental Implementation Steering Committee lead by the Minister to develop an implementation plan of NIMS.

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DPW as the Handy Man of the State

• Focus on the improvement of service delivery efforts to clients through Zimisele

• Build the capacity of the department for the implementation of the EPWP and NYS on the implementation of the building programme

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DPW as the “THE LEADER" of the EPWP

• The department derives its mandate from the President’s call following the Cabinet Lekgotla held in July 2006, the mandate which includes the eradication of poverty, unemployment and underdevelopment. To this end, the department has established critical strategic with the three spheres of government, SOE’s and the private sector.

• As would be revealed, in the discussion of the budget, the department has increased its staff in EPWP to capacitate it for the leadership role it has to play.

• The following programmes will be implemented, monitored and evaluated in the medium term:

1. Expand beneficiary training2. Enhance internal EPWP capacity

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DPW as the leader of EPWP (CONT.)

3 Enhance Provincial and Municipal EPWP delivery capacity4 Enhance performance of the Environmental Sector5 Clarify on-going role of the EPWP • In line with the President’s call, the department in collaboration

with DoL and UYF through its EPWP unit will be employing 5000 young people in its building maintenance programme in the 2007/08 financial year under the NYS. A similar roll-out programme will be implemented by the Provincial Public Works.

• The department will further implement its building programme using EPWP methodology. Projects amounting to R2.9 billion have already been identified for implementation as from 2007/0.8 financial year

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DPW as the REGULATOR

• The department continues to provide strategic direction for sustainable growth, transformation and development of the construction sector in partnership with its sector entities.

• The construction sector charter has recently been gazetted by the dti and the process of establishing the Construction Sector Council is currently underway

• The department through the CIDB is implementing the national contractor development programme in line with the CIDB Act.

• The department initiated a review of the CIDB in January 2007, and it is hoped that that the results of the Review Panel will assist in identifying the focus areas that will ensure that DPW, through CIDB achieves the objectives of the CIDB Act.

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DPW as the REGULATOR (CONT.)

• In recognition of its responsibility of ensuring that there is constant supply of adequate built environment resources, the department will:

1. Enter into a bilateral agreement with the Cuban Government in May 2007, to source built environment professionals from Cuba to be deployed in the various spheres of Government.

2. working with entities, the Department will develop a comprehensive skills development strategy for the industry.

3. Explore effective ways of engaging the institutions of higher learning to ensuring the constant supply of adequate suitably qualified built environment professionals / practitioners in future.

4. continue with the implementation of the existing skills development initiatives in the form of 2014 Youth Foundation

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DPW as the REGULATOR

• In line with our key strategic pillars, the department will focus on the transformation of the property sector in the forthcoming months to deal amongst others with the deracialisation of this important sector in the country’s economy

Extension of GIAMA: The focus in the medium term will be assisting provincial and national departments in the understanding and implementation of GIAMA.  The department will continue engagement with dplg and SALGA to bring local government on board.   

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DPW as the Asset Manager

• Asset Management ensures that immovable property owned and/or utilised by the State for delivering various government services yield functional, economic and social benefits to the State

• The department will as asset manager for the State:1. ensure effective and efficient management of government’s

immovable assets.2. implement GIAMA once promulgated3. Develop norms, standards and toolkits for proper management of

immovable assets. The property performance standards will enhance the optimal performance of state owned and leased properties through determination of the minimum requirements in relation to cost and space as well as ensuring that the true cost of assets are

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Other Strategic Issues

• The department has in the past fully spent its budget - this trend will continue in the future.

• The department had been successful in turning around its financial management challenges and this trend will continue for both the department and its newly established Trading Entity that will be reporting for the first time in the 2006/07 financial year.

• In line with the Minister’s mandate, the department will constantly play its oversight over its sector entities to ensure that their legislative mandates are fulfilled whilst also providing its guidance under applicable circumstances as well as discharging its reporting and related functions to Parliament and its Committees.

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Other Strategic Issues (cont.)

• Enhance skills development through internships, learnerships and external bursary programme focusing on the built environment professions

• Reduce the vacancy rate in the department’s establishment

• As far as practically possible, unbundle the building programme projects to advance BEE procurement objectives

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Key Policy Developments affecting the Budget

• Refinement of Budget Devolution and introduction of accommodation charges that commenced in 2006/07 financial year

• GIAMA – more systematic planning and prioritisation of Building programme budgeting

• Implementation of the National Infrastructure Maintenance Strategy

• Envisaged devolution of Property Municipal Rates to the Provinces has been delayed. It is however, envisaged that this process will be finalised in the 2008/09 financial year.

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Funding arrangements after devolution

DPW

Client departments, including DPW

Devolved budgets:leases, maintenance,municipal rates andservices

Accommodation charges based on areas occupied

Treasury

Accommodation budget per department

DPW vote

Trading entity

Treasury

Quarterly invoices, MOU

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DPW Budget Vote Allocation for 2007/08

- Vote allocation for the 2007/08: R3 693 120 000

- Increase of R584 922 000 compared to 2006/07 financial year

- Breakdown per programme:• Programme 1 (Administration) : R 628 610 000• Programme 2 (Land and buildings) : R 2 866 556 000• Programme 3 (NPWP Policy and EPWP): R 173 574 000• Programme 4 (Auxilliary): R 24 380 000

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Analysis of DPW Vote Allocation by Standard Items (after devolution) (R’000)

Expenditure Item 2006/07 2007/08Personnel Budget (Refer Table 6.B) R619 506 R709 544Administration R222 192 R262 307Accommodation charge* R247 360 R274 965Trading Entity Transfer* R450 000 R476 000 Capital Works Budget (Table 6.E) R493 450 R798 450Municipal Rates/Provincial Properties R710 343 R836 570EPWP R 54 502 R71 742Facilities Management* R231 639 R156 864Transfer Payments to CIDB (Table 6.8) R 40 012 R49 891Transfer Payments to CBE (Table 6.9) R 8 000 R23 939Transfer Payment to Agreeme’nt Board R 8 065 R8 468Auxiliary Services R 23 129 R24 380 TOTAL R3 108 198 R3 693 120

*Funds to transferred to the PMTE

*ds to be transferred to Trading Entity

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PMTE estimates of revenue: 2007/08

DETAILS AMOUNT

RECEIPTS R’000

Accommodation Charges (State-owned)

2 195 611

Leasing (Private Sector Landlords) 1 488 994

Municipal services management fees

65 000

Transfers Received 476 000

Total Received 4 225 605

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DETAILS AMOUNT

PAYMENTS R’000

Leasing (Private Sector Landlords) 1 488 994

Maintenance & Major Refurbishments 2 276 920

Rates on State Property 459 691

Total Payments 4 225 605

PMTE estimates of expenditure: 2007/08

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Reflections on the Budget AllocationsOver the next financial year, there has been a notable improvement in the baseline allocation on the

following items, details of which are set out in the Vote:

– Personnel Budget increased by R90M - The increase will mainly fund the additional staff to be recruited to drive the EPWP objectives as well as the appointment of Interns and Learnership candidates

– Capital Works Budget increased by R305M – the bulk of which as explained in Table 6.E will be used to fund the following projects:

1. Prestige Projects amounting to R135M2. Dolomite Risk Management amounting to R132M3. Ports of Entry Projects amounting to R268M4. Government Head Office Projects amounting to R116M

Provincial Property Rates budget increased by R126M - The increase is meant to address the arrears that get identified as part of the on-going improvement initiatives with the Local Government’s sphere

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Reflections on the Budget (cont.)

– Maintenance and Rates charges for the National Property Portfolio increased by R478M – the breakdown of which is as follows:

1. Property Rates to Municipalities: R70M

2. Maintenance Budget increased by R408M

this amount is not reflected on the Department’s allocation as it represents the amount devolved to client departments to be reimbursed to the department in return for services rendered

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THANK YOU