DPWI 2020/21Quarter 1 & 2 performance

Meeting report

The Chairperson said that the agenda for the meeting would be a briefing on the 2020/21 first and second quarter performance of the Department, but the performance would differ from previous years as a result of the COVID-19 national lockdown.

DPWI Performance Progress Quarter One & Two 2020/21

Mr Lwazi Mahlangu, Deputy Director-General (DDG): Governance, Risk and Compliance, Department of Public Works and Infrastructure (DPWI), began by providing an overview of the Department’s performance and noted that five of the 23 key performance indicators (KPIs) and seven of the 21 KPIs where achieved by the Department in quarters 1 and 2 respectively. This translated to an overall performance of 22% and 33% respectively, broadly meaning that some action had been started, or completed, but had not yet yielded any output.

Regarding Programme 1 (Management): it was noted that due to challenges resulting mainly from failures to implement during the national lockdown, both the percentage performance information levels and percentage financial performance levels were below the quarterly targets. He provided the Committee with a detailed overview of the Department’s progress towards each individual performance indicator (See presentation for details).

In Programme 2 (Intergovernmental Coordination): the Department had driven its efforts towards increasing managerial integration. While there had been progress towards all three performance indicators, the progress made towards them was part of the annual performance plan, and was thus not counted within the quarterly reports. (See presentation for details).

Under Programme 3 (Expanded Public Works Programme): as many of the programmes undertaken during the lockdown were in the social sector which had high levels of women, the Department managed to significantly exceed its quarter 1 and 2 indicators for the participation of women in public works. However, despite this progress, the Department failed to meet the targets for youth and people with disabilities, along with the number of work opportunities reported. (See presentation for details).

Progress had been made towards achieving Programme 4 (Property and Construction Industry Policy Research). The Expropriation Bill had been presented to the Inter-Ministerial Committee on Agriculture and Land Reform, and there had been continued engagements with the Law Reform Commission and the Department of Justice on the Law Reform Commission’s Report.

The Department had failed to reach its quarterly targets for Programme 5 (Prestige), as no planned state events had taken place in the period under review due to the COVID-19 pandemic, and thus no requests were made to support state events with movable infrastructure. Additionally, the review of prestige policies had been delayed while the inputs received from stakeholders were properly considered.

Challenges with achieving the Programme 6 (Management) percentage financial performance level performance indicator resulted mainly from the failure to implement some programmes during the lockdown period. (See presentation for details).

Programme 7 (Real Estate Investment Services) had seen progress being made, with targets being met. The Department’s Custodial Asset Management Plan (CAMP) had already been submitted to National Treasury according to the stipulated regulations. Additionally, the Department’s portfolio for the Development of Infrastructure Programmes and Economic Objectives had requested guidance from National Treasury regarding the pending release of an additional 323.6 hectares of land. ((See presentation for details).

Programme 8 (Construction Project Management) indicators could not be reached, with no progress being made at all during quarter 1, as owing to the lockdown regulations, contractors could not access any construction sites, and thus this resulted in projects being halted. Further, while the lockdown regulations had been eased, and progress had been made in quarter 2, targets had still not been met as the number of projects behind schedule was substantial. (See presentation for details).

While several Programme 9 (Real Estate Management Services) targets had been met, such as revenue generated through the letting of state-owned properties, unutilised vacant state-owned properties being let out, and new leases awarded to black-owned companies, the Department required further consultation with National Treasury and other stakeholders to reach 100% performance.

Regarding Programme 10 (Real Estate Information Registry Services), the Department was able to reach its Quarter 1 and 2 targets for the number of provincial immovable asset registers assessed for compliance. However, the lockdown, along with restrictive access to government facilities, had severely hindered the number of immovable assets that could be verified to validate their existence and assess conditions, and the number of land parcels vested by the Department.

As with previous programmes, Programme 11 (Facilities Management) targets could not be reached, as their roll out and implementation was severely hindered, especially in quarter 1, due to the impact of COVID-19 related regulations.

Mr Mahlangu provided an overview of the process that projects undergo from start to end, and said that there were currently 81 active projects at different stages of construction, with a portfolio value of R800 billion. There were currently 22 projects in the procurement stage, with a portfolio value of R73.1 billion, following sponsors/owners putting out of a tender for the appointment of key service providers for the implementation of the project. Additionally, there were 31 projects, with a value of R215.1 billion, in the feasibility stage, where the project sponsor/owner would be conducting final studies to determine the overall cost, implementation timeline, and market value of the project. It was also noted that projects that had stalled over a significant period without advancing through the development stages were considered to be “on hold”. There were currently 66 projects and programmes on hold, with a portfolio value of R2.6 Trillion. He said the Department currently had 46 projects which were completed and in operation, with a value of R162 billion.

Discussion

Ms S Graham (DA) commented that the Department was doing relatively well in terms of meeting its targets. Regarding the R234 million that had been spent on behalf of the Department of Health on cleaning and sanitising quarantine sites, the report indicated the DPWI would be covering the costs of the EPWP participants, and not the actual products used. She asked that clarity be provided on this matter.

With the onset of the Independent Development Trust (IDT) closure, the Department had been told that they would receive an amount of R84 million over a period of four months. However, she said that there was no evidence indicating that this money had been received. As such, she asked where the money had gone and if the R76 million that had been presented on was part of the missing R84 million. She also sought clarity on what was being done to deal with the IDT, as they were not allowed to be used as implementing agents by the DPWI, and they were not allowed to take on new clients due to their closure. However, there were running costs that needed to be covered. She asked if anything was being done with respect to their funds, as it negatively impacted the spending of the Department if it was necessary to support the IDT throughout the financial year.

Regarding the non-state sector non-profit organisation (NPO) programme which should have begun in April, she queried whether the money that had been unspent till now had been reallocated to the bailout of South African Airways (SAA), as it could have been allocated to the IDT.

There were two areas of concern in regard to the delay in construction projects, such as the construction mafia and the small, medium and micro enterprises (SMMEs). The construction mafia demanded 30% whilst completing no work, and had shut down various sites. She asked if the Department was taking this matter seriously, and if there was a plan to address it. She explained that the SMMEs were paid per each brick laid, and that there was a set daily target that needed to be met for the full payment to be received. However, these targets were not being met, and the issue of reduced pay had created an exceptionally hostile situation. Ms Graham said she believed that the issue was not being adequately addressed by the Department.

Lastly, she asked how would the Department be reporting on infrastructure in the future, and if they would be creating a new programme that focused just on infrastructure. On the accommodation policy under consideration, she asked if there were timeframes that could be provided and if it would be completed before the next financial year.

Ms A Siwisa (EFF) expressed her concern regarding the leasing of buildings, because the Department was renting buildings when there was no need to, as it had buildings that were verified, vacant and available for use. She sought clarity on the projects presented, and who was responsible for them.  According to the presentation, the Law Commission Report had begun in 2012 and had still not been finalised, and she wanted to know why this was the case. The Department was responsible for handing out bursaries to those in need, so what was being done to assist the beneficiaries of these bursaries and were they actually being absorbed into the system or not?

On the digitalisation of the Department, she asked if this was linked to the original offices. It had been asserted in the presentation that everything was on track, but the validity of this was questioned as the government had had to conduct virtual meetings, thus putting a halt to Members conducting oversight to ensure that things were in fact on track.

She asked how many vacant buildings the DPWI had, and why they were not being used. On slide 27, which stated that R800 billion had been spent on 81 projects, she asked if the Department was saying that each project used R10 billion. She also questioned what remedies the Department had in place to deal with landlords who were increasing rental prices.

Mr W Thring (ACDP) referred to slide 14, which looked at the Department’s financial performance. He said the presenter had indicated that he would not be looking at this in detail, but he argued that it was crucial in terms of the current crisis, and thus asked what the causes for the poor financial performance were. He further argued that the Department was not taking advantage of the excess property that was available. On the letting of state-owned properties, he contended that they were not using this advantage that was available. After visiting the Telkom Towers building last year, he had indicated that the land available was supposed to be occupied by the South African Police Service (SAPS), and asked that an update be provided on the matter. Lastly he asked if there was a date for the completion of the Immovable Asset Register (IAR).

Ms M Hicklin (DA) reiterated the seriousness of the construction mafia’s activities, and asserted that measures needed to be implemented to address the matter, and that would have to come from a legal framework. She said that programmes 1, 2 and 8 which were presented were severely dependent on having a proper Immovable Asset Register (IAR). A physical verification of land needed to be done, and although there were obvious constraints due to COVID-19, the matter needed to be resolved.

Regarding the digitisation of the Department, she asked if it was a tamper-proof system in terms of procurement, leasing and revenue collection, to ensure that once money came in it could not be tampered with. She argued that the IAR was useless at the moment, as it did not offer any safety net. On the lack of an efficient data base, she asked if all the money owed to the Department was able to be collected, and if there were tenants in buildings owned by the DPWI who were not being billed. 

Ms L Mjobo (ANC) voiced her concern regarding the low performance levels reached in respect of the renting of offices at Telkom Towers,. She noted that the Department should implement Operation Phakisa, an initiative designed to fast track the implementation of solutions on critical development issues, to increase their capital investment levels and thus enhance employment figures.

Ms S Kopane (DA) said that there was obvious under-spending in different programmes due to the failure to fill the vacant positions, and asked how this had impacted service delivery. It was obvious that the R234 million spent on behalf of the Department of Health was for the cleaning and sanitising of the quarantine facilities and the purchasing of personal protective equipment (PPE), and she wanted to know how this had impacted the work of the Department. Concerning program 4 presented, she asked how did the over spending effect its ability to function correctly.

DPWI’s responses

Responding to the questions that arose regarding digitalisation, the Department said that the key issue was the effort made towards having an Economic Recovery Programme (ERP) system in place, such as concluding the role out of the Archibus and Sage platforms. While the Department would be increasing its levels of automation in several business areas, and had made progress in modernising its logistics systems, the main digitalisation efforts had been the ERP projects.

While progress had been made, the Department had yet to conclude the finalisation of its Immovable Assets Register on the Archibus platform, as a service provider had not yet been contracted in this respect. This process had been protracted, as only two service providers from the approved list had responded. As the responses received were both well above market rates, the Department had placed out an open call in order for progress to be made. Once the Department had fully transitioned to using the Archibus platform for its IAR, individuals would no longer be able to tamper with it with ease.

Regarding the non-filling of vacancies, when the country moved from Alert Level 5 to Alert Level 4, the Department had immediately begun the process to finalise a recruitment plan, which had been concluded in June/July. This had already yielded results, as the Department had concluded conducting interviews for managers in Cape Town and Mthatha, and expected these positions to be filled shortly.

Ms Abrahams said that the work that had been done by the EPWP during the COVID-19 related interventions was not related to the quarantine sites. However, it was related to the EPWP’s public health and hygiene strategy, as guided by the Department of Health.

Regarding the normal NPO programme, she said that Ms Graham was indeed correct that the programme would be commencing shortly, with a budget of R344 million, with R200 million having been released by National Treasury during the medium term budget. The impact of this programme, up to the end of September, had been the creation of 27 077 jobs against a target of 25 000. Within the third quarter, additional work opportunities had been created, and while the number had yet to be finalised, it was expected to be in excess of 32 000. An additional benefit of the programme was that more than 90% of its participants where youths.

Ms Sasa Subban, DDG: Real Estate Investment Services, DPWI, responding to questions regarding the Department’s IAR and specifically addressing physical verification, said that the Department periodically conducted physical verifications of assets on its register, the last of which was conducted in 2014/2015. Unfortunately, the Department had not been able to achieve its targets for updating the register due to COVID-19, but efforts would be intensified in the third quarter so that the undertaking could be completed in a timely manner.

Regarding the vacant state buildings, the Department had identified 1 168, many of which did not meet occupation safety standards, making it difficult for them to be rented out and utilised. Additionally, while some vacant buildings had been offered to tenants, they often did not meet the intended office space requirements required. As such, the Department had commenced a programme in which these vacant state-owned buildings would be sold on the open market, following the current ongoing valuation stage.

Regarding the release of additional land, the Department had targeted to release 34 995 ha of land, but further progress was dependent on the Departments of Human Settlements and Rural Development. As the majority of this land had been set aside for restitution claims, the Department had been forced to wait for the supporting documentation and authorisation from the Department of Rural Development before it could be released.

Ms Florence Rabada, Acting DDG: Property and Construction Industry Policy and Research, DPWI, responded to questions regarding the Public Works General Laws Repeal Bill, and said that it differed from the Public Works Act. She said it referred to a single Public Works Bill, the intention of which was to repeal or amend any preceding acts administered by the Department. The need for this bill had emerged from a report commissioned to highlight any technical or substantive changes required in all governmental legislation. As a concluding note, she noted that all efforts made in this regard were being conducted in tandem with the Department of Justice.

The Department responded to questions regarding the transfer of funds to the IDT, and confirmed that so far the Department had been able to pay two tranches. However, an operational shortfall of R30 million had to be addressed first, as per the recently passed Appropriations Bill.

Mr Batho Mokhothu, DDG: Construction Project Management, DPWI, responding to the question raised regarding the “construction mafia”, acknowledged that the Department had faced several delays that had hindered the completion of projects within various communities. However, through increased consultation with communities, along with more in-depth feasibility studies, it was of the view that these obstacles could be overcome.

With regards to the construction SMMEs, he acknowledged that the nation’s youth had to be involved in the discussion, in order for a sustainable construction industry to emerge. He commented that the Department had previously struggled to increase the involvement of youth, women, and people with disabilities within the construction sector. Responding to these challenges, the Department had developed several initiatives, such as the EPWP Vuk'uphile Learnership Programme, which was intended to develop emerging contractors into fully fledged contractors, able to execute labour-intensive projects.

The meeting was adjourned.