Department of Public Works; Construction Industry Development Board & Independent Development Trust on their 2016 Strategic & Annual Performance Plans

Meeting report

Department of Public Works (DPW) 2016/17 Strategic and Annual Performance Plans
Mr Imtiaz Fazel, Deputy Director General: Governance, Risk and Compliance, Department of Public works, set out the strategic goals for the Department (or DPW) for the next five years:
▪ Sound legislative and policy prescripts to accelerate service delivery
▪ Oversight, leadership and support to provincial public works’
▪ Coordination of Expanded Public Works Programme Phase 2 for the creation of decent employment through inclusive growth
▪ Strategic leadership and regulation of the construction and property sectors to promote economic empowerment and skills development; and ‘
▪ Good corporate governance to support effective and efficient service delivery

The DPW policy priorities for 2016/17 were derived from the policy statement of the Minister of Public Works and the Seven Year Turnaround Plan. The key priorities include:
▪ The creation of six million work opportunities for poor and unemployed people through the labour intensive delivery of public services and infrastructure
▪ Putting the Property Management Trading Entity (PMTE) into operation, and the transformation of the core property business
▪ Full operation of the  governance, risk and compliance branch to drive anti-corruption and to spearhead the second phase of the turnaround strategy
▪ A policy review to culminate in the Public Works Act and
▪ A renewed and sustained programme of action to transform the built environment and construction and property sectors as part of the second more radical transition to democracy.

Challenges in the current service delivery environment include deficiencies in the internal control environment, inadequate internal performance management operating procedures, lack of integration of performance information structures and systems within existing management processes and systems and inability to retain and attract required skilled personnel.

The budget allocation for DPW in 2016/17 is R6.5 billion and likely to increase to R7.2 billion in 2017/18. The transfer of budget for the Construction Industry Development Board (CIDB) has been decreased by R10 million in the 2016/17 financial year and was likely to be decreased by R20 million in 2018/19. The budget for PMTE had also been reduced by R380 million but this was likely to be R128 million in 2018/19.

Whilst the economy will benefit from the reduction in oil prices and the immediate lift that provides for the trade and current account balances, the energy deficit will remain a material constraint on economic performance.

Property Management Trading Entity (PMTE) 2015-2020 Strategic Plan and Annual Performance Plan
Mr Paul Serote, Head of the PMTE, DWP, said the PMTE strategic goals included the following:
▪ Effectively and efficiently manage the life cycle of immovable assets under the custodianship of Public Works
▪ Good corporate governance to support effectual service delivery
▪ Promote economic growth through integrated infrastructure development in urban and rural areas
▪ Create employment opportunities and develop skills in the provision of construction, property and facilities management services to the state
▪ Leverage the state’s property portfolio to contribute towards government’s broader transformation, empowerment and economic development
▪ The budget for PMTE in the 2016/17 financial year was R10.72 billion and this was projected to increase to R11.44 billion in the 2018/19 financial year. 

Discussion
Ms D Kohler-Barnard (DA) commented that she was very heartened by the tremendous improvement in the performance of PMTE compared to how the entity was some few years back. She said that it was unclear as to whether the rumours were true that one of the determinants for accessing the Expanded Public Works Programme (EPWP) was being a card-carrying member of the ANC.

The Chairperson interjected and added that the matter of whether one needed be a card-carrying member of the ANC in order to access the EPWP had been raised before, by different political parties. If Members wished to make such claims then they should provide the Department with instances where being an ANC member was in fact found to have been a determinant for accessing EPWP, so that the matter could be taken forward.

Ms Kohler-Barnard promised that she would provide the Department with detailed instances as there were many individuals that had actually complained about the matter. It would be important to know if there was a way to access the Public Works private property database. She wanted to know the number of properties, and the values, that PMTE owned, rented and leased for government use and those that were abandoned and un-used. The total of R1.5 million revenue for the rental of property by government agencies seemed extremely low and this could once again point to lack of revenue from unused and idling properties. She also asked how much had had been allocated to the Parliamentary Villages? Was the Department still continuing with the practice of running leases on a monthly basis? How many government staff  had been evicted in the past years because of the failure of the Department to effect payment of leases? It would be important for the Committee to know if the R246 million that had been taken away from the inner-city regeneration project and dolomite risk management programme was for the Nkandla upgrades. The amount of money that was being paid by the Department on leasing some buildings was sometimes close to the amount that would be paid to actually buy the property. Her final question was why the DPW and other departments were not buying its own properties so as to save money that is used for leases?  

Mr M Filtane (UDM) requested the Department to come clean as to whether there was a plan in place to spend additional money on new developments on Nkandla upgrades. The Committee should be provided with detailed information on the two pieces of legislation that are to be tabled by the Department, and the timeframes for the tabling of those legislations. How many jobs had been created from the EPWP at the present moment? He asked about the implications of the budget cuts on CIDB and on its ability to discharge its obligations, especially when one considered that the pivotal role of CIDB was legislative and constitutionally based. The Department was running the risk of not achieving the annual target in the reduction of irregular expenditure baseline as there was nothing that was targeted for quarter 2. It looked like the Department was also merely guessing the target for number of agreements to be signed for joint service delivery with provinces and municipalities. Why was there such a variation between the quarters in the target for agreements to be signed for joint service delivery with provinces and municipalities?

Mr Filtane wanted to know if there was any due diligence that was done internally, for the success or failure of the independence of the Independent Development Trust (IDT), especially when considering the R50 million that was projected to be allocated to the entity. It would be important to hear if PMTE was taking into consideration the concept of water preservation in the construction of new “green buildings”. It was of concern that PMTE would be relying on municipalities for conducting an evaluation of the fair value of property as there are many municipalities that do not conduct an effective evaluation of the value of property. There is a pending court case in Mthatha where the evaluations that were conducted were seriously questioned by the Ratepayers Association. Was there a way for PMTE to verify the evaluations that had been conducted by municipalities to ensure credibility? He requested that the Committee be provided with a list of the location of 350 buildings with scheduled maintenance contracts in place, which would assist Members in conducting an individual oversight. It was unclear as to why PMTE planned to have an annual target of 80% for the leases to be awarded to black-owned companies.

Mr K Sithole (IFP) asked if there was any specific reason as to why there was no budget that had been allocated for the inner-city regeneration. What was the timeframe of the Department for the consideration of ways of restructuring, monitoring and evaluating its programmes to meet its spending needs? The Committee should be assured that the strengthening of the Department’s research and policy development capacity would be able to drive transformation in the built environment. It was quite clear that the issue of transformation of the built environment was not being taken seriously in the built environment. It was concerning that the service providers are not being paid on time within the stipulated 30 days. He enquired if the Committee could be assured that there would be 100% compliance in the payment of contractors within the 30 day period, in line with the targets. He too wanted to know how many unused properties the state owned.

Ms S Kopane (DA) asked if there was any specific reason why no budget had been allocated for Agrement South Africa (ASA) for 2016/17 financial year. It was concerning that there had been a significant increase in the amount of legal fees, from R9.2 million to R25.5 million, and she asked why.  What are the implications of the budget cuts on Programme 2, especially on oversight responsibility of the Department? There is a significant increase of R7.9 million for travelling and subsistence in the budget of the Department and this was once again contradictory to the statement that was made by the President in the 2016 State of the Nation Address (SONA) that there would be significant budget cuts in travelling and subsistence expenditures. Why was the Department not able to implement this declaration by the President? Why there is no budget allocation for public corporations and private enterprises for 2016/17 to 2018/19 financial year?

Dr C Madlopha (ANC) wanted to know if the Strategic Plan of the Department was aligned to the Medium Term Strategic Framework and objectives of the National Development Plan (NDP). There was an indication from the Parliamentary Budget Office (PBO) that most of the indicators of government departments are not talking to the MTSF as well as NDP. Was there a central point where all government departments are working together to achieve the objectives of Outcome 4: Decent employment through inclusive growth? The Committee should be provided with the actual number, and not the percentage of the target, for the contracts to be renewed/ terminated within the prescribed timeframes. She appreciated the work that had been done by the Department after the implementation of the turnaround strategy in 2012, and the Committee knew that the turnaround strategy was planned to take seven years. What are the issues, internally, that are causing delays for the Department in being able to promptly finalise the pending disciplinary cases?

Dr Madlopha requested to be provided with detailed information on the lack of specialised resources with a focus on business intelligence, so as to ascertain whether the problem was actually with human resources or if it was funding based. She  was concerned that the responsibility of the Department was to provide an oversight responsibility in the EPWP but at the same time the Department was having a problem of inadequate training and risk management in Programme 1. Who was responsible for providing inadequate training? Why was the Department still having a challenge of inadequate risk management? She wanted to know if there were people coming forward with confidential information since the Department had introduced the whistle-blowing policy.

It would be important to hear from the Department on ways to fast-track and balance the target of six million people to be employed in the EPWP, especially when one considered that the new building methods that had been introduced in the market are likely to cripple that target and achievement of employment. Members should be provided with a breakdown of the R3.486 million hectares of land that had been rehabilitated and cleared and the four environmental centres that had been established, giving the provinces and municipalities. The challenge of under-reporting and poor reporting of data on the labour intensive projects was something that needed to be addressed promptly. She wanted to know if the Department, as coordinator of EPWP, had a template in place for reporting of other government departments and entities that are implementing the EPWP. It should be impossible to get inconsistent information if there is a template in place for the kind of information required from all implementing agencies of EPWP

Ms E Masehela (ANC) commented that there was a lot that had been done by the Department especially on the immovable assets. It seemed like the Department was starting the register of immovable assets from scratch. There is a need for the Department to ensure that there is consistence and coherence in the targets that are stipulated in the APP. It looked like the Department was planning for failure on some of the targets that had been set. It would be important to hear from the Department if it was not possible for community members to use some of the unoccupied buildings offices of the Department in most rural areas for something productive instead of being “white elephants”. She wanted to know if the Department was confident of the ability to create the target of six million jobs for EPWP. The people in rural areas are currently going through tough times as it was even difficult to plough because of the persistent drought and this should motivate the Department to fast-track the EPWP to deep rural areas.

Ms K Adams (ANC) complained about the fact that the presentation that was done by the Department was rushed and as a result some of the important factors were not discussed or explained. It would be important to know if the improvement of oversight of the concurrent functions of the Department was not previously part of the strategic objective of the Department. Was the performance of oversight adequate enough in the Department? She wanted to know if it would not be considered unconstitutional for the Department to take over some of the functions of local municipalities. It was of concern that there are no targets in some quarters of the Department and this was once again likely to lead to a situation where those targets would not be achieved for the 2016/17 financial year.

The Chairperson indicated that the Department had made a very long presentation and Members had also asked a number of pertinent questions and therefore the responses should be briefly summarised.

Mr Ignatius Ariyo, Chief Director: EPWP Infrastructure Sector, DPW responded that the Department was still in the process of achieving the target of six million jobs for EPWP and the focus at the moment was on consolidating data on the number of jobs that had been created thus far. The number of jobs that had been created cumulatively so far was 1.645 million work opportunities against the target of 2.1 million over two years. It must be noted that Outcome 4 entailed more than the jobs that are created by EPWP, as the focus is on the New Growth Path and whole range of other national plans. It must be highlighted that EPWP falls under sub-outcome 9 and therefore Outcome 4 was not the responsibility of the Department as a whole. The Department was acutely aware that there are some work opportunities that only last for three months and this was once again dependent on the duration of the projects, which varied across the sectors that had offered a particular project.

The Department had negotiated with the Department of Labour and concluded that there should be no limit for participation of people in EPWP. Previously, participants in the EPWP were only allowed in the programme for no longer than four months. There are some contracts that are now renewed annually for people to be able to participate in the EPWP projects without having to exit the system after four months. Some of the projects in place are specifically targeting women and people with disabilities and there are also certain percentages of targets in place that had been set aside for those individuals across the sector.

Ms Kohler-Barnard wanted to know if there was any particular difference between the previous short-term basis for participation in the EPWP projects and the new unlimited duration of participation.

Mr Ariyo responded that EPWP was specifically designed to play a role in reducing the unemployment figures. The uptake of EPWP was mainly for those who could not find employment in the formal sector economy. The programmes and projects are linked to the budget allocation of national, provincial and local municipalities and this means that some of the projects would be short in nature. The unlimited duration for participating in the EPWP was basically to ensure that those who could not find employment are able to participate in the projects on a continuous basis and maintenance work was to feature very strongly in EPWP- as this provided longer duration for participation. The Department was aware of the challenges in the data capturing for the accurate number of people that had been employed in the EPWP projects and this was something that was being fixed. The EPWP projects are implemented across the spheres of government and the Department was engaging with all implementing bodies in order for the information to be synchronised.      

Mr Cox Mokgoro, Chief Financial Officer, DPW, responded that there is a storage facility in Cape Town that is used to keep all the furniture that is moved from the Parliamentary villages. The Department usually utilises some of the furniture for other purposes and this is usually dependent on the quality of the furniture. Some of the furniture is utilised and some is sometimes disposed of or given to charities. The Department has spent about R23 million from a baseline of R9 million on furniture for Parliamentary villages in the previous financial year. The additional expenditure of R10 million for the parliamentary villages included transportation of Members to Parliament and back to the villages. There is no specific budget allocation for the additional upgrades on Nkandla and the Department has only allocated budget to regional offices for normal day-to-day maintenance. The question regarding the R246 million that had been taken away from the inner-city regeneration project and dolomite risk management programme for the Nkandla upgrades was related to the previous financial years and the focus of the Department now was essentially on 2016/17 financial year.

Mr Filtane wanted to know if the Department had a specific budget for the new developments in Nkandla, as this was not clearly explained in the provided response.

Mr Mokgoro responded that there was indeed no budget that has been allocated for new developments in Nkandla.

Ms Kohler-Barnard expressed concern about the fact that the Department did not have a budget previously for the security upgrades in Nkandla and yet was able to find R246 million, at the expense of the inner-city regeneration project and dolomite risk management programme. There should be assurance from the Department that there would be no budget or funding allocated for the new developments in Nkandla.

Mr Mokgoro reiterated that there would be no budget allocation for new developments in Nkandla as correctly reflected in the allocated budget. In relation to missing targets in some quarters, the Department was structuring its work in a way as to deal with other incoming matters like irregular and wasteful expenditure. The Department was also aware that the main focus in the second quarter is basically on audits and dealing with irregular expenditure and therefore there is not much that is being done in this specific quarter. The Department was also aware that the target of achieving 100% in the payment of service providers within the 30 day period was extremely difficult and this was one of its challenges. However, the Department was doing its best to achieve the target. It was impossible to set a target of less than 100% as that would be setting a target for non-compliance. There had been a change in the programme structure of programme 2 especially in the reallocation of functions. The Department has now moved the Governance Risk and Compliance branch from programme 2 to programme 1 under administration. The Department has implemented the cost-containment measures that had been introduced by the President and this would be evident in the next financial year. There had been budget cuts in terms of travelling, catering and other expenses that are deemed unnecessary. There has been a reduction in the baseline of the Department and this was already clear in the budget allocation.       
 
Mr Mokgoro added that there was no budget that had been allocated for the public corporations and private enterprises for 2016/17 to 2018/19 financial year because the R50 million was allocated for assisting in the corporatisation of IDT to sustain itself financially, but this was discontinued as the focus at the moment was on rewriting the business case of the entity.

Mr Serote replied that some of the questions that had been asked by Ms Kohler-Barnard were not the subject matter of parliamentary questions and the Department would prepare a consolidated response that would be made to most of the questions that had been asked. The Department was also grappling with the evaluation of the fair value of property as there are indeed many municipalities that do not conduct an effective evaluation of the value of property. The focus at the moment was on developing a fair value model and the use of a comparison method where the focus would be on looking at similar properties in the same area and trying to derive value from that. The DPW would consult with professional valuers when looking at more specialised facilities, buildings or properties. There was previously lack of clarity on the nature and extent of property portfolio of the Department and this was linked to the expansion and complexity of the portfolio and legacy issues. There were capacity issues in the past in trying  to ensure that the data on the asset register was correctly and accurately captured. The Department was trying to combine the good work that had been done in the past and close the existing gaps and also broaden the forces that are hampering the compilation of asset register.

Ms Kohler-Barnard asked if it was correct to assume that the asset register of the Department was not completed. What was the completion date?

Mr Serote responded that the focus was on the historical challenges that were still hampering the progress on compilation of the asset register. There was an acknowledgement of the work that had been done in the past and there are currently about 250 properties that are under phase 2 that are being completed. There are also 1     200 properties that DPW is unable to appropriately identify in the GIS system and the Department was engaging with the Registrar of Deeds and the Surveyor General in order to obtain other spatial data to cover the remainder of properties that are not appropriately identified.

Mr Fazel responded that most of the fraud and corruption allegations that the Department heard about are at the level of the implementing agency, so that the EPWP programme of the head office would not be involved directly and carry any of the budgets responsible for creating jobs in areas where there are allegations of favouritism and other malpractices . There is a huge risk of stolen and missing properties and there are properties that are occupied by third parties without the Department being aware of such properties. The physical verification process of the Department highlighted a number of properties that were illegally occupied and the property management branch in PMTE is embarking on a process of imposing court orders for eviction. Operation Bring Back in the Department was launched by the Minister at the national and provincial level, to work together in identifying properties that are illegally occupied, and those that had been illegally transferred or misappropriated from the state.  

Mr Fazel assured the Committee that the Department would never implement any security upgrades without a request and security assessment from the Security Cluster. The Department was developing norms and standards to ensure that the security requirements and assessments are converted in a more economical manner in the required infrastructure.

Ms Kohler-Barnard wanted to know if the Security Cluster had asked the Department to build other non-security upgrades in Nkandla, like the swimming pool and chicken-run.

Mr Filtane requested the Department to inform the Committee before planning any new developments in Nkandla.

Dr Madlopha interjected and indicated that it was not proper for Members to start discussing issues that are not included in the Strategic Plan of the Department. The Committee had already made it clear that it would not support any project of the Department that is outside its allocated budget. It could not be correct to assume that there are some Members who support the expenditure on projects that are outside the budget although allocated to the Department.

Ms Masehela added that Members should not be obsessed about the issue of Nkandla, as the focus for today was mainly on the Strategic Plans and APPs of the Department and its entities.

The Chairperson jokingly said he was aware that politicians had the ability to link any issue with everything and therefore it would be important for the focus to be on the purpose of the meeting today.

Ms Kohler-Barnard said that it was the job of MPs to interrogate government departments and its entities, and it was quite clear that there was no budget for the security upgrades in Nkandla. Members could not be prevented from asking tough questions just because some Members are feeling uncomfortable about issues that are being flagged.

Mr Fazel replied that the Department would submit the CIDB Amendment Bill in 2017/18 and then a Public Works Bill in 2018/19 financial year. It is clear that the CIDB would struggle from the projected budget cuts of R45 million over three years. The Department was looking at other possible sources of funding for CIDB and this included contractor registration functions. The Department has signed a framework for working with the IDT as it is clear that the entity would need more support from the Department in order to be able to operate independently and efficiently

He noted that there is a target of 100% investigation of all cases of fraud and corruption within the 30 day period. There is no target for the actual number of cases to be investigated as the Department could not predict the number of cases to be dealt with. The whistle-blowing policy is intended to encourage reporting of cases of fraud and corruption within the Department and elsewhere and there is a massive campaign to encourage more people to utilise whistle-blowing as part of the broader framework of fighting fraud and corruption.  

Construction Industry Development Board (CIDB) Strategic and Annual Performance Plans
Ms Hlengiwe Khumalo, Acting Chief Executive Officer, CIDB, said that the vision for the Board (or  CIDB) was to achieve a transformed construction industry that delivered sustainable value, in a manner that was responsive to the socio-economic needs of South Africa. The CIDB existed in order to create an inclusive, sustainable and competitive construction industry. It did so by regulating, developing and transforming the construction industry, through monitoring and enforcement, setting of standards and guidelines, capacity building and forging partnerships. Its values included service excellence, integrity, innovation, leadership, cooperation, and teamwork and personnel development. Its mandate was to provide strategic leadership to stimulate sustainable growth, reform and improvement of the construction sector. The entity also wanted to play a role in sustainable growth and participate in the emerging sector. It wanted to improve performance and implement best practices. It sought to monitor and regulate the performance of the industry, including the registration of projects and contractors.

She explained that the CIDB had listed five matters arising out of the external environment which had an impact on the entity, and posed problems that the CIDB was trying to address. There was a slow progress to transform the industry. The CIDB wanted to deliver enhanced value to clients and society to improve the industry's performance and wanted to provide an approach to management that would centred on clients and that would have enough capacity. Contract development and participation of the emerging sector remained a key focus point for the entity. In order to assess its internal environment, the CIDB had conducted a culture survey, to assess the areas in which the entity needed to improve. Some of these were communication, diversity, innovation, remuneration, learning and development, structure, teamwork and vision and values.

The Five Year Review showed that stakeholders were generally appreciative and supportive of the role of the CIDB in the industry. CIDB was well regarded and was seen as providing valuable guidance, leadership and direction to the industry. Its outputs were perceived as useful and relevant. However, there remained much to be done. For example, it had been recommended that the entity should strengthen its internal legal resources, decentralisation, its communication with stakeholders on the CIDB’s role and mandate, and should also direct the strategic foresight of the South African construction industry in line with the National Development Plan (NDP) and global challenges, whilst also implementing Phase 2 of the Register's Best Practice Project Assessment Scheme and Best Practice Contractor Recognition Scheme. It had further been recommended that it should provide leadership in a comprehensive NDP with clear targets, train client departments to utilise Best Practice Notes, and work closely with other research and higher education institutions and reinvigorate the concept of Centres of Excellence.

The CIDB's strategic goals included:
- strengthening and enhancing compliance with CIDB regulations to reduce construction risk and all forms of fraud and corruption in the sector
- building and capacitating the industry to deliver quality infrastructure
- enhancing transformation of the construction industry
- maintaining financial sustainability
- positioning the CIDB as a knowledge authority in the industry
- optimising organisational design that supported the effective delivery of the mandate
- strengthening and maintaining good relationships with stakeholders, through effective communication.

Ms Khumalo took Members through the specific strategic goals (see attached presentation for full details). The entity would focus on the amendments to Construction Registers Service (CID) Regulations. Significant changes to the Register of Contractors were introduced through regulation amendments gazetted in July 2013. These included the removal of the requirement for contractors to have registered professionals in their full time employ for the purposes of CIDB registration, and reduction in Annual Turnover requirements, among other amendments. The entity would also continually scan the environment to ensure that the Register of Contractors served as a macro risk management tool for the public sector and provided a framework for the development of emerging contractors. During the 2016-17 financial year further amendments have been identified and these will be gazetted for public comment, subject to approval by the Minister of Public Works. These include, among others: Grade 1 registration - introduction of entry level requirements which will enable increased and improved advisory service to contractors, improved appeals process, and requirement for subcontractors to be CIDB registered.

During the 2016-17 year the CIDB will pilot an online contractor registration system
The pilot will allow the CIDB to refine the system. Contractors will be able to lodge applications and upload supporting documents through the CIDB website. This will allow for improved customer service and will reduce the burden on contractors in terms of travelling to CIDB offices. It will also reduce the administration overhead on the CIDB in the management of the Register

Ms Khumalo added that the Draft Regulation for the Project Assessment Scheme will be published for public comment in 2016/17. The Scheme will lay the foundation for the implementation of CIDB Standards in 2016/17, which includes, among others, developmental goals on public and private sector contracts. Around 500 contractors will receiving developmental support per year. Around 6 000 learning opportunities per year for Further Education and Training (FET) learners / artisans and around 1   500 learning opportunities per year for candidates will be offered.

The entity was allocated a total budget of R125 million in the 2016/17 financial year, from R145 million in the previous financial year, but rising to R149 million in the following year. The CIDB was planning to review its income generation model and try to generate alternative revenue schemes, including the Best Practice Fee

Discussion
Mr Adams appreciated that the presentation of CIDB was generally eloquent and detailed and highlighted a number of interesting points. It was clear that transformation was now a buzzword and therefore it would be important for CIDB to clearly explain what it meant when referred to transformation. It was also unclear as to what were the targets in place to ensure that these transformational goals could be realised. The Committee should be provided with more information on some of the issues that came out after the engagement with stakeholders on critical transformation issues and the conclusion that was reached on achieving those transformational goals. It would be important to know if there was any possibility of laying-off some personnel in the CIDB and further training to ensure that there is no retrenchment.

Ms Masehela asked if there were any specific challenges that were hampering CIDB from achieving the transformational goals and whether there was any strategy in place to expedite the transformational goals in CIDB? There should be measures in place to ensure that CIDB was able to hire credible and qualified service providers who would be able to execute their mandates. There should be an effort to concentrate on subcontractors, as these are people that had been taken for a ride for many year. It should  find ways to regularise the sub-construction industry, as it was previously done in the past. She wanted to know if there are learners from the Further Training and Education (FET) colleges that would be assisted. It would be important to know how the once-off registration was different from one grade to another, as this was not clearly explained in the presentation.

Ms Kohler-Barnard commended the previous acting CEO of CIDB for ensuring that the entity was able to significantly cut-down on operation expenses like travelling and subsistence, electricity and imposed fines. It would be important to know if the current acting CEO had done any analysis on why the previous acting CEO was able to successfully implement these cost-cutting measures, and then  replicate in the current regime. It is clear that the entity had failed to achieve the target of 3 year review and revision of the infrastructure delivery management tool in the previous financial year. What is the status quo in this regard and the current status of that project? It was pleasing to see that the recommendations that had been made by the National Treasury in the previous financial year were now incorporated in this year’s APP, especially on adhering to Treasury regulations. In terms of compliance with procurement and delivery, the Committee should be briefed on why KwaZulu-Natal province was performing poorly (46%) in this regard compared to other provinces like Northern Cape that are at 96%.

Ms Kohler-Barnard commented that it was unclear as to why the information on the percentage that was obtained by metropolitan councils, high capacity municipalities and other entities on compliance with procurement process was left blank. It was extremely difficult to motivate staff workers who had been  idling in one position for a very long period of time, and this was the issue that the entity needed to deal with.

Mr Sithole also complained about the slow pace of transformation in the built environment and reiterated that this was an issue that needed to be prioritised. What was to be done by CIDB to achieve the transformational goals? The Committee should be provided with the breakdown of 28    136 Grade 1 contractors, in terms of race, in order to determine the number of White people in this lowest grade.

Dr Madlopha appreciated that there is some willingness to transform the built environment and urged that Members should support this important objective. It was unclear as to whether the organisational redesign that had been implemented indicated that most of the people in the entity were not in line with the mandate of the entity. What is the cost of the organisational redesign of CIDB?

Ms Kopane was also pleased to see that the current Acting CEO was willing to fine-tune the entity to be able to operate efficiently and urged that everyone in the entity should rally behind the CEO in order to achieve the objectives. It had been noted that the entity had failed to adhere to the National Treasury regulations, showing deviation in terms of Supply Chain Management (SCM). What is the status quo in this regard? She wanted to know if there was a training programme in place for the capacitation of municipalities in terms of procurement and contractor development.

Ms Khumalo responded that there was a recent National Stakeholder Forum, that was hosted about a week ago, where there was an identification of five streams that needed to be dealt with as far as transformation is concerned. The first looked at the business conditions that are prevailing within the construction industry and the ones that are faced by contractors when trying to deal with transformation. The second was governance issues, and the focus here was on legislation and procurement reforms and access to work as a tool to address issues of transformation. There was also a focus on enterprise development and support as well as skills and competence. The members of the National Stakeholder Forum are going to be dealing with the finalisation of programmes to look at the five issues that had been identified around transformation, looking to what needs to be done in the short, medium and long term, and this was being done in parallel with the review of the Act that would look at specific issues around transformation.

There is awareness that CIDB is supposed to play a key role in the transformation of the built environment although there are also other role players that are involved in this objective. CIDB conducted a culture survey project about two years and some of the findings that emanated from the analysis of the enterpriser architecture which was finalised last year were similar. The details of the analysis would be presented on the Annual Report of 2015/16. It was not clear presently whether  there would be a downsizing of personnel at CIDB, but there was a possibility that some staff members could be laid-off. There would also be an upskilling of some personnel at CIDB in order to see if they could be capacitated and redeployed somewhere. It was indeed true that CIDB had been receiving an increase of revenue from contractors who are interested in being registered at CIDB. There is a need for the revenue of the legislation and the strategy of the CIDB in order to deal with the issue of transformation in the built environment. The reality is that the focus of the entity seemed to be on the registration of contractors and some of the priorities like transformation have suffered as a result.

Ms Khumalo added that the entity was engaging with different departments and municipalities on issues such as contractor development programmes and contractors should be able to have sufficient access to work in order to upgrade from one grade to another. There is a concerted effort to focus on regularisation of subcontractors as there is realisation that there are many contractors that could potentially move from one grade to another and this could be done by regularising their space. There are currently no learners in FET colleges and this was to be done only after the implementation of the best practice fee.  The once-off registration was only for Grade 1 and other grades are supposed to do renewals after every three years. Most of the questions that had been asked by Ms Kohler-Barnard are related to issues that are still to be dealt with in the annual report. There is a corrective action plan in place within the CIDB and it was also reporting to the Audit and Risk Committee of the Board.

It must be highlighted that KZN was simply performing poorly in the implementation of the prescripts of procurement especially in terms of registration of projects and wide advertisement of tenders. The procurement and delivery management team was in close contact with Provincial Treasury in KZN to deal with whatever specific issue might arise there, especially the capacitation of municipalities. There was no data provided on the percentage that was obtained by metropolitan councils, high capacity municipalities and other entities on compliance with procurement process, hence the spaces were left blank. CIDB had incorporated a changed management strategy within the organisational redesign and it would be important for staff members to understand the need to have an organisational change. 

Ms Khumalo reiterated that the entity would need to shift its focus from the registration of contractors to expertise that needs to come on board, especially to prevent the outsourcing of other functions like investigation. The mere fact that CIDB did not have the inspectorate function in the construction sites was something that spoke to lack of adequate expertise within the entity. The cost of first phase of organisational redesign was roughly R500 000 and the second phase was more detailed. It was about to begin in April and would cost R3 million. This would look at business processes and mandate of CIDB.     

Independent Development Trust (IDT) Strategic and Annual Plans
Mr Coceko Pakade, Chief Executive Officer, IDT; indicated that the mandate of the entity from Cabinet  in 1997 was still in place; namely, to transform the IDT into a government development agency that would implement projects commissioned by government departments. It was integrated into the public service delivery system in 1999, with the promulgation of the Public Finance Management Act (PFMA), in which it was listed as a Schedule 2 Major Public Entity. It contributed towards the mandate, vision and strategic objectives of the Department of Public Works to advance the National Development Plan (NDP), National priority outcomes, National Infrastructure Plan (NIP) and New Growth Path (NGP). The relevant programmes of the DPW were outlined as Administration, Immovable Assets Investment Management and EPWP. The contribution to the national strategic outcomes included: quality basic education, a long and healthy life for all South Africans, decent employment through inclusive growth, a skilled and capable workforce.

He outlined the performance outcomes of the IDT over the last ten years. It had managed to deliver programmes worth approximately R20.25 billion, and 85% to 95% of that amount was directed to social infrastructure development. It implemented integrated social infrastructure and social development programmes whose outputs had a long-term development impact. One of IDT's key service offerings was social facilitation; it facilitated acceptability and ownership of development, programme delivery, undertaken with the full participation of communities. Direct contributions were made to achieve the government’s strategic outcome that was translated by the Department of Public Works to mean “Service, Delivery, Quality and Access to Government Services”.

He noted that IDT had done a SWOT analysis of Strengths, Weaknesses, Opportunities and Threats. Under opportunities, IDT noted that it had been positioned as an agency specialising in programme management and development, tasked with managing and delivering social infrastructure backlogs on behalf of government. It had expanded the programme implementation management services to basic services and housing infrastructure. It had spearheaded the Green Technology and related innovations in infrastructure development, and made provision for rural development infrastructure programme implementation support services and post-settlement support, linked to the Comprehensive Rural Development Programme.

Threats were posed due to the frequent changes in leadership of client government departments. Other threats related to the risks to continuity of the IDT’s delivery of programmes and meeting of obligations to service providers. The fiscus was under pressure, which led to delays in programmes and delays in programme payments by client departments, thereby exposing the IDT to litigation. The intense competition by State Owned Companies (SOCs) for provision of social infrastructure and programme management also caused problems for the entity. Any lack of clarity in mandate exposed the IDT to a possible usurping of its own mandate by other state entities which led to financial vulnerability. It had lost some critical staff, due to uncertainty arising from the financial viability challenges. This was compounded by the overall shortage of skills in the built environment industry.
Strengths were then described.

The IDT had made progress in some matters. It had made a commitment to eradicating poverty, empowering of marginalised sectors of society and building of sustainable communities, and building a strong client base around the country. IDT had established good working relationships with provincial and national governments. It had developed a youthful, professional and passionate personnel. Effective management and business process systems were put in place.

Mr Pakade conceded that, as with any other organisation, IDT also had its weaknesses. The organisational capacity was not aligned with the high growth in programme portfolio. There was a shortage of technically qualified staff who were needed to meet the growing national infrastructure development programme delivery standards, This in turn also limited the influence that IDT could input into the conceptualisation and design of clients programmes, and the formulation of development solutions and programme impact. Its relationship with the government was often structured on a client/service provider basis, thus limiting the value that could have accrued from a partnership based relation.

The Chairperson indicated that the Committee would still need to set aside enough time to have further discussions with IDT.

The meeting was adjourned.