Chairperson, the Select Committee on Appropriations convened hearings on the hospital revitalisation grant, HRG, for the first quarter of the 2010-11 financial year on 4 May 2010, with the focus on the over- and underspending of the grant allocation.
During the deliberations the provincial department of health raised a number of challenges that contributed to the underspending of the HRG allocation, among other things, the appointment, by the provincial departments of public works, of underperforming contractors, poor construction work by contractors and late payment of contractors.
The committee resolved that the national and provincial Departments of Health and Public Works should be invited when the committee conducts hearings on the HRG. The national Department of Health and the nine provincial health departments were in attendance.
However, the national Department of Public Works could not honour the invitation. The National Treasury presented expenditure figures as at 30 June 2010.
Key findings of the committee were as follows: As at 30 June 2010, the National Treasury reported that only 20,8% or R835,9 million was spent of the total main budgeted amount of R4 billion for the 2010-11 financial year; actual expenditure trends within some provinces remain below quarterly target benchmarks; and there are already indications in the second quarter that the HRG budget will be underspent by R1,6 billion at the end of the 2010-11 financial year.
The committee has observed little improvement by provinces in alleviating the expenditure challenges. The same challenges reported in previous hearings continue to persist in some provinces.
The committee came to the following conclusions: Some service providers provide poor quality work and perform poorly because they do not have the necessary competencies for managing projects of this nature; the termination of underperforming contractors results in project delays; inadequate norms and standards or enforcement thereof also result in poor quality work, and this also fosters a negative perception about government's commitment to improving health infrastructure. [Interjections.]
On a point of order: members who go out should remember that they are representing provinces here and we are about to vote on the matter. Really, let us be responsible, hon members. I urge you. There are many members going out and I don't understand why. Continue, hon De Beer.
Thank you, Chairperson. Late payment of contractors by either departments or principal agents still occurs, which impacts negatively on small emerging contractors.
There are significant variation orders, which are attributed to poor contract management by provincial health departments. Variation orders can be costly because an initial budget can escalate and may double the original budget; hence, greater care should be taken in the planning stages to ensure project briefs contain the correct specifications and design.
The national and provincial Health departments have limited technical capacity such as project management skills and monitoring and evaluation capacity to oversee projects and contractors. This results in projects not meeting specifications and not being fit for purpose. This also delays the completion of projects.
The recommendations are as follows: The national Department of Health should accelerate the implementation of the health infrastructure delivery plan. In turn, the provincial health departments should fast-track the establishment of the infrastructure units and the appointment of resident engineers, which should be a priority. Monitoring and evaluation activities should also be improved throughout the health sector regarding the HRG.
Co-ordination of the grant and co-operation among the provincial departments of health and public works should be strengthened. Contractors should provide value for money and be penalised for failing to complete projects on time.
Joint ventures between experienced and less experienced contractors should be carefully monitored. This is because, in most cases, the experienced contractors leave the implementation of projects to less experienced, usually small, contractors, which compromises the quality of work. The lack of transfer of skills impacts negatively on efforts to improve the capacity of smaller contractors.
In conclusion, the national Department of Health should address the issue of standard plans and norms in relation to structures for clinics and hospitals to avoid the costly exercise of commissioning designs for new structures by the provincial health departments. Chairperson, I move that the House adopts the report. Thank you.
Debate concluded.
Question put: That the Report be adopted.
IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.
Report accordingly adopted in accordance with section 65 of the Constitution.