Report of the Portfolio Committee on Public Works on Public Hearings on Strategic Plan and Budget Vote of Department of Public Works, dated 12 April 2005:
The Portfolio Committee on Public Works, having conducted public hearings on the Strategic Plan and Budget Vote No. 6 of the Department of Public Works on 4 April 2005, reports as follows:
TABLE OF CONTENTS
Glossary
Presenters
Procedure
Introduction
Presentations:
National Department of Public Works
Civil Society
Council for Built Environment
Recommendations
Acknowledgements
Presenters: Department of Public Works (DPW)
Previously Disadvantaged Individuals (PDIs)
Council for Built Environment (CBE)
Emerging Contractor (EC)
South African National Defence Force (SANDF)
Black Economic Empowerment (BEE)
Small, Medium and Micro Enterprises (SMME)
Extended Public Works Programme (EPWP
Independent Development Trust (IDT)
Public Finance Management Act (PFMA)
Construction Industry Development Board (CIDB)
Programme Implementing Agent (PIA)
First Draw Trading 70CC
The following entities were invited but could not attend:
Independent Development Trust
Construction Industry Development Board
Procedure Upon the decision of the Committee to conduct the public hearings, the public and interested stakeholders were invited to submit written and oral submissions. The advertisement was placed on the South African Broadcasting Corporation Radio stations. The following bodies and persons were invited to make oral and written representations to the Committee:
The National Department of Public Works (Written and oral)
Khaya womens’ Project (Written and oral)
Council For Built Environment (Written and oral)
Introduction The Portfolio Committee on Public Works held public hearings on the strategic plan and the budget vote of the Department of Public Works on 4 April 2005.This process follows the briefing on the annual reports of entities reporting to the Department of Public Works. A number of representatives from entities reporting to the Department of Public Works and business operated by previously disadvantaged individuals made inputs.
NATIONAL DEPARTMENT OF PUBLIC WORKS Development of a risk management strategy and fraud prevention plan.
Launch of a Disaster Recovery Plan.
Launch of the Leadership Way:
This is a new initiative aimed at improving service delivery.
The initiative will set minimum standards of behaviour for staff and management.
There will be disciplinary action against non-performance.
Launch of the Expanded Public Works Programme (EPWP).
Evaluation and review of the Emerging Contractor Development Programme (ECDP) and the Repair and Maintenance Programme (RAMP).
Asset Management:
Development of a holistic maintenance plan costing R12,5 billion.
An Immovable Asset Register Plan to improve the data integrity of the Asset Register.
Capacity:
An internal skills and competencies audit has been conducted.
The recruitment of appropriately qualified graduates is under way.
The Department’s budgetary allocation is inadequate to fund the critical programme.
There is shortfall of R1 644 859 to manage the department’s four programmes.
Maintenance:
In order to curb overspending the department has had to terminate certain services, such as maintenance.
The maintenance backlog is estimated at R12,5 billion.
The department requires funding levels of R2,5 billion per year to carry out its maintenance function.
The maintenance function requires the department to maintain 100 972 facilities around the country.
There is a funding deficit of R1,5 billion for maintenance per year.
The implications of under-funding of the department:
Buildings that are not maintained deteriorate faster and cost more to repair in the long run.
The maintenance backlog increases.
If lease commitments are not honoured, this could result in client eviction.
If municipal rates are not paid critical public services such as that provided by hospitals could be terminated.
Poor, or lack of maintenance, could result in non-compliance with the Occupational Health and Safety Act.
Key focus areas The NDPW’s role in the construction of schools:
Treasury allocates funds to the provinces for infrastructure, but funding for the construction of schools is sent directly to the Department of Education.
The department has no responsibility with regard to the construction of schools.
However, since problems arise from lack of early planning, the NDPW is trying to facilitate joint planning between the provincial Departments of Public Works and the provincial Departments of Education.
Asset Management:
The department is trying to develop a strategy for the disposal of un- and under-utilised buildings.
The problem is that some buildings fall under the jurisdiction of the provinces – thus the department wants to ensure that all levels of government have an asset management and disposal strategy.
The EPWP:
Some consultants are not in favour of the labour-intensive approach as they regard it as primitive.
However, the department is trying to promote projects such as road construction (such as the projects in Limpopo) and road maintenance (such as the projects in KwaZulu-Natal) based on the EPWP approach among both communities and consultants.
Costs for the various job creation projects differ.
The department is able to monitor progress with regard to job creation as we have defined and documented this process on our website.
Relationship with the Independent Development Trust – this organisation assists with maintenance issues at the national and provincial levels, although it does not carry out maintenance itself.
Disposal Strategy
The department needs to dispose of un- and under-utilised state assets. These cannot be leased instead, as the deci sion to dispose is a policy decision.
The disposal of unused army bases is part of that strategy. In the meantime, however, money still needs to be spent on maintenance and security in order to ensure that further deterioration does not take place and that state assets are protected from theft or illegal occupation.
Treasury will always ensure that unpaid rates etc, are ultimately paid.
There is a process under way to identify unpaid rates bills and clear the backlog, as this impacts negatively on local government budgets.
With regard to the lack of funding for critical functions such as maintenance, it should be borne in mind that it is difficult for Treasury to distribute all the funds requested by departments as there is a finite amount at its disposal. Treasury therefore has to prioritise.
The Disposal Strategy should help in this regard, as should individual departments billing Treasury directly for their maintenance costs. This latter strategy should therefore be investigated.
Lack of asset management and built environmental skills.
Repair and maintenance of public buildings.
Improving service delivery.
The problem of under-funding, as this impacts negatively on service delivery and the department’s critical functions.
PRESENTATION AND INPUTS BY CIVIL SOCIETY A presentation was made to the Committee by a representative of the Khaya Women’s Project, on behalf of several small businesses, including: Imvusa Trading, Dumela Construction, African Outbacks Services and African Construction. This presentation, together with inputs from other representatives, mainly highlighted the problems they were experiencing in trying to access the benefits of the formal economic sector in general. In particular, the presenters highlighted the difficulties they experienced in dealing with a number of local and provincial bodies, as well as parastatals. These problems included the following:
The Western Cape Department of Public Works and Transport
Numerous problems, such as lack of professionalism and an unco-operative attitude from officials, were experienced in their interaction with the regional Department.
Small businesses were frustrated, as they approached the Department for help, but instead, experienced delays, additional costs and a refusal to deal with queries about the basis on which tenders are awarded.
Many consultants are white, and are perceived as unsympathetic and unable to relate to the problems experienced by small, medium and micro enterprises (SMMEs) and PDIs.
In summary, the regional office is perceived as more of a hindrance than help - instead of being a practical manifestation of Black Economic Empowerment (BEE), the regional department was not empowering small businesses.
The City of Cape Town
The City of Cape Town was perceived as being biased in favour of large, white-owned companies.
SMMEs were limited to projects under R30 000 on the grounds that they did not have the experience, resources or finances required to carry out larger projects – an argument rejected by the presenters.
The South African National Defence Force (SANDF) and South African Navy
The SANDF requires the completion of long, complicated tender forms which most SMMEs and PDIs find intimidating.
As a result of the use of forms that are not user-friendly, many small businesses are reluctant to tender for these projects.
The Navy appears to be biased in favour of large commercial firms, against whom it is almost impossible for SMMEs to compete.
There is also a perception that the Navy is biased in favour of companies whose owners are related to their employees.
Metrorail
Metrorail was perceived as being racist.
They were also perceived as being hostile to SMMEs in that their rigid application of their rules did not enable contractors or their workers to make use of their facilities.
Any infraction of the conditions of the tender resulted in the imposition of fines and/or a decrease in the number of trains the contractor was responsible for.
There are unacceptable delays in the payment of contractors, resulting in their workers not being paid
Finally, the ‘First World’ techniques used to call for tenders (e.g. advertising in newspapers or listing on the Internet), were criticised for preventing access by PDIs.
Intersite
Financial difficulties are experienced as a result of the fact that, although the work is based in Cape Town, the administration is carried out in Gauteng.
The delays and extra costs this incurs results in additional costs and problems for SMMEs.
Fronting
BEE is not being implemented correctly. Some companies are exploiting their black employees in order to satisfy BEE criteria and thus secure contracts. However, this is usually a farce, as those employees are not shareholders, they are just being used.
The national DPW should ensure that all tenders awarded by itself, as well as the regional departments, are based on genuine BEE criteria.
Corruption
Several instances of corruption have been experienced by SMMEs in Cape Town, but when attempts have been made to complain or to challenge tenders, no action has been taken against the officials deemed responsible.
Registration
The national DPW has begun a process of registration of contractors. However, registration is also required by other bodies, such as that regulating homebuilders, and is thus an expensive process.
COUNCIL FOR THE BUILT ENVIRONMENT
The CBE is a very recently constituted organisation.
The Council was established by an Act of Parliament (Act 43 of 2000), the CBE’s Council was appointed only in March 2002, with the first meeting being held in May of that year.
The six statutory bodies for the built environment are:
Engineering Council of South Africa
South African Council for the Architectural Profession
South African Council for the Quantity Surveying Profession
South African Council for the Property Valuers Profession
South African Council for the Landscape Architectural Profession
South African Council for the Project and Construction Management Professions
Vision
Sustainable built environment professions, serving public and national interests.
Mission
Through good governance of the built environment professions, facilitate integrated development, whilst promoting efficiency and effectiveness
.
Role and functions
To serve as a forum where the built environment professions can interact and address matters of mutual interest.
To advise government on issues affecting the built environment.
To provide advice and consultation to government on aspects of national policy that could impact on the built environment.
To facilitate inter-ministerial co-operation on built environmental issues.
To advise on human resource development in the built environment professions.
To ensure that councils apply policy consistently on matters concerning their professions.
To act as an appeal body for professions and aggrieved members of the public.
Constraints and Challenges
As a fairly new organisation, the CBE is not well known.
The CBE is a unique organisation and hence is not able to draw upon the experiences of similar organisations globally – consequently the CBE is engaged in a Strategic Planning phase.
The organisation lacks sufficient resources, particularly funding.
There is a lack of appropriately qualified staff.
There is a lack of office accommodation – the Council currently rents space in the building of the Construction Industry Development Board.
There is a lack of public awareness of the work of the CBE.
The recruitment of students into the built environment professions is a slow process for a number of reasons - as a result, these are ageing professions with a low intake of new students (particularly from historically disadvantaged communities).
These last two challenges constitute serious problems as they have the potential to impact negatively on housing delivery in the future.
Countries such as Brazil, India, Ghana and the islands of the Caribbean have well established built environment professi ons, whose experts ply their skills at a global level.
South Africa can certainly learn a lot from these countries – this is one of the issues that the CBE will be expecting its Research Manager to address.
Ageing of the built environment professions
The CBE is working to address this problem by interacting with academic institutions and statutory higher education statutory bodies.
Marketing of these professions among students and graduates is also under way.
The CBE is also working on the provision of bursaries to disadvantaged students in order to encourage more black students to enter the professions.
Much of the problem, however, lies in the low numbers of secondary school students who study mathematics, as well as the poor quality of the passes in that subject.
Lack of resources
This is a serious problem as it impacts negatively on the efforts of the CBE to establish itself as a properly functioning organisation.
However, the CBE will be holding discussions soon with the NDPW to iron out these problems.
The low number of students taking mathematics at Grade 12 level and the poor quality of the passes at this level acts as a barrier to higher education as many students cannot meet the entrance criteria of technikons and universities.
Current Annual Report
This is late due to the fact that the CBE did not have permanent staff and this impacted upon the production of the report.
In addition, the production of this report depends upon the prompt receipt of reports from the various Councils – this is a stumbling block that the CBE is trying to address.
The Annual Report is presently in draft form.
The Committee recommended that: The Department must work with the National Treasury to clear the maintenance backlog of R12,5 billion and present a report to the Committee within six months.
The national and regional Departments should deal with the specific allegations of racism and corruption (supported by documentation provided at the public hearing by representatives from the small business sector) raised during the hearings and resolve them.
Companies in conjunction with CETAs should be required to provide training, internships and/or bursaries for students from historically disadvantaged communities as part of the BEE criteria.
Officials of the Department at all spheres must be continuously trained and re-orientated on the guidelines of the EPWP.
As an on going process, the Department must adhere to and implement the Batho pele principles. Civil servants should at least be proficient in one of the African languages in line with government policy.
(a) The NDPW must expedite payments to contractors for work done in order that they meet their obligations. The Department must address the impediments that have result in this problem.
(b) The Department must consider utilizing the expertise of the IDT in the furtherance on training and coordination of the EPWP programme.
The speedy passage of the Intergovernmental Bill into an Act will provide good communication and relationships between Municipalities, Provincial Departments of Public Works and National Department of Public Works. The Committee has identified that communication and coordination between these spheres is a challenge.
The CIDB must update and include statistical analysis with regard to the registration of contractors and such statistics should reflect gender, youth and people with disabilities.
The progression of the emerging contractors must be recorded and remain in the Department’s database even after they have left the incubator programme.
The process in developing the Construction Charter must be inclusive and involve the all stakeholders.
Contract and tender documents must be simplified and be user-friendly.
The Department of Public Works, the Department of Education, the CBE and the CIDB must develop a strategy that will encourage and, refocus the learners in high schools and school leavers to consider the construction industry as an attractive profession.
The fronting in all forms should be addressed by the CIDB as a matter of urgency.
The guidelines for EPWP in all language must be available on the Department website.
The CBE did not table its annual reports for the years 2002/2003 and 2003/2004. The Department must investigate the non-compliance of the CBE on this matter and report to Parliament within reasonable period.
The Committee would like to acknowledge the participation of the following:
Department of Public Works (DG and Departments officials)
National Treasury (Mr. Mahlangu)
Council for Built Environment (Mr.A Mokweni Acting Chairperson CBE and Ms M Neluheni CEO CBE)
Khaya Women’s Projects (Ms Y Buekes)
Mvandaba Cleaning Services (Ms M Mvandaba)
African Outback Services (Ms N Matanda)
Dumile Construction (Mr. D Wisani)
Investec (Ms F Leny-hassen)
Cormcordia (Mr. T Adams)
Imulsa Trading 279 CC