201920 Third Quarter Financial and Non Financial performance

2019/20 Third Quarter Financial and Non Financial performance South Africa Works because of 4 th March 2020 Portfolio Committee on Public Works and Infrastructure (Parliament, RSA) Office of the Director-General Public Works

Purpose • To present to the Portfolio Committee on the 2019/20 Third Quarter Financial and Non Financial performance 2

Table of Contents Section Content A Mandate B Q 3 Non-Financial Performance DPW C Q 3 Non-Financial Performance PMTE D Q 3 Financial Performance - DPW E Q 3 Financial Performance - PMTE F Recommendation 3

Section A Mandate 4

Mandate of the Department Constitutional mandate The Constitutional mandate is provided for in Schedule 4, Part A, of the Constitution of the Republic of South Africa: Functional Areas of Concurrent National and Provincial Legislative Competence. Legislative mandate The legislative mandate is primarily governed by the Government Immovable Asset Management Act, 2007. The Department regulates the construction industry and built environment through the Construction Industry Development Board Act, 2000 (Act No. 38 of 2000) and the six Professional Council Acts that regulate the six Built Environment Professions (BEPs), and through the Council for the Built Environment Act (Act No. 43 of 2000) Policy mandates • • DPW White Paper: Public Works, Towards the 21 st Century, 1997 DPW White Paper: Creating an Enabling Environment for Reconstruction, Growth and Development in the Construction Industry, 1999 Construction Sector Transformation Charter, 2006 Property Sector Transformation Charter, 2007 DPW Broad-based Black Economic Empowerment Strategy, 2006 Property Management Strategy on BBBEE, Job Creation and Poverty Alleviation, 2007 Green Building Framework, 2011 5

Programme Structure DPW PMTE Programme 1: Administration • Finance and Supply Chain Management Programme 2: Inter-Governmental Coordination Programme 2: Real Estate and Investment Services Programme 3: Expanded Public Works Programme (EPWP) Programme 3: Construction Project Management Programme 4: Property and Construction Industry Policy and Research Programme 4: Real Estate Management Services Programme 5: Prestige Policy Programme 5: Real Estate Information & Registry Services Programme 6: Facilities Management 6

Programme Structure and Shared Services Main Vote PMTE Shared Services • EPWP • Property and Construction Industry Policy • Prestige Management • Corporate Services • Governance, Risk and Compliance • Inter-Governmental Coordination • Finance and Supply Chain Management • • • Real Estate and Investment Services Construction Project Management Real Estate Information and Registry Facilities Management 7

Section B DPW - Non- Financial Performance Information 8

Performance Legend Not a Target for that Quarter in the APP but performance reported in the operational Plans 9

Programme 1: Administration Performance Indicator Annual Target Quarter 3 Performance Target Comments on Performance Sub-Programme: Management Strategic Objective: To improve governance processes within the Department and PMTE Number of initiatives undertaken to 36 accelerate the transformation agenda of the Department (9) 9 initiatives undertaken to accelerate the transformation agenda of the Department Percentage of investigations instituted within 30 day of validated reported allegations (100%) (3 out of 3) 100% Investigations instituted within 30 Continue with similar efforts to ensure that days of validated reported allegations targets are met _ Not Q 3 target 100% Number of interventions recommended 2 resulting from fraud risk management Continue with similar efforts to ensure that targets are met 10

Programme 1: Administration Performance Indicator Annual Target Quarter 3 Performance Target Comments on Performance Sub-Programme: Finance and Supply Chain Strategic Objective: To provide a compliant internal control, financial and supply chain management service Percentage of compliant invoices settled within 100% 30 days 100% 97% Percentage change in the irregular expenditure 100% (R 114 _ baseline million) Not Q 3 Target Percentage of bids awarded within 56 working 75% days from closure of tender advertisement 75% 55% 6 out of 11 tenders awarded within 56 days of closure of advert Percentage of quotations awarded within 30 working days from requisition date 90% Delay in certification and submission of invoices for processing by line managers, controls put in place to ensure timeous submission of invoices • Dependency on State Security Agency to security clear service providers. • Turnaround time afforded to service providers to resolve and clarify tender information including tax compliance in terms of PAJA • Implementation of the PPR 2017 sub-contracting clause which included additional steps in the process (validation of sub-contractors information) • Turnaround time for client departments to confirm funding for tenders • Inability of Bid Committees to make a quorum due to competing priorities • Capacity constraints in terms of Project Managers, Professionals and SCM officials to deal with high volume of tenders received • Implementation in Q 3 of external probity audit for tender awards has added to the turnaround time 83% - 72 Out of 87 Quotations • Negative responses from the market when invited to quote. This results in SCM were awarded within 30 days having to re-invite so as to comply with the three quote rule. • Regulations require that when evaluating quotes and if a service providers tax matters for example are not in order, then one must give the service provider a reasonable time to resolve this. This impacts the awarding within 30 days of requisition. • Some quotations that are technical/complex in nature advertised for longer periods so as to allow potential service providers reasonable time to submit 11 their offers

Programme 1: Administration Performance Indicator Annual Target Quarter 3 Performance Target Comments on Performance Sub-Programme: Finance and Supply Chain Strategic Objective: To provide a compliant internal control, financial and supply chain management service Percentage of procurement spend for bids awarded to designated groups in line with Preferential Procurement Regulations 2017 80% (100%) R 41 874 918 out of R 41 874 918 awards were Sufficient response from the market in terms made to designated groups of qualifying designated groups Percentage of bids awarded to designated groups in line with Preferential Procurement Regulations 2017 80% (100%) 11 out of 11 bids were awarded to designated groups Sufficient response from the market in terms of qualifying designated groups 12

Programme 1: Administration Performance Indicator Annual Target Quarter 3 Quarter Performance Target Comments on Performance Sub-Programme: Corporate Services Strategic Objective: To facilitate organisational transformation through effective performance management Percentage of funded prioritized vacancies filled as per approved recruitment plan 100% Number of Property Management modules implemented (Investment Analysis module) 1 - Number of modules enhanced as per ERP 5 implementation plan (Scheduled maintenance, condition assessment, lease in, lease out, and construction project management) 60% (32 of 53) funded prioritised vacancies filled within 6 months from date of advertisement There was a delay of panel approvals for positions filled beyond six months. Moratorium of positions placed in June Not for Q 3 target 2 (lease in 1 Module enhanced (lease in) and lease out) Three other unplanned modules enhanced (Unscheduled Maintenance, condition assessment and IAR) Lack of availability of business representative caused a major delay on progressing the module development and awaiting finalisation of COEGA BPR process for Lease Out. A plan was initiated by the service provider to implement multiple modules simultaneously, thus additional unplanned modules could be enhanced. The successful execution of the project depends on the availability. 13

Programme 1: Administration Performance Indicator Annual Target Quarter 3 Performance Target Comments on Performance Sub-Programme: Corporate Services Strategic Objective: To facilitate organisational transformation through effective performance management Phase 1 Integrated Single Asset Register developed for the Public Works sector Not for Q 3 target _ Percentage of reported fraud and 100% corruption misconduct cases subjected to disciplinary processes 100% Percentage of default judgments against 100% the Department prevented 100% (4 out of 4) of reported fraud and corruption Continue with similar efforts to ensure that misconduct cases subjected to disciplinary processes targets are met Status of cases: 1 case finalised , 1 Pending chairperson's report 2 Pending finalisation of disciplinary hearings 100% (8 out of 8) default judgement against the Department prevented Continue with similar efforts to ensure that targets are met 14

Programme 2: Intergovernmental Coordination Performance Indicator Annual Target Quarter 3 Performance Target Comments on Performance Sub-Programme: Intergovernmental Relations Strategic Objective: To ensure integrated planning and coordination of concurrent functions Number of performance review reports 2 for the sector Programme of Action presented to Technical Min. Mec - Not Q 3 Target Number of agreements signed for joint service delivery with IGR partners 5 1 agreement for joint service delivery was facilitated _ Not Q 3 Target 15 Number of reviews conducted on the 1 intergovernmental governance structures During Q 3 the branch managed to conclude consultation processes on range of agreements with targeted IGR partners. As a result, in a Year To Date (YTD) more than 10 IGR agreements were signed off for implementation. The annual targets of 15 agreements will therefor be attained. 15

Programme 2: Intergovernmental Coordination Performance Indicator Annual Target Quarter 3 Performance Comments on Performance Sub-Programme: Professional Services Strategic Objective: To restore the skills pipeline in the built environment Number of beneficiaries participating in 1 212 the skills programmes - Number of provinces with state capacity 3 building in the built environment aligned to skills pipeline programme Number of schools programmes 40 participants enrolled for built environment qualifications Draft capacity building programmes developed Not Q 2 Target Number of bursary scheme beneficiaries 40 with completed built environment qualifications _ Public Works academy established Not Q 3 Target Continue with similar efforts to ensure that targets are met Not Q 2 Target Public Revised business Business processes not revised Works processes (DPW and academy PMTE), IDMS, into operations training manuals The Department has put the Academy plan on hold. Therefore all the activities relating to the academy, including the business process revision, were also put on hold. 16

Programme 3: Expanded Public Works Programme Performance Indicator Annual Target Quarter 3 Performance Comments on Performance Purpose: Coordinate the implementation of the expanded public works programme which aims to create work opportunities and provide training for unskilled, marginalized and unemployed people in South Africa Number of work opportunities reported in the EPWP-RS by public bodies 981 497 Percentage EPWP participation among 55% (Y) designated groups (women, youth and 60% (W) 2% persons with disabilities) reported on the (PWD) EPWP RS by public bodies 736 122 742 969 work opportunities reported in the EPWP System training and data capturing work -RS by public bodies. sessions were provided extensively as support opportunitie measures to improve reporting on the EPWP s reported Reporting System. in the EPWPRS by public bodies. 55% Youth 37. 8% Youth; 70. 3% Women; 1. 2% Persons with 60% Women disabilities 2% persons with disabilities Advocacy to attract Youth and Persons with disabilities on EPWP programmes is being undertaken. A colloquium was held in January 2020 with affected stakeholders to respond to this matter directly. 17

Programme 3: Expanded Public Works Programme Performance Indicator Annual Target Quarter 3 Performance Comments on Performance Purpose: Coordinate the implementation of the expanded public works programme which aims to create work opportunities and provide training for unskilled, marginalized and unemployed people in South Africa Number of contracted Non Profit 350 Organisations (NPOs) to implement the Non-State Sector (NSS): NPO Programme supported Number of public bodies provided with 290290 technical support public bodies provided with technical support. Number of frameworks on sector 1 convergence approved Framework approved (EPWP Policy). 350 340 contracted NPOs supported Not Q 3 Target - Most of the NPOs in the regions did not meet the selection criteria for participation in the Programme, as such only the NPOs that met the tender requirements were contracted. Not Q 3 Target 18

Programme 4: Property and Construction Industry Policy and Research Performance Indicator Annual Target Quarter 3 Performance Comments on Performance Strategic Objective: To research and develop policies and legislative prescripts for the construction and property sectors Developed Public Works Bill Draft Public Works White Paper submitted to Minister for Parliamentary process. Public Works green paper developed. Developed Expropriation Act Draft Expropriation Bill submitted Stakeholder consultation on to Minister for Parliamentary expropriation Bill process Developed Construction Industry Development Board (CIDB) Amendment Bill Draft legislative amendments developed for submission to Minister Public Works green paper not developed. In view of the transition from 5 th to 6 th Administration: The Comprehensive Policy Review Report was presented to Minister in August 2019. The approach towards the finalization of the project has been reviewed to not include the development of the Green Paper, but rather use the two existing White Papers towards the development of the Public Works Bill- (also in cognizance of the included infrastructure Mandate to the Department in June 2019). This also affects Q 4 target. A reviewed road map to be developed for the project and capacitation of the project to be prioritized following the non-renewal of Project team contracts. Stakeholder consultation on Continue with similar efforts to ensure that targets expropriation Bill was conducted are met Not a Q 3 Target) Continue with similar efforts to ensure that targets are met Developed Council for the Built Revised Built Environment Not a Q 3 Target) Environment (CBE) Amendment Bill. Profession (BEPs) Policy submitted to Minister for approval. Not a Q 3 Target) Procurement process to appoint a service provider to consolidate inputs during public consultations for BEP Policy undertaken 19

Programme 5: Prestige Policy Performance Indicator Annual Target Quarter 3 Performance Comments on Performance 0 Prestige policy approved Stakeholders consultations and engagement on the policy took longer than initially anticipated. Strategic Objective: To improve the delivery of services to Prestige clients Number of prestige policies approved 2 policies approved 1 Number of planned state events 8 planned state events supported with movable structures Percentage of movable assets provided within 60 days after approval by Prestige clients Signed infrastructure worklists (Presidency and Parliament) 2 planned state events supported with movable structures and 01 structures unplanned state event supported with movable structure 85% movable assets provided 85% movable assets 100% (1 of 1) movable assets within 60 days after approval provided within 60 days after by Prestige clients after approval by Prestige clients 1 signed infrastructure worklists (Presidency and Parliament) Not Q 3 target unpredicted winning of the Rugby World Cup by SA Springboks warranted the state event in the form of parading the cup Continue with similar efforts to ensure that targets are met Not Q 3 target 20

Section C PMTE - Non- Financial Performance Information 21

Programme 1: Administration Performance Indicator Annual Target Quarter 3 Performance Target Comments on Performance Sub-Programme: Finance and Supply Chain Strategic Objective: To provide a compliant internal control, financial and supply chain management service Percentage of compliant invoices settled within 100% 30 days 100% Percentage change in the irregular expenditure 100% (R 114 baseline million) Percentage of bids awarded within 56 working days from closure of tender advertisement 65% 94% Client departments not confirming funds timeously, CSD information not updated timeously and disputed invoices by suppliers, delayed verification and certification by line managers, delays in updating banking details, services rendered without an order and subsequent ratification thereof, delays in the approval of day to day expenditure budget. Not Q 3 Target 65% 20% • Dependency on State Security Agency to security clear service 12 out of 60 bids were awarded within 56 days. providers. • Turnaround time afforded to service providers to resolve and clarify tender information including tax compliance in terms of PAJA • Implementation of the PPR 2017 sub-contracting clause which included additional steps in the process (validation of subcontractors information) • Turnaround time for client departments to confirm funding for tenders • Inability of Bid Committees to make a quorum due to competing priorities • Capacity constraints in terms of Project Managers, Professionals and SCM officials to deal with high volume of tenders received • Implementation in Q 3 of external probity audit for 22 tender awards has added to the turnaround time

Programme 1: Administration Performance Indicator Annual Target Quarter 3 Performance Target Comments on Performance Sub-Programme: Finance and Supply Chain Strategic Objective: To provide a compliant internal control, financial and supply chain management service Percentage of quotations awarded within 80% 30 working days from requisition date 80% 85% 1629 Out of 1924 Quotations were awarded within 30 days Percentage of procurement spend for bids awarded to designated groups in line with Preferential Procurement Regulations 2017 80% Percentage of bids awarded to designated groups in line with Preferential Procurement Regulations 2017 80% 81% A total rand of 559 778 946 out of 686 427 507 bids were awarded to designated groups 80% 86% A total rand of 51 out of 59 bids were awarded to designated groups • Negative responses from the market when invited to quote. This results in SCM having to re-invite so as to comply with the three quote rule. • Regulations require that when evaluating quotes and if a service providers tax matters for example are not in order, then one must give the service provider a reasonable time to resolve this. This impacts the awarding within 30 days of requisition. • Some quotations that are technical/complex in nature advertised for longer periods so as to allow potential service providers reasonable time to submit their offers Continue with similar efforts to ensure that targets are met 23

Programme 2: Real Estate Investment Services Performance Indicator Annual Target Quarter 3 Performance Comments on Performance Sub-Programme: Planning and Precinct Development services Strategic Objective: To direct precinct planning and development for national government in urban and rural areas Number of Government Precinct 4 _ Not Q 3 Target Development plans aligned with identified municipal (rural & urban) Integrated Development Plans Number of sites established for development 4 _ Not Q 3 Target Number of concept designs completed for identified user departments 6 _ Not Q 3 Target 24

Programme 2: Real Estate Investment Services Performance Indicator Annual Target Quarter 3 Performance Comments on Performance Sub-Programme: Real Estate Investment Management Strategic Objective: To inform asset management decisions through optimal investment solutions Percentage of feasibility studies 90% completed within scheduled timeframes 90% feasibility studies completed within scheduled timeframes 90% valuations completed within scheduled timeframes _ (66/66) 100% Feasibility studies Concerted effort put in to fast-track completed with schedule timeframe the achievement of targets Percentages of valuations completed within schedules timeframes 90% (40/66) 61% valuations completed 27 Requests in the process of being due to backlog in the previous quarter finalised owing to complexity of the projects Percentages of responsive disposal requests approved within scheduled timeframes 90% disposal requests processed by 31 March 2019 Number of Custodian Asset Management Plan approved 1 - Not Q 3 Target Number of facilities performance measured in identified performance areas 800 200 Facilities performance measured in identified performance areas 175 buildings performance measured Inadequate resources. Concerted in identified performance areas effort will be put in place for available staff to do more in order to achieve annual target. Not Q 3 Target 25

Programme 3: Construction Project Management Performance Indicator Annual Target Quarter 3 Performance Comments on Performance Sub-Programme: Construction Project Management Strategic Objective: To develop detailed construction plans that direct the execution of construction projects and ensure that construction programmes are implemented according to approved criteria Number of approved infrastructure 103 26 23 Slow progress in achieving sketch plan approvals due to projects designs Consultants not meeting required specifications. Designs completed late due to design changes by the Clients. Delay in the approval of the drawings by the Clients. Consultants to be put on terms for poor performance, PBA & UDM to intervene in getting drawings approved by the Clients. Number of approved infrastructure 140 40 28 Procurement Instructions being revised to accommodate projects ready for tender additional scope of work categorized as capital works. Delays by the Clients to confirm funds. Number of infrastructure sites handed 116 33 34 Continue with similar efforts to ensure that targets are met over for construction Number of infrastructure projects completed 116 91 78 Contractors being behind with completion due to cash flow problems, Capacity constraints of the appointed service providers. Poor performance of the contractors, Follow-on contracts not finalized due to extension to be approved by National Treasury, resulting in projects not being completed. Head Office to intervene. Tighten risk assessment during tender evaluations. 26

Programme 3: Construction Project Management Performance Indicator Annual Target Quarter 3 Performance Comments on Performance Sub-Programme: Construction Project Management Strategic Objective: To develop detailed construction plans that direct the execution of construction projects and ensure that construction programmes are implemented according to approved criteria Number of infrastructure projects within 92 (80%) 69 42 Contractors being behind with completion due to cash agreed construction period flow problems, Capacity constraints of the appointed service providers. Poor performance of the contractors, Follow-on contracts not finalized due to extension to be approved by National Treasury, resulting in projects not being completed. Head Office to intervene. Tighten risk assessment during tender evaluations. Number of infrastructure projects completed within approved budget 92 (80%) 69 67 Number of EPWP work opportunities created through construction projects 8 200 2 194 Contractors being behind with completion due to cash flow problems, Capacity constraints of the appointed service providers. Poor performance of the contractors, Follow-on contracts not finalized due to extension to be approved by National Treasury, resulting in projects not being completed. Head Office to intervene. Tighten risk assessment during tender evaluations. Under reporting. Major projects scheduled to create work opportunities within Q 3 not yet reached tender stage due to: Redesigns, Structural Engineering appointments, Deregistration of QS. 27

Programme 4: Real Estate Management Services Performance Indicator Annual Target Quarter 3 Performance Comments on Performance Sub-Programme: Real Estate Management Strategic Objective: To provide functional leased accommodation for user departments Two lease agreements signed within scheduled time frame. Percentage of lease agreements signed within scheduled timeframe 100% 40% (2 of 5) Three (3) lease agreements: the signature of the Lessor (to complete signed lease agreement) was not within one month, making the lease agreement not to fall within the category of those signed within one month after approval by the RBAC as per the TID. 28

Programme 5: Real Estate Information & Registry Performance Indicator Annual Target Quarter 3 Performance Comments on Performance Sub-Programme: Real Estate Information & Registry Strategic Objective: To maintain a compliant Immovable Asset Register (IAR) and provide guidance and support to other custodians in the compilation of compliant Immovable Asset Registers Percentage of approved disposals (in respect of socio economic purposes for transfer processed Percentage of immovable assets updated on the IAR for completed infrastructure projects Number of land parcels vested (confirmation of ownership) 90% _ 100% _ Not Q 3 Target 900 225 155 land parcels vested Number of immovable assets physically verified to validate existence 24 636 Not 3 Target 6 162 assets 7 649 Immovable assets physically verified to validate existence Number of provincial immovable asset Number of provincial 2 Provincial Immovable Asset registers assessed for compliance immovable asset immovable Asset Registers assessed for compliance registers assessed for Registers compliance assessed for compliance Number of National and Provincial Number of National _ Not Q 3 target Immovable Asset registers incorporated and Provincial into single repository (National database of Immovable Asset state properties) registers incorporated Recommended vesting applications are in the process of being finalised Concerted effort to achieve targets 29

Programme 6: Facilities Management Performance Indicator Annual Target Quarter 3 Performance Comments on Performance Sub-Programme: Facilities Management Strategic Objective: To manage maintenance programmes in accordance with an approved plan and ensure resource efficiency in State-owned buildings Number of facilities with maintenance 550 150 424 Facilities Management Due to preventative maintenance Regions are contracts in place contracts & 51 Term encouraged to enter into Term Contracts Percentage of unscheduled maintenance 20% 1. 3% Inadequacy of the Worx 4 U system which reflects faulty incidents resolved within agreed controls from the design. timeframes Migration from Worx 4 U to Archibus has commenced with 8 out of 11 Regions. Reduction in energy consumption (kilowatt hours) in identified buildings 155 000 kwh Number of kilowatt hours of renewable 20 000 kwh energy generated Reduction in water consumption (kilolitres) in identified buildings 15 000 kl 38 750 000 kwh Q 3 performance report not Capacity constraints provided 5 000 kwh Q 3 performance report not Capacity constraints provided 4 500 000 kl Q 3 performance report not Capacity constraints provided 30

Summary of Performance Per Programme – DPW Q 3 % Achieved 70 67 64 67 59 60 50 50 40 33 30 20 10 0 Prog 1 Prog 2 Prog 3 Prog 4 Prog 5 Overall % Achieved 31

Summary of Performance Per Programme – PMTE Q 3 % Achieved 90 80 80 67 70 60 50 46 43 40 33 30 20 20 10 0 0 Prog 1 Prog 2 Prog 3 Prog 4 Prog 5 Prog 6 Overall % Achieved 32

Section D DPW Financial Performance Information 33

DPW SUMMARY FINANCIAL INFORMATION 34

Summary Expenditure per Programme: 31 December 2019 Adjusted Allocation Exp. as at 31 December 2019 Variance as at 31 December 2019 % Spent as at 31 December 2019 Drawings as at 31 December 2019 Expenditure Versus Drawings variance R'000 % R'000 R’ 000 Programmes Prog 1. Administration Prog 2. Intergovernmental Coordination Prog 3. Expanded Public Works Programme Prog 4. Property and Construction Industry Policy and Research Prog 5. Prestige Policy Total 511 013 336 057 174 956 66% 369 900 33 843 56 386 40 221 16 165 71% 45 637 5 416 2 680 814 1 904 606 776 208 71% 2 385 060 480 454 4 538 905 3 367 285 1 171 620 74% 3 375 308 8 023 119 927 67 497 52 430 56% 97 694 30 197 7 907 045 5 715 665 2 191 379 72% 6 273 599 557 934 35

Budget Allocation per Programme Chart - 2019/20 1% 55% 8% 0% Administration Intergovernmental Coordination 36% Expanded Public Works Programme Property and Construction Industry Policy and Research Prestige Policy 36

Summary Expenditure per Economic Classification Adjusted Allocation Exp. as at 31 December 2019 R'000 Variance as at 31 December 2019 % Spent as at 31 December 2019 Drawings as at 31 December 2019 Expenditure Versus Drawings variance % R'000 R’ 000 Economic classification R'000 Compensation of employees 557 826 380 730 177 096 68% 411 302 30 572 Goods and services 451 994 266 357 185 637 59% 341 509 75 152 - - Interest Transfers and subsidies Machinery and equipment Total 6 873 984 5 053 295 1 820 689 74% 5 499 348 446 053 23 241 15 283 7 958 66% 21 440 6 157 7 907 045 5 715 665 2 191 380 72% 6 273 599 37 557 934

Allocation per Economic Classification Chart – 2019/20 38

Notes to Expenditure Summary per Economic Classification Total expenditure as at the end of December 2019 is R 5. 7 billion and equivalent to 72% of the total budget allocation of R 7. 9 billion. The variance between expenditure and the drawings amount to R 558 million. The variance (10%) between drawings and expenditure is detailed below per economic classifications: • Compensation of employees’ expenditure as at the end of December is R 381 million, and the expenditure is equivalent to 68% of the budget allocation of R 558 million. Against the drawings of R 411 million, expenditure is equivalent to 93% (or R 31 million positive variance), and the variance is due to delay in filling of posts prioritised for filling because of the moratorium and those vacated in the current financial year. • Goods and Services’ expenditure amounts to R 266 million and is equivalent to 59% of the budget allocation o R 452 million. Against the drawings of R 342 million, the expenditure is equivalent to 78% (or R 75 million positive variance). The variance between drawings and actual expenditure relate to low spending in Programme 1 (communication, computer services and office accommodation items), 3 (outsourced services item) and 5 (state functions). • Transfers and subsidies expenditure variance against the drawings amounts to R 446 million (positive) and is mainly due to the R 359 million not transferred for the non-state sector incentive to the IDT; R 34 million Integrated Grant for Provinces and R 48 million for Municipalities and R 3 million for Social Sector being withheld due to non compliances to DORA requirements. • Machinery and equipment expenditure as at the end of December 2019 is R 15 million, and the expenditure is equivalent to 66% of the budget allocation of R 23 million. Against the drawings of R 21 million the expenditure is equivalent to 71%. 7

Earmarked Budget Allocation: 31 December 2019 Allocation Exp. as at 31 December 2019 % Spent as at 31 December 2019 R'000 % Construction Industry Development Board 76 160 100% Council for the Built Environment 52 796 100% Agrement South Africa 31 062 100% EPWP Integrated Grant for Provinces 437 388 403 308 92% EPWP Integrated Grant for Municipalities * 730 046 462 738 63% EPWP: Non-state Sector 750 424 390 910 52% 44 486 100% 430 793 427 459 99% 4 315 736 3 161 802 73% 10 599 100% 5 000 100% 6 884 490 5 066 320 Management Fee to the Non-state sector transfer budget EPWP Social Sector for Provinces Property Trading Entity Management Parliamentary Villages Management Board Independent Development Trust Total * EPWP Integrated Grant for Municipalities spending trend is aligned to the Municipal financial year 74% 40

Section E PMTE Financial Performance Information 41

Budget and Cashflow Statement Revenue Revised Budget R'000 Variance as a percentage of the Actual Performance budget R'000 % Variance Projection Projected Over/Under R'000 Accommodation Charges Freehold – state owned 5 092 500 3 799 841 75% 1 292 659 4 834 282 -258 218 Accommodation Charges Freehold - Client projects 2 474 459 1 281 010 52% 1 193 449 1 652 464 -821 996 58 320 38 893 67% 19 427 51 857 -6 463 5 039 642 2 523 090 50% 2 516 552 4 376 463 -663 179 212 220 149 262 70% 62 958 199 016 -13 204 9 592 45 457 474% -35 865 58 641 49 049 4 215 736 3 161 802 75% 1 053 934 4 215 736 0 17 102 469 10 999 356 64% 6 103 113 15 388 459 -1 714 010 Accommodation Charges Freehold – Private leased out Accommodation Charges Leasehold Municipal Services Management Fees Other (Including Interest, fines, sale of assets) Augmentation received from DPWI Total Revenue 42

Budget & Cashflow Statement Expenditure Current Payments Cleaning and Gardening Leases Maintenance Repair Municipal Services – PMTE Compensation of Employees Goods and Services Turnaround Transfer Payments Property Rates Total Current/Transfer Expenditure Capital Payments Refurbishments DPW Capital Machinery and Equipment Client Capital Total Expenditure Budget R'000 Actual Performance R'000 % 19/20 Deviation R'000 Projected Over/Under R'000 313 595 5 098 642 1 413 613 1 217 898 420 797 2 051 049 388 114 121 112 11 024 821 200 798 3 744 553 1 333 854 789 522 332 906 1 359 887 233 416 52 151 8 047 086 64% 73% 94% 65% 79% 66% 60% 43% 73% 112 797 1 354 089 79 759 428 376 87 891 691 162 154 698 68 961 2 977 735 267 731 4 992 737 1 778 472 1 052 696 443 875 1 813 182 311 221 69 535 10 729 448 45 865 105 905 -364 859 165 202 -23 077 237 867 76 893 51 577 295 373 1 443 466 624 517 43% 818 949 936 775 506 691 12 468 287 8 671 603 70% 3 796 684 11 666 223 802 064 1 255 306 849 667 54 750 2 474 459 4 634 182 790 978 394 851 25 405 1 377 053 2 588 287 63% 46% 56% 464 328 454 816 29 345 1 097 406 2 045 895 1 054 637 603 468 45 573 1 836 071 3 539 749 200 669 246 199 9 176 638 388 1 094 433 17 102 469 11 259 890 66% 5 842 579 15 205 972 1 43 896 497

Budget Analysis • Cleaning and Gardening: • Expenditure is at 64% at the end of December which is below the guideline. This is below the expenditure for the same period in the previous financial year. A reallocation was done during September where Regions indicated that they will need additional funding. They committed to spending the revised allocation as some Regions surrendered funding. The expenditure trend has not increased during the last two months and it is unlikely that the full allocation will be spent. • Private Leases: • Expenditure is at 73% of the allocated budget, which is just below the expenditure guideline. This budget might underspend by 2%. • Maintenance: • Expenditure is at 95% and has increased significantly as Regions are requesting additional funding. Funding will have to be identified on other budget items to finance this. Based on current expenditure trends, this budget will still overspent by R 365 m. It is recommended that the envisaged underspending on property rates be utilised to cover this shortfall and the a reallocation to this effect be done. • Repair: • 65% of the budget has been spent. This is a significant increase from the previous month. This item is still projecting an underexpenditure of R 165 m. • Municipal Services: • The expenditure is at 79% of the budget which is above the guideline. The expenditure fluctuates monthly based on consumption. Regions have requested additional funding during the reallocation exercise which was approved. The budget is still under pressure although the expenditure has reduced. A possible over-expenditure of R 23 m is projected • Compensation of Employees: • 66% of this budget was spent and a straight line projection indicates a possible under-expenditure of R 237 m. There are currently more than 400 vacant positions in the PMTE 44

Budget Analysis • Goods and Services • 60% of this budget has been spent. An under-expenditure of R 77 m is projected. Of this amount R 50 m is allocated to Programme 5. This amount is ring-fenced and cannot be used for anything else. • Turnaround Projects: • Only 43% of this budget has been spent. • Property Rates: • Payments have increased, but are now paid monthly in stead of annually as before. This is to avoid pre-payments and to assist with cash flow. Due to only 9 months overlapping in the department and municipalities financial years, the department will spent less in this financial year. An underspending of R 507 m is envisaged at this stage. This amount can be used to defray the over-expenditure on the Maintenance budget • Refurbishments: • 63% of the budget has been spent. The expenditure has significantly increased from the previous months. At this stage an amount of R 201 m is still projected as under-expenditure • DPW Infrastructure: • Only 46% of the budget has been spent. A potential underspending of R 246 m is projected. Of this, R 155 m relates to Prestige projects • Machinery and Equipment: • 46% of this budget has been spent. Funding has been identified to roll out additional VC facilities in Regions to cut down on the cost of traveling. Specifications have been concluded and the project will go to tender early in January 2020 • Client Capital: • Only 56% of the budget has been spent. The expenditure trend has improved from the previous month and the projected underspending has decreased to R 638 m 45

Expenditure Analysis per programme for the period ending 31 December 2019 Programme Budget Allocation Actual Expenditure Balance R’ 000 % spent Administration 937 432 531 632 405 800 57% Real Estate Investment Services 208 955 137 240 71 715 66% Construction Management Services 4 998 983 2 859 871 2 139 112 57% Real Estate Management Services 7 169 396 4 818 496 2 350 900 67% 104 387 46 561 57 826 45% 3 683 317 2 868 529 814 788 78% 17 102 469 11 259 890 5 840 141 66% Real Estate Registry Services Facilities Management Services Total 46

PMTE DEBTORS INFORMATION 47

Total outstanding balance as at 31 December 2019 Categories Opening Balance as at 01/04/18 Adjustment R’ 000 Amount received for prior year Outstanding for prior year Invoiced amount as at 31/12/19 Amount Received for 2019/20 % Recovery Total Outstanding Balance R’ 000 % R’ 000 Accommodation (State Owned) 932 109 0 696 519 235 590 3 983 717 3 103 322 78% 1 115 985 Accommodation (Private) 129 911 - 34 906 106 228 -11 352 3 806 304 2 378 683 62% 1 416 269 2 560 325 -20 900 516 680 2 022 745 3 887 309 2 553 136 66% 3 356 918 Municipal Services PACE 252 173 194 542 57 631 1 013 808 766 954 76% 304 485 Recoverable: CA 298 031 174 624 123 407 384 567 144 889 38% 363 085 1 688 593 2 428 021 13 075 705 8 946 984 68% 6 556 742 Total 4 172 690 -55 806 Included in the R 6, 557 b outstanding debt is an amount of R 1, 777 m relating to current invoices issued for December 2019

Debtors Age Analysis 31 December 2019 Categories Accommodation (State Owned) Accommodation (Private) Municipal Services PACE Recoverable: CA Total Current 30 Days >60 Days Total 2019/20 Prev Years Total R’ 000 R’ 000 282 386 882 091 7 078 156 337 590 931 389 193 880 395 1 427 621 235 590 -11 352 1 115 985 1 416 270 38 301 697 648 665 1 334 173 2 022 745 3 356 918 173 312 16 720 56 844 246 876 57 631 304 485 55 554 32 378 151 745 239 677 123 406 363 083 1 777 154 514 210 1 837 378 4 128 742 2 428 020 6 556 742 67% 33% 3 811 49

Section F Recommendations 50

Recommendations It is recommended that the Portfolio Committee on Public Woks and Infrastructure: • Notes the 2019/20 third Quarter Financial and Non Financial performance • Advice on areas where the Department should improve 51

Thank You National Department of Public Works and Infrastructure (NDPW&I) Head Office: Public Works CGO Building Cnr Bosman and Madiba Pretoria Central Private Bag X 65 Pretoria 0001 Website: http: //www. publicworks. gov. za 52

SCM Corrective Actions for Improved Performance To improve on Quotation Awards • SCM invites a larger pool of service providers in the first instance to ensure that at least 3 quotes are received. • Review the closing period for quotations and consider 3 days as opposed to 5 or 14 days. • Minimise the response time allocated for service providers to resolve tax matters to approximately 48 hours. To improve on Tender Awards • Reviewed the security clearance policy that talks to obtaining clearance for ALL service providers and now only security clear Prestige service providers. • Appointing standing Bid Evaluation and Specification Committees so as to ameliorate the challenge of achieving a quorum at meetings. • Established an additional Bid Adjudication Committee to expedite adjudication and award of leasing tenders. • Impose a turnaround time for external consultants to submit risk assessments reports. Currently these reports can take anything between 1 to 3 weeks to finalise. • Stagger the closing dates of tenders so that evaluation is not impacted when large volumes of proposals for different tenders are all received on the same closing date. • Decreed that tender evaluation must commence immediately upon closing of the tender. • Minimise the response time allocated for service providers to resolve tax matters to approximately 48 hours. 53