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Portfolio Committee Presentation DEPARTMENT OF PUBLIC WORKS by 8itFZLkT


									Portfolio Committee Presentation

         Turnaround Strategy

            28 February 2012

       Purpose of the Presentation

 Present the TURNAROUND STRATEGY of the Department in
 light of the prevalent crisis.

 When written in Chinese, the word "crisis" is composed of
       two characters-one represents danger, and
         the other represents opportunity.” JFK

 Where we come from?
 Where we are now?
 Where we are going?                    Opportunity/Turnaround

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Size of DPW: Property Portfolio Compared to

             DPW portfolio is relatively 7 times larger than the
             most significant private companies

             DPW portfolio operates below the ‘profitably’’ curve
             (About 1.6% compared to 16% others)

             Management personnel to portfolio ratio relatively
             much higher for DPW than other commercial
             (approximately 4300 compared to less than less than
             400 for other)

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                        28 February 2012
                                        Part 1

Where do we come from?

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Year      Hon. Minister           Director General                                         History – Major Initiatives

1994                              T van Robbroeck

            J Radebe

1997                                   S Shezi                                                                                         White Paper PW
                                                                     White Paper on                                                    beyond the 21st
1998                                                               Construction Industry                                                  Century.
1999                                                                                                                                                 environment
                                                                                                                                                     councils Acts
2000                                                                       CIDB Act
                                                                                                                                       State Asset
2001                                 T M Sokutu                                                                                       management

2003       S.N. Sigcau

                                                                                                                                                                  Built Environment Professionals
2004                                 T Maseko                                                                                          White Paper

                                                                              CIDB Establishment
                                                                                                                                       on GIAMA

                                                                                                   Contractor Development Programme

                                 Acting: Z Ntsaluba
                                  Acting: S Philips                                                                                      GIAMA

             T Didiza                M Moroka


2009                         Acting: S Malebye, S Vukela
            G Doidge
2010                                S Dongwana

       G Mahlangu-Nkabinde        Acting: S Vukela
Year         Hon. Minister               Director General                                                           History – Organisational Change

1994                                     T van Robbroeck


                J Radebe
1997                                          S Shezi        Discontinuation

                                                                               Introduction of Project Management
                                                              of Workshops

1999                                                                                                                   Organisation

                                                                                                                                                  State Asset
2001                                        T M Sokutu                                                                                           management
                                                                                                                          Restructuring          Partnership

2003           S.N. Sigcau

2004                                        T Maseko

                                        Acting: Z Ntsaluba
2006                                                                                                                         Zimisele         Introduction of
                                         Acting: S Philips                                                                 Performance       Accommodation
2007                                                                                                                      Improvement       Charges and PMTE
                T Didiza                    M Moroka
2008                                                                                                                               Failed
2009                                Acting: S Malebye, S Vukela
               G Doidge
2010                                       S Dongwana
                                         Acting: S Vukela
          G Mahlangu-Nkabinde                                                                                        Corruption Investigations
2011                                    Acting: M Mabuza
       Mr Thembelani Thulas Nxesi                                                                                                                               6
                                        Acting: M. Fatyela
• Increasing rate of change of executive and
  administrative leadership
• Number of Acting DGs/DDGs and CDs over the years
• Limited success in the implementation of policies (e.g.
  1997 White Paper, Construction White Paper and
  Property and Construction Charters)
• Inappropriate recording/systems/processes and M & E
  and reporting
• Client’s dissatisfaction and allegations of corruption

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                                      Part 2

Where are we now?

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              Budget / Financial Challenges
•   Disclaimer
•   Uneven spread of budget - Bulk sits under programme 2 [Immovable Asset
    Investment Management]
•   Under-spending by the infrastructure and EPWP programmes
•   Opacity of budget, especially programme 2 on infrastructure
•   Shifting of funds by the department
•   March expenditure spike from delayed project implementation
•   Lack of technically sound budget proposals
•   Lack of technical capacity to plan, implement and report on projects
•   Lack of adequate finance skills, and poor financial management
•   Violations of the PFMA and Treasury Regulations, including supply chain
    management rules
•   Client’s dissatisfaction
•   Corruption
•   Escalation of construction costs through poor planning/policy / supply chain
•   Slow delivery of accommodation and job creation
•   Low worker morale
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                      Service Area Challenges
Service Area                        Challenges
Policy / Regulatory                 Conflict of interest [Implementer & regulator], Funding,
                                    Capacity, Strategic Leadership

Asset Management                    Asset Register- incomplete, inaccurate, undervalued & no
                                    condition status, Missing records, Unusable land, Disposals,
                                    Regenerating portfolio
Prestige                            Poor planning, management, lack of policy, norms and
                                    standards lacking
Property Management & Facilities    Charges too small, Bad debt, Maintenance over Expenditure,
                                    Maintenance backlog, Skill shortages, Underutilised / unused
                                    properties, Poor leasing, SCM open for corruption, Poor client
                                    relations, Aging owned properties, Unreliable asset register

Construction Project Management     Under resourced, Built Environment Skill           shortage,
                                    Insufficient training, Poor SCM, lack of controls, open for
                                    corruption, Cost and time over runs, Poor quality control,
                                    Maintenance backlog
                                    Under spending Departmental budgets, Too much decision
                                    making power
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                                            28 February 2012
                          Service Area Challenges
Service Area                     Challenges
Special Functions (ICR)          Feasibility Study target not achieved due to insufficient HR,
                                 Only preliminary work plans for minor centres completed,
                                 Delays in implementing Tshwane precinct master plan,
                                 partnership has not translated into a policy of action, Under

EPWP                             High visibility programme, Suitable labour intensive projects,
                                 Poor reporting, 50% of grant not disbursed (2010)
                                 Non-core business for DPW

Corporate Services               Top heavy senior management, Key skill shortage, Lack of
                                 systems & controls, Poor placement, Ineffective training
                                 IT system projects failed, IT not integrated, GAAP
                                 implementation slow, Records & Filing poor, Overstaffing in
                                 Regions, Ineffective management reporting systems ,
                                 Ineffective Internal Auditing, Inappropriate organizational
                                 structure, Poor SCM checks & balances
                                 Overpriced tenders, absence of HR Plan

                               Portfolio Committee Presentation
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                                      Part 3a

Where are we going?

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       Some Characteristics of Turnarounds
•   “turnaround specialists’… mandate is to lead a significant change effort within a
    limited period of time – to turn things around as quickly as possible, all the while
    focusing not only upon immediate challenges but also on long-term planning and
    the bigger picture”                                    (Takacs, Turnarounds, 2001)
•   “Turnaround literature stresses the importance of a change in the overall
    management team, not only the CEO”
                                                            (Takacs, Turnarounds, 2001)
•   “Organizational change of any magnitude is unlikely to take place unless there is
    also significant change in many of the individuals who work for the organization”
                                                                           (Eadie 1997)
•   “What is crucial here is the need to turn people around, along with the
    organization. Turning internal and external stakeholders, who may initially be
    cynical or even hostile, into enthusiastic contributors to the turnaround process
    is a key challenge for all leaders”                         (Khandwalla 1992, 162)

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                                                  Part 3b

The DPW Approach to the Turnaround Strategy

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                 DPW: Turnaround Strategy Role Players

    Committee                                         MINISTER

Technical Advisory

              Support Team
    (Stabilisation & Transformation)

                          DDG:            DDG:                                   DDG:
                                                              Construction                   DDG:
       DDG:             Innercity       Expanded                                 Asset                 CFO
                                                               & Property                  Corporate
      Projects        Regeneration     Public Works                           Investment
                                                                 Policy                     Services
                       Programme       Programme                             Management

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            Composition of Support Team
 Full Time Core Team members:
    Team Leader – Candidate has been identified and will be on board by 7
     March 2012
    Change manager
    Monitoring, Evaluation & Reporting
    Strategic Content Advisor
    Administrative support
 Functional Specialists as an when required:
      Supply Chain Management
      Public Finance Management
      Built Environment
      Asset management/Property Management (lease mgmt)
      Human Resources/Legal

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      Purpose/Functions of the Support Team
   Oversees the Stabilisation Projects
          • These projects have formal Terms of Reference
          • Specifically assigned Team Leader (DDG or CD )
          • Set out Performance framework and timeframes
   Provides structure for the Systemic (Introspective) Reviews in each business
          • Business areas will be addressed
          • Responsibilities for performing the work
          • Framework to guide the work
          • Framework for documenting the results
          • Framework for the reporting of the results
   Develop the framework for transformation based on further diagnostic,
    feedback and successes from the Stabilisation Process and Systemic Reviews
    Crisis and damage control. This is important because there will be recurring
              crises that should not side-track or dilute the Turnaround.

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                  Turnaround Capacity
• Human Resources
   – Change management is central to success
   – Recognition of and building on capabilities of existing staff
   – As per Dpt. of Home Affairs, use embedded knowledge to
     optimise processes, controls, performance standards, reporting
     and management oversight.
   – Recruit qualified staff while training trainable current staff; open
     recruitment to the international market; direct budget to critical
     skills; develop focused training programmes with tertiary
     institutions; fill vacancies
   – Build an appropriate Corporate Services unit that recruits, serves
     and retains the right skills; develop a strong finance unit
   – Deal decisively with wrongdoers

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                           Combining operational support with
                             organizational capacity building

                           Required capacity of a department for delivery

                                 Ideally a Stabilisation Team providing operational
Capacity of a department

                                 support should be provided in the early stages of an
                                 intervention but should decrease
                                Operational Support
                                 as organisational capacity
                                improves efficiency

                                                        The Transformation Team builds              … but often
                                                        organisational capacity over time.          leaves the
                                       Existing capacity of a department                            worse off in
                                                                                                    the long

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                                 Turnaround Actions

                                      Strategic Direction

    Stabilisation Actions              Systemic Reviews                      Transformation Agenda

•   Asset Register                •   Structured review by staff         •    Will be informed by and
•   Lease Advisory Team               in each business area                   follow on from progress
•   Clean Audit                   •   Determine options for                   on Stabilisation and
•   PMTE debt recovery                immediate business                      System Reviews in the
•   IDIP Support                      improvement                             long term
•   Audit of areas of progress    •   Continuous system of
    and challenges                    reporting/feedback

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                                               28 February 2012
                       Stabilisation Actions
•   Purpose
     – Stabilisation intention has already been specified
     – Contribution to transformation been defined
     – Governed by a specific Terms of Reference

•   Responsibility
     – Oversight by the Director General and Support Team

•   Capacitation
     – Will have dedicated resources

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                        Systemic Reviews
•   Purpose
     – Structured discussions on challenges and opportunities
     – Focus on what individuals can do to improve performance
     – Governed by a specific approach to be confirmed by the Support Team
•   Responsibility
     – Oversight by the Director General and Support Team
     – Performed by the business unit heads
     – Reported back to Director General and Support Team
•   Capacitation
     – Staff participation in each business area

                             Portfolio Committee Presentation
                                      28 February 2012
                   Transformation Agenda
•   Purpose
     – Structured improvements to the way DPW delivers its services
     – Builds on Stabilisation and Systemic Reviews

•   Responsibility
     – Oversight by the Director General and Support Team

                             Portfolio Committee Presentation
                                      28 February 2012
                             Time lines (Matrix)
    Short-Term                      Medium-Term                    Long-Term
 Review of                                                                  Ongoing
                                                                                  Q4       2011/12
      Stabilisation        Asset
        Actions                                                                   Q1       2012/13
                          Leases                                                  Q2
                                                    ments                                   2013/14
                                    Systemic                                          Q1
                                                     Options                          Q3

Ongoing                                        Reporting                                    2014/15
                                                                                  Q1        2015/16
                          Ongoing                                                 Q2
                                                  Sustain and Improve
                Distinctive functional streams
           Service Area                          Outcome
                                        Well functioning built environment
A          Policy / Regulatory           (government & private sector)

                                          Optimised portfolio of assets
          Asset Management                     (owned & leased)

         Property Management                     Efficient records
B             & Facilities
                                          Cost effective service delivery
    Construction Project Management

                                             Functioning Inner Cities
C         “Special Functions”                  Functioning industry
                                              Standards maintained

                                                  Jobs created
D                EPWP                            Skills developed

                                            Functioning organisation
                                                 -Proper Accounts
E          Corporate Services                  -Internal capabilities
                                           -Efficient and effective SCM      25
• Crisis areas need to be addressed quickly
• Short term solutions must enable longer term stability
• Some improvements are dependent on fundamental
  transformation that will be time consuming to implement
• Turnaround actions must not further reduce existing levels
  of operational performance
• Turnaround actions must be based on adequate analysis
  and understanding of the problems and potential cost
  effective solutions
• Prioritisation of critical actions in a logical sequence
• Adequate resourcing of turnaround actions

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• Staff must support and be part of the turnaround
• Necessary external expertise must leave a legacy
  in the department
• Turnaround effort must be resourced with
  dedicated capacity
• Focus on the goodwill and positive contribution of
  all staff;
   – Maladministration, corruption and poor performance
     to be dealt with decisively

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              Concluding Remarks
Under the guidance of the Minister,

  The Department has a structured Turnaround
  A dedicated Support Team that will plan, manage,
   monitor and report on the Turnaround actions
   which include

     • Stabilization actions
     • Systemic reviews
     • Medium term Transformation actions

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