portfolio committee presentation department of public works 28 february 2012 portfolio committee...

Portfolio Committee PresentationPortfolio Committee Presentation

DEPARTMENT OF PUBLIC WORKSDEPARTMENT OF PUBLIC WORKS

Turnaround Strategy

28 February 201228 February 2012

1

Purpose of the PresentationPurpose 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?

Portfolio Committee Presentation 28 February 2012 2

Danger/Crisis

Opportunity/Turnaround

Size of DPW: Property Portfolio Compared to Size of DPW: Property Portfolio Compared to others others

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 companies(approximately 4300 compared to less than less than 400 for other)

Portfolio Committee Presentation 28 February 2012

3

Where do we come from?


Part 1

Year Hon. Minister Director General History – Major Initiatives

1994

J Radebe

T van Robbroeck

1995

S Shezi

1996

1997

1998

1999

2000

S.N. Sigcau

T M Sokutu2001

2002

2003

T Maseko2004

2005

2006 Acting: Z NtsalubaActing: S Philips

2007T Didiza M Moroka

2008

2009G Doidge

Acting: S Malebye, S Vukela

2010 S Dongwana

2011 G Mahlangu-Nkabinde Mr Thembelani Thulas Nxesi

Acting: S VukelaActing: M Mabuza

Sakahasonke ECD

Sakahasonke ECD

GIAMA ACT

State Asset management Partnership


CIDB Act

White Paper PW beyond the 21st

Century.

White Paper on GIAMA

Built environment councils Acts

White Paper on Construction Industry

Development

5

Year Hon. Minister Director General History – Organisational Change

1994

J Radebe

T van Robbroeck

1995

S Shezi

1996

1997

1998

1999

2000

S.N. Sigcau

T M Sokutu2001

2002

2003

T Maseko2004

2005

2006 Acting: Z NtsalubaActing: S Philips

2007T Didiza M Moroka

2008

2009G Doidge

Acting: S Malebye, S Vukela

2010 S Dongwana

2011 G Mahlangu-Nkabinde Mr Thembelani Thulas Nxesi

Acting: S VukelaActing: M MabuzaActing: M. Fatyela

Discontinuation of Workshops

Discontinuation of Workshops

Organisation Review

Organisation Review



FailedRestructuring

Zimisele Performance

Improvement

Zimisele Performance

Improvement

Introduction of Accommodation

Charges and PMTE

Introduction of Accommodation

Charges and PMTE

Failed Implementation

Corruption InvestigationsCorruption Investigations

6

ChallengesChallenges

• 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


Where are we now?


Part 2

Budget / Financial ChallengesBudget / 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

management• Slow delivery of accommodation and job creation• Low worker morale


Service Area ChallengesService Area Challenges

Service Area ChallengesPolicy / Regulatory

Conflict of interest [Implementer & regulator], Funding, Capacity, Strategic Leadership

Asset Management

Prestige

Asset Register- incomplete, inaccurate, undervalued & no condition status, Missing records, Unusable land, Disposals, Regenerating portfolioPoor 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 backlogUnder spending Departmental budgets, Too much decision making power


Service Area ChallengesService Area Challenges

Service Area ChallengesSpecial 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 spending

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 trainingIT 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 & balancesOverpriced tenders, absence of HR Plan



Part 3a

• “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)


Some Characteristics of Turnarounds


Part 3b

DPW: Turnaround Strategy Role PlayersDPW: Turnaround Strategy Role Players

DDG:Corporate Services

DDG:Projects

DDG:Innercity

Regeneration Programme

DDG:Expanded

Public Works Programme

DDG:Construction & Property

Policy Regulation

DDG:Asset

Investment Management

DG

COO

CFO

Inter-Ministerial Committee MINISTER

Support Team(Stabilisation & Transformation)

Technical Advisory Committee

Simplified Version


Composition of Support TeamComposition 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

16Portfolio Committee Presentation 28 February 2012

Purpose/Functions of the Support TeamPurpose/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 area

• 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.


Turnaround Capacity 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


Operational Support improves efficiency immediately…

Time

Capa

city

of a

dep

artm

ent

Existing capacity of a department

Required capacity of a department for delivery

The Transformation Team builds organisational capacity over time.

… but often leaves the department worse off in the long run.

Ideally a Stabilisation Team providing operational support should be provided in the early stages of an intervention but should decreaseas organisational capacityincreases.

19

Combining operational support with organizational capacity building


Turnaround ActionsTurnaround Actions

20

Strategic Direction

Stabilisation ActionsStabilisation Actions Systemic ReviewsSystemic Reviews Transformation AgendaTransformation Agenda

• Asset Register• Lease Advisory Team• Clean Audit• PMTE debt recovery• IDIP Support• Audit of areas of progress

and challenges

• Asset Register• Lease Advisory Team• Clean Audit• PMTE debt recovery• IDIP Support• Audit of areas of progress

and challenges

• Structured review by staff in each business area

• Determine options for immediate business improvement

• Continuous system of reporting/feedback

• Structured review by staff in each business area

• Determine options for immediate business improvement

• Continuous system of reporting/feedback

• Will be informed by and follow on from progress on Stabilisation and System Reviews in the long term

• Will be informed by and follow on from progress on Stabilisation and System Reviews in the long term


Stabilisation ActionsStabilisation 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


Systemic ReviewsSystemic 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


Transformation AgendaTransformation 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


Time lines (Matrix)

24

Stabilisation Actions

Stabilisation Actions

Asset

Systemic Reviews

TransformationTransformation

Leases

Disclaimer

Short-Term Medium-Term Long-Term

2012/13Q1Q2Q3Q4

Q4

Q1Q2Q3Q4

Q1Q2Q3Q4

Q1Q2Q3Q4

2013/14

2014/15

2015/16

Ongoing

Improvements

Improvements

OptionsOptions

ReportingReporting

Ongoing

Sustain and Improve

OngoingRapid

Review of DPW

Rapid Review of

DPW

2011/12

Policy / RegulatoryPolicy / Regulatory

Asset ManagementAsset Management

Property Management& Facilities

Property Management& Facilities

Construction Project ManagementConstruction Project Management

EPWPEPWP

OutcomeOutcomeOutcomeOutcome

Optimised portfolio of assets(owned & leased)

Efficient records

Cost effective service delivery

Skills developedJobs created

Service AreaService AreaService AreaService AreaWell functioning built environment

(government & private sector)

“Special Functions”“Special Functions”

A

B

C

D

E Corporate ServicesCorporate ServicesFunctioning organisation

-Proper Accounts-Internal capabilities

-Efficient and effective SCM

Functioning Inner CitiesFunctioning industry

Standards maintained

25

Distinctive functional streams

SummarySummary

• 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


SummarySummary

• 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


Concluding RemarksConcluding Remarks

Under the guidance of the Minister,

The Department has a structured Turnaround Strategy

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


Enkosi


portfolio committee presentation department of public works 28 february 2012 portfolio committee...

Documents

property portfolio

portfolio ratio

s malebye

s vukelaacting

construction white paper

z ntsalubaacting

size of dpw

budget bulk sits