Portfolio Committee Presentation
DEPARTMENT OF PUBLIC WORKS
Turnaround Strategy
28 February 2012
1
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?
Danger/Crisis
Opportunity/Turnaround
Portfolio Committee Presentation
28 February 2012
2
Size of DPW: Property Portfolio Compared to
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
Part 1
Where do we come from?
Portfolio Committee Presentation
28 February 2012
4
Year
Hon. Minister
1994
Director General
History – Major Initiatives
T van Robbroeck
1995
Sakahasonke
ECD
J Radebe
S Shezi
1997
1998
CBPWP
1996
White Paper on
Construction Industry
Development
White Paper PW
beyond the 21st
Century.
Built
environment
councils Acts
1999
CIDB Act
2000
2001
State Asset
management
Partnership
T M Sokutu
S.N. Sigcau
T Maseko
2007
T Didiza
M Moroka
2008
2009
Acting: S Malebye, S Vukela
G Doidge
2010
2011
S Dongwana
G Mahlangu-Nkabinde
Acting: S Vukela
EPWP
CBE
Acting: Z Ntsaluba
Acting: S Philips
2006
GIAMA
ACT
PMTE
2005
White Paper
on GIAMA
Contractor Development Programme
2004
CIDB Establishment
2003
Built Environment Professionals
2002
5
Year
Hon. Minister
1994
Director General
History – Organisational Change
T van Robbroeck
1995
J Radebe
S Shezi
1997
Discontinuation
of Workshops
1998
1999
2000
2001
T M Sokutu
2002
2003
S.N. Sigcau
2004
Introduction of Project Management
Approach
1996
Organisation
Review
State Asset
management
Partnership
Failed
Restructuring
T Maseko
2005
Acting: Z Ntsaluba
Acting: S Philips
2006
2007
T Didiza
Zimisele
Performance
Improvement
Introduction of
Accommodation
Charges and PMTE
M Moroka
2008
Failed
Implementation
2009
Acting: S Malebye, S Vukela
G Doidge
2010
2011
S Dongwana
G Mahlangu-Nkabinde
Mr Thembelani Thulas Nxesi
Acting: S Vukela
Acting: M Mabuza
Acting: M. Fatyela
Corruption Investigations
6
Challenges
• 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
Portfolio Committee Presentation
28 February 2012
7
Part 2
Where are we now?
Portfolio Committee Presentation
28 February 2012
8
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
management
Slow delivery of accommodation and job creation
Low worker morale
Portfolio Committee Presentation
28 February 2012
9
Service Area Challenges
Service Area
Policy / Regulatory
Challenges
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
Poor planning, management, lack of policy, norms and
standards lacking
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
Prestige
Property Management & Facilities
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
Portfolio Committee Presentation
28 February 2012
Service Area Challenges
Service Area
Special Functions (ICR)
Challenges
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 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
28 February 2012
Part 3a
Where are we going?
Portfolio Committee Presentation
28 February 2012
12
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)
Portfolio Committee Presentation
28 February 2012
13
Part 3b
The DPW Approach to the Turnaround Strategy
Portfolio Committee Presentation
28 February 2012
14
DPW: Turnaround Strategy Role Players
Inter-Ministerial
Committee
MINISTER
Technical Advisory
Committee
DG
Support Team
(Stabilisation & Transformation)
DDG:
Projects
DDG:
Innercity
Regeneration
Programme
COO
DDG:
Expanded
Public Works
Programme
DDG:
Construction
& Property
Policy
Regulation
Portfolio Committee Presentation
28 February 2012
DDG:
Asset
Investment
Management
DDG:
Corporate
Services
CFO
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
Portfolio Committee Presentation
28 February 2012
16
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
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.
Portfolio Committee Presentation
28 February 2012
17
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
Portfolio Committee Presentation
28 February 2012
18
Combining operational support with
organizational capacity building
Capacity of a department
Required capacity of a department for delivery
Ideally a Stabilisation Team providing operational
support should be provided in the early stages of an
intervention but should decrease
Operational Support
as organisational capacity
improves
increases. efficiency
immediately…
… but often
leaves the
department
worse off in
the long
run.
The Transformation Team builds
organisational capacity over time.
Existing capacity of a department
Portfolio Committee Presentation
28 February 2012
Time
19
Turnaround Actions
Strategic Direction
Stabilisation Actions
•
•
•
•
•
•
Asset Register
Lease Advisory Team
Clean Audit
PMTE debt recovery
IDIP Support
Audit of areas of progress
and challenges
Systemic Reviews
•
•
•
Structured review by staff
in each business area
Determine options for
immediate business
improvement
Continuous system of
reporting/feedback
Portfolio Committee Presentation
28 February 2012
Transformation Agenda
•
Will be informed by and
follow on from progress
on Stabilisation and
System Reviews in the
long term
20
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
Portfolio Committee Presentation
28 February 2012
21
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
22
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
23
Time lines (Matrix)
Short-Term
Medium-Term
Long-Term
Rapid
Review of
DPW
Ongoing
Stabilisation
Actions
Q4
2011/12
Q1
Q2
Q3
Q4
2012/13
Asset
Leases
Disclaimer
Systemic
Reviews
Ongoing
Improve
ments
Q1
Q2
Q3
Q4
Options
Reporting
2013/14
Q1
Q2
Q3
Q4
2014/15
Q1
Q2
Q3
Q4
2015/16
Transformation
Ongoing
Sustain and Improve
24
Distinctive functional streams
A
B
Service Area
Outcome
Policy / Regulatory
Well functioning built environment
(government & private sector)
Asset Management
Optimised portfolio of assets
(owned & leased)
Property Management
& Facilities
Efficient records
Cost effective service delivery
Construction Project Management
C
D
E
“Special Functions”
Functioning Inner Cities
Functioning industry
Standards maintained
EPWP
Jobs created
Skills developed
Corporate Services
Functioning organisation
-Proper Accounts
-Internal capabilities
-Efficient and effective SCM
25
Summary
• 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
Portfolio Committee Presentation
28 February 2012
26
Summary
• 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
Portfolio Committee Presentation
28 February 2012
27
Concluding 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
Portfolio Committee Presentation
28 February 2012
28
Enkosi
Portfolio Committee Presentation
28 February 2012
29