Strategic Corporate Plan 2011/12
Mr. Sipho Mashinini
CEO - NHBRC
Siphom@nhbrc.org.za
16 March 2011
Botshabelo Housing Accord
The Land mark Botshabelo Housing Accord stated that:
Government strives for the establishment of viable, socially and economically
integrated communities which are situated in areas allowing convenient access to
economic opportunities, health, educational and social amenities and within which
South Africa’s people will have access on a progressive basis to:
(a) A permanent residential structure with secure tenure, ensuring privacy and
providing adequate protection against the elements.
(b) The Strategy set out definite actions:
• Stabilizing housing environment
• Establishing a subsidy scheme to provide housing opportunities
for millions
• Providing housing support to communities
Strategic Objectives
1. To grow, protect and sustain the NHBRC warranty
fund
•
•
•
•
Review and revise NHBRC pricing model
Reduce operational costs
Market and brand NHBRC
Introduce new products in the market
2. To provide innovative quality homes that will satisfy
and protect the consumer
•
•
•
Improve operations quality service levels
Expand housing consumer education initiatives
Rectification programme
•
Research new and value add NHBRC products and
services
Develop NHBRC standards and brands
Legislative review
Establishment of Investigation and Enforcement
Unit.
3. Strengthen NHBRC operating processes, systems
and procedures
4. Create a learning environment and build capacities to
products and services
•
•
•
•
•
Improve and strengthen NHBRC human resource
skills base
Review and develop Human Capital Strategy
National Rectification Project
•
Pre-2002 non-enrolment of homes in accordance with the Act.
•
PHP projects and homes were not enrolled.
•
Rural housing not enrolled.
•
“RDP houses” were not build in accordance to SABS building standards
and technical requirements stipulated by the NHBRC.
•
No homes were inspected.
•
NDHS statistics data indicates that 3,047,600 houses were built between
1994 and 2010, (2,807,595+ 240,000).
• Total units enrolled by NHBRC from 2002 to 2010 is 409,100.
• Number of units at high risk is 2,638,500.
Impact on houses
• Desktop study shows that 40% of houses under risk will have
workmanship related problems at a cost of R12 000 per house.
• Estimated cost of rectifying minor defects will be 1,055,400 X 12 000 =
R 12,7 billion.
• Approximately 20% of houses at risk will have major structural defects
which is 609 520 units.
• To demolish and rebuild the units at current subsidy quantum of
R 87 000 will be R 46 billion.
• Total estimated remedial costs is therefore R 58.7 billion.
Enrolment Fee
• All houses rectified and meeting NHBRC requirements will be enrolled
and provided with 5 year major structural warranty.
• All future defects occurring within the warranty period will be covered
by the NHBRC.
• Enrolment fee will be calculated as for the other subsidy projects as
1.75% of the subsidy quantum, which is currently R87k.
• It is expected that 60% of the houses will be rectified.
• The total amount of units to be rectified is 1,583,100.
• The total estimated enrolment fee is 1.75% X R 87000 X 1,583,100
= R 2.4 billion.
Professional Fees
•
The professional fees for the services will be R1,500 per house per unit.
•
Total estimated professional fees is as follows:
(0.6 X 2,638,500) X R1,500
= R 2.4 billion
(0.4 X2.638,500) XR850
= R 0.9 billion
Total estimated Professional Fees
= R 3.3 billion
Summary of Costs will be:
Estimated remedial costs
= R 58.7 billion
Estimated Enrolment Fees
= R 2.4 billion
Estimated Professional Fees = R 3.3 billion
Total Estimated Costs
= R 64.4 billion
Value for Money for Department
•
Assurance that each and every home is of quality standards that meets the
National Building Regulations.
•
Very limited come-backs related to workmanship and structural integrity.
•
All houses assessed and rectified NHBRC technical requirements and
qualify for a 5 year structural warranty cover provided by NHBRC.
•
During rectification process, contractors and sub-contractors will be trained
by NHBRC.
•
NHBRC will develop a central registry of all houses that have been
assessed and rectified.
Capacity of NHBRC
• NHBRC has adopted a Customer Centric Strategy.
• Technical staff have been placed in all the NHBRC provincial offices
which include geotechnical, structural engineers, quantity surveyors
and project managers.
• The provincial offices will be supported by a team of experts from
Central Office.
• We are short listing specialist contractors to do the work on behalf of
the NHBRC.
• There will be no rectification of the completed rectified homes.
Pilot Projects in KZN
• Initial focus of the rectification project is in KZN ;
• Preliminary results is based on assessment made recently in KZN;
• Number of units to be assessed is 160,000 (preliminary);
• Number of Units assessed more than 27,000;
• About 80% of the units are to be demolished.
It is more expensive to rectify a 16m2 to 30m2 house!
Pilot Project in EC
• A total of 178 848 (preliminary) units are subjected to Forensic
Investigation by NHBRC in Eastern Cape Province.
• NHBRC pilot investigated a total of 36,000 units.
• Study indicates that 63% of units require to be rebuilt at R 87 000
quantum,(112 674 X R87 000 = R 9,802,658,880).
• 37% of units can be rectified at average cost of R 30,000
(66,173 X R30,000 = R 1,985,190,000).
• A total of R 11,787,848,880 (preliminary figure).
Jobs Created
• 100 Jobs have been created for assessment through the
rectification programme.
• Most of the jobs are for Technical Consultants.
• More than 1000 jobs will be created during Construction
of the rectification programme.
• The jobs will be for both skilled and unskilled labourers.
• NHBRC has created 77 jobs of Technical Scarce skills.
Surface bed with no foundation
Blocks laid with mud
Cracks above windows with no lintels
Roof anchorage done by home owners
NHBRC Contribution to homes constructed
- Pre 2010
• All sub-standard houses will be demolished and re-built;
• NHBRC will enrol these houses;
• The NHBRC has referred the Engineers to Engineering Council of
South Africa for possible disciplinary action;
• NHBRC Council is taking disciplinary action against builders , and
• The rectification phase will be project managed by the NHBRC.
• Final budget and Rectification programme 2 B finalised in Consultation
with NDHS pending availability of financial resources.
NHBRC Value Proposition
– Post 2010
•
•
•
•
All houses will be inspected by
NHBRC .
All houses enrolled with NHBRC will
enjoy the following benefits:
– 3 Months Workmanship Cover
– 1 Year Roof Leak Cover
– 5 Year Major Structural Warranty
Cover
Future remedial costs, if any, will be
covered by NHBRC warranty.
NHBRC will continue to provide more
training to emerging home builders.
The quality of construction is not yet at
the desirable level.
•
NHBRC will be more involved in housing
consumer education, focusing on:- implications of alterations & additions.
- importance of proper maintenance of
houses.
- benefits of the warranty scheme.
•
NHBRC will pay more attention to
infrastructural services during project
construction.
NHBRC Post 2010 (Cont…)
•
•
•
NHBRC will conduct “at risk”
inspections of late enrolled
houses.
NHBRC will continue to crosssubsidise the subsidy sector
enrolment fees in order to
contribute to the sustainability of
human settlements and assist in
service delivery.
NHBRC will implement a new
enrolment process, whereby
the project enrolment and home
enrolment phases are collapsed
into a single phase (reduction in
turnaround times).
•
•
•
•
•
NHBRC will assist the province in
geotechnical investigations.
NHBRC will enroll all houses
including rural houses and PHP.
NHBRC has established a Forensic
Investigation Business Unit.
Focus will be on prosecuting all
defaulting Home Builders not
complying with the provisions of the
Act.
Enforcement of the NHBRC code of
ethics.
NHBRC Post 2010 – The Future!
Improving quality of living
A home that is suitable to the needs of the
majority of the people of RSA.
• Contribute to reduction of
housing backlog through
the promotion of
innovative and/or
alternative building
methods.
NHBRC Post 2010
Training of Youth ,Men& Women
GP
FS
WC
KZN
EC
MP
NC
LP
NW
TOTAL
Training of
Youth
360
104
176
240
144
104
64
104
104
1400
Training of
Women
268
80
132
180
108
76
48
80
78
1050
Training of
Men
272
76
132
180
108
80
48
76
78
1050
TOTAL
900
260
440
600
360
260
160
260
260
3500
INSPECTIONS
In terms of the Housing Consumers
Protection Measures Act, 1998 (Act No. 95
of 1998), section 5(4)(b), the Council shall:
“enrol and inspect the categories of
homes that may be prescribed by the
Minister”
Inspection Critical Success Factors
• Inspection of all homes which
are enrolled.
• education and training of
home builders.
• acceptable level of technical
competency of all home
builders.
• reduction in claims against
the warranty fund (risk
management).
• maintaining a high profile of
NHBRC visibility.
• provision of statistical data to
guide pro-active decisions on
risk aspects.
• provision of industry
feedback, and
• reduction in the cost of
inspection through an
optimised inspection process.
NHBRC Inspection Model Post 2010
 Utilisation of a hybrid model (Outsourcing and
in-sourcing for smaller Provinces)
 Hybrid model resulted in reduction in
inspection fee from R 2,500 to R 1700 per
home.
 Implementation of an on-site inspection
monitoring system through use of PDA’s
(Personal Digital Assistant).
NHBRC Post 2010
Inspection Model
BUDGET 2011/12
NUMBER OF
INSPECTIONS
193 516
TOTAL COST
R48 967 463
FORECAST 2010/11
AVERAGE NUMBER
OF INSPECTION per
HOUSE
NUMBER OF
INSPECTIONS
6
73 355
TOTAL COST
R50,154,416
Inspection Cost per Unit
Subsidy
• VFP’s
Average Enrolment fee
Non-Subsidy
649
7 964
(552)
(1 476)
97
6 488
(145)
(77)
(48)
6 411
Cross-subsidy Quality Assessors
(488)
(1 545)
Contribution to Fixed Costs
Cross-subsidy to fixed costs
(536)
(503)
4 877
(1 593)
(1 039)
1 707
Outsourced Inspectorate
Contribution
Direct Fixed Expenditure
Contribution before Cross-subsidy
Net Surplus Deficit
VFP’s
Development contribution to
subsidy sector
• VFP’s
Inspection costs
Fixed costs
Total Cross-subsidy
Per-Unit
R’ Million
488
51.0
503
VFP’s 991
104.2
155.2
Major Fixed Cots Cross-subsidy:
Staff Costs
Infrastructure costs
Administration costs
51.2
21.8
31.2
Total Fixed Costs
104.2
Revenue Assumptions
Non-Subsidy
Subsidy
Registration Fees
R 750 (Inc) per builder
Annual Fee
R 600 (Inc) per builder
Manuals
R 100 (Inc) per set
ENROLMENT FEE STRUCTURE
Subsidy
Enrolments
Subsidy
Quantum
1% Project
enrolment
0,75% Home
enrolment fee
Fee Scale
A
R 86 553
Selling
Price
(R)
0 to
500 000.
Applicable Enrolment fee
(R)
1.3%
B
500 001 to
1,0 million
A + 1.0% of difference
C
1,0 million to
2,0 million
B + 0.75% of difference
D
2,0 million to
5,0 million
C + 0.5% of difference
E
5,0 million +
Maximum of R 34,000
Valuable Final Products
Trend and Value
VFP’s
• VFP’s
Registration Units
2010/11
FORECAST
3 000
2011/12
BUDGET
COMMENTARY
3 337 Developments in GP, MP and LP
Registration Rand
R 3.9m
R 4.1m
Renewals Units
10 500
12 000 Gauteng and KZN’s activities
Renewals Rand
R 5.5m
Enrolment Units
Enrolments Rand
30 000
VFP’s
R 6.3m
NW increase developments in Mafikeng,
Hartebeest and Rustenburg. KZN increase
developments in Newcastle, Umhlatuzi and
33 170 Ballito area.
R 232m
R 264m
1 850
1 659
Late Enrolments Rand
R 1.2m
R 1.0m
Average Enrolment Fee
R 7.745
R 7.964
Late Enrolments
Valuable Final Products
Trend and Value
VFP’s
2010/11
FORECAST
Subsidy Projects Units
2011/12
BUDGET
14 410
105 050
R 9m
R 91m
Subsidy Enrolment Units
80 090
105 050
Subsidy Enrolment Rand
R 38m
R 68m
Subsidy Projects Rand
VFP’s
Expenditure Trend
250
200
R' Million
150
100
50
0
-50
Budget 2014/15
Budget 2013/14
Budget 2012/13
Budget 2011/12
Forecast 2010/11
Operations
Admin
Payroll
Council
151
141
132
123
76
25
14
24
24
19
8
8
7
7
3
Employment
Cost
Sem Var
Fixed
215
195
178
167
151
84
77
63
69
51
58
54
50
58
66
Surplus /Deficit
Before
Interest
-8
4
7
3
1
Statement of Financial Performance
by Segment for 2011-2015
Description
Revenue
Operation Expenditure
Fixed Expenditure
Non
Subsidy
Subsidy
Total
Budget
2012-13
2013-14
2014-15
166 510 208
283 847 531
450 357 739
461 276 454
493 565 805
532 898 299
64 771 500
58 188 517
122 960 017
131 567 218
140 776 923
150 631 308
8 412 070
212 124 074
220 536 144
209 476 947
226 568 260
253 612 003
104 162 413
112 795 280
121 998 294
136 560 310
Cross Subsidy
104 162 413
Total Expenditure
177 345 983
270 312 591
447 658 573
453 839 445
489 343 477
540 803 621
(10 835 775)
13 534 940
2 699 165
7 437 009
4 222 328
(7 905 323)
-
255 683 307
255 683 307
273 581 138
292 731 818
313 223 045
(10 835 775)
269 218 247
258 382 472
281 018 147
296 954 146
305 317 723
Surplus / (Deficit)
before interest
Net Interest
Surplus/ (Deficit)
Statement of Financial Position 2011-2015
BUDGET
2011/12
2012-13
2013-14
2014-15
ASSETS:
Non-current assets
Current assets
TOTAL ASSETS:
3 367 624 734
3 617 523 169
3 883 143 623
4 177 212 868
70 621 050
78 883 511
107 305 357
113 896 074
3 438 245 784
3 696 406 680
3 990 448 979
4 291 108 943
2 529 900 288
2 795 918 435
3 092 872 581
3 398 190 303
85 352 248
77 494 996
74 583 151
69 925 392
822 993 247
822 993 247
822 993 247
822 993 247
3 438 245 784
3 696 406 679
3 990 448 979
4 291 108 943
EQUITY AND LIABILITIES:
Reserves
Current liabilities
Technical liabilities
TOTAL LIABILITIES:
Warranty Fund Analysis- 2012
R’ M
Allocation of Investments:
Warranty Fund Reserves
VFP’s
Working Capital Reserves
1 240
740
Investment Reserve
1 323
TOTAL:
3 303
NHBRC will continue to assist
all spheres of Government in
the delivery of sustainable
human settlements.
Thank You.