Independent Development Trust & Construction Industry Development Board: Strategic Plans 2015, in presence of Deputy Minister

Meeting report

Independent Development Trust Strategic Plans 2015 briefing

Dr Somadoda Fikeni, Chairperson of the Board, Independent Development Trust, noted that accompanying him, as advised previously by the Committee, were certain members of the executive team from the Trust (IDT), and a number of members of the Board of Trustees. It was noted that there were also representatives from the Department of Public Works (DPW).

Mr S Masango (DA) said it was not necessary for the entity to have brought the whole team as well as representatives from the DPW, particularly in view of the costs and the fact that the IDT had been complaining about lack of financing.

Dr Fikeni replied that the IDT was serious about cost-cutting and assured Members that none of those present had flown business-class nor were they staying in five-star expensive hotels. After a long vigorous process the IDT had appointed a new Chief Executive Officer (CEO), Mr Coceko Pakade, who would assume his duties on 1 April 2015, but who could unfortunately not accompany the team today because he had commitments as the outgoing Director General of the Department of Social Development. He invited Members to continue making site visits to projects that the IDT was implementing around the country and thanked them for their inputs on visits last year. The report on the mandate of IDT was close to finalisation and would cover elements arising from a review of the IDT structure, clarifying which positions needed to be filled, and which needed to be created in order to fulfil its mandate.

Dr Stanley Bhebhe, Acting Chief Executive Officer, IDT, gave an outline of the purpose of the presentation and noted that it was being made in compliance with the obligations of entities to report to the National Assembly (NA). The IDT had complied with the National Treasury (NT) Framework on Strategic and Annual Performance Planning. This plan was approved by the Board of Trustees on 25 February 2015, lodged with the Executive Authority and National Treasury on 27 February 2015, was further approved by the Minister on 6 March 2015 and submitted to Parliament on the 11 March 2015.

He noted that the IDT contributed to national development imperatives through its service offerings. The strategy of the IDT Board was aimed at building an IDT which has the capacity to deliver a distinctive value proposition which measurably advances the national development policy objectives. The IDT wanted to address the development gap that continued to undermine government’s development policy objectives and it tried to be financially viable and organisationally sustainable. The executive authority must ensure that IDT’s Strategic Plan underscores the importance of infrastructure which will foster shared prosperity by all, and highlight the role of the entity overall in the DPW. The IDT was committed to being relevant, effective and a financially viable development agency that delivered programmes that make meaningful impact on the life of people.

The values and operating principles were outlined, emphasising that the IDT must show a people-centred approach, integrity, professionalism, accountability and innovation.

He expanded by being people centred, the IDT tried to improve the lives of the people, they encouraged strong working teams and always worked towards putting people first. Integrity meant it was open and honest in all its communications, treated others with respect and dignity, and the business was conducted in a manner which was lawful, honest and ethical. The IDT tried to enhance professionalism through approaching work matters in a systematic way. It would deliver quality results and its service would comply with best practices. It tried to be innovative by approaching work matters in creative ways, would explore innovative solutions and implement projects that would foster sustainable developments practices and outcomes.

The mandate from Cabinet produced in 1997 was still in place; namely, to transform the IDT into a government development agency that would implement projects commissioned by government departments. It integrated into the public service delivery system in 1999, with the promulgation of the Public Finance Management Act (PFMA), in which it was listed as a Schedule 2 Major Public Entity. It contributed towards the mandate, vision and strategic objectives of the Department of Public Works to advance the National Development Plan (NDP), National priority outcomes, National Infrastructure Plan (NIP) and New Growth Path (NGP).

The relevant programmes of the DPW were outlined as Administration, Immovable Assets Investment Management and Expanded Public Works Programme (EPWP). The contribution to the national strategic outcomes included: quality basic education, a long and healthy life for all South Africans, decent employment through inclusive growth, a skilled and capable workforce.

He outlined the performance outcomes of the IDT over the last ten years. It had managed to deliver programmes worth approximately R20.25 billion and 85% to 95% of that amount was directed to social infrastructure development. It implemented integrated social infrastructure and social development programmes whose outputs had a long-term development impact. One of IDT's key service offerings was social facilitation; it facilitated acceptability and ownership of development, programme delivery, undertaken with the full participation of communities. Direct contributions were made to achieve the government’s strategic outcome that was translated by the Department of Public Works to mean “Service, Delivery, Quality and Access to Government Services”.

He noted that IDT had done a SWOT analysis of Strengths, Weaknesses, Opportunities and Threats. Under opportunities, IDT noted that it had been positioned as an agency specialising in programme management and development, tasked with managing and delivering social infrastructure backlogs on behalf of government. It had expanded the programme implementation management services to basic services and housing infrastructure. It had spearheaded the Green Technology and related innovations in infrastructure development, and made provision for rural development infrastructure programme implementation support services and post-settlement support, linked to the Comprehensive Rural Development Programme.

Threats were posed due to the frequent changes in leadership of client government departments. Other threats related to the risks to continuity of the IDT’s delivery of programmes and meeting of obligations to service providers. The fiscus was under pressure, which led to delays in programmes and delays in programme payments by client departments, thereby exposing the IDT to litigation. The intense competition by State Owned Companies (SOCs) for provision of social infrastructure and programme management also caused problems for the entity. Any lack of clarity in mandate exposed the IDT to a possible usurping of its own mandate by other state entities which led to financial vulnerability. It had lost some critical staff, due to uncertainty arising from the financial viability challenges. This was compounded by the overall shortage of skills in the built environment industry.

Strengths were then described. The IDT had made progress in some matters. It had made a commitment to eradicating poverty, empowering of marginalised sectors of society and building of sustainable communities, and building a strong client base around the country. IDT had established good working relationships with provincial and national governments. It had developed a youthful, professional and passionate personnel. Effective management and business process systems were put in place.

Dr Bhebhe conceded that, as with any other organisation, IDT also had its weaknesses. The organisational capacity was not aligned with the high growth in programme portfolio. There was a shortage of technically qualified staff who were needed to meet the growing national infrastructure development programme delivery standards, This in turn also limited the influence that IDT could input into the conceptualisation and design of clients programmes, and the formulation of development solutions and programme impact. Its relationship with the government was often structured on a client/service provider basis, thus limiting the value that could have accrued from a partnership based relation.

Dr Bhebhe went on to describe some of the specific intentions and outputs of the various programmes.

Programme 1 articulated the IDT’s responsibility to promote sustainable development in marginalised areas, through the delivery of integrated social infrastructure. The institution aimed to achieve these strategic goals by using resources in a prudent and efficient manner. IDT contributed to the country's capacity to effectively implement development programmes, and it strategic objective said it should provide integrated development programme services in a cost effective manner within the prescribed time and scope and to the required quality. Its statement of objectives was focused on a distinctive developmental approach to social infrastructure delivery that empowered communities to receive, participate in, own and sustain their own development.

Programme 2 confirmed and reasserted the IDT’s commitment to continue being a relevant, efficient, effective, sustainable and compliance-driven entity. The IDT was committed to striving to reach the best in terms of corporate governance practice and prudent leadership and management. The goals committed it to being a relevant, effective, efficient and sustainable organisation and the statement of objectives encompassed operating a development agency that remained relevant to the country’s development needs and aspirations. It would also maintain a clean administration committed to the efficient application of resources, full compliance with regulations and legislation and full accountability.

He reminded Members that IDT is a major public entity and development agency. It must create value in the lives of the people of South Africa, deliver high quality services and sustainable development in a cost-effective way, remaining relevant in the development landscape, with innovative and sustainable solutions to the development challenges in the country. It must also give voice to the values and principles in the National Development Plan (NDP) and other key instruments. Its strength lay in its ability to deliver quality social infrastructure through its niche programme management. It had been shown to deliver meaningful value-add to government through cost-effective delivery of programmes in a way that integrated key development objectives of job creation, shared prosperity and skills development, whilst addressing the social infrastructure and social development backlogs.

Dr Bhebhe went on to highlight some key performance measures and indicators. He noted that the IDT was required to generate its own business portfolio. However, the speed at which agreements were concluded, as well as the frequency and values of funds transferred, was not always entirely within the control of the organisation, and any delays could impact on delivery.

Management Fees were negotiated with clients and stipulated in agreements. In order to remain a going concern, the minimum average management fee was between 6% and 7% in the short term. A level lower than 6% would jeopardise the organisation’s status as a going concern status.

On the question of going concern, Dr Bhebhe noted that currently, if all management fees were collected it was estimated that the IDT would remain a going concern for the next 12 months. However, unforeseen cash flow challenges may jeopardise the organisation and thus could have devastating impact on the delivery of approximately R20 billion worth of programmes over the planning period. Shareholders had formally undertaken and provided certainty on the organisation’s mandate and long term sustainability. It had for many years been under the shadow of uncertainty, and this had negatively impacted on client confidence, organisational culture and staff morale, affecting the business generation. In 2014/15, due to the uncertainty, there were high staff losses and a high vacancy rate of 20%, and meantime IDT was also facing difficulty in attracting and retaining the right skills. He noted that client confidence was enhanced by an organisation’s ability to deploy appropriate competencies to manage programmes.

He outlined the structure of IDT. There was a shareholder compact between the Executive Authority and the Accounting Authority. The Board of Trustees included the Strategic Planning and the Programmes Committee, Human Resources and Corporate Services Committee, Audit and Risk Committee, Finance Committee and the Board EXCO (which also acted as the Remuneration Committee). The Executive Management comprised of Executive Heads who mostly reported to the Chief Executive Officer (CEO), providing leadership to operations, development services unit, corporate services unit, financial services unit and office of the CEO.

Major financial challenges and risks facing the IDT emanated from the uncertainty, just outlined, on its financial sustainability. National Treasury had allocated R50 million for the 2015/16 financial year, on condition that the IDT will develop and submit restructuring plans to the National Treasury. These plans, by way of a Business Case, must address issues of structure, form and resourcing for the IDT in order for it to become self-sustainable.

He explained certain risks. The strategic Risk Management in Litigation resulted from the delays in programme funds transfers, which in turn resulted in late payments to the service providers, failure of projects, and the on-going competition between contractors when tenders were allocated. All of these had damaged the IDT's reputation, had prolonged delays in service delivery and led to unproductive time. IDT had now put controls in place to deal with these matters. These included plans for monitoring of payment turnaround times. IDT planned to investigate and look into a contingency plan to have funds available, to be used in circumstances where there were delays in the transfer of programme funds from client departments. IDT aimed to improve adherence to the programme and project management process, improve the contract management capacity and recruit in-house professionals for technical validation and evaluation. Lack of continuity within the regions with regard to political engagements and stakeholder management had been one of the main factors contributing to the loss of business. Awarding of contracts to contractors from other regions had resulted in conflicts and outcry from the local contractors.. Again, this had dented the corporate image and led to some retrenchment of staff. In order to avoid a recurrence, IDT had implemented effective Supply Chain Management processes and procedures. It intended to manage relationships better in business, and to improve leadership responses to challenges.

Mr Ian Ellis, Chief Financial Officer, IDT, tabled a budget and performance figures. The Business Plan for the financial years 2015/16 to 2017/18 showed steady growth, as opposed to the quantum leaps shown over the last three years. He noted that between 2010 and 2014,  programme delivery grew from R2.2 billion to R6.63 billion. From there, the growth was now predicted to reach R7 billion to R8 billion, but over the next three years. The IDT had two sources of income - management fees and investment fees. Management fees that were charged to client departments constituted the major source of its income. The level of fees budgeted or projected was 6% during the 2014/15 financial year. Management had a process to increase this average level to 6.3% over the year. He pointed out that investment income was earned from interest on the investment fund, but since that fund had declined over the years, as it had been used to fund the IDT’s operational costs, it had also led to a reduction in the level of interest rates, which, taken with the decrease in capital, had reduced the income altogether over the last few years.

He pointed out that the IDT had no authority to borrow money. . In the 2015/16 financial year, the financial support from the government was a R50 million allocation from National Treasury. This was the third and final tranche of a total allocation of R 150 million committed by National Treasury in the 2013/2014 financial year..

The growth in the programme portfolio was expected to be lower than it had been over the previous years - growth of between R500 million and R1 billion over the next three years would indicate growth of between 3% and 4% per annum.

There were three critical areas that IDT considered. Firstly, it had to consider the size and nature of the portfolio. It was important not only to manage the different portfolios within the entity, but also to ensure that they generated sufficient management fees which were needed to fund operating expenses. Cost containment of the operational costs received the attention of management.as did the cash flows. Until three years ago, IDT still had a reasonably large balance retained from  from the original grant made by government in 1990 to assist with the funding of operational expenditure, but this had now been almost entirely depleted and IDT and stood at approximately  R66 million. The third source of income was the National Treasury allocation, over which the IDT had no control.

He noted that, as indicated on pages 40 to 41 of the Strategic Plan, the biggest single cost driver for operational expenses was the salary bill. Employment costs amounted to around 60% of the total operating expenses, with the remaining 40% related to non-employment costs  such as renting of office space, travelling and other office administration costs.

Discussion

Mr K Mubu (DA) wondered why IDT appeared to want to spend 70% of the programme budget on programme 1, and asked for further explanations of what the figures meant, as he did not understand the terminology used. He also wondered, in view of the statement that IDT had not managed to collect much of the management fees, how it managed to operate. The Committee had heard that there had been problems in getting the provinces to report on the Expanded Public Works Programme (EPWP) of the DPW, and he wondered if the IDT could not help the Department to develop social infrastructure and get communities to understand and accept that the ownership of infrastructure lay with the communities. He appreciated that IDT had managed to build strong relations with provincial government but did not appear to have made too much effort to build relations with local government, and it was suggested that it should try to expand on this as well. He pointed out that a credible entity should not still be at the stage of trying to build partnerships and questioned why it was still seeking partnerships; had it established full credibility it should have departments queuing up to enter into arrangements with it.

Mr L Filtane (UDM) said the points mentioned as key indicators seemed to him more like organisational concerns. If the clients were taking their time to transfer funds, there should be legal implications attached to this, to prevent recurrence. He asked if the projected increase of R7 billion to R8 billion had taken into consideration factors such as inflation, and wondered if IDT would have enough capacity to deal with an increased volume of work in the next three years.

Ms P Adams (ANC) asked what the IDT’s relationship was with the Department of Public Works. She suggested that it should take note of the management strategies of other government organisations, to help it to deal with its current concerns. She noted that IDT seemed to be complaining more than proposing solutions to its concerns. She suggested that there should be an analysis of the EPWP programme, to assess whether the IDT had managed to deal with issues of concern, such as the skills transferred, the structures, and whether the youth, women and people with disabilities had been included in the development agencies which helped with the transfer of skills.  It was however noted that the EPWP represents a relatively small part of the IDT’s programme portfolio

Ms N Sonti (EFF) said the IDT played an important role in the development of the country. Its vision and mission is aligned to the pillars of her party, the Economic Freedom Fighters, and this party regarded the IDT as a key player for social development programmes. However, its mandate was not clear and there did not appear to be sufficient financial resources for it to carry out its functions and meet the mandate. She asked for an explanation what distinguished the IDT from the other developmental organisations.

Ms E Masehela (ANC) said the delays in funds transfer had led to other problems around the creation of jobs and the payment of salaries. All payments should be done within the prescribed 30 days, so she wanted to know why the IDT had not met these deadlines, and how it would go about garnering timely transfers of programme funds by government departments.

Mr S Masango (DA) said he felt IDT needed to include time-frames in its presentations, to indicate when the programmes were expected to be rolled out. There were several inaccuracies in the report. The budgetted  programme expenditure target was reflected  as R7 billion but the calculations for that target were close to R9 billion, and he asked for an explanation. This question was responded to by the IDT’s Interim Chief Operating Officer, Mr Ayanda Wakaba, who advised the Committee that the quarterly figures shown in the Annual Performance Plan were cumulative and the figure for programme expenditure was correctly stated at R 7 billion for the financial year.

Dr Fikeni said the IDT had noted all comments and recommendations from the Committee. The change of Ministers meant that the entity had to start afresh, since it was situated under the Department of Public Works. The fact that the IDT awaited the finalisation of the Business Case by the Department of Public Works led to uncertainties and impacted on the number of s vacancies, and at the moment, only the most critical positions were actually filled. He noted the comment on time frames and said that the Cabinet and the shareholders had the power to determine the time-frames for each programme. In the past, IDT had been able to pay contracted entities providing services to it, whilst waiting for the client to pay, but in light of the current financial constraints, it was unable to do so and had to wait for the client department first to transfer money.

Dr Bhebhe said that the broad mandate of the IDT was to service government departments to deliver services and IDT should approach departments to help them with a mechanism for those departments then to provide services. He agreed that a clearer mandate was needed before IDT could fill the vacant positions, and that mandate would help establish where exactly the IDT needed to expand and which technical skills would be needed.

Mr Ellis said that the collection of management fees and the determination of those fees was designed to cover all operating costs of the IDT. There had been on-going interaction with the National Treasury, which was playing an involved role in trying to ensure that the IDT would become financially viable. The IDT could not be sure that it would recover all the management fees, although it had predicted a 90% collection in 2015/16, and projected recoveries of 95% in the years thereafter.  It preferred to encourage clients to transfer on time rather than resorting to threats of legal action.

Mr  Wakaba  said Programme 1 consisted of the core activities of the entity, and that was why it received 70% of the operations budget. This programme was used to drive the entity and managed most of the costs involved.  He pointed out that all the IDT's services were people-based. It could develop a viable relationship with local government if there were adequate funds available to help foster the relations.

The Chairperson asked what IDT was doing, and whether it had any planned programmes targeted at youth development. If so, then it was important to notify the youth of any opportunities. The programmes should also be planned around including those with disabilities.

Mr Wakaba replied that the DPW had learnerships available for the youth, and IDT would also plan to support  construction compaies owned by young owners, as a way of developing them. Approximately 20% of the programme portfolio  was allocated  to  women-owned businesses. The DPW was currently working on a Protocol for Allocation of Projects to the IDT that was intended to help the IDT form more partnerships with more departments.

The Chairperson asked the COO to explain each of the acronyms used.

Mr Wakaba replied, noting that QS stands for Quantity Surveyor, CBO for Community Based Organisation, NPO for Non-profit Organisation. He added that the IDT had various initiatives to improve its influence in the communities. IDT believed that it was leading in investing time in understanding Green Technologies. It was also noted that the projects were allocated by the provinces to the entity.

Ms Adams asked why the IDT had allocated only 10% of the budget in respect of Strategic Objective 2 to the function of risk management, pointing out that this was an important function as it was used to fight corruption. She asked whether the remuneration of staff figures related to the executive or the junior staff.

Mr Masango wanted clarity on whether IDT was able to sell its property and, if so, where the money would go.

Ms Seipati Boulton, Chairperson: Audit and Risk Committee, IDT, noted that the Audit and Risk Committee was constantly updated on key risk areas that needed their attention. The problem with adverse reporting could be caused by poor prioritisation from management, if it put business before compliance. The Committee would provide oversight on risk management on a quarterly basis. She indicated that although it was true that much of the financing went towards the functions of Programme 1, the risk of litigation remained a reality.

Mr Ellis said the remuneration referred to in the report related to all the employees of IDT, including the executives.  All the regional properties were leased and the only property which was owned by the IDT was the national office building.

The Chairperson noted that the Committee could, if they wished, raise further questions directly to the IDT. There would be ongoing discussions at Committee level with the entity.

Construction Industry Development Board Strategic Plan briefing

Ms Inba Thumbiran, Acting Chief Executive Officer, Construction Industry Development Board said the vision for the Board (also referred to as CIDB) was to achieve a transformed construction industry that delivered sustainable value, in a manner that was responsive to the socio-economic needs of South Africa. The CIDB existed in order to create an inclusive, sustainable and competitive construction industry. It did so by regulating, developing and transforming the construction industry, through monitoring and enforcement, setting of standards and guidelines, capacity building and forging partnerships. Its values included service excellence, integrity, innovation, leadership, cooperation, and teamwork and personnel development. Its mandate was to provide strategic leadership to stimulate sustainable growth, reform and improvement of the construction sector. The entity also wanted to play a role in sustainable growth and participate in the emerging sector. It wanted to improve performance and implement best practices. It sought to monitor and regulate the performance of the industry, including the registration of projects and contractors.

She explained that the CIDB had listed five matters arising out of the external environment which had an impact on the entity, and posed problems that the CIDB was trying to address. There was a slow progress to transform the industry. The CIDB wanted to deliver enhanced value to clients and society to improve the industry's performance and wanted to provide an approach to management that would centred on clients and that would have enough capacity. Contract development and participation of the emerging sector remained a key focus point for the entity.

In order to assess its internal environment, the CIDB had conducted a culture survey, to assess the areas in which the entity needed to improve. Some of these were communication, diversity, innovation, remuneration, learning and development, structure, teamwork and vision and values.

The Five Year Review showed that stakeholders were generally appreciative and supportive of the role of the CIDB in the industry. CIDB was well regarded and was seen as providing valuable guidance, leadership and direction to the industry. Its outputs were perceived as useful and relevant. However, there remained much to be done. For example, it had been recommended that the entity should strengthen its internal legal resources, decentralisation, its communication with stakeholders on the CIDB’s role and mandate, and should also direct the strategic foresight of the South African construction industry in line with the National Development Plan (NDP) and global challenges, whilst also implementing Phase 2 of the Registers Best Practice Project Assessment Scheme and Best Practice Contractor Recognition Scheme. It had further been recommended that it should provide leadership in a comprehensive NDP with clear targets, train client departments to utilise Best Practice Notes, and work closely with other research and higher education institutions and reinvigorate the concept of Centres of Excellence.

The CIDB's strategic goals included:

• strengthening and enhancing compliance with CIDB regulations to reduce construction risk and all forms of fraud and corruption in the sector
• Building and capacitating the industry to deliver quality infrastructure
• enhancing transformation of the construction industry
• maintaining financial sustainability
• positioning the CIDB as a knowledge authority in the industry
• optimising organisational design that supported the effective delivery of the mandate
• Strengthening and maintaining good relationships with stakeholders, through effective communication.

Ms Thumbiran took Members through the specific strategic goals (see attached presentation for full details).

Under Strategic Goal 1: Strengthen and Enforce CIDB Regulations she noted that the CIDB planned to have a full review of the CIDB Act, by end of July 2015. There would be an on-going review of the regulation, standards and codes of conduct. It would conduct also an on-going development of the CIDB Register of Professional Service Providers (RoPSP) and PSP Recognition Scheme, which should be achieved by 2016. The CIDB would roll out an anti-corruption model for clients in 2015/16 and it would also publish Standards for Integrity Management Systems for Contracts in 2015/16.

Under Strategic Goal 2: Build and Capacitate, the CIDB planned to continue to implement compliance strategies, strengthen contractor development and roll out and implement the CIDB Best Practice Project Assessment Scheme. It would consider improvements to IDMS for application by all levels of government, as well as nurture key partnerships for the training of infrastructure managers and professionals to use IDMS.

Strategic Goal 3: Transformation remained an overarching focus area within the CIDB’s Strategic Plan, and indeed an overarching focus across all its programmes. CIDB wanted to put regulations in place. It planned to grow the business and commit to priorities of transformation that would result in redistribution of available work, which would in turn lead to easier access to work, and develop the enterprises.

Strategic Goal 4: Knowledge Authority required CIDB to continue to monitor the performance of construction companies, by establishing:

• Construction Industry Indicators
• Construction Monitor,
• Small and Medium Enterprises (SME) Business Conditions Survey
• Compliance Monitor and Status Reports.

It would support and encourage postgraduate and research activities and hold postgraduate conferences.

In order to reach Strategic Goal 5: Financial Sustainability, the CIDB planned to review the income generation model opportunities, to generate alternative revenue streams, including the Best Practice Fee.

Strategic Goal 6: Service Excellence required that CIDB continue to focus on the delivery of excellent services. Specific areas would be the processing of contractor applications within the stipulated turnaround times, providing efficient and effective head office and provincial registration call centre service, improving head office and provincial office customer service levels, enhancing provincial service implementation and visibility, and strengthening an enabling environment to promote infrastructure delivery procurement uniformity and contractor development. There would be on-going and new surveys to increase customer satisfaction and monitoring of service delivery against predetermined targets.

Strategic Goal 7: Optimal Organisational Culture would be achieved by CIDB addressing the outcomes of a recent CIDB Culture Survey and inculcating in all employees a culture of high performance, employee satisfaction and improvement of staff morale.

Strategic Goal 8: Effective Communication would ensure that the CIDB maintained good relationships with stakeholders.

The Strategic Plan was aligned with the NDP. The CIDB had developed and capacitated the industry skills to deliver infrastructure, to grow the country’s economy and contribute to infrastructure of the construction industry, in line with Chapters 3 and 4 of the National Development Plan. The goals around strengthening and implementing and enforcing the CIDB regulations to reduce risk, fraud and corruption in the sector related to Chapter 14 of the NDP. Furthermore, this aligned with the DPW aims to achieve transformation in the industry, amongst others by combating fraud and corruption and by strengthening, implementing and enforcing the CIDB regulations. It was also aligned with the Ministerial priorities around development and increased capacity of the industry to deliver quality skills to grow the economy and contribute to the infrastructure of the construction industry. Furthermore, its goals were also in alignment with Government Outcome 4 (Decent employment through inclusive growth) and Outcome 6 (Efficient, competitive and responsive economic infrastructure network).

The staffing structure was dependent on the proposed organisational design, and she informed the Committee of a decentralised business plan, to be implemented by July 2015. Across all the years, it was estimated that CIDB would be employing 224 employees.

The budget for the 2015/16 and 2016/17 years included some funding from retained surplus. The total budget for the 2015/16 year was R134.453 million and the estimated budget for 2016/17 was R142.117 million. She had previously noted the budget constraints.

She indicated, for the information of Members, that the acronyms in the slides were CRS for Contractor Register Service, CIP for Construction Industry Performance, PDM for Procurement and Delivery Management, PCD for Provincial and Contractual Development Programme.

Discussion

Ms L Mjobo (ANC) asked for a detailed budget explanation.

Ms Thumbiran replied that the Construction Register Service (CRS) had R23 million set aside for implementation in programmes. R10 Million was allocated to CIP, for the research that it was undertaking for the Commission, The PDM programme was concerned with development for clients, and here she explained that PDM conducted a lot of training on behalf of the DPW, which was rolled out across all the departments. The Provincial and Contractual Development Programme budget was used to pay staff in the different provinces, as well as to fund the surveys and research which were conducted from time to time. The office of the CEO had a budget geared mainly for the investigations which were conducted by the employees, and to cover staff remuneration (Information Technology and Human Resources departments).

Ms P Adams (ANC) said the presentation was short, and asked for more explanation of Strategic Goal 5, and what was listed under this category "Other" in the budget, which seemed to have a lot of money allocated to it. She asked what the relationship was between the CIDB and the DPW. She asked that the CIDB should elaborate further on its understanding of transformation, since the word was used loosely by many. She also wanted more information on the number of women and people with disabilities whom the CIDB might have empowered through its programmes and support. She also noted that the CIDB had not mentioned how it planned to improve the morale of the staff and she wanted to hear some pointers on this. She also asked what were the main challenges with the Information Communication Technology (ICT) systems.

Mr K Mubu (DA) said there were some inaccuracies in their budget concerning the salaries. He said that there was a company, the Siyenza Group, which had government member affiliations, including with Mr Mantashe and the President's son in law. However, this company was apparently not registered with the CIDB, yet was awarded a tender in Eastern Cape. He asked what the implications were of this and what steps the CIDB could take to resolve the matter, if it was aware of this case. If it was not aware of the matter, then he wanted to know why, since the mandate related directly to the CIDB.

Mr K Sithole (IFP) pointed out that in the handbook handed to Members, there was nothing said about the programme for 2015/16. He asked how many contractors were registered in 2014. He also complained about the lack of visibility of CIDB in the provincial departments, which indicated that there had not been much marketing of the entity.

Mr M Filtane (UDM) asked if the CIDB had been able to prosecute any company which did not comply with its regulations. He called for a report on the number of companies that it had helped to develop, and the current status of those at present. He asked if the CIDB was involved with educational institutions, and what it had done to develop those that were in the institutions.

Ms E Masehela (ANC) asked for a further explanation of slide 23, and what the Best Practice Fee referred to. He asked if the CIDB had a working relationship with Women in Construction organisation.

Ms Thumbiran replied that there was an on-going review of the CIDB Act, which would help strengthen the leadership role and improve the CIDB's visibility to the public. The recommendations from the Culture Survey prompted the CIDB to start this review of the Act. She told Members that the CIDB did interact and have relations from time-to-time with other entities, but she admitted that this still had to be built to establish a strong ongoing working relationship with the other entities, especially the ones in the DPW. The low morale of the staff had been mainly caused by remuneration complaints and CIDB accepted that there was a need to address this because staff were not happy with their current salaries.

In regard to the questions raised by Mr Mubu, she noted that the CIDB would firstly need to conduct a full investigation on the company he had questioned. It may be necessary to set up a tribunal to help with that investigation. There were procedures that needed to be followed if a company did not follow the regulations of the CIDB, and such initial procedures could be followed by issuing a fine of up to R100 000 to the company, and retracting contracts. However, the CIDB conceded that this amount was low and said that it was intending to revise it during the full review of the CIDB Act.

Ms Hlengiwe Khumalo, Chief Financial Officer, CIDB, said the category “Other” in the budget referred to the Department of Corporate Services. This budget was used for administration remuneration. The operating expenses were managed by the Department of Corporate Services. The CIDB was currently leasing buildings for office space. The other expenses under this category were the auditing fees. The 2015/16 budget was set out on page 2 of the handbook that was handed out to the Committee.

Ms Thumbiran said that slide 23 set out the CIDB's new approach that would help with generating other sources of revenue, and this would mainly be done through the Best Practice Fee. The CIDB did have a regional footprint but she admitted that again, its visibility is low. in regard to its work in the schools, she noted that the CIDB did not have a direct working relationship with the Departments of Education but it was possible to initiate this through the DPW. There were statistics available, which the CIDB would update consistently, but she did not have the statistical reports with her, but could present them to the Committee on another occasion if Members wished.

Ms Lindelwa Myataza, Chairperson of the Board, said the entity planned to build partnerships with other organisations and departments to develop and help women who wanted to get into the construction industry. The youth and people with disabilities were also included in the programmes.

Ms Masango believed that the CIDB should be in a position now to give the Committee details on the Siyenza construction company, instead of making excuses about procedures which had to be followed. He did not understand what type of investigation would need to be done for he thought that when a company has clearly been corrupt; the responsibility of the CIDB was to terminate their contracts.

Ms Thumbiran replied that government departments were not allowed to award tenders to companies that are not registered with the CIDB.

The Chairperson said the entity should not give a general answer to the questions, but should be able to give the Committee the specific information requested; if the CIDB did not have this information, it should say so.

Ms Myataza said the CIDB was aware of the case, and a complaint had been lodged. However, there were clear regulations around the process of terminating a contract for a company that was corrupt. The CIDB had to be given the chance firstly to deal with the investigation process, then provide the Committee with the answers, in order to ensure fairness of the process.

Mr Masango asked if the CIDB could conduct a full investigation if he asked it to do so.

Ms Myataza replied that CIDB was not attempting to avoid the question. It was important for the CIDB to give the Committee accurate answers on this case, and this would require a prior investigation. A general overview of the case would not be valuable.

Ms Thumbiran replied that on page 26, the table talked to the programme which was responsible for meeting the particular targets, which was the CIP. The indicator used in order to reach this target was the CIR's dashboard and she explained that the dashboard was a roll-up of specific information which the CIDB had to look for, in order to produce a knowledge document as part of the CIR.

The Chairperson noted that there should be an ongoing working relationship with the CIDB and thanked the Deputy Minister for his presence.

The meeting was adjourned.