2017/18 INDEPENDENT DEVELOPMENT TRUST - PowerPoint Presentation

1. 2017/18 INDEPENDENT DEVELOPMENT TRUSTANNUAL PERFORMANCE PLANPRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC WORKS02 MAY 20171

2. PRESENTATION OUTLINE1. Purpose2. Assumptions and Context3. Summary of the Strategic Overview (Part A)4. Summary of Programme Plans (Part B)5. Links to other Plans (Part C)6. Significant changes effected on the 2015/16 - 2019/20 performance indicators and targets 7. Conclusion and Recommendations2

3. 1. PURPOSETo present the 2017/18 IDT Annual Performance Plan and 2017/18 – 2019/20 Budget Framework to the Portfolio Committee on Public Works for consideration and noting.3

4. 4The 2015/16 – 2019/20 IDT Strategic Plan remains operational. The 1997 government mandate of the IDT is still applicable. According to this mandate, the “IDT must be transformed into a government development agency that will implement projects which are commissioned by government departments. It must cease to be a civil society organisation, an independent agency or funding agency.”The IDT transformation process emanating from the long term sustainability Business Case under development by the NDPW is underway. e.g. cost recovery principle per the new funding model and the social infrastructure focus.The IDT Business Case is at an advanced stage of development by the NDPW with interactive engagements with National Treasury and DPSA taking place. A Cabinet Memorandum seeking the support of the Cabinet on the IDT transformation ethos and elements is being developed based on the Business Case propositions.The NDPW / National Treasury will provide supplementary funding to address the budgeted 2017/18 – 2019/20 MTEF deficit to safeguard the continued operations of the IDT. 2. ASSUMPTIONS AND CONTEXT

5. 53. SUMMARY OF THE STRATEGIC OVERVIEW: PART A

6. 6 DESCRIPTION OF THE STRATEGIC PLANNING PROCESSNODESCRIPTIONDATE1.Develop the IDT Annual Strategic Planning Framework and obtain Executive Committee and Strategic Planning Committee support and submit the document for Board approval.February2.Develop Environmental Scanning Guidelines and templates and obtain Executive Committee endorsement.March-April3.Initiate the Environmental Scanning process by workshopping the National and Regional Environmental Scan Teams on the guidelines and templates. Undertake the research and business intelligence gathering and compile the draft Regional and National Environmental Scan Reports and PresentationsMay-June4.Organise a National Environmental Scan Workshop to discuss and review the Draft Regional and National Environmental Scan Reports. During the discussions and analysis of the reports, critical performance issues are identified, potential performance targets based on business opportunities and client needs, and future priorities and targets are deliberated on. The research and inputs are then consolidated to produce an integrated environmental scan highlighting key issues for the IDT. Develop the IDT MTEF budget submission to input to the Department of Public Works Estimates of National Expenditure. June-July

7. 7 DESCRIPTION OF THE STRATEGIC PLANNING PROCESSNODESCRIPTIONDATE5.Develop the First Draft Annual Performance Plan and Budget informed by the environmental scan and MTEF budget estimates for submission to NDPW by 31 August. Based on the IDT Environmental Scan Report and other internal business reports, a comprehensive presentation dealing with corporate strategy proposals, scenarios and strategic choices, strategic goals and objectives, and draft key performance indicators is developed for Board consideration at its strategic planning.  Jul-August6.A Board strategic planning session is held to process the environmental scan, strategy proposals, strategic goals and objectives, and the key performance indicator proposals. This session is followed by an Extended EXCO to firm up the upcoming year strategy and APP in preparation for the second draft of the APP due for Board review in November. Consultative workshop with DPW in preparation of the 2nd draft APP (feedback on 1st draft APP are also undertaken).September-October

8. 8DESCRIPTION OF THE STRATEGIC PLANNING PROCESSNODESCRIPTIONDATE7.Develop the Second Draft Annual Performance Plan and Budget based feedback and comments received from DPW, EXCO, SP&P Board Committee and Board. After the consideration and approval of the 2nd Draft by the decision making structures of the IDT i.e. Executive Committee and Board Committees the 2nd Draft APP and Budget is submitted to DPW for assessment on 30 November 2016. Consultative workshop are held with DPW in preparation for the final draft APP. November-December

9. 9VISION:To be a leading public sector developmental programme implementation and management agencyMISSION: The IDT manages and delivers integrated quality social infrastructure programmes on behalf of government on time, cost effectively and through a people centred approachOUR APPROACH : The IDT’s approach to social infrastructure development entails the necessary measures and networks required to prepare communities to receive, participate in, own and sustain their own developmentVISION, MISSION AND APPROACH

10. 10VALUES AND OPERATING PRINCIPLESThe organisation espouses five core values which also inform its operating principlesVALUESOPERATING PRINCIPLESPEOPLE CENTRED We support an enabling leadership culture and talent managementWe encourage teamwork, inclusive and participatory approachesWe improve the lives of peopleWe work towards making positive impact on communitiesINTEGRITYWe are open and honest in communicationsWe believe in the integrity of data and reportsWe treat one another with dignity and respectWe conduct our business in a lawful, honest, ethical and corrupt free mannerPROFESSIONALISMWe approach work in a systematic mannerOur service complies with best practiceWe strive for continuous business improvementWe deliver quality resultsWe are responsive, knowledgeable and professionally in our workWe are disciplined and promote appropriate business conduct

11. 11VALUES AND OPERATING PRINCIPLESThe organisation espouses five core values which also inform its operating principlesVALUESOPERATING PRINCIPLESACCOUNTABILITYWe are accountable and responsible to our clients, communities, stakeholders and to one another for our actionsWe promote effective regulatory and legislative compliance with financial controls, systems and processesWe are committed to sustainable development and empowermentVISIONARYWe approach our work in a creative mannerWe explore and implement innovative solutions We are open to new ideas

12. 12LEGISLATIVE AND OTHER MANDATESLegislation, regulations and policies informing the IDT workITEM NO.Short Title of the ActPurpose of the Act/Regulation1Constitution of the Republic of South Africa: Act of 1996The constitution of Republic of South Africa sets out rights and duties of citizens and defines the structure of government.2.Public Finance Management Act No 1 of 1999The PFMA regulates the management of finances in the national, the provincial and the state owned entities. It sets out the procedures for efficient and effective management of revenue, expenditure, assets and liabilities.3.Construction Industry Development Board Act No 38 of 2000To provide for establishment of the Construction Industry Development Board; to implement an integrated strategy for the reconstruction, growth and development of the construction industry and to provide for matters connected therewith. 4.National Treasury Regulations The purpose of the National Treasury Regulations among other, is to institute good financial governance including ensuring that government departments and public entities efficiently and effectively manage public resources and corruption is prevented and detected.5.Prevention and Combating of Corrupt Activities Act No 12 of 2004To provide the strengthening of measures to prevent and combat corruption and corrupt activities. Also to place a duty on certain persons holding position of authority to report certain corrupt activities.6.Labour Relations Act No 66 of 1995Aims to promote economic development, social justice, labour peace and democracy in the workplace. It applies to all employers, workers, trade unions and employers’ organisations.

13. 13LEGISLATIVE AND OTHER MANDATESLegislation, regulations and policies informing the IDT workITEM NO.Short Title of the ActPurpose of the Act/Regulation7.Occupational Health and Safety Act No 85 0f 1993To protect workers from health and safety hazards on the job. It sets out duties for all workplace parties and rights for workers.8.Employment Equity Act No 55 of 1998To achieve equity in the workplace by promoting equal opportunity and fair treatment in employment through elimination of unfair discrimination and implementing affirmative action measures to redress the disadvantages in employment experienced by designated.9.Pension Funds Act No 24 of 1996To provide for the registration, incorporation, regulation and dissolution of pension funds and for matters incidental thereto.10.Companies Act No 71 of 2009 as AmendedRegulates the workings of a business entities and provides stipulations relating to allowable legal form.11.The Trust Property Control Act No. 57 of 1988To regulate further the control of trust property and to provide for matters connected therewith. The IDT is regulated b

14. 14POLICY MANDATESShareholder Compact The Shareholder Compact between Government and the Independent Development Trust is in keeping with the provisions of the PFMA, and the Regulations promulgated in terms thereof.The Government has endorsed the Protocol on Corporate Governance in the Public Sector to be read in conjunction with the King Report applicable to Schedule 2 public entities listed in the PFMA. The protocol is intended to guide the public entities on how to achieve the political and socio-economic objectives of Government, good governance in the public sector, freedom of management and effective accountability by public entities on both financial and non-financial matters. The IDT will continue to execute its mandate as entailed in its founding documents and policy pronouncements as reflected in the Shareholder’s Compact or any subsequent corporate governance framework.

15. 15POLICY MANDATESBusiness Case Business Case on IDT’s Long-term Sustainable proposes the reconstitution of the IDT as a state owned Built Environment Programme and Project Management entity reporting to the Minister of Public Works and supporting government in the delivery of social infrastructure.Business Case further evaluates institutional options available and proposes the corporate form and scheduling considered most appropriate for the IDT. The Business Case is currently at an advanced stage towards completion. Thereafter, the Business Case will be tabled by the Minister of Public Works for consideration and approval by the Cabinet.

16. 16IDT STRATEGIC GOALS AND OBJECTIVESPROGRAMMESTRATEGIC GOALSSRATEGIC OBJECTIVESPROGRAMME 1: INTEGRATED SERVICE DELIVERYThe IDT contributes to the State’s capacity to effectively implement development programmes.Strategic Objective 1: Provision of efficient, effective and integrated public social infrastructure delivery management servicesTo deliver quality social infrastructure on time, within budget and scope.To employ a developmental approach in the delivery of development programmes on behalf of government to strengthen community ownership and social cohesion.To manage public employment programmes on behalf of government in order to strengthen job creation efforts. Objective Statement 1:IDT distinctive developmental approach to social infrastructure delivery empowers communities to receive, own, manage and sustain their own developmentPROGRAMME 2: ADMINISTRATIONThe IDT is an effective, efficient and sustainable organisationStrategic Objective 2: A financially viable, compliant, results-based, efficient and focused organisation? Objective Statement 2: Building a sustainable organisation and maintaining a clean administration which is committed to the efficient application of resources, compliance with regulations and legislation and which is accountable.

17. 17IDT’S CONTRIBUTION TO THE NATIONAL DEVELOPMENT AGENDA AND DPW KEY POLICY PRIORITIESITEMNATIONAL DEVELOPMENT PLAN OUTCOMEsDPW POLICY PRIORITIESIDT CONTRIBUTION1Outcome 1: Quality of basic educationEradicate infrastructure backlogs and ensure that all schools meet the minimum standardsRural development and land reformValue of social infrastructure programme spendNumber of social infrastructure facilities implementedNumber of new/ replacement social infrastructure facilities2Outcome 4: Decent employment through inclusive economic growth.Attainment of 6 million EPWP work opportunities for the poor and unemployed as reported on the NDPW job opportunities tracking system.Labour intensive delivery of public services and infrastructureUnlocking the potential of SMMEs and cooperatives to accelerate growthEconomic transformation and Black Economic EmpowermentContribute to job creation and economic growthBroaden-Based Black Economic Empowerment.Number of work opportunities created through the IDT portfolio % of weighted BBBEE spend % Value of social infrastructure programme spend contracts awarded to women% Value of social infrastructure programme spend contracts awarded to youthNumber of work opportunities created through the IDT portfolioNumber of EPWP-NSS work opportunities created 3Outcome 5: Skilled and capable workforce of support an inclusive growth path.Drive transformation of the built environmentJob creation through implementation of programmes in the construction, maintenance, greening and management of State Owned facilities which are expected to create jobs and enable skills development in particular the skilling of artisansEffective Human Capital management% of women contractors participating in the contractor development of womenNumber of EPWP cooperatives, NPOs and CBOs supportedInvest in professional registration of built environment employees, support human resources and talent development

18. 18IDT’S CONTRIBUTION TO THE NATIONAL DEVELOPMENT AGENDA AND DPW KEY POLICY PRIORITIESITEMNATIONAL DEVELOPMENT PLAN OUTCOMEsDPW POLICY PRIORITIESIDT CONTRIBUTION4Outcome 6: An efficient competitive and responsive economic infrastructure network.Improving the maintenance of existing and new infrastructureEnergy saving 9as part of wider greening initiative) to resolve the challenge of energy constraints Value of social infrastructure programme spendNumber of social infrastructure programme spendPromotion of alternative construction initiatives in the building of school infrastructure5Outcome 11: Create a better South Africa and contribute to a better and safer Africa and WorldGreening the economy and the built environment.   % of projects completed on time out of total completed projects in a given  % of projects completed within required quality out of total completed projects in a given year (based on sample testing)% of projects completed within cost out of total completed projects in a given yearNumber of EPWP cooperatives, NPO’s and CBO’s supported6Outcome 12: Effective and efficient development oriented public service/ and an empowered, fair and inclusive citizenship Drive transformation of the built environmentOperationalisation of the governance, risk and compliance across the Department  Effective financial and non-financial performance management.

19. 19UPDATED SITUATIONAL ANALYSISEXTERNAL BUSINESS ENVIRONMENT:Global environment perspective: According to the Internal Monetary Fund, October 2016 World Economic Outlook, global growth was projected to slow to 3.1 percent in 2016 before recovering to 3.4 percent in 2017. The forecast reflects a much more subdued outlook for the advanced economies following the June 2016 United Kingdom vote to exit the European Union. The market reaction to the Brexit was not too disruptive as the ultimate impact remains unclear because of the uncertainty of the institutional and trading arrangements. The prospects for growth differ from countries and regions of the world. The current outlook affects different emerging economies and developed countries differently. Three global mega-trends most likely to impact more on South Africa are:Urbanisation: Trend fuelled by internal migration thereby creating demand for social infrastructure in the urban areas and creating challenge for rural and small towns.Global economic crisis: Negative impact on South Africa: poverty, inequality and unemployment: leading to cost cutting and other austerity measures. Spread in global terrorism: Creating uncertainty on security in the country.United Kingdom Exit from the European Union: Creation of an uncertain outlook for the global economy due to Brexit. South Africa is likely to be affected as Europe and Great Britain are its major trading partners.

20. 20UPDATED SITUATIONAL ANALYSISPOLITICAL ENVIRONMENTAL PERSPECTIVE: South Africans, in the main, enjoy the basic human rights as enshrined in the Bill of Rights as embedded in the South African Constitution. There are many initiatives that seek to ensure that all South Africans hold the state accountable for its constitutional obligations such to respect, protect, promote and fulfil the rights as guaranteed in the Constitution. Furthermore, the country is characterised by sound policy regime and independent judiciary which creates a positive climate for conducting business. Major reforms and programmes including large investments in social and economic infrastructure are under way to tackle backlogs and to help stimulate economic growth. The government is developing social infrastructure to boost employment and promote small and medium enterprises. Major macro-economic policies and strategic investments initiatives are being undertaken to stabilise inflation and public debt.  2016 Local Government Elections upheld the rights of South African citizens enshrined in the constitution and proved that democracy is thriving in the country. The local government elections held on the 3rd August 2016 have resulted in a changed political landscape and in some instance’s new administrations and political leadership of the municipalities.

21. 21UPDATED SITUATIONAL ANALYSISSOUTH AFRICAN ECONOMIC ENVIRONMENT PERSPECTIVE:According to the institute for Future Research at Stellenbosch University, Africa’s average economic growth is expected to remain moderate in 2016, but strengthen in 2017.Government has laid solid business regulations and legislative framework to build business and investor confidence. In spite of the foundations that government has laid for economic growth, the economic outlook and domestic growth for South Africa was on the decline and remains constrained. South Africa credit rating has been downgraded by Fitch, Moody’s and Standard and Poor’s. The country rating has fallen due to poor economic growth, policy uncertainty, loss of business confidence, and the deteriorating value of the Rand. Further, during the first quarter of 2016, the Reserve Bank of South Africa had projected GDP growth to be around 0.9%, but now the latest forecast is zero per cent growth for the rest of the financial year.

22. 22UPDATED SITUATIONAL ANALYSISSOCIAL ENVIRONMENT PERSPECTIVE:The Internal Monetary Fund, October 2016 World Economic Outlook has indicated that in the coming decades sub-Saharan African migration will continue to be shaped by a profound demographic transition which has already started. As a result of the rapid growth in the working-age population, this trend will fuel migration outside the sub-Sahara region. This migration is increasingly driven by economic challenges and considerations. Ethiopia, Nigeria and South Africa have a large number of migrants - each country has about 0.7 million people.This growing challenge of immigration and migration between developing countries and developed countries has had an impact on service delivery and social instability due to the rapid urban sprawl, e.g. in South Africa, Gauteng and Western Cape are experiencing social and economic pressures (StatsSA, Community Survey 2016). The country continues to face huge unemployment challenges. The number of unemployed persons increased by 521 000 from the fourth quarter of 2015 to the first quarter of 2016. The total number of unemployed South Africans stand around 5, 71 million. The number of discouraged job seekers increased by 53 000 in the year to the first quarter of 2016.

23. 23UPDATED SITUATIONAL ANALYSISPHYSICAL ENVIRONMENT PERSPECTIVE:Government is developing social infrastructure to boost employment and promote small and medium enterprises. Major macro-economic policies and strategic investments initiatives are being undertaken to stabilise inflation and public debt. Fiscal constraints resulting in cuts on client department’s budget allocations has impacted negatively on the IDT business. In addition, there are threats from some of the client departments to withdraw business from the IDT.Business environment is generally fluid and creates uncertainty especially in the construction industry. Throughout the country, there is an emergence of alternative service delivery vehicles e.g. provincial development implementing agencies. Aging infrastructure and/or the one damaged or destroyed by extreme climate changes poses a huge challenge to development practitioners to initiate climate change resilient social infrastructure. Infrastructure development for the next three (3) years is estimated at R827bn, 51% of which is allocated to social infrastructure. This money will be used to address the backlogs and maintenance of social infrastructure including disused facilities.

24. 24UPDATED SITUATIONAL ANALYSISORGANISATION ENVIRONMENTThe challenges faced by the organisation largely relate to the human resources capacity to deliver on the mandate of the organisation. The prolonged transformation resulting in the misalignment of the organisation structure with the business, poses the biggest risk to the organisation. This implies that the current capacity is inadequate in delivering on the objectives of the organisation. Staff Establishment and Occupancy LevelsThe IDT’s staff establishment as at 31 December 2016 was 441 and 365 positions were filled. The use of temporary employees has declined over the years which is good considering that the new labour relations law restricts employers from employing temporary employees for more than 3 months.

25. 25Staff Establishment and Occupancy Level: 31 Dec 2016The IDT’s staff establishment as at 31 December 2016 was 441 and 365 positions were filled.

26. 26IDT SWOT ANALYSISStrengths, Weaknesses, Opportunities and Threats STRENGTHSWEAKNESSESIntegrative programme management processes incorporating community development in the service delivery model.Fragile funding model due to change in original mandate in 1997 not accompanied by a review of the funding model.Committed to poverty eradication, empowerment of marginalized sectors of society and building of sustainable communities. Limited influence on the conceptualisation and design of clients programmes resulting in reduced input in the formulation of development solutions and programme impact..National reach with presence in all provinces, with access to all spheres of government and a strong client base around the country.Relations with client departments often structured on a client /customer basis, thus limiting value that could accrue from a partnership based relation. Established working relations with provincial and national governments. Limited effectiveness in instruments at IDT disposal for enforcing compliance to agreements by clients e.g. funds transfer, creditor obligation liquidation, etc.Programme management personnel that are youthful, professional and passionate about development.Shortage of technically qualified staff to meet the growing national infrastructure development programme delivery demands.Functional management and business processes systems i.e. procurement, construction management, payments processing etc.Systems and organizational capacity not aligned with high growth in programme portfolio.Reporting to DPW, the custodian of public infrastructure in the country.Inadequate human resource capacity for site monitoring.Community/social development programmes that can be leveraged to enrich infrastructure delivery approach.Inadequate programme and project management system.

27. 27IDT SWOT ANALYSISStrengths, Weaknesses, Opportunities and ThreatsOPPORTUNITIESTHREATSPositioning as a programme management and development agency tasked with managing and delivering social infrastructure backlogs on behalf of government.Frequent changes in leadership of client government departments threatens continuity in the IDT’s delivery of programmes and meeting of obligations to service providers.Extension of programme implementation management services to basic services and housing infrastructure.Budget cuts and delays in transfer of funds by client departments exposes the IDT to litigation due to late processing of service providers payments.Spearheading of Green Technology and related innovations in infrastructure development.Competition by State Owned Enterprises for the provision of social infrastructure and programme management services.Leveraging the organisation’s community development competencies particularly social facilitation, community empowerment and job opportunities creation.Unclear mandate exposes the IDT to usurping of its mandate by others state entities, leading to financial viability vulnerability which threatens the continued existence of the IDT. Provision of rural development infrastructure programme implementation support services and post-settlement support linked to the comprehensive rural development programme.Loss of critical staff due to uncertainty arising from the long drawn transformation process. This is compounded by the general shortage of skills in the built environment industry. Negative audit opinion/disclaimer affecting acquisition and retention of new clients. Existing clients withdrawing business due to poor project and programme execution.

28. 28TURNAROUND STRATEGYThe main purpose of the Turnaround Strategy is to transform the IDT into a leading public sector developmental programme implementation and management agency. The strategy entails the following pillars as drivers for the IDT turnaround:Financial government and viability: Effective resolution of the root causes underlying the negative Auditor General findings in the 2014/15 and 2015/16 audits; Expansion of the revenue base to address the financial sustainability concerns; Strengthen financial management capabilities particularly relating to billing and project accounting; and Effective prevention of irregular, fruitless and wasteful expenditure.Organisational integrity, governance, accountability and compliance: Alignment of the IDT focus and priorities to the national DPW mandate and strategic focus; Attaining a substantially secure business portfolio pipeline and effective complementarity of the IDT to the national and provincial departments of Public Works; Building the confidence of clients in the IDT’s through effective corporate and financial governance systems and practices; Promoting a corruption and fraud free environment.

29. 29TURNAROUND STRATEGYService Delivery Improvements: Corporate effectiveness and efficiency; Striving for minimal litigation and elimination of procurement related irregularities; Promoting service delivery efficiencies that are customer/client centric; Establishing and implementing an effective early programme/project delivery warning system to improve service levels; and Strengthen business intelligence and research in the built environment.Organisational reconfiguration, professionalization and image building: Developing an effective human capital planning, development and talent management strategy; Ensuring that the organisation is optimally structured and well-resourced; Developing and implementing an Executive Authority endorsed Remuneration strategy and Framework; and Driving professionalisation of the built environment service offering.

30. 30PERFORMANCE ENVIRONMENTThe state faces persistent pressure from its citizens to deliver and sustain socio-economic transformation, growth and development.Demand for service: High demand for jobs and economic opportunities; Pressure for new and high demand for social infrastructure; Growing demand for green social infrastructure; Eradication of the remaining backlogs Demand for post-settlement support facilities; Community demand for localisation benefits; and Demands for social infrastructure programmes that target participation by women, youth and people with disability.Client expectations: Timeous payment of service providers; Credible and timeous financial project reconciliations accounting for client funds; Effective audit support to enable complete accounting for client projects implemented through implementing agents; Accurate and timely reporting: Implementing agent visibility on the ground i.e. effective project execution monitoring; and Quick turnaround times for project and programme implementation i.e. met targets regarding set completion periods. 

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32. 32RESOURCE CONSIDERATIONSGENERAL FINANCIAL OVERVIEWIDT’s financial outlook for the current 2016/17 financial year is negative with an estimated deficit of R129.3 million anticipated based upon current trends and a declining portfolio of programmes to be delivered on behalf of government. The MTEF period covering 2017/18 to 2019/20 assumes an injection of funding from the Shareholder- National Department of Public Work (NDPW) particularly to fund a shortfall in the operating activities of IDT as own generated cash resources will fund substantially to a level of about 63%.Management fees are the only external source of revenue to sustain IDT financially and have been budgeted at an average of 5.5% of the expected programme expenditure throughout the MTEF. The management fees substantially fund operations to a level close to 70% whist the balance and capex will be largely dependent on the grant from NDPW. The level of Programme Expenditure that is required to fully IDT without any funding from fiscus is above R8bn, thus a projected level of R5bn about R121m of IDT’s expenditure remains exposed.

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34. 34FINANCIAL ISSUESIDT’s financial outlook for the current 2016/17 financial year is negative with an estimated deficit of R129,3 million anticipated based upon current trends.Growth in programmes expenditure is expected to be minimal in the short term. The MTEF period covering 2017/18 to 2019/20 continues to reflect a subdued financial position with a total deficit of R410m for the three years.Engagements with NDPW and National Treasury regarding measures to address the deficit are underway. Further, the organization continues to implement cost containment measures.

35. 35FINANCIAL ISSUES-BUDGET- FRAMEWORK  

36. 36CHALLENGESDelays in transfer of funds from client departments have resulted in IDT not complying with the 30 day payment to suppliers and service providers provision. Some of these delays have resulted in litigation and delays in programme delivery where service providers have suspended works due to non payment.Management fees continue to be a challenge due to lower programme values for the 2017/18 – 2019/20 MTEF period. A specific level of programme work needs to be guaranteed to ensure a multi year revenue pipeline.The previous two years negative audit opinion has adversely impacted the organisation, its business and reputation. The organisation has developed Audit Action Plan (AAP) and established a disclaimer task team to address the root causes of the negative audit outcome.

37. 37IMPACT ON MEDIUM TERM EXPENDITURE ESTIMATESProgramme expenditure is expected to grow at a moderate pace until 2019/20. The level of expenditure will return revenue streams that are not adequate to fund the operational costs.Additional funding is required from 2017 to 2020 in order to deliver on the APP and maintain the IDT going concern status.

38. 384. SUMMARY OF PROGRAMME PLANS: PART B

39. 39FIVE YEAR THEME: GROWTH, DIVERSIFICATION AND SUSTAINABILITYIDT has instituted a targeted operational refocus placing significant effort on institutional and financial sustainability of the Organisation.Table 8: Strategic Plan Programmes Weighting2016/172017/18Programme 160%60%Programme 240%40%Total100%100%

40. 40Medium Term Expenditure Framework Estimates and Quarterly Performance Plan TargetsStrategic Objectives 1: Provision of efficient , effective and integrated public social infrastructure delivery management services PERFORMANCE INDICATOR YEAR STRATEGIC PLAN TARGETS (2015/16-2019/20) AUDITED ACTUAL PERFORMANCEPERFORMANCE ESTIMATES 2016/17MEDIUM-TERM TARGETS2013/142014/152015/162017/182018/192019/20Sub Strategic Objective 1.1: To deliver quality social infrastructure on time, within budget and scope Value of Social Infrastructure programme spend R39.7bnR6.6bnR6.4bnR4.6bnR4.6bnR5.0bnR5.5bnR6.1bn Sub Strategic Objective 1.2: To employ a developmental approach in the delivery of development programmes on behalf of government to strengthen community ownership and social cohesion % value of weighted BBBEE spend 75%79%R5.2bn67%R4.3bn69.2%R3.2bn65%65%65%65% Value of social infrastructure programme spend women  20%17%R1.1bn27%R1.7bn20.3%R922.3m20%20%20%20%

41. 41Medium Term Expenditure Framework Estimates and Quarterly Performance Plan Targets PERFORMANCE INDICATOR YEAR STRATEGIC PLAN TARGETS (2015/16-2019/20) AUDITED ACTUAL PERFORMANCEPERFORMANCE ESTIMATES 2016/17MEDIUM-TERM TARGETS2013/142014/152015/162017/182018/192019/20 Value of social infrastructure programme spend ON youth  15%  15%R990m  17% R1.08bn 15.3%R697.4m 15%  15%  15%  15%  % of women contractors participating in the contractor development programme  65%  67%   67% 67% 65% 65% 65% 65% Value of programme spend for contractor development participants as a percentage of total value of programme spend  5%  Not targeted 3.5%R225m  0.1%R2,9m 0.7%  4%  4%  4% 

42. 42Medium Term Expenditure Framework Estimates and Quarterly Performance Plan Targets PERFORMANCE INDICATOR YEAR STRATEGIC PLAN TARGETS (2015/16-2019/20) AUDITED ACTUAL PERFORMANCEPERFORMANCE ESTIMATES 2016/17MEDIUM-TERM TARGETS2013/142014/152015/162017/182018/192019/20Sub Strategic Objective 1.3: To manage public employment programmes on behalf of government in order to expand the social safety net for the unemployed. Number of work opportunities created through the IDT portfolio (Excluding EPWP NSS) 125 000  26 937 20 983  7 602 7 000 7 500 8 500 9 500 Number of EPWP-NSS work opportunities created 290 000  48 920 53 268  54 155  45 000 50 000 52 000 55 000 Number of EPWP Co-operatives, NPO’s and CBO’s supported 1870  330 378  380 300 280 300 320

43. 43Medium Term Expenditure Framework Estimates and Quarterly Performance Plan TargetsProgramme 2Strategic Objective 2: A financially viable, complaint , results-based, efficient and focused organisationPERFORMANCE AREAYEAR 5 STRATEGIC PLAN TARGETS (2015/16- 2019/20)AUDITED ACTUAL PERFORMANCEPERFORMANCE ESTIMATE 2016/17MEDIUM-TERM TARGETS2013/142014/152015/162017/182018/192019/20 Financial and non-financial performance management Financial audit outcome: unqualified  Qualified audit outcome Disclaimed audit outcome  Disclaimed audit outcome   Financial audit outcome: unqualified   Financial audit: unqualified outcomeFinancial audit: unqualified outcomeFinancial audit: unqualified outcome Performance information audit outcome: unqualified   Qualified audit outcome Disclaimed audit outcome   Disclaimed audit outcome     Performance information audit outcome: unqualified   Performance information audit: unqualified outcome    Performance information audit: unqualified outcome     Performance information audit: unqualified outcome   Average number of days for payments from date of invoice receipt: 30 days  Compliance with relevant legislation: achieved at 100%  Compliance with relevant legislation and regulations: effective compliance  Compliance with relevant legislation and regulations: effective compliance  Average number of days for payments from date of invoice receipt: 30 days  Average number of days for payments from date of invoice receipt: 30 days   Average number of days for payments from date of invoice receipt: 30 days   Average number of days for payments from date of invoice receipt: 30 days 

44. 44Medium Term Expenditure Framework Estimates and Quarterly Performance Plan TargetsPERFORMANCE AREAYEAR 5 STRATEGIC PLAN TARGETS (2015/16- 2019/20)AUDITED ACTUAL PERFORMANCEPERFORMANCE ESTIMATE 2016/17MEDIUM-TERM TARGETS2013/142014/152015/162017/182018/192019/20Risk and compliance management  Functional risk management committee Effective & functioning Board and Committees: achieved at 140% The Board of Trustees and its sub-structure, i.e. committees met and discharged its mandate: 100% Currently, the existing approved Strategy and Plan still operational.       Business Continuity Strategy & Plan developed in draft form100% Compliance with quarterly targets as per approved Risk and Compliance Management plan for 2017/18100% Compliance with quarterly targets as per approved Risk and Compliance Management plan for 2018/19100% Compliance with quarterly targets as per approved Risk and Compliance Management plan for 2019/20 Enterprise risk management strategy and plan in place and implemented Risk assessment conducted, risk appetite statement endorsed by the Board and Fraud Prevention Plan implemented Risk Management (RM) Framework implemented  Risk Mitigation Plansimplemented andreported  Enterprise risk management strategy and plan in place and implemented Risk Management Maturity Level 3 achieved based on annual assessment to be conducted one month before end of financial year i.e. 28 February 2018 Risk Management Maturity Level 4 achieved based on annual assessment to be conducted one month before end of financial year i.e. 28 February 2019 Risk Management Maturity Level 5 achieved based on annual assessment to be conducted one month before end of financial year i.e. 28 February 2020 

45. 45Medium Term Expenditure Framework Estimates and Quarterly Performance Plan TargetsPERFORMANCE AREAYEAR 5 STRATEGIC PLAN TARGETS (2015/16- 2019/20)AUDITED ACTUAL PERFORMANCEPERFORMANCE ESTIMATE 2016/17MEDIUM-TERM TARGETS2013/142014/152015/162017/182018/192019/20 Human capital management Human Capital Strategy approved and implemented HR Plan implemented as planned  Effective Human Capital management : Effectively implemented The Human Capital Plan for 2015/16 constitutes a final year of the 2013-16 Human Capital Strategy.  Human Capital Strategy approved Human Capital Strategy in place and implemented  Human Capital Strategy in place and implemented    Human Capital Strategy in place and implemented  Corporate occupancy level for positions not less than 94% Targeted at business unit level Targeted at business unit level Vacancy rate for funded positions: 9%.   Corporate occupancy level for funded positions not less than 90%  Corporate occupancy level for funded positions not less than 92%  Corporate occupancy level for funded positions not less than 92%  Corporate occupancy level for positions not less than 92% Approved Employment Equity Plan in place Targeted at business unit level Internal organizational refocus and streamlining plan approved and implemented:  Targeted at business unit level Approved Employment Equity Plan in place Employment Equity Plan implemented based on targets set for each population group  Employment Equity Plan implemented based on targets set for each population group Employment Equity Plan implemented based on targets set for each population group

46. 46Medium Term Expenditure Framework Estimates and Quarterly Performance Plan TargetsPERFORMANCE AREA YEAR 5 STRATEGIC PLAN TARGETS (2015/16- 2019/20)AUDITED ACTUAL PERFORMANCEPERFORMANCE ESTIMATE 2016/17MEDIUM-TERM TARGETS2013/142014/152015/162017/182018/192019/20 IDT’s sustainability Annual average management fee billed: 6.7% Average management fees: achieved at 6.1% The average management fees billed decreased from 6.1% in 2013/14 to 5.44% in 2014/15  Actual average management feeBilled: 5% (R227.5m)/ R4.6bn)  Annual average management fee billed: 5% Annual average management fee billed: 5.5% Annual average management fee billed: 5.8% Annual average management fee billed: 6%Annual management fee collection rate: 95%Value of management fees recovered: R402.852mValue of management fees recovered: R347.395mApproximately 85% of the financial year’s billing was collectedAnnual management fee collection rate: 85%Annual management fee collection rate: 90%Annual management fee collection rate: 90%Annual management fee collection rate: 90%Efficiency of operations Corporate efficiency ratio: 6.5% % Efficiency ratio: 6.6% % Efficiency ratio: 5.5% Corporate efficiency Ratio:7.8%   Corporate efficiency ratio: 7.5% Corporate efficiency ratio: 8.6%  Corporate efficiency ratio: 7% Corporate efficiency ratio: 6.5% Corporate budget savings: minimum 5% Not targeted Cost Containment Strategy under implementation Target at business unit level  Corporate budget savings: minimum 12% Corporate budget savings: minimum 5% Corporate budget savings: minimum 5% Corporate budget savings: minimum 5%

47. ate47Medium Term Expenditure Framework Estimates and Quarterly Performance Plan TargetsPERFORMANCE AREAYEAR 5 STRATEGIC PLAN TARGETS (2015/16- 2019/20)AUDITED ACTUAL PERFORMANCEPERFORMANCE ESTIMATE 2016/17MEDIUM-TERM TARGETS2013/142014/152015/162017/182018/192019/20 Communications  Corporate communication plan approved and implemented Deliver communications srategy as planned: Communications and Stakeholder Management Strategy delivered at 100% Effective communications and Stakeholder Management Strategy: Strategy under implementation Corporate communication plan approved and implemented. Corporate communication plan approved and implemented     Communication Strategy in place and implemented Communication Strategy in place and implemented Communication Strategy in place and implementedStakeholder Management  Not targeted  Not targeted  Not targeted  Not targeted  Stakeholder Management Strategy approved and implemented Stakeholder Management Strategy in place and 2017/18 plan implemented Stakeholder Management Strategy in place and 2018/19 plan implemented  Stakeholder ManagementStrategy in place and 2019/20 plan implemented

48. 485. LINKS TO OTHER PLANS: PART C

49. 49LINKS TO OTHER PLANSRISK MANAGEMENT PLANAudit and Risk Committee of the Board of Trustees has the overall responsibility to ensure that the organisation has identified the key risks facing the IDT and that a strategy to manage those risks is implemented. Risk Management Committee chaired by the Chief Executive Officer and reports to the Audit and Risk Committee has the responsibility to review the organisation’s Risk Management Strategy.Compliance and Risk Office is tasked with the responsibility to facilitate risk assessments and ensuring that constant monitoring and reporting on progress made in mitigating risks within the organisation is done.

50. 50LINKS TO OTHER PLANSKEY CORPORATE STRATEGIC RISKS To achieve the goals of the Turnaround Strategy, the organisation needs to manage and mitigate the following key strategic risks: SR 1: Litigation SR6: Corrupt practicesSR 2: Delayed transfers and payments by departmentsSR7: Financial insecuritySR 3: Delayed transfers and payments by departmentsSR8: Loss of clients and business portfolioSR4 Reputational risk SR9: Lack of legislated mandateSR 5: Non compatible system with organisational growth obligationSR10: Non-Compliance with Occupational Health and Safety regulations

51. 51LINKS TO OTHER PLANSFRAUD PREVENTION PLANDue to the nature of the organisation, where volumes and financial value of projects continue to rise, fraud risk is considered to be very critical and as such it is separated from all other risks. The Fraud Prevention Plan (as required by PFMA) which entails fraud prevention strategy and policy has been developed and implemented within the organisation.IDT continues to operate an externally managed hotline for the reporting of fraud and corruption, and also makes use of forensic expertise for the investigation of reported cases when such intervention is required. The fraud hotline number is communicated to all IDT employees through various channels, namely, employee pay slips, posters and email disclaimer message. In addition, the website has a direct link to the hotline for the outside world.

52. 52SIGNIFICANT CHANGES EFFECTED ON THE 2015/16 – 2019/20 STRAREGIC PLAN PERFORMANCE INDICATORSInformed by the review of the IDT operating environment, the following changes have been on the 2015/16 – 2019/20 strategic plan performance indicators: Deferred targets to the Business Unit level pending upgrade of systems to enable effective tracking% of projects completed on time out of total completed projects in a given year.% of projects completed within budget out of total completed projects in a given year.% of projects completed within required quality out of total. Dropped targets because the IDT has no control over themNumber of government departments supported.Number of new/replacement schools completed.

53. 537. CONCLUSION AND RECOMMENDATIONSIt is recommended that the Portfolio Committee on Public Works:Notes the 2017/18 IDT Annual Performance Plan and 2017/18 – 2019/20 Budget Framework.2. Notes the changes effected on the 2015/16 – 2019/20 Strategic Plan performance targets to align the 5 year plan with the operating environment.