Transcript Project Risk Management - Office of the Accountant

PUBLIC ENTITIES RISK FORUM
PROJECT RISK MANAGEMENT
Presenter: Chief Directorate Risk Management Support | 26 February 2014
INTRODUCTION

Introductory of the topic of the day – Project Risk Management
“Working towards eliminating project failures in the public sector through risk management”

National Infrastructure Plan – NDP and New Growth Plan

Chapter 4 of the NDP - proposes the improvement of infrastructure
regulation to clarify roles, strengthen accountability and reform
institutional design.

Involvement and embedding risk management

Some examples of mega projects
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CHALLENGES FACED BY GOVERNMENT
 Twenty years into our democracy, there still major challenges of poverty,
unemployment and inequality
 The New Growth Path sets a goal of five million new jobs by 2020
 NGP identifies structural problems in the economy and points to
opportunities in specific sectors and markets or job drivers
 The first job driver is Infrastructure (projects)
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GOVERNMENT RESPONSE - PROJECTS
 National Infrastructure Plan was adopted by government in 2012
 Infrastructure Development Bill_October 2013
 Aims to transform economic landscape while simultaneously
creating new jobs and strengthen the delivery of basic services
 Government to spend R827 billion to build new and upgrading
existing infrastructure
 These investments will improve access by South Africans to
healthcare facilities, schools, water, sanitation, housing and
electrification
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GOVERNMENT RESPONSE Cont…
 Establishment of Presidential Infrastructure Coordinating Committee
(PICC):
• Coordinate, integrate and accelerate implementation
• Implementation and monitoring of NIP
• Responsible people and hold them accountable
• Develop a 20 year planning framework
 Developed 18 strategic integrated projects (SIPs) and adopted by
Cabinet:
• Durban-Free State-Gauteng logistics and industrial sector
• Electricity generation to support socio-economic development
• Revitalisation of public hospitals and other health facilities
• Expanding access to communication technology
• Water and sanitation infrastructure
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PURPOSE OF THE BILL
To provide for the:
 Facilitation and co-ordination of public infrastructure development which
is of significant economic or social importance to the Republic;
 To ensure that infrastructure development in the Republic is given priority
in planning, approval and implementation;
 To ensure that the development goals of the State are promoted through
infrastructure development;
 To improve the management of such infrastructure during all life-cycle
phases, including planning, approval, implementation and operations.
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EXAMPLES OF MEGA PROJECTS
Name of
Project
Budget Cost
Actual Cost
Targeted Time
Gautrain
R3.5 bn
R30 bn
March 2011
(June 2012)
Medupi
R105 bn
On-going
(Overruns)
June 2014
Kusile
R120 bn
On-going
Dec 2014
Further R30 bn
Called off
Pebble Bed
R9.2 bn
Modular Reactor
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Gautrain Example
 Time…started in 2006 to be completed in March
2011…but on this date was 99.6% complete.
 Risks: Water seepage problems – From
Rosebank to Park Station.
• Costs – further R100m to fix
• Service delivery (Use of buses and time
commuters spent on traffic)
• Major snags and defects in Marlboro station
 Quality of concrete work in Rhodesfield
 Politics – opposition parties
 …..final completion on 07 June 2012.
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COMMON CHALLENGES OF PROJECTS
 Poor or Lack of planning (estimation)
 Objectives – non-alignment with the mandate or priorities of government;
 Integration with normal day-to-day service delivery, such as economic
effect by Gautrain, etc.
 Role of Risk Officers – in project process;
 Time and Cost escalation;
 Involvement and embedding risk management – inadequate knowledge
and skills;
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THANK YOU!