Gauteng PPP conference 18 February 2010

• Population served ~ 14 million • Civil engineering professionals ~ 2500 + • 21 + civil staff per hundred thousand population

• Population served ~ 47 million • Civil engineering professionals in 2007 ~ 1300 + • ~2.8 civil staff per hundred thousand population

Numbers and Needs in Local Government : Civil Engineering – the critical profession for service delivery – November 2007

Bleeding has taken place for a long time

3000 2500 2000 1500 1000 500 0 -500

1989 1991 1993 1995 1997 1999 2001 2003

-1000 -1500

Contractor abandoned the project as he could not cope, 4% Contractor quality was so poor - remedial work required, 7% Poor quality contracting, 18% Design (or lack thereof) caused failure of the final product, 6% Design was inadequate and had to be redone, 11% Contractor abandoned project as municipality did not pay timeously, 1% Halted for other reasons, 1% Completed satisfactorily with minor niggles, 51%

• • • • • • • • • Ageing distribution networks and equipment High losses due to poor financial management, calibration and theft Total lack of funds for maintenance Vandalisation, cable & transformer theft for copper 10% energy savings required by ESKOM Limited engineering staff remain Few GCC registered Few artisans No O&M – waiting for the REDs for the past 17 years!

Area 2008/09 Annual Demand (million m3) 2008/09 Non-Revenue Water (million m 3 /a) Estimated Non Revenue Water loss (R’000) % of Municipal Use Johannesburg Ekurhuleni Tshwane Emfuleni Mogale Randfontein Merafong Westonaria Lesedi Midvaal Kungwini Nokeng Tsa Taemane 502.7

326.8

214.2

77.1

26.4

8.7

8.4

6.1

5.1

9.6

5.3

0.0

160.9

124.2

62.1

31.6

7.1

2.6

2.5

1.8

1.5

2.9

1.6

0.0

R 522.8

R 403.6

R 201.9

R 102.7

R 23.2

R 8.4

R 8.2

R 5.9

R 4.9

R 9.3

R 5.2

R 0.0

0% Province ~ R 1,295 bn loss p.a. from leaks! 32% 38% 29% 41% 27% 30% 30% 30% 30% 30% 30%

Leaking toilets Leaking pipes Leaking meters

Repair at 5 years = R0.1 m/km Repair at 8 10 years = R0.6m/km

(x6)

Repair at 10 15 years = R1.8m/km

(x18)

SERVICE Surfaced roads* Electricity Waste management Sewerage networks Waste water treatment Water networks Water treatment and pump stations Total * insufficient info exists on gravel roads and condition of bridges to estimate backlogs Maintenance backlog R 6,590,479,200 R 8,618,700,000 R 1,274,736,000 R 3,113,449,000 R 3,000,000,000 R 1,579,857,000 R 4,000,000,000 R 28,177,221,200

• • • • Increase income Re-prioritise spending to increase development, operations and maintenance Increase engineering capacity Harness private sector to break the back of development and upgrading needs, and assist with training

• • • • • • Correct tariffs (many municipalities selling way below cost) Enforce developer contributions Set up systems to determine who to be billed to increase income Chase debtors – only about 20% of outstanding debt relates to indigents – Collect money from other consumers to cross subsidise indigents – Automatically debit public sector departments and employees Repair water and electricity networks to reduce losses Consider metering technologies

• • • Look at new technologies and life cycle costing for new projects and include maintenance budgeting as a condition of all future developments Make equitable share conditional and ring fence maintenance funds Need to calculate maintenance budget from zero base to determine actual need – 6% increase per annum has eroded effectiveness because – – Staffing costs have increased beyond 6% Operating costs have increase beyond 6% leaving little for spares and materials

• • • Need to reprioritise municipal spending, reducing expenditure on non-core activities Need specific grant to restore non-income generating infrastructure Need loans to restore income earning infrastructure, as savings from reduced losses will soon repay loans

• • • • Capacity levels at an all time low Rebuild structures and develop meaningful organograms Change terms and conditions to retain S57 staff unless inadequate performance, rather than terminate in the absence of performance reviews Stop job hopping

• • • • Develop competence model Appoint professional, registered, senior officials with sound track record (MM, CFO, Chief Engineer) Review selection criteria guidelines from – Profession of Town Clerks Act (Act 75 of 1988) – Municipal Accountants Profession Act (Act 21 of 1988) – Engineering Profession Act (Act 46 of 2000) Professional bodies to assist with interviews and selection

• • • • • Increase spend on technical staff – usually way below 32% - reduce staffing levels in non-core activities if necessary Train engineering staff, with external mentorship if necessary Implement career and succession planning – Involve students, graduates, inadequately trained in-house staff Train and fund more artisans Mandatory infrastructure asset management system for all municipalities – Train students/graduates and set up dedicated team to keep info up to date in order to adequately budget for and manage infrastructure – Implement real-time complaints log, repair process, reporting and costing for maintenance activities

Technical job description programme developed Electrical trainees meet the Minister of Minerals and Energy Students attend orientation course but no one employing them!

Engineering students graduate as a result of experiential opportunities Supervising construction of various treatment works Learning how to survey!

• • • • Partnership with the private sector – PPP (Public private partnerships) – PPC (Public private cooperation) Use communities a lot more for maintenance and increase job creation Franchising Short term support and training from private sector

• • • •

Second young staff to consultants to be trained Private sector to second experienced municipal staff to local government to rebuild capacity, offer structures and systems, and on-the-job training, or Outsource rebuilding of municipal structures to consulting firms (S78 type of approach over say a 5 year period) – condition that senior engineers with municipal experience must be used to manage the rebuilding process Work with the MM and be given authority to make the changes

•

An Engineering Corps: Set up an engineering corps with experienced engineers to direct and attend to many strategic and planning issues (suggested by Professor Steven Kelman of Harvard, when the capacity problems were outlined in a meeting with National Treasury)

•

Panel of consultants: Appoint a panel of experienced consultants for specialist work that municipalities can harness without going to tender (Clause 32 of the MFMA)

•

Develop standards and scopes: Use pool to assist municipalities with tenders and scopes of work

• • •

Second engineering staff and apprentices to contractors to be trained Harness contractors to train SMMEs and communities as part of each major contract so that they can be used for on-going maintenance thereafter Adopt-a-town - private sector contracts to adopt-a-town in toto to:

―

Address backlogs

―

Refurbish and rehabilitate

―

Put operating and maintenance systems and processes in place

―

Address losses, increase income etc

―

Build capacity in all departments (technical, financial, HR etc)

―

Use powerful CEO type of person who has run large businesses in the past to set up

It has been suggested that O&M could largely be outsourced, but that service providers should be franchisees, set up and trained by recognised franchisors, to give municipalities the peace of mind that there is quality control and franchisees have access to expertise in case of challenges which arise beyond their level of expertise

• •

Short-term Dispatch support to stop further decay Constitute ‘Action teams’ but they will require authority to be effective

• •

Medium-term Develop and implement turnaround strategy, using dedicated experienced professionals working with MM or deployed professional leader. Return to core business

• •

Long-term Manage turnaround process to rebuild structures, systems and processes Support must be used to train and rebuild rather than do line function work or fire fighting

Contact details: Allyson Lawless [email protected]

SAICE (to purchase book) Angelene Aylward 011-805 5947 [email protected]