Exciting progress in 2010

The SPAID programme continues to see good progress with some exciting new developments occurring in the first six months of this year. Set out below is an overview of the key highlights of the last six months and plans for the remainder of 2010.

The Infrastructure Dialogues project

The Infrastructure Dialogues comprises high level monthly seminars dealing with relevant topics and issues within the infrastructure sector. The dialogue is attended by 50 to 60 invited stakeholders from the private and public sector that are knowledgeable on the topic being discussed. Reports and documents are circulated prior to the dialogue and experts on the topic are invited to make presentations. The discussions held at the dialogue are summarized into a dialogue report. The documents, presentations and summary are circulated to approximately 400 registered stakeholders electronically. Four dialogues were held since January 2010:

• Infrastructure Sector Procurement Strategies;
• Climate Change and the effect on Municipal Infrastructure;
• 2010 FIFA World Cup – Its Legacy Impact; and
• The role of Public Infrastructure on Urban Regeneration.

For the remainder of the year Dialogues are to be held on the last Thursday of August, September and October.  The proposed topics are:

• Provincial and Local Government Roads Infrastructure,
• the Infrastructure Economic Stimulus Package, and
• Government Performance Management of the Infrastructure Sector.

The order of these sessions will depend on availability of speakers. For information and to register as an electronic participant in the Dialogues log onto www.infrastructuredialogues.co.za. The website also provides access to all of the documentation produced through the dialogues.

This project is being undertaken in partnership with the Development Bank of Southern Africa and the South African Cities Network.

Infrastructure Sector Procurement Support

This project is a follow on of the Limpopo Education Procurement Strategy project which was undertaken during 2009. This project was based on research which highlighted the absence of a rational framework for the procurement of infrastructure and therefore the need for an analytical approach that could support the development of sector specific procurement and contracting strategies, in order to improve governance and delivery outcomes.

There are a wide range of procurement procedures and methods that are available through existing legislation and policies. These are described in various toolkits and guidance notes which are produced by the Construction Industry Development Board (CIDB). However most government entities do not consider these options when procuring services and goods in the infrastructure sector, but only use a limited number of time honored and familiar methods, often resulting in poor and disappointing delivery outcomes. The reason for this is that there is currently an absence of processes, procedures and methods to assist government bodies to select the appropriate procurement approach for meeting their infrastructure delivery needs.

A sector procurement strategy guides the allocation of resources by a government body in a more rational fashion and identifies the most appropriate and best value delivery management and contracting approach and procurement arrangements for all of the identified categories of work comprising that sector’s infrastructure plan and budget. Such a strategy recognizes and responds to the unique capacity strengths and weaknesses of the public body as well as the specific primary and secondary delivery objectives (desired outcomes) set by that government body.

The approach was successfully piloted and refined in 2009 with the Limpopo Province Education Department (LDoE). Since January 2010 there has been broader acceptance at a national and provincial level of the value of the approach. SPAID has engaged with National Treasury, the Technical Assistance Unit (TAU), the Infrastructure Delivery Improvement Programme (IDIP) and the Construction Industry Development Board (CIDB) so as to integrate and align the Sector Procurement Strategy approach into these institutions programmes and documents. Key achievements arising out of this process include:

• The Sector Procurement Strategy approach is being incorporated into the new phase of the IDIP. The way in which this will occur is currently being formulated.
• SPAID has successfully provided input into a Construction Industry Development Board (CIDB) toolkit that is currently being developed to assist Provinces to manage infrastructure delivery in the Health and Education Sectors.  The sector procurement approach has been incorporated into the toolkit.  The toolkit is expected to be launched shortly by the CIDB.

The Ukulungisa Project Preparation Fund (UPPF)

The Ukulungisa Project Preparation Fund (UPPF) was established by SPAID out of the recognition that project preparation is critical to service delivery and infrastructure development. The objectives of the UPPF were to assist participating municipalities to initiate, structure and accelerate projects; mobilise private sector resources and know-how to accelerate infrastructure delivery and ensure the financial sustainability of the Funds’ activities.

The UPPF commenced engagements with municipalities in November 2008. Take-up was slow and a significant problem was identified as to how municipalities could easily procure the services of the UPPF. This resulted in SPAID exploring a number of mechanism as to how this could occur, none of which were successful. However through this process the issue of project preparation was raised and is receiving more recognition at a national and provincial level.

The UPPF has been restructured and has expanded its focus on a broader set of stakeholders than just the municipalities such as implementing agents (for example, civil engineering companies and consulting companies). In addition it is undertaking pilot demonstration projects to show case the need for, methodology and benefits of effective project preparation.

In addition UPPF is developing a set of tools on project preparation for use by Municipalities.

Infrastructure Inputs Monitoring Project and Infrastructure Spend Tracker

The Infrastructure Inputs Monitoring Project and Infrastructure Spend Tracker both focus on improving understanding of the status of the infrastructure sector.

The Infrastructure Inputs Monitoring Project has developed a system for reporting relevant consolidated information and data on infrastructure projects (demand) and the capacity to provide the key inputs for the projects (supply) on an annual basis. The Project assesses demand trends and potential supply constraints for the key infrastructure inputs associated with the infrastructure investment programmes of government, SOE’s and development finance institutions (DFI’s) as well as the private sector. Two reports have been developed and published to date one in 2007 and one in 2008 (for details see www.spaid.co.za).

The Development Bank of South Africa is taking over the development and publishing of this report in the future.

The Infrastructure Spend Tracker tracks the extent of spending in the infrastructure sector. In recent years the South African public sector’s infrastructure spending programme has formed the centrepiece of government plans to support and facilitate economic growth and development. In addition to contributing directly to economic growth, the public sector infrastructure programme is also supposed to contribute to job creation, reducing poverty and assisting in developing competitive local industry.

The sheer scale of this public infrastructure development programme, together with the fact that rolling annual budgets have continually been supplemented and adjusted, and that so many different parties are actually involved in the delivery of the associated projects, has meant that it has been difficult to track the spending. The Infrastructure Spend Tracker provide an overview of the historical composition of the public infrastructure programme since 2005, with a specific focus on spending by different levels of government (national, provincial and local) and state-owned enterprises (SOEs), and on the type of assets purchased.  It reviews the funding sources for infrastructure spending and assesses the potential impact of public infrastructure expenditure on employment levels in the South African economy, as well as on the international competitiveness of South Africa as a business and investment destination.

The report is available on www.spaid.co.za.

Assisting municipalities to improve the management of infrastructure delivery relating to basic services

In 2008, a review of municipalities revealed several challenges in respect of their ability to deliver services, particularly to meet the 2014 Backlog Eradication targets of basic services. Since that date, SPAID has undertaken a number of initiatives to assist municipalities to improve the management of infrastructure delivery relating to basic services.

In 2008 the Municipal Project Expediting System was developed which is a programme monitoring and management system that enables Municipalities to plan and monitor progress in eradicating infrastructure service backlogs. In 2009, SPAID supported the process initiated by CoGTA which requires Municipalities to develop Comprehensive Infrastructure Plans (CIP). A CIP sets out the requirements for a Municipality to provide sustainable and affordable infrastructure services to its population. SPAID together with CoGTA scoped a Comprehensive Infrastructure Planning Implementation Support process that would assist Municipalities to determine if they were sufficiently aligned to achieve the 2014 Backlog Eradication targets and to develop plans to address any misalignment.

Based on the above work, in February 2010 CoGTA requested SPAID to assist in the development of a strategy to intervene in the failure of low capacity municipalities to meet their municipal infrastructure delivery and service provision targets (the so called Municipal Infrastructure SPV). This proposed intervention to enhance municipal infrastructure performance is currently being tested and the institutional options for implementing it are being assessed.

Since February 2010 extensive work has been undertaken by SPAID together with CoGTA to develop a strategy and business case for the Municipal Infrastructure SPV intervention. A process of testing this is currently underway with key stakeholders.