Gauteng PPP conference18 February 2010

Infrastructure Development

Allyson Lawless Pr EngDBSA : Siyenza Manje

Engineering Support in Gauteng The South African Institution of Civil Engineering (SAICE)

• Population served ~ 14 million

• Civil engineering professionals ~ 2500 +

• 21 + civil staff per hundred thousand population

Functions performed

• Population served ~ 47 million

• Civil engineering professionals in 2007 ~ 1300 +

• ~2.8 civil staff per hundred thousand population

Wall to wall local government since 2000

Successful local authorities

Numbers and Needs in Local Government : Civil Engineering – the critical profession

for service delivery – November 2007

Functions performed

-1500

-1000

-500

0

500

1000

1500

2000

2500

3000

1989 1991 1993 1995 1997 1999 2001 2003

Bleeding has taken place for a long time

Design was inadequate and had to

be redone, 11%

Design (or lack thereof) caused failure of the final product, 6%

Contractor abandoned project as municipality did not pay timeously,

1%

Contractor abandoned the project as he could

not cope, 4%

Halted for other reasons, 1%

Contractor quality was so poor - remedial work required, 7%

Poor quality contracting, 18% Completed

satisfactorily with minor niggles, 51%

Limited maintenance – waste, sanitation, stormwater challenges

The electricity challenge• 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!

Water losses Area 2008/09

Annual Demand

(million m3)

2008/09 Non-Revenue

Water (million m3/a)

Estimated Non Revenue Water loss

(R’000)

% of Municipal Use

Johannesburg 502.7 160.9 R 522.8 32% Ekurhuleni 326.8 124.2 R 403.6 38% Tshwane 214.2 62.1 R 201.9 29% Emfuleni 77.1 31.6 R 102.7 41% Mogale 26.4 7.1 R 23.2 27% Randfontein 8.7 2.6 R 8.4 30% Merafong 8.4 2.5 R 8.2 30% Westonaria 6.1 1.8 R 5.9 30% Lesedi 5.1 1.5 R 4.9 30% Midvaal 9.6 2.9 R 9.3 30% Kungwini 5.3 1.6 R 5.2 30% Nokeng Tsa Taemane 0.0 0.0 R 0.0 0%

Province ~ R 1,295 bn loss p.a. from leaks!

What to do – new dams or fix leaks – huge cost benefit

to fix leaks!

Leaking toilets

Leaking pipes

Leaking meters

Maintenance has become prohibitively expensive because of neglect

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)

Rough estimate of maintenance backlogs in Gauteng

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

Functions needed

To dos• 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

Increase income, address losses, • 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

Innovate and invest in maintenance • 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

Funding for turnaround • 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 - rebuild not restructure• 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

Professionalise• 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

Develop technical team• 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

Rebuild collapsing structures

Successes of support to date

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!

External delivery mechanisms

• 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

Numbers and Needs in Local Government

Contact details:

Allyson Lawless allyson@ally.co.za

SAICE (to purchase book)Angelene Aylward

011-805 5947aaylward@saice.org.za