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Asset Management:Strategic Issues

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Table of contents• Background• Government Wide Immovable Asser Management (Policy)• User Asset Management Plans (UAMP) and Custodian Asset

Management Plans (CAMP)• Asset Register: Enhancement• Asset Register: Lost/Abused Assets• Un/Under- Utilized Assets (DOD)• Prioritization of Budgets• Memorandum of Understanding (MOU)• Service Level Agreements (SLAs) • Disposals• Research• Pan African Parliament (PAP)• Ports of Entry

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Background• The Asset Management unit’s specific purpose is to ensure that the state-

owned immovable assets are optimally utilized, functional, cost effective and support service delivery objectives of state’s national client’s department.

• Although the unit has been existent in the department it has just gone through a major transformation which prompted creation of new structure. The structure comprise of Portfolio Performance Unit, Investment Analysis and Key Accounts Management.

• The unit has embarked on a number of initiatives since its inception. Some of the initiatives in progress are:

– Asset Register Enhancement Project, – Short term prioritization of maintenance budget, – Long term criteria of prioritising maintenance budget– User and Custodian Asset Management Plans in line with GIAMA – MOUs between DPW and its clients departments, – Service Level Agreements (SLA) with client departments, – Options analysis on disposals (both local and foreign) programmes

• It is unit’s intention to have facilitated and developed policies and strategies for the life cycle management of state’s immovable assets by 2007.

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Government-wide Immovable Asset Management (Policy)

• In August 2005, Cabinet approved the Government-wide Immovable Asset Management Policy and the draft Government Immovable Asset Management (GIAMF) Bill for submission to Parliament.

• The policy calls for more efficient and effective use of immovable assets by three spheres of government and places an obligation on accounting officers to prepare Immovable Asset Management Plans to ensure that prudent management of such assets takes place.

• The policy and draft bill distinguish between users and custodians of immovable assets.

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User Asset Management Plans (UAMPs) and Custodian Asset Management Plan

(CAMP)• Asset Management has compiled draft guidelines for the

completion of user immovable asset management plans (UAMPs) to facilitate and assist with the required asset management plans by national governments. These guidelines will also be used for provinces.

• Assistance is being provided to user departments to complete their UAMPs in accordance with the client strategic plans.

• It is envisaged that the necessary basic immovable asset management plans in compliance with GIAMF would be completed for national departments in the current MTEF period.

• Parallel, Custodian immovable asset management plan (CAMP) guideline is being finalised.

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User Asset Management Plans (UAMPs)

• Users of immovable assets utilise the space or accommodation to give best effect to their functions and therefore must produce a User Immovable Asset Management Plan (UAMP) to ensure:– accountable, fair and transparent management of immovable

assets;– effective, efficient and economic use of immovable assets;– reduced overall cost of service delivery; and– reduced demand for new immovable assets.

• A.M. will assist with the completion of a final pilot UAMP for the Department of Home Affairs to be implemented by the beginning of the financial year 2006/07 by 30 March 2006.

• AM also plans to complete all the UAMPs of its remaining client departments in March 2007. This will allow capacity build-up and consultation.

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Custodian Asset Management Plan (CAMP)

• DPW as the custodian is responsible for all activities associated with common law ownership and therefore must produce a Custodian Immovable Asset Management Plan (CAMP) to ensure that immovable assets:– are efficiently and effectively managed throughout their life-cycle;– provide a transparent and cost effective (best value) manner to

meet service delivery requirements of users; – are maintained in a state to provide the most effective service;– are assessed in relation to its performance, suitability, condition and

the effect of the condition service delivery ability; and– are disposed of in line with assessment recommendations.

To this end, DPW will produce this plan during the 2006/07 fiscal year

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Asset Register: Enhancement

• For the first time, a comprehensive inventory of State-owned immovable assets is available in an electronic format. Through the data gathering exercise, the number of entries in the National and Provincial Governments’ immovable asset registers increased from 112 000 to 375 000 (consisting of information on land parcels and all buildings and structures).

• Agreement has recently been reached with the Office of the Accountant-General in National Treasury on the various fields of information that an immovable asset register should contain – including both basic (essential) and additional (supplementary).

• In addition, it has recently been agreed with the Auditor-General that the basic (essential) fields will serve as the basis for the auditing of Government’s immovable asset registers in future.

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Asset Register: Enhancement

• AM commenced the asset register enhancement project in 2005/06 to improve data integrity of the department’s asset register, service delivery and to facilitate property management in the eleven regions.

• The project will be completed over three years with an estimated total budget of R30m, effective from March 2005.

• A total of fifty four (54) contract workers have been employed in its regional offices to assist with the enhancement of asset register, service providers will also amply this process.

• Asset register enhancement project is running concurrently with the property vesting of the Department of Land Affairs.

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Asset Register: Lost/Abused Assets• Situational Analysis requires DPW’s capability to acquire

basic source information from the public through existing structures.

• A dedicated toll-free call centre number is being established. • The approach of this process covers the entire extent of the

Republic and should not only be former TBVC focused.• DPW engages the Intelligence Structures to sort

reclassification of the former National Intelligence Services (NIS), Military Intelligence (MI) Immovable Asset Registers and establishes all SARS records for transfers and donation to the State .

• Recommendations to this effect have just been forwarded to the Minister.

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Asset Register: Lost/Abused AssetsThe lack of comprehensive information and

collection of data necessitates the need for the institutional framework to assist in the assets identification strategy, given the recurrent of this problem.

• Parliamentary Constituency Offices• South African Local Government Association

(SALGA)• Media Advertisements• Capacity Enhancement • DPW is exploring a FICA modelled verification

process for all the identified grey immovable assets within and outside RSA

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Un/Under-utilised Assets Department of Defence (DoD)

• Confirmed status of DoD’s under -utilised facilities: – Western Cape: 5 facilities have been identified, DoD to consolidate

its operations in attempt to free some properties for disposal.– Eastern Cape: awarded to Cacuba community for land claim.– Gauteng: being investigated for possible disposal subject to

confirmation by DoD.– Limpopo: 2 properties released to Justice and SAPS.– Mpumalanga: 1 property under evaluation for possible release to

other departments/disposal.– North West: 3 properties identified for disposal and 1 still under

investigation for possible disposal.– For the rest of the un/under-utilised assets, DPW is awaiting

confirmation from DoD.

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Prioritisation of Budgets

• Prioritising of the department’s Maintenance and Capital Budgets

• During the 2005/06 financial year, the branch embarked on a prioritisation of the maintenance and capital budgets programme for the 2006/07 year.

• The implementation programme was completed after collaboration with various stakeholders after giving due consideration to budget constraints.

• A draft long-term prioritisation of budgets is being prepared to co-incide with the MTEF cycles, going forward.

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Prioritisation of Budgets

• In December 2005 the Department developed a short-term criteria of prioritising maintenance projects for 2006/07.

Criteria- ranked in order of importance:1.Statutory compliance e.g. OHSA, PFMA, PPPFA other Land,

Environmental & Safety Legislation;2. Security measures e.g. prevention of escapes and safe keeping of

firearms;3. Functional vs. Residential accommodation e.g. provision of

“essential services”4. Special projects e.g. not captured on WCS but are a priority, and5. Degree of readiness e.g projects that are at a tender stage

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Prioritised Maintenance Budget 2006/07

A m o u n t a va i l a b l e fo r M a in t e n a n c e 1 1 1 7 6 1 9A m o u n t r e s e rve d fo r P r e s t i g e 7 3 3 4 7S A P S A l l o c a t i o n ( i n t e r m s o f d e vo lu t i o n ) 2 7 8 2 1 6

A m o u n t d e vo l ve d t o C l i e n t s ( i e m o n e y a va i l a b l e fo r m a in t e n a n c e ) 7 6 6 0 5 6

A m o u n t s e t a s id e fo r U n p l a n n e d M a i n t e n a n c e 2 5 8 1 9 5

B a l a n c e 5 0 7 8 6 1

C a p i t a l i s a t i o n o f T r a d i n g E n t i t y 4 4 0 0 0 0

A m o u n t a va i l a b l e fo r P l a n n e d M a in t e n a n c e 9 4 7 8 6 1

A m o u n t s e t a s id e fo r C o n s u l t a n t s ( 1 8 % ) 1 4 6 8 9 7

A m o u n t a va i l a b l e fo r P l a n n e d M a in t e n a n c e c o n t r a c t o r s 8 0 0 9 6 4

C o n t r a c t u r a l c o m m i t m e n t s ( F o r 2 0 0 6 / 0 7 fo r c u r r e n t c o n t r a c t s ) 5 4 1 7 3 4

A va i l a b l e fo r p r i o r i t i s a t i o n 2 5 9 2 3 0

P r io r i t i s e d , i n d e s ig n ( R 6 8 7 2 2 3 0 0 0 b e f o r e p r i o r i t i s a t i o n ) 2 7 4 3 6 2

S h o r t fa l l - 1 5 1 3 2

P r io r i t i s e d , n e w s e r vi c e s ( o n W C S , b u t n o t y e t i n D e s ig n s t a g e ) 1 7 7 1 4

T o t a l s h o r t fa l l - 3 2 8 4 6

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Memoranda of Understanding (MOUs)

• The memorandum of understanding (MOU) is aimed at clarifying the relationship between the Department of Public Works (DPW) and the User Department with regard to the provision of services related to the management of immovable accommodation.

• Asset Management is tasked with the management of roles and responsibilities of DPW and the user departments and to ensure that a cooperative working relationship exists between departments.

• Asset Management is tasked with the management of roles and responsibilities of DPW and the user department and to ensure that a cooperative working relationship exists between departments.

• A total of 8 MOUs have already been signed and it is anticipated that the rest will be completed by 31 March 2006.

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Service Level Agreements (SLAs)

• The Department has embarked on an exercise of developing Service Level Agreements for all clients in April 2006.

• This is intended to define and monitor the level of services (service standards) offered to DPW clients in compliance with GIAMF.

• The SLAs will be governed by best practice principles and aligned with Government and Departmental strategic objectives over the MTEF period.

• These SLA’s will be premised on the CVP’s (Asset Management approach), that will be adopted for our respective clients.

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Asset Management Research

• One of the key objectives of AM is to provide past, current and future property industry researched information / data to enable the department to make informed decisions.

• AM must provide tools and capacity:– To research and analyse financial, economic and social market

trends for broader economy,– To determine economic and social market trends for property and

construction sectors at both micro and macro level,– To develop and implement analytical tools and models as well as

appropriate systems, and– To provide data and information to enable financial analysis, risk

and return, socio-economic, planning, and policy for influencing acquisition, construction, maintenance and disposals.

• It is on the basis of the research outputs that tangible results and improvements will evident in 2006/07.

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Disposals

• GIAMF provide that immovable assets are only of value to the user if they support service delivery objectives (effectively and efficiently).

• The branch has identified about 2000 unutilised properties from the asset register for possible disposal and has developed a disposal programme for their disposal over a period of 5 years. The final disposal decisions will depend on further investigation and analysis in respect of the 2000 unutilised properties.

• Disposals are now managed in a more integrated and co-ordinated manner for efficiency and effectiveness.

• Disposal Phases 1 and 2 of the disposal programme have already been approved by the Minister and it is planned that the surplus properties will be disposed in the MTEF period 2006/08. In addition to the phases 1 and 2 properties, further investigation into the 2000 unutilised properties together with other additional unutilised properties will be continued and included in disposal phase 3.

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Disposals

• The effective rollout of the disposal programme will minimise holdings of surplus and under-performing assets and maximise value to Government.

• Apart from Phases 1, 2 and 3, special disposals , particularly, illegally occupied and dilapidated properties must be sold immediately. For example, through auctions.

• An identification and investigation of Foreign properties for disposals has already commenced.

• Asset Management has already identified properties in Malawi, Namibia, France, Germany, Madeira and Switzerland for disposal.

• Foreign property disposal is subjected to the laws and regulations of the country where property is domiciled.

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Pan African Parliament (PAP)

• Residential Properties has been secured for the President of PAP whose occupation is earmarked for 1 April 2006.

• Options Analysis PhaseNeeds analysis– This encompasses the identification of site location; site analysis;

location due diligence; evaluation and recommendation.Design– Appointment of competitions advisor: Alignment with accreditation

institution of choice; compilation of competition document; announcement of competition; and appointment of the preferred bidder to work on drawings and tender documentation.

Construction– Setting out of the works; site clearance; sub-structure; super-

structure; roof construction; external works; first delivery; 12 months defects period including specialized work; and final handover.

• Project completion expected in the first half of 2010.

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BCOCC• The BORDER CONTROL OPERATIONAL CO-

ORDINATION COMMITTEE (BCOCC) structure was presented and approved by the Cabinet Lekgotla in July 2005.

• DPW has been mandated to chair the BCOCC Development Committee.

• National Treasury allocated budget of R 910 million for the BCOCC until the end of 2008/2009 financial year.

• The funds are utilised for Capital Works, Acquisitions, and RAMP projects and for the expansion and renewal of the ICT systems at Ports of Entry (Air, Land, Sea and Rail which includes 54 Land Ports of Entry, 10 Harbours and 10 International Airports).

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Siyabonga