Ci d b Presentation of Annual Report 2006/07 Parliamentary Portfolio Committee

Cidb

Presentation of Annual Report 2006/07

Parliamentary Portfolio CommitteeWednesday, 07 November 2007

development through partnershipcidb

Presentation Layout

• Introduction – Legislative framework & Mandate

• Highlights for the FY 2006/07• Stats to date-context• Performance Summary-Table• Presentation of Financials• Audit Process

– Audit findings– Management’s corrective action

• Conclusions


Introduction


Legislative Framework & Mandate

CIDB Act 38 of 2000…mandates the CIDB to

provide strategic leadership to industry stakeholders to stimulate sustainable growth, reform and development

Regulate the construction industry

Introduction


Legislative Framework & Mandate

CIDB Act 38 of 2000…mandates the CIDB to establish the National Register of Contractors:

Facilitates public sector procurement, delivery and risk management

Supports contractor developmentPromotes better performance - improved

quality, safety, health and environment. to categorise contractors in accordance with their

capability

Benefits of the RoC

Support risk management in the tendering process Reduce the administrative burden To facilitate sustainable growth and transformation of

contractors, enable effective access by the emerging sector

Reduce tendering costs to clients and contractors Promote minimum standards and contractor best

practice Enable access by the private sector Provide information on the size, distribution, nature

and development of contractors To improve the performance of contractors

Legislative framework and mandate


Highlights for 2006/07

Challenges

– Boom in the Construction industry– Exponential Growth of the Register of

Contractors– Backlog in contractor registration- resolved in

March– Internal Growth –expansion programme in

response to the growth of the RoC– Challenge on resources and systems


Highlights for 2006/07Focus areas/Projects

– Rollout of the Std for Uniformity• Municipalities (main focus)• Continued with National and Provincial Dept’s• Continued with Parastatals• Continued with support to Contractors

– Construction Contact Centers– National Contractor Development Programme– National Infrastructure Maintenance Strategy– Support to 2010 Infrastructure Team (stadia)– Independent Review of cidb


Stats to date-Class of Works by grading

GradeGB CE ME EE SW Total

1 21417 5823 911 684 2523 313582 1881 1000 184 186 329 35803 608 387 79 92 64 12304 585 587 98 159 89 15185 248 318 83 102 71 8226 205 275 44 57 27 6087 84 135 20 31 21 2918 20 42 6 5 9 829 22 34 17 7 6 86

Total 25070 8601 1,442 1323 3139 39,575CE Civil Engineering EE Electrical Engineering GB General BuildingME Mechanical Engineering SW Specialist Works

Class of works

9

Stats- Exponential Growth• Increase in registrations

Dec 2004 – 1500 Dec 2005 – 7500 Dec 2006 – 27500 July 2007 – 42000 Dec 2007 – 55 000 projected, currently 51 000+

Registrations

0

10000

20000

30000

40000

50000

60000

Dec

-04

Jun-

05

Dec

-05

Jun-

06

Dec

-06

Jun-

07

Dec

-07

Registrations

Total registrations = (active + suspended)

Performance Summary

Growth– Economic Research & Monitoring of Public

Sector Spending – Publish quarterly construction economy monitor

and improve quality of monitor based on information from the registers.

– Investigation into “Skills for infrastructure delivery - the challenge of restoring the skills pipeline” completed – report published

– Framework for ongoing Quarterly Monitors established


Performance Summary

GrowthCommunication

– Promote outcomes of the Charter process. – Monitor progress and promote sustainable

empowerment initiatives and performance against targets.

– Construction Charter was launched. The next phase i.e. 3rd party review had not been finalised due to delayed DTI scorecard/BEE codes.


Performance Summary

GrowthCommunication

Procurement Forum (for procurement reform) and Focus Group (for register of professional service providers) engaged; National Treasury engaged to deal with Competitive bidding. Various public sector client capacitation workshops

New website-work in progress Various communication tools


Performance Summary

PerformanceCRS

Phase I of registers-municipalities, etc Implementation of regulations Phase II-components investigated

RoPSPFramework for Register of Professional Service Providers and consulted stakeholders


Performance Summary

PerformanceCII’s

Last ones published in 2005/06 AR New-contract awarded to UFS Strong link to Registers Link to Charter - after 3rd Party Review


Performance Summary

Procurement and DeliveryProcurement Reform

2000+ officials and consultants capacitated by the end of the financial year.

Provided support and advice to the 2010 Infrastructure Procurement team in the procurement of contractors to build the 2010 stadia.

Provided support in the development of procurement documents for the EC Department of Public Works, in conjunction with the Coega Development Corporation.

Started focus on Compliance


Performance Summary

Procurement and Delivery

Public Sector Delivery • Increased cidb participation and commitment to

IDIP by increasing cidb capacity (internal staff).• Hosted an international expert on Polarity

Management as part of training for IDIP PMU (partners).

• Participated fully in the appointment and training of Technical Assistants for DPW and Department of Education, later in the appointment and training of Technical Assistants for Department of Health.


Performance Summary

Procurement and Delivery

Public Sector Delivery -- i-Tender Register of Projects• Continued to promote the use of the i-Tender

Register of Projects (RoP) to enable electronic registration of projects.

• Special project-Upscaled the registration of clients as employers to ensure they use the i-tender RoP.


Performance Summary

Emerging Contractor Development

• Developed, in conjunction with National DPW, the framework for National Contractor Development Programme framework, to be rolled out to provinces-started where the first Outreach Centres/CCC would be established.

Engaged the Banking Council and some regional bank offices to facilitate their involvement. Some banks eg in KZN (Ithala, ABSA) have responded with packages to support contractors.

Kick-started establishment of Construction Contact Centres


Performance Summary

Knowledge Centre and Research

Agenda• Cidb 4th Post Graduate Student Conference, hosted

by the Institute of Transport Technology at the University of Stellenbosch, held from 8 to 10 October 2006 – attracting some 100 academics from around the world

• Continuous engagement with academic institutions and individuals regarding the research agenda


Performance Summary

CIDB Impact - 5-year Evaluation

• Successful evaluation of cidb by independent Panel in Jan 29-Feb 02, 2007.

• Review report submitted to the Board, to be submitted to the Minister.

• Report is positive about the performance of cidb in the first 5 years, with recommendations to enhance further delivery on mandate.


Financial Performance

• Revenue– Revenue from government increased by 19%

to R40,012m from R33,510m in the previous year. This increase was in line with the business plan and budget expectations.

– Revenue from registers increased by 142% to R16,930m from R6,988m in the previous year

• Total expenditure – Total expenditure increased by 33% compared

to the previous year. The bulk of the this increase relates to Staff costs which increased by R8,339m(78%) from previous year.

Financial Performance• Finance income

– Interest income increased by 186% to R1,943m from R0,679m in the previous year.

• The surplus– Surplus for the year is R5,525m to be utilized

in the next year’s budget for the set up of CCC’s as part of our expansion program.

• Cash & Cash Equivalents– Cash & cash equivalents increased by

R8,073m from R18,261m. The bulk of this increase relates to Investments which grew by R6,962m(38%) from R18,110m.

Financial Performance

• Accounts Payable

– Accounts payable increased by R4,375m from R14,408m. The bulk of this increase relate to two areas:

• ‘Contractors not assessed’ grew by R2,836m(41%) from R6,910m

• ‘Unallocated deposits grew byR3,621m(84%) from R4,293m

Auditor General Findings 2006/07

OVERVIEW

• One(1) Qualification• Two(2) Other matters• No Emphasis of matter

Auditor General Findings 2006/07Qualification

• Finding

– ‘contractor accounts were incorrectly debited and/or credited which might have

resulted in material misstatement of the accounts payable and accounts receivable balances disclosed in the statement of financial position’.


Qualification (continued)

Management’s Action

– A reconciliation process has been started to reconcile each contractor account since inception. The reconciliation process is planned to be completed on 30 November 2007.

– We have requested Treasury’s approval to open up a new bank account which will be used for contractor deposits. All future deposits will be made to this new bank account. The existing bank account, which is a savings account, will be discontinued and all amounts in that account will be ring-fenced in order to simplify the reconciliation process.

Auditor General Findings 2006/07Other Matters

• Finding

– Tenders were not always advertised for 30 days before closure as required in terms of Treasury Regulation 16A.6.3


– All tenders are currently advertised for 30 days before closure in terms of Treasury Regulation 16A.6.3.

Auditor General Findings 2006/07Other Matters (continued)

• Finding

– ‘The schedule of outcome of disciplinary hearings and/or criminal charges, names and ranks of employees involved and sanctions and any further actions taken against employees during the year under review were not submitted to the executive authority, National Treasury and the Auditor General as required in terms of Treasury Regulation 33.3.1’


Other Matters (continued)


- Treasury Regulation 33.3.1 is currently being complied with.

Conclusions

• Our systems are being beefed up• HR Resource allocation being increased• New structure to deal with risk

management• Internal audit & AG’s recommendations

being implemented• New proactive approaches to managing

the organisation• Registration process being simplified

……………………….Thank you


Conclusion

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Ci d b Presentation of Annual Report 2006/07 Parliamentary Portfolio Committee

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