INDUCTION PACK 2

(I) The Funding Agreement(II) Managing the Project Stages

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Project Preparation: Three Step Process

Project Verification Step Status Quo Step Pre-Appraisal /

Business Case StepBusiness Plan

Step

THE NDPG PROJECT STAGES

Implementa-tion Step

Immediate Interventions

Exit Step

3

Introduce Municipalities to NDPG

MUNICIPALITY AND TREASURY SIGN FUNDING AGREEMENT (FA) AND PRELIMINARY SCHEDULES

NDP Unit makes call for projects

Municipality prepare project application (may be assisted by consultants) Submit application to NDP Unit

NDP Unit receives application:•Records receipt , Allocates to a PD, First round assessment

NDP Unit prepares shortlist of projects for verification

NDP Unit undertakes Verification Process:•Site / municipal visits, Complete Verification Report

Final short list for submission to Review Committee / Reference Group

Reference Group recommendations & Report to DDG with funding envelope recommendations

Funding envelope approved by Treasury

Induction workshop by Treasury in the Municipality

Notify Municipality of award

Support Bundles Contents

* Support Bundle A1•Toolkit 1: Grant overview•Toolkit 2: Grant details•Toolkit 3: Guidelines for registration•Toolkit 4: Registration form•Toolkit 5: Building the Business Case

** Support Bundle A2•Funding Agreement (FA)•Schedules

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THE FUNDING AGREEMENTTHE FUNDING AGREEMENTExtracts to note:

Clause 4.2.20: the municipality is responsible for managing performance of the consultants

“ Enter into all contracts with the Consultant and/or Contractor as required to complete the Project, and shall be

responsible for the management of the performance of the Consultant and/or Contractor in accordance with the contract

and for the management of the Project as a whole in accordance with all applicable National Treasury Regulations and

related National Treasury Guidelines and municipal supply chain management legislation and policy.

Clause 4.2.21: the municipality is responsible for ensuring that the required project management capacity is in

place at all times.

“Maintain an appointed Project Manager at all times”

Clause 5.1: although a funding envelope is potentially available, the NT in the yearly gazette stipulates the actual

yearly allocation

“The National Treasury shall allocate to this Project, on the terms and conditions set forth in this Agreement, amounts for

Technical Assistance and/or Capital Grant Funds, not exceeding the amounts stipulated in the Schedules, and/or as may

be revised and agreed to in writing by the National Treasury.

Clause 5.9 and 5.10: causes for suspension and or withdrawal of funds:

“ Should the Municipality not provide progress reports, financial reconciliation reports, bank statements and updated cash

flow projections on a monthly basis, as required by the National Treasury, and should the Municipality submit for payment

an invoice of the Consultant in respect of Technical Assistance Funding, or request a drawn-down in terms of the Capital

Grant transfer to the Municipality, more than one calendar month from the date of such invoice or request for draw-down,

projected by the most recent Milestone Payment Schedule, the National Treasury shall be entitled to withhold payment of

further transfers until such time as all required reports are submitted. All costs arising from such delayed payments shall be

for the account of the Municipality. 5.10 Should the Municipality not meet the agreed milestones on a monthly basis, as

required for Technical Assistance or quarterly, as required for the Capital Grant, the National Treasury shall be entitled to

withhold or delay payment of further invoices and/or transfers, in whole or in part, until such time as milestones are met. All

costs arising from such delayed payments and/or transfers shall be for the account of the Municipality.

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THE FUNDING AGREEMENT SCHEDULESTHE FUNDING AGREEMENT SCHEDULES1 General Project Description Yes…ensure you fill in details of the NDPG project manager AND

specifics about the project as per your application + the verification report + information from your award letter.

2 Overall Project Costs Yes. Must reflect the actual and indicative contributions of municipal, other public and private partners.

3 Milestone Payment Schedule Yes at least for year 1

4 Authorization by the Municipality Yes, signed by the MM (as Accounting Officer)…name and signature

5 Council Resolution supporting NDPG Application Yes

6 Special Conditions No

7 NDPG Award Letter from National Treasury Yes

8 Any pertinent delegations approved by the Municipality in terms of this project, e.g. payment requests signed off by NDPG Coordinator, or by NDPG Project Manager, any related delegations and evidence thereof, etc.

No BUT….. We prefer that the MM delegates the NDPG programme management responsibilities here. Full name and signature of MM and delegated official.

MAIN AGREEMENT IS STANDARD. SCHEDULES ARE ORGANIC…CAN BE CHANGED BUT ONLY IF SIGNED BY THE SAME PARTIES WHO SIGNED THE FA…THE MM AND THE CD NDPG

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Project Preparation: Three Step Process

Status Quo Step Pre-Appraisal / Business Case Step

Business Plan Step

A. YOU HAVE RECEIVED YOUR AWARD LETTERB. YOU HAVE SIGNED THE FA C. YOU KNOW WHAT YOUR GAZETTED ALLOCATIONS ARE:

WHAT THEN ARE THE SUGGESTED PROCESS STEPS FOR MANAGING THE PROJECT PREPARATION PROCESS ?

Implementation Step

Exit Step

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MANAGING THE PROJECT CYCLE: GUIDELINES ON % SPLIT MANAGING THE PROJECT CYCLE: GUIDELINES ON % SPLIT OF ALLOCATIONS OVER PROJECT LIFE CYCLEOF ALLOCATIONS OVER PROJECT LIFE CYCLE

TECHNICAL ASSISTANCE OUTPUTS

20%

10%

10%

25%

30%

5%

NDPG PROGRAMME MANAGEMENT& COORDINATION

TOWNSHIP REGENERATIONSTRATEGY AND IMPLEMENTATIONPLAN

REVIEW OF PROGRAMME ANDPROJECT STATUS QUO

PRE-FEASIBILITY & DETAILEDINVESTIGATIONS

BUSINESS PLANS

EXIT PLANS & M&E

CAPITAL GRANT OUTPUTS

18%

1%

80%

1%

DETAILED DESIGNS

CONSTRUCTION SUPERVISION

CAPITAL FOR CONSTRUCTION

O&M

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EXAMPLE OF MANAGING THE PROJECT CYCLE: GUIDE TO % EXAMPLE OF MANAGING THE PROJECT CYCLE: GUIDE TO % ALLOCATION SPLITALLOCATION SPLIT

Case Study: Municipality x received an NDPG award letter stating that they have been awarded a TA envelope of R12m and R150m for CG. The Municipal project manager now draws up an indicative project plan to start the process of contracting external and internal support for the planning and implementation process. A very indicative idea of how the R12m TA and R150m CG could be utilized:

1. Programme Management & Coordination: overall management of the NDPG award from status quo step to exit and review.

(ONLY IF NEEDED!)

(i) If consultant: max 1% of R162m, to be paid from TA if consultant. (20% of TA = R2.4m).(ii) If a municipal official on contract: to be paid from CG

2. Status Quo Review: programme and project level assessment Approx 10% of TA = R1.2m

3. Feasibilities and other technical or sectoral studies Approx 25% of TA = R3m

4. Business Plans Approx. 30% of TA = R3.6m

5. Exit Reviews, Assessments Approx 5% of TA = R600.000

6. Township Renewal Strategy Approx 10% of TA = R 1.2m

7. Detailed design work to build asset funded by the capital Approx 18% of the CG envelope of R150m = R27m

8. Capital for construction Approx 80% of R150 CG amount = R120m

9. Outsourced Construction Management Approx 1% of R150m CG = R1.5m

10. Kick-start operating funding (BIDs, ops, etc.), if needed Approx 1% of R150m CG = R1.5m

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PSC agrees Terms of Reference (ToR) for the Overall Status Quo analysis and report

Municipality may appoint consultants (using TA Grant) to prepare Overall Status Quo report

Municipality nominates a Project Steering Committee (PSC) that reports to a Portfolio Head (MMC)

Draft programme Status Quo report with priorities and phasing of projects and input to Township Regeneration Strategy

Final Status Quo report(s) approved by PSC (Overall and Project – and contains scoping of Pre-Appraisal Step)

Workshop on Overall Status Quo report with priorities with PSC and NDP Unit. NDP Unit and PSC to formally minute the decision

Project Status Quo report(s) prepared for priority project(s) including draft revised schedules and Council resolutions

NDP Unit receives Final Status Quo report and reviews it

Final Status Quo Report is approved by the Municipal Council and resolution approved

Treasury signs new / revised schedules

Project baseline 1 established on Treasury Portfolio data base

Amended schedules (V2)

STRAGIEC REVIEW BY THE NDPG UNIT

CONTRACTUAL APPROVAL BY

THE NDPG UNIT

PARALLEL DEVELOPMENT OF A

TOWNSHIP REGENERATION STRATEGY AND

IMPLEMENTATION PLAN CAN COMMENCE HERE

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Pre- Appraisal Report

Draft Report with implications for project scope and concept

Consultants appointed and / or briefed on PA step by Municipality

Phase 1: Consultants undertake project appraisals:•Technical (land, planning, geotechnical, environmental, infrastructure)•Economic and Social (economic profile, socio-economic data, potential for leveraging economic investment

Phase 2: Impact assessment (based on technical, social, economic studies from above)•Technical impacts and risks•Economic impacts and risks•Social impacts and risks

Revise the project conceptPrepare final Pre Appraisal report•Revised project scope•Impact assessment•Indicative project budget and work plan•Summary of TR Strategy and implications of project for TRP and vice versaScope the needs of the Business Plan stepInclude revised schedules and milestone payment schedule

Submit final report to Municipal Council for information

Submit PA report to NDP Unit

Include summary of the TR Strategy and indicate alignment of project to the Strategy

Workshop to discuss findings with PSC and Treasury officials, include TRS

Treasury and Municipality sign revised schedules

SRATEGIC REVIEW BY THE NDPG

CONTRACTUAL APPROVAL

Amended schedules (V3)

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Appoint consultants to prepare Business Plan / extend appointment

Technical viability Institutional arrangements Financial viability

Implementation Plan

Draft Business Plan with draft revised Schedules

Financial Plan

In line with funding envelope Not in line with funding envelope then apply for Exception

Municipal Council resolution and Municipal Council approved Business Plan and schedules

Business Plan and schedules to NDP Unit for approvalTreasury approved Business Plan and endorse schedules

Capital Grant award to Municipality

Quarterly disbursements of CG to Municipality

Treasury sends Municipality letter with conditions and amendments to schedules

Treasury monitoring of project progress

Partnership / Leverage Plan

Workshop with PSC and Treasury and TRP consultants and officials to discuss draft Business Plan and revised draft schedules and alignment with TRP

Include summary of TRP and ensure projects aligned with TRP

CONTRACTUAL APPROVAL BY NDPG:

CAPITAL GRANT TOTAL AMOUNT IS CONFIRMED

CONTRACUAL REVIEW BY NDPG

STRATEGIC REVIEW BY NDPG

Risk Management PlanOngoing Management / Exit Strategy Plan

Municipality revised BP and schedules

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PSC and NDPG PD’s resolve procurement of resources for the implementation of the Business Plan

Municipality mobilises the professional team (new / existing) for implementation

Procurement of contractors / extend appointment of professional team to undertake final design

Municipality approves final design and NDP Unit provides inputs, if necessary

Project implementation / construction

Implementation team commissions detailed design

Final design for implementation

Achieve milestone payment pointsTreasury Implementation review / inspection (quality assurance)Begin consideration of exit requirementsComplete projectProject Handover

Submit project close out report with all support documentation to MunicipalitySubmit draft Exit Strategy to NDP Unit and Municipality

NDPG Disburse payment to Municipality

NDP Unit confirms close out report submitted

NDP Unit considers draft Exit Strategy

CONTRACTUAL REVIEW

CONTRACTUAL REVIEW

CONTRACTUAL APPROVAL

CONTRACTUAL REVIEW

13

NDP Unit undertakes project inspection / review

Municipality ensures necessary management and maintenance requirements are in place (financial / budgetary and human capacity)

Municipality and NDP Unit exit workshopMunicipality and NDP Unit review Exit Strategy

Municipality approves final Exit StrategyNDP Unit receives copy

NDP Unit updates project data on their systems as status complete