REPORT TO THE SELECT COMMITTEE ON APPROPRIATIONS ON

HOSPITAL REVITALISATION GRANT PERFORMANCE

DR SIBONGISENI DHLOMO

MEC FOR HEALTH

KWAZULU NATAL

CONTENT• Grant Framework• Trends in grant Financial performance• Third quarter performance • Preliminary 2009/10 Outcome• 2010/11 MTEF allocation• Preliminary 2010/11 allocation by project and category• 2009/10 Grant Performance by Project and category• Some factors contributing to under expenditure• Monthly Reporting • Way Forward

GRANT FRAMEWORK

• To provide funding to enable provinces to plan, manage, modernise, rationalise and transform the infrastructure, health technology, monitoring and evaluation of hospitals, and to transform hospital management and improve quality of care in line with national policy objectives

  2005/06 2006/07 2007/08 2008/09 2009/10R'000

Adjusted Appropriation R 223,938 R 317,300 R 360,194 R 330,404 R 449,558

Actual Outcome R 111,821 R 225,900 R 333,684 R 330,404 R 225,000

Nominal Difference R 112,117 R 91,76 R 26,510 R 0,00 R 224,558

% Variance -50.06% -28,93% -7,35% 0% -49,95%

TRENDS IN GRANT FINANCIAL PERFORMANCE 2005/06 TO 2009/10

(AS AT 31/03/10)

•HRG budgets have grown rapidly over the past five years•Planning and project management has not kept pace, resulting in under expenditure due to delays – explained later

3RD QUARTER PERFORMANCE-by allocation

Budget Actual Variance % spentKing George V 186 445 78 784 107 661 42.26LUWMH 94 652 25 191 69 461 26.61Hlabisa 53 962 4 200 49 762 7.78Rietvlei 46 449 10 075 36 374 21.69Dr. Pixley kaSeme 45 625 4 907 40 718 10.76Dr. John Dube 2 425 0 2 425 0.00Edendale 8 000 446 7 554 5.58Madadeni 6 500 460 6 040 7.08Grant Management 5 500 4 199 1 301 76.35Total 449 558 128 262 321 296 28.53

Third quarter 2009/10

PRELIMINARY 2009/10 OUTCOME-by allocation

BUDGET ACTUAL Variance % Spent

186,445 109,865 -76,580 59%

94,652 51,277 -43,375 54%

53,962 24,398 -29,564 45%

46,449 20,313 -26,136 44%

45,625 12,937 -32,688 28%

2,425 0 -2,425 0%

8,000 459 -7,541 6%

6,500 460 -6,040 7%

5,500 5,804 304 106%

449,558 225,513 -224,045 50%

TOTAL HRG 2009/10

InstitutionKing George V

LUWMH

Hlabisa

Rietvlei

Dr Pixley ka Seme

Dr John Dube

Edendale

Madadeni

Grant Management

Total

PRELIMINARY 2009/10 OUTCOME-by category

BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL

122 925 86 606 56 350 21 839 6 670 1 420 500 0 0 0

69 660 17 233 5 600 31 396 18 392 2 606 1 000 42 0 0

48 660 18 000 500 4 599 4 302 1 799 500 0 0 0

40 146 13 044 1 500 5 654 4 303 1 589 500 26 0 0

45 625 12 937 0 0 0 0 0 0 0 0

2 425 0 0 0 0 0 0 0 0 0

8 000 459 0 0 0 0 0 0 0 0

6 500 252 0 208 0 0 0 0 0 0

0 0 0 0 0 0 0 0 5 500 5 804

343 941 148 531 63 950 63 696 33 667 7 414 2 500 68 5 500 5 804

Institution

King George V

LUWMH

Hlabisa

Madadeni

Grant Management

Total

Rietvlei

Dr Pixley ka Seme

Dr John Dube

Edendale

GRANT

MANAGEMENTINFRASTRUCTURE

QUALITY

ASSURANCE

HEALTH

TECHNOLOGY

ORGANISATIONAL

DEVELOPMENT

2010/11 MTEF HRG ALLOCATIONS

  2010/11 2011/12 2012/13

R'000

Main Appropriation R 500,815 R 551,698 R 572,560

•Grant allocation increases by a nominal 27 percent from R449.5 million in 2009/10 to R500,8 in 2010/11

•Projected allocations are expected to increase further than currently shown due to rescheduling on the 2009/10 under spent funds , currently negotiated with the National Treasury.

•Adjustment budget will paint a fairer picture in terms of future allocations

PROVISIONAL 2010/11 MTEF ALLOCATION

InstitutionInfra Dev

Health Techno Org Dev

Quality Assurance Grant Mngmt Total

King George V 80 068 298 48 605 000 9 284 500 221 550 - 138 179 348Ngwelezane 30 294 313 5 132 000 8 248 000 222 666 - 43 896 979LUWMH 44 270 063 851 000 8 162 457 733 335 - 54 016 855Hlabisa 18 950 000 739 000 6 967 500 460 000 - 27 116 500Rietvlei 14 810 596 2 029 000 7 426 800 310 000 - 24 576 396Dr Pixley ka Seme 49 794 186 - - - - 49 794 186Dr John Dube 2 425 000 - - - - 2 425 000Edendale 50 900 000 2 975 000 - - - 53 875 000Madadeni 15 500 000 25 000 000 - - - 40 500 000King Edward 8th 56 295 000 3 980 000 - - - 60 275 000Empangeni Tertiary - - - - 250 000 250 000Grant Management - - - - 5 909 736 5 909 736Total 363 307 457 89 311 000 40 089 257 1 947 551 6 159 736 500 815 000

•Of the Infrastructure allocations, King George V had the largest share•LUWMH has the second largest allocation and only spent 25 percent of the allocation in 2009/10

BUDGET ACTUAL Variance % Spent

122,925 86,606 -36,319 70%

69,660 17,233 -52,427 25%

48,660 18,000 -30,660 37%

40,146 13,044 -27,102 32%

45,625 12,937 -32,688 28%

2,425 0 -2,425 0%

8,000 459 -7,541 6%

6,500 252 -6,248 4%

0 0 0 0%

343,941 148,531 -195,410 43%

InstitutionKing George V

LUWMH

Hlabisa

Rietvlei

Dr Pixley ka Seme

Dr John Dube

Edendale

Madadeni

Grant Management

Total

2009/10 INFRASTRUCTURE

INFRASTRUCTURE PERFORMANCE-Explanatory notes (1)

King George V (Under spent by R36.3m)• Slow contractor: District Hospital, TB Surgical

wards;• Delays in designs & documentation (Consultants):

TB Complex, Creche, Landscaping Ph1, Aircon TB multi storey, Psychiatric Phase 2, Waste facility, Psychiatric Closed unit;

• Tender procurement delays (DoW): security facility & Landscaping Ph1, Creche, Workshop & Laundry.

INFRASTRUCTURE PERFORMANCE-Explanatory notes (2)

King George V (Under spent by R36.3m) continued• Department not having adequate monitoring

capacity to follow up on slow contractors and consultants’ delays in designs & documentation;

• Department did not act on building defects timeously;

• Department did not have dedicated project manager to follow up on tender document delays and variation orders.

INFRASTRUCTURE PERFORMANCE-Explanatory notes (3)

LUWMH (under by R52.4m)

•Tender procurement delays (DoW): New Mother & Child Hospital (R365m) delayed for 16 months;•Department did not have monitoring capacity to detect inaccuracies with tender documents (exclusive of prof. fees, escalation and contingencies);•Differences in interpretation of ‘appeals lapsing’ period to re-advertise tender.

INFRASTRUCTURE PERFORMANCE-Explanatory notes (4)

Hlabisa (Underspent by R30.7m)

•Tender procurement delays: New District Hospital (15 months), Kitchens to Nurses Home, Upgrade to existing theatre;•Delay in Final Account (consultants): Phase 1•Dept lacking capacity to follow up and manage delays and outstanding documents

INFRASTRUCTURE PERFORMANCE-Explanatory notes (5)

Rietvlei (R27.1m underspent)• Slow contractor: Ph3A - pharmacy, laboratory• Design & tender procurement delays (DoT): Access

road to Hospital;• Dept not able to constantly follow up/manage delays

Dr Pixley ka Seme (R32.7m under)• Delay awaiting NDoH approvals of Initial Project

Implementation plan;• Delay in constituting DoH internal design review team

due to lack of capacity

INFRASTRUCTURE PERFORMANCE-Explanatory notes (6)

Dr John Dube (R2.4m underspent) and

Madadeni (R6.2m under)

• Non-delivery of IAs: Delay due to switching Implementing Agents from DoW to IDT, then back to DoW;

• Department not efficiently managing progress of IAs due to lack of capacity

INFRASTRUCTURE PERFORMANCE-Explanatory notes (7)

Edendale (R7.5m underspent)• Delay of 12 months awaiting NDoH approval of design

brief (still not approved);• Delay in funding approval by NDoH for emergency

projects.• Dept not consistently following up on outstanding

approval due to lack of capacity

HEALTH TECHNOLOGY PERFORMANCE -explanatory notes

Spending not in line with budget:• Delays on construction resulted in delays in acquisition

of health technology at King George V• Over expenditure at LUWMH, Hlabisa and Rietvlei due

to spill over of purchases that had been scheduled for the previous years

• Department not having a dedicated resource to drive this aspect of Hospital Revitalisation;

• Planning not aligned to SCM processes and timeframes

ORGANISATIONAL DEVELOPMENT PERFORMANCE-explanatory notes

Underspending mainly due to:• Non - approval of filling of ‘Critical Posts’: due to concern

of committing the DoH to additional staff costs which it couldn’t meet in 3 years time, when no longer covered by Revite

• Delay of Implementation of Hospital Information System, initially due to finalizing the Agreement, then due to moratorium by NDoH;

• Delays in implementing Digital Radiography Picture Archiving Communication System / Radiography Information System.

Some factors contributing to under expenditure (1)

• IMPLEMENTING AGENTS (IAs): The DoH has no or very little control over IAs who prove to be inflexible and/ or unwilling to change, and speed things up.

• CONSULTANTS: IAs appoint consultants who are not qualified to do the work to the standard required or in the time lines required. Hospital design is complex and requires speciality. The time period to appoint consultants is also slow.

• CONTRACTORS: IAs appoint contractors who are incapable of undertaking this complex work.

Some factors contributing to under expenditure (2)

• Lack of Capacity of the Hospital Revitalisation Office;

• No dedicated project managers for various categories of Health Technology, Quality Assurance and Organisational Development;

• Supply Chain Management was not properly managed and implemented resulting in project delays, cancellation and appeals;

• Weak project management and planning due to lack of capacity

MONTHLY REPORTING• Historically, formal reporting from IAs was erratic

and often inaccurate;• Currently, Revite Project Managers attend

Contractor and Consultant meetings so they are aware of on site progress and can act timeously;

• Joint task team comprising DoH, DoW and other IAs was in place, but has met erratically;

• This has now been replaced by monthly Infrastructure Programme Management Committee meetings.

WAY FORWARD• In 2010/11 the Department will re organise its

infrastructure management unit in line with Project Management principles.

• Key management posts will be filled by appropriately qualified persons with formal training in built environment.

• Overall Quality Assurance process currently being developed, improvements expected during 2010/11

Thank you!