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Infrastructure Delivery Management Toolkit

Management Companion

Version control: Version 9-1 Date 2010-10-16

Status Approved


Infrastructure Delivery Management Toolkit 2

Foreword

The Construction Industry Development Board in conjunction with National Treasury, Department of Public Works and the Development Bank of Southern Africa are delighted to issue the third edition of the Infrastructure Delivery Management Toolkit. The publication of the third edition and its improvements comes at an important time in South Africa‟s history where enormous resources are being harnessed to accelerate the delivery of infrastructure as part of improving service delivery. Our Government has also recognised the link between the investment in infrastructure and lifting our global competitiveness and is thus proactively using the investment to create sustainable jobs and raise skills levels. As a result, the need has never been greater for our public and private sectors to ensure that delivery is as efficient and effective as possible to ensure that these resources are maximised. The Toolkit is therefore a significant resource to raise the benchmark in this regard. This third edition introduces significant updates and amendments to the previous edition. It caters for new legislation, a modernised approach to procurement, greater emphasis on Portfolio Management, readiness for local government applications and dedicated additional modules to provide an expanded body of knowledge in Strategy, Construction Procurement and Performance Management. It also provides for an updated and easy to use web based navigation tool for users to navigate through the delivery processes, practice guides and their associated supporting documents. This third edition has been compiled by a panel of authors, some of whom were intimately involved in previous editions, as well as new authors so as to create the balance of introducing new thought leadership while building on the solid foundation of previous editions. The development of the third edition has also been through a robust peer review process over a number of months in order to test the content and acceptability.

Ronnie Khoza Chief Executive Officer, CIDB



Acknowledgements

Sincere appreciation is acknowledged to the following organisations:

Construction Industry Development Board

National Treasury

Public Works

Department of Health

Department of Education

Development Bank of Southern Africa Sincere appreciation is also expressed to the team who developed this edition:

Inba Thumbiran, Sponsor

Kabelo Ntiisa, Project Manager

Edward Singo, Administrative Support

Arthur De Swardt, Technical Editing

David Lievaart, Portfolio Management

Sonny Schmidt, Project Management

Johan Coetzee, Operations and Maintenance

Sanet Koster, Provincial Infrastructure Strategy

Dr Ron Watermeyer, Construction Procurement Strategy

Georg Hofmeyr, Performance Management



Table of Contents 1. Overview ......................................................................................... 9

1.1 Background to the Toolkit ........................................................... 9

1.2 Purpose of the Toolkit and how it will help users .......................... 9

1.3 What‟s new in the 2010 edition ................................................... 9

1.4 Structure of the Toolkit...............................................................10

1.5 The Infrastructure Delivery Management System .......................13

1.6 Introduction to some key concepts .............................................17

1.7 Key legislation applicable to infrastructure management .............26

1.8 King III Public Sector Guide – An introduction.............................27

2. Delivery Process 1: Portfolio Management ......................................29

2.1 Introduction ...............................................................................29

2.2 Benefits of Portfolio Management ..............................................31

2.3 Risks .........................................................................................32

2.4 Estimating and Budgeting ..........................................................32

2.5 The “Alignment Model” ..............................................................35

2.6 Life Cycle Costing Analysis ........................................................40

2.7 Components of Portfolio Management .......................................43

2.8 Conclusion ................................................................................50

3. Delivery Process 2: Project Management ........................................52

3.1 Introduction ...............................................................................52

3.2 Projects in context of the Toolkit.................................................53

3.3 Project Management Framework ...............................................53

3.4 Project Management Methodologies ..........................................58

3.5 Public Sector Infrastructure Project Management Methodologies 62

4. Delivery Process 3: Maintenance and Operations............................70

4.1 Introduction ...............................................................................70



4.2 O&M Processes ........................................................................71

4.3 Asset management team general activities.................................78

4.4 Disposal of assets .....................................................................78

4.5 Asset Hierarchy .........................................................................79

4.6 Asset management: O&M ..........................................................79

4.7 Risks .........................................................................................82

5. Practice Guide 1: Provincial Infrastructure Strategy .........................83

5.1 Introduction ...............................................................................83

5.2 Why is a provincial infrastructure strategy important ...................83

5.3 The broader context ..................................................................84

5.4 Contents of a provincial infrastructure strategy ...........................87

5.5 Role players in compiling the strategy ........................................90

5.6 Steps to develop a provincial infrastructure strategy ...................91

5.7 Who is accountable ...................................................................94

5.8 What are critical success factors ................................................98

5.9 How mature is the province‟s infrastructure strategy process ......99

6. Practice Guide 2: Construction Procurement Strategy ................... 101

6.1 Introduction ............................................................................. 101

6.2 Delivery management strategy ................................................. 101

6.3 Contracting arrangements ....................................................... 105

6.3.2 Activity 2: Establish requirements for outsourced professional services ........................................................................................... 107

6.4 Procurement arrangements ..................................................... 109

6.5 Documenting a procurement strategy ....................................... 111

7. Practice Guide 3: Performance Management ................................ 112

7.1 Introduction ............................................................................. 112

7.2 The benefits and value of outcomes based performance management ................................................................................... 112

7.3 The principles .......................................................................... 116



7.4 The Practice ............................................................................ 118

7.5 So what does this mean and why is it different ......................... 120

7.6 What must I do ........................................................................ 128

8. Selected Glossary of Terminology................................................. 130

9. Selected Abbreviations ................................................................. 134

10. Disclaimer ............................................................................... 136

Table of Figures and Tables Figure 1: Structure of the Infrastructure Delivery Management Toolkit (IDMT) ..................................................................................................12 Figure 2: The Infrastructure Delivery Management System model ..........14 Figure 3: Portfolio, Programme and Project Management and “other work” interactions (PMI) ..................................................................................18 Figure 4: Packages versus Portfolios, Programmes and Projects............20 Figure 5: Alignment of the Infrastructure Delivery Cycle with the MTEF Budget Cycle ........................................................................................24 Figure 6: Portfolio Management Inputs and Outputs ...............................30 Figure 7: Generic Planning Processes ...................................................31 Figure 8: Budget for new infrastructure showing acquisition and operating stages ...................................................................................................34 Figure 9: MTEF Budget Cycle ................................................................36 Figure 10: Alignment of the Infrastructure Delivery Cycle with the MTEF Budget Cycle ........................................................................................39 Figure 11 : Concurrent Infrastructure Delivery Activities in any one year .39 Figure 12: Asset Life Cycle ....................................................................42 Figure 13: Portfolio Management Components.......................................43 Figure 14: Programme Life Cycle showing Programme Governance.......46 Figure 15: Programme Management Processes .....................................47 Figure 16: Development of the Construction Procurement Strategy ........48 Figure 17: Procuring the services of contractors to perform construction works where design services are required ..............................................62 Figure 18: Public Sector Project Management Methodology for Packages with no Design Inputs ............................................................................65



Figure 19: Public Sector Project Management Methodology for Management Contract ...........................................................................66 Figure 20: Public Sector Project Management Methodology for Design and Construct (D&C) ....................................................................................67 Figure 21: Public Sector Project Management Methodology for Develop and Construct .......................................................................................68 Figure 22: Public Sector Project Management Methodology for Design by Employer Packages ..............................................................................69 Figure 23: Asset Operations and Maintenance Process Map ..................72 Figure 24: The broader context when compiling the provincial infrastructure strategy ............................................................................85 Figure 25: Provincial Infrastructure Strategy Development Roadmap ......93 Figure 26: Stages of strategy maturity .................................................. 100 Figure 27: The concept of packages .................................................... 105 Figure 28: The Outcomes based performance management model ...... 116 Figure 29: Performance Management - Overview and context of the process ............................................................................................... 118 Figure 30: The Performance Management System for infrastructure management in the Toolkit context ...................................................... 120 Figure 31: Example of a responsibility matrix ....................................... 123 Figure 32: Information must be presented in a manner that promotes understanding ..................................................................................... 125 Table 1: Examples of how Packages can overlap with Programmes and Projects ................................................................................................21 Table 2: U-AMP and C-AMP processes .................................................44 Table 3: Project Management Framework for Implementation of Infrastructure Projects in the South African Public Sector .......................54 Table 4: Insertion point for Contractor Procurement Phase .....................61 Table 5: Guidelines of the content of a Provincial Infrastructure Strategy 87 Table 6: Role players to collaborate with ................................................91 Table 7: Responsibilities in developing a provincial infrastructure strategy .............................................................................................................94 Table 8: Gather and analyse information .............................................. 102 Table 9: Formulate procurement objectives .......................................... 102 Table 10: Strategic delivery management decisions ............................. 103 Table 11: Decide on delivery mode ...................................................... 103 Table 12: Package works .................................................................... 104 Table 13: Allocate risks for packages ................................................... 106 Table 14: The options for service requirements .................................... 106



Table 15: Establish requirements for outsourced professional services . 107 Table 16: Package professional service contracts ................................ 108 Table 17: Allocate risks for professional service contracts .................... 108 Table 18: Decide on quality strategy .................................................... 109 Table 19: Decide on procurement procedure ........................................ 109 Table 20: Decide on targeted procurement strategy ............................. 110 Table 21: Decide on a tender evaluation procedure .............................. 110 Table 22: Selected Glossary of Terminology ........................................ 130 Table 23: Selected Abbreviations......................................................... 134



1. Overview

1.1 Background to the Toolkit The Infrastructure Delivery Management Toolkit (the “Toolkit”) has its origins from 2001 when National Treasury commissioned a review of provincial infrastructure delivery systems. The recommendations from the study resulted in, amongst others the launch of the Infrastructure Delivery Improvement Programme (IDIP). The IDIP developed the Delivery Management System (DMS) as a model for best practice delivery of infrastructure management. This model and its associated guidelines and supporting documents were consolidated as the first edition of the Toolkit as a pilot phase in 2004. The second edition of the Toolkit was launched in 2006 with a number of improvements, especially relating to Programme Management. The current (third) edition is a significant update to the previous edition.

1.2 Purpose of the Toolkit and how it will help users The Toolkit provides a documented body of knowledge and set of processes that represent generally recognised best practices in the delivery management of infrastructure. It is focussed on the delivery and life cycle management of South African public sector infrastructure. The target users for this Toolkit include both technical and non-technical managers. The Toolkit provides “how to” guidelines for infrastructure delivery and procurement management necessary to deliver, operate and maintain infrastructure, capacitate delivery managers and facilitate a uniform approach to infrastructure delivery management. The Toolkit, when adhered to, will also assist departments in complying with applicable legislative requirements.

1.3 What‟s new in the 2010 edition The 2010 version of the Toolkit includes alignment with new acts and trends and an expansion to include new thought leadership that has arisen since the previous edition. It also includes an improved and easier



navigable web based Infrastructure Delivery Management System (IDMS). The content updates include:

Modernised approach to procurement

o Strategic construction procurement

o Gateway approach

o Institutionalise alternative delivery models

o Introduce the concept of Packages

Alignment to the Government Immovable Asset Management Act

(GIAMA) – Act number 19 of 2007

An expanded emphasis on Portfolio Management

New modules to widen the body of knowledge:

o Provincial Infrastructure Strategy

o Construction Procurement Strategy

o Performance Management

Readiness for Local Government.

1.4 Structure of the Toolkit The Toolkit is structured into three Components as follows:

1. Management Companion (this document):

A summary version of the text of the Toolkit, serving as a quick

reference guide

Provides senior managers with sufficient understanding so as to

hold middle managers accountable

Provides middle managers with a quick reference summary

Content of the Management Companion:

o Overview

o Guidelines to the Delivery Processes (DP‟s):

DP1 Portfolio Management

DP2 Project Management

DP3 Operations and Maintenance

o Practice Guides (PG‟s):

PG 1 Provincial Infrastructure Strategy

PG2 Construction Procurement Strategy

PG3 Performance Management.

2. Delivery Management Guidelines (DMG):



The main body of knowledge of the Toolkit, also acting as

guidelines to the Infrastructure Delivery Management System

(IDMS)

Content of the Delivery Management Guidelines:

o Overview

o Guidelines to the Delivery Processes:

DP1 Portfolio Management

DP2 Project Management

DP3 Operations and Maintenance

o Practice Guides:

PG 1 Provincial Infrastructure Strategy

PG2 Construction Procurement Strategy

PG3 Performance Management.

3. Infrastructure Delivery Management System (IDMS):

Encompasses all of the content

A web based tool for users to navigate through the delivery

management processes via “roadmaps”

It provides the “how to” process steps for day to day infrastructure

delivery management

It also includes examples, templates and additional supporting

documentation.

The structure of the Toolkit and its components is illustrated in Figure 1 below. It is important for users to understand that the Toolkit consists of the three components together, and that only one or other individual component is not the Toolkit.



Figure 1: Structure of the Infrastructure Delivery Management Toolkit (IDMT)

Delivery Management Guidelines


Infrastructure Delivery Management System(IDMS)

Practice guides

PG1: Prov Infr Strategy

PG2: ConstrProc Strat

PG3: Perform

Mgt



1.5 The Infrastructure Delivery Management System The Infrastructure Delivery Management System (IDMS) is the model that describes the processes that make up public sector delivery and procurement management as it applies to the construction industry. The model reflects the diverse needs of the construction industry, in responding to the demands placed on it for the delivery of infrastructure and tangible assets for South Africa. It outlines the core processes associated with the model for delivery and procurement management where the project delivery processes relate to the provision of infrastructure works. The model is represented in Figure 2 overleaf. The model presents the distinctly different processes and sub-processes that are present in delivery management, namely:

Portfolio Management - comprises the iterative combination of management practices applied to infrastructure assets with the objective of developing, implementing, monitoring and controlling prioritised works based on long term plans, available budgets and an organisation‟s management capacity. Portfolio Management also includes identifying and managing non-asset solutions to provide the required environment for the delivery of an organisation‟s services

Project Management - comprises the undertaking of the projects identified in the planning processes to deliver the infrastructure

Operations and Maintenance - where the assets are operated, maintained and ultimately disposed of.



Figure 2: The Infrastructure Delivery Management System model

Prov Infr Strat

G1(a) G2G1(b)U-AMP C-AMP

PC1

PF1.4PF1.3 PF2.1 PF2.2 PF2.3 PF3 PF4PF5

PF1.1 PF1.2

DP1: Portfolio Management

DP1-2 Programme ManagementDP1-1 Infrastructure Planning

Develop/review U-AMP (including prioritised MTEF works list)

Develop/review C-AMP (incl portfolio level Work Plans)

Develop /review Constr

Proc Strat

Develop /review

IPMPManage Implementation

Authorise Implementation

Monitor & Control

Close Out

G3 G4 G5 G6(a) G6(b) G7 G8PC2

PC3

PC4a

PC5

PC4b


T1 T2

PEP2PEP1 IPIP PEP3

DP2: Project Management

DP2-1 Implementation Planning

Prepare Packages

Define Packages

Develop/Review IPIPs (Prgr & Proj level)

DP2-2 Design

Design devlpmt

Detailed design

Compile MFC Info

DP2-3 Works

Construct / Deliver works

Handover works

DP2-4 Close Out

Contracts Close Out

Adminstv Close Out

PEP4 PEP5 PEP6 PEP7


G8

DP3: Operations & Maintenance

DP3-1 Recognise & accept assets

DP3-2 Mobilisation for Facilities Mgt

DP3-3 Operations DP3-4 MaintenanceDP3-5 Demobilisation

of Facilities Mgt



The IDMS is structured by building up “layers” of processes. It also integrates delivery elements as follows:

Delivery processes – “DP” – three or more levels

Delivery Gates – “G”

Procurement milestones – “PC”

Performance Management processes – “PF”

Triggers – “T” - a trigger of a future action. The following summarises the IDMS Gates (as adapted from the CIDB Gateway System), Procurement Milestones, Performance Management steps and Triggers: Gates:

G1a – Approved U-AMP (incl MTEF list)

G1b – Approved C-AMP (incl Works list)

G2 – Accepted Construction Procurement Strategy

G3 – Accepted PEP v1 (Strategic Brief)

G4 – Accepted PEP v2 (Concept Report)

G5 – Accepted PEP v3 (Design Development Report)

G6a – Accepted PEP v 4 (Production Information)

G6b - Accepted Manufacture, Fabrication & Construction information

G7 – Accepted PEP 5 - works in accordance with requirements

G8 – Works taken over by User, complete with record information.

Note: PEP is a Project Execution Plan Procurement milestones:

PC1 – Procure PSP for Programme Management, incl strategic procurement services

PC2 – Management Contractor / Framework Contract

PC3 – Design and Construct

PC4a – Design by Employer (Consultant procurement)



PC4b – Design by Employer (Contractor procurement)

PC5 – Develop and Construct. Performance Management Processes:

PF1.1 – Develop Indicators from Strategic Plan objectives

PF1.2 - Develop Indicators from Programme Implementation Plans and Budgets

PF1.3 – Develop Indicators from Project / Operational & Maintenance Plans

PF1.4 – Link Indicators and RACI to individual Performance Agreements

PF2.1 – Monitor & Evaluate Inputs, Activities and Outputs against plan

PF2.2 – Monitor & Evaluate Outcomes against plan

PF2.3 – Monitor & Evaluate Impacts against plan

PF3 – Publish Performance Information

PF4 – Review / Appraise individual performance

PF5 – Take management action. Triggers: T1 – To O&M on requirements for works that will be delivered T2 – To other Departments on requirements for other services (staff, books (Education), pharmaceuticals (Health), etc). It is to be emphasised that infrastructure delivery management does not necessarily have a defined beginning or end. Rather it is a cyclical process of continually assessing needs, budgeting, prioritising, planning for delivery, delivering infrastructure, maintaining and operating the infrastructure and disposing of assets that have reached their useful life cycle. This is in parallel to continually planning for new needs and implementing new infrastructure that arises during the delivery of current infrastructure.



1.6 Introduction to some key concepts The following paragraphs provide a summary of some key concepts that users need to be familiar with in order to successfully use the Toolkit. Please note that all of these principles are covered in more detail in the Delivery Management Guidelines.

1.6.1 Portfolios, Programmes, Projects and Packages

Standard good practice shows that project management exists in a broader context governed by programme and portfolio management. As Figure 3 below illustrates, a collection of projects within the organisation are linked and have relationships between portfolios and programmes and between programmes and individual projects. Organisational planning impacts the projects by means of project prioritisation based on risk, funding and the organisation‟s strategic plan. Organisational planning can direct the funding and support for the component projects on the basis of organisational strategies, risk categories, specific departmental functions, or general types of projects, such as infrastructure or operational support services.



Figure 3: Portfolio, Programme and Project Management and “other

work” interactions (PMI)

The intelligent grouping of projects under carefully selected programmes and portfolios provides for substantial improvement in efficiencies by being able to, amongst others, consolidate and share resources, shared governance and control processes, focussed benefits management and stakeholder management. Portfolio Management: Infrastructure portfolios should be aligned with the strategic objectives of the organisation. Consequently the typical manager that would be responsible for portfolio management would report to the strategic management level. As a result their performance indicators would be informed by and contained in the strategic plans of the organisation. The portfolio performance indicators are of an “impact” nature. Typically these would be aimed at measuring the impact that infrastructure has in achieving strategic goals. Examples could include how the roll out of basic sanitation services impact infant mortality rates, labour intensive construction programmes impact poverty levels, classroom roll out impacts literacy rates, etc.

Programme Management: The infrastructure programmes are scoped and managed within the greater infrastructure portfolio. Consequently the typical programme manager would report to the portfolio level manager. The programme management plans include the Infrastructure Plan (IP), Infrastructure Programme Management Plan (IPMP), Infrastructure Programme Implementation Plan (IPIP), etc. Performance indicators at the programme level are of an “outcome” nature. Typical examples would include reducing the classroom backlog by 50% over three years in a Province, serving 90% of the population with at least primary health care facilities within a 20km radius of place of residence within four years in a Province, etc.

Project Management: Individual infrastructure projects are scoped and managed within the greater programme and portfolio. Consequently the typical project manager would report to the programme or portfolio level manager as far as the individual



project performance is concerned. This may or may not be an organisational line function reporting line. The project management plans include the Project Execution Plan (PEP). Performance indicators at the project level are of an “output” nature. A typical example would include the progress of a classroom construction project on cubic meters of concrete, square meters of paving, etc within the approved time, cost and quality parameters. Packages: Definition of a Package: Works which have been grouped together for delivery under a single contract or a package order One of the key advantages of introducing the concept of a “Package” is to enhance efficiencies in the procurement process. It was partly motivated by the fact that the traditional approach has often been to procure a single contractor for a single project under a single contract. While this seems logical at a single project level, it does not exploit the potential efficiencies of grouping a number of works items together, i.e. a Package, under a single contract. By grouping these works items together a number of efficiencies will be obtained such as simplified Supply Chain Management, grouped controls, grouped supervision and grouped reporting. To implement a Package solution requires a strategic approach to procurement since the Programme Managers need to apply their minds early in the planning process to ensure that the most appropriate grouping of projects is properly selected early enough in the process. However, common sense needs to be exercised in ensuring that while a number of works items might be grouped under one Package for reasons of procurement efficiencies, this grouping of works items can now form the scope of a new and larger project. Consequently the normal project management activities to manage this larger project scope of work will still take place in the normal way. This will include ensuring that there is now only one Project Manager accountable for the larger scope of work and one set of project management plans to manage the project.



It can therefore be seen that there is great synergy between the concept of grouping projects under a single procurement regime or Package, while at the same continuing to apply the good practices of project, programme and portfolio management. In some cases the Package could mirror the grouping of projects that forms a programme, or in other cases they could intersect with one another as illustrated by Figure 4 below.

Figure 4: Packages versus Portfolios, Programmes and Projects

From the above it can be seen that Packages could intersect with Projects and Programmes in the following combinations:

Portfolio of projects

ProgrammesPackages

1

2

34

5

Governance anomaly



Table 1: Examples of how Packages can overlap with Programmes and

Projects

Number Description of overlap

1 Package overlaps completely with the Programme.

2 Package overlaps with a portion of a Programme.

3 Package overlaps across a Programme and individual Project.

4 Package overlaps with a single Project.

5 Package overlaps with only certain portions of a group of single Projects.

From the above table it is clear that selecting how and what work is grouped under a Package is very important. If it is not carefully grouped anomalies can be introduced in governance that can create confusion between contracts and leave the project or programme managers in a situation where they are hamstrung in controlling some of the work ordinarily under their control but now grouped under a separate package.

1.6.2 The Gateway System

The CIDB has introduced the concept of the Gateway System to further improve efficiencies in the delivery management of infrastructure. Please refer to the CIDB‟s Practice Note 22 (a, b) of 2010 for more details. See www.cidb.org.za. Many of these principles have been embedded into the IDMS. The CIDB Infrastructure Gateway System provides a number of control points (gates) in the infrastructure life cycle where a decision is required before proceeding from one stage to another. Such decisions need to be based on information that is provided during the infrastructure life cycle. If the Gateway System is correctly followed it will provide assurance that a project involving the design, construction, refurbishment, alteration, rehabilitation or maintenance remains within agreed mandates and that it aligns with the purpose for which it was conceived and can thus progress successfully from one stage to the next.

http://www.cidb.org.za/



1.6.3 Construction Procurement Strategy

A construction procurement strategy is the combination of the delivery management strategy and contracting and procurement arrangements. A construction procurement strategy can be developed for a single project, a programme of projects or a portfolio of projects to identify the best way of achieving objectives and value for money, whilst taking into account risks and constraints. Once the necessary decisions relating to the delivery management strategy, contracting strategy and the procurement arrangements have been made, the procurement strategy may be documented and implemented in respect of each package.

1.6.4 Infrastructure estimating, budgeting and prioritisation

In order to implement an infrastructure plan and its related organisational support plan, resources will have to be made available to the responsible unit within an organisation. All these resources require financial resources at particular times in the planning and implementation cycle of infrastructure assets. These estimated financial projections are used to generate a long term estimate of the required cash flow for managing an organisation‟s infrastructure portfolio. The costs associated with the life cycle stages of infrastructure fall into two categories, namely:

Capital costs

Operating costs. Cost estimating for the long term infrastructure plan is conducted at high level. The costs for infrastructure work are related to the life cycle of each asset while the cost estimates for the organisational support work are based on the capacity required to manage this work effectively. The accuracy of estimates for work, initially included in the long term infrastructure asset plan, improves as the plan is reviewed each year and as scheduled work is included in the



MTEF period (requiring a pre-feasibility study). This increasing accuracy of estimates is based on “progressive elaboration” of the scope of work. This process is repeated for all assets in an organisation‟s portfolio and is reviewed at least annually. Ideally the long term budget is updated as more accurate information becomes available (from completed work, new norms and standards, etc). As the MTEF cycle advances each year, work schedules need to be adjusted to match the available budget.

The prioritisation process determines which work is implemented in an MTEF period and which work is delayed into the future. Prioritisation is necessary when the demand for infrastructure work exceeds financial and/or organisational resources to allow delivery of projects according to the desired or initially planned timeframes.

1.6.5 The “Alignment Model”

In order to improve planning and efficiency in the delivery of infrastructure, the Alignment Model was developed which calls for the amendment of the timeframes of the Infrastructure Delivery Cycle to include appropriate due processes in the cycle as well as to create the critical linkages that are necessary between the Infrastructure Delivery Cycle and the MTEF Budget Cycle. The Alignment Model shows the process and indicative time frames of the infrastructure cycle and how it links with the Budget Cycle.

Figure 5 below shows one of the processes in the alignment of the Infrastructure Delivery Cycle with the MTEF Budget Cycle for illustrative purposes. Please refer to Delivery Process 1 (Portfolio Management) for more details on the model.



Figure 5: Alignment of the Infrastructure Delivery Cycle with the MTEF

Budget Cycle

1.6.6 Principles of cooperative governance and joint Programme Management

The Constitution of South Africa (Act 108 of 1996) assumes devolution of powers to cascading levels of responsibility down and across the governance chain. Chapter 3 of the Constitution makes specific provision for such cooperation. In other words, one of the foundations of our Constitution assumes that individual Departments will proactively cooperate with other Departments to deliver an integrated service, even if some of their duties are not strictly their own responsibility. This requires a mature degree of cooperation so as to avoid complex and tedious legislation to force cooperation. This cooperation has not always been as successful as is desired, partly due to the complexity of integration. Consequently it has



necessitated additional legislation to provide mandatory actions and guidelines. Chief of these is the Intergovernmental Relations Framework Act, 2005 (Act 13 of 2005 – the IGR Act). It establishes a framework for the national, provincial and local governments to promote and facilitate intergovernmental relations, and to provide for mechanisms and procedures to facilitate the settlement of intergovernmental disputes. The concept of managing immovable asset delivery as a joint programme is also entrenched in GIAMA Clause 14 (1) (b) which prescribes that: “The accounting officer of a user or custodian in its capacity as a user must, for all the immovable assets that it uses or intends to use - jointly conduct the immovable asset strategic planning process with the relevant custodian”. In November 2005, the Cabinet approved the Framework for Managing Joint Programmes in the Public Service („the Framework‟). The Framework defines joint programmes as “Those programmes that transcend the conventional organisational boundaries in planning, budgeting and implementation resulting in a number of departments/agencies/ministries responsible for one aspect of the programme, although none is responsible for it in its entirety.” This Framework will assist users in their joint duties. Consequently, it is clear that infrastructure programme managers are required to think outside of their departmental “silo‟s” and ensure that the necessary joint management processes are in place to ensure shared efficiencies of infrastructure management.

1.6.7 Risk Management

All projects are exposed to risks that could potentially negatively, or positively, impact on delivering the required outcomes of the project. Therefore it is good practice in the management of any Portfolio, Programme or Project to ensure that a concerted Risk Management Plan is developed and implemented.



Definition of Project Risk: An uncertain event or condition that, if it occurs, has a positive or negative effect on a project‟s objectives. The objective of Project Risk Management is therefore to increase the probability and impact of positive events, and decrease the probability and impact of negative events. The following are good practices to follow in Risk Management:

Plan for Risk Management – how to conduct risk management activities

Identify risks – determining which risks may affect the project

Perform risk qualitative analysis – prioritising risks for further analysis or action by assessing and combining their probability of occurrence and impact

Quantitative risk analysis – numerically analysing the effect of identified risks on overall project objectives

Monitor and control risks – Implementing risk response plans, tracking identified risks, monitoring residual risks, identifying new risks and evaluating risk process effectiveness throughout the project

1.7 Key legislation applicable to infrastructure

management It is noted that users are faced with a daunting range of legislative requirements in planning for infrastructure delivery. The following are some of the key pieces of legislation. There are a number of other pieces of legislation that have relevance, however for the sake of expediency only key applicable Acts are listed below.

Constitution of the Republic of South Africa, 1996

Public Finance Management Act, 1999

Government Immovable Asset Management Act (GIAMA), 2007

Intergovernmental Relations Framework Act, 2005

Construction Industry Development Board Act, 2000

Division of Revenue Act, annual



Legislation applicable to municipalities o Local Government: Municipal Finance Management

Act of 2003 o Municipal Systems Act of 2000

1.8 King III Public Sector Guide – An

introduction The third King Report on Governance for South Africa 2009 was released on 1 September 2009. It provides for a good governance Code of practices for both public as well as private institutions. Consequently Departments are required to comply to the Code as well. The King Code of Corporate Practices and Conduct 2002 (King II) saw only limited adoption in government and the public services. In contrast, the provisions of King III are specifically intended to be “applied or explained” within all economic sectors, including the public sector. The following lists key issues in the code that will assist departments in fulfilling their obligations of good governance as detailed in the King III Report:

The code is founded on principles of self-regulation

Good governance is essentially about effective leadership

Sustainability is now the primary moral and economic imperative and it is one of the most important sources of both opportunities and risks for businesses

Innovation, fairness, and collaboration are key aspects of any transition to sustainability

Social transformation and redress is important and needs to be integrated within the broader transition to sustainability

King III has opted for an “apply or explain” governance framework

In contrast to King I and King II, King III applies to all entities regardless of the manner and form of their incorporation or establishment



Some of the requirements introduced by King III include: o The need for an annual integrated report that

focuses on the impact of the institution in the economic, environmental and social spheres

o A statement by the audit committee to the governance body on the effectiveness of internal financial controls to be included in the integrated report

o The consideration of the strategic role of IT and its importance from a governance perspective

o The positioning of internal audit as a strategic function that conducts a risk-based internal audit and provides a written assessment of the institution‟s system of internal control, including internal financial controls

o The governance of risk through formal risk management processes



2. Delivery Process 1: Portfolio

Management

2.1 Introduction Infrastructure Portfolio Management is a component of an organisation‟s service delivery procedures. It is the combination of management practices applied to infrastructure with the objective of developing, implementing, monitoring and controlling prioritised work lists based on long term plans, available budgets and an organisation‟s management capacity. Therefore well managed infrastructure portfolios assist public organisations to deliver their mandated services effectively, efficiently and reliably. Best results are achieved by recognising and managing the full life cycle costs associated with infrastructure ownership and use including the ongoing operation, maintenance and renewal costs as well as initial acquisition costs. Acquisition includes construction, purchase or lease. Portfolio Management links an organisation‟s strategic service delivery plan with the infrastructure it will require to deliver those services in an efficient, effective and reliable manner. Figure 6 shows the key process inputs, controls and mechanisms, and outputs from Portfolio Management.



Figure 6: Portfolio Management Inputs and Outputs

The first two gates as described in the Gateway System, namely G1 (a and b) and G2 are addressed in DP1. Key to Portfolio Management activities is the asset register. All assets must be recorded in sufficient detail to enable effective planning and decision making. The asset register must, amongst other requirements, reflect the condition and record any work carried out on each asset, at least annually. The planning process for developing infrastructure management solutions and organisational capacity solutions is based on processes as shown in Figure 7 below.

Portfolio Planning

• Service delivery mandates

• Asset Register

• Budget allocation

• Monitoring & Feedback

Infrastructure management capability:

• Organisation

• Custodian

• Industry

• Infrastructure strategy

• Legislation & policies

• Long Term asset priorities

• U-AMP (G1(a))

• C-AMP (G1(b))

• Construction Procurement Strategy (G2)

• IPMP

• Monitoring Reports

• Recommended actions



Figure 7: Generic Planning Processes

2.2 Benefits of Portfolio Management

Managing infrastructure in a transparent, effective and reliable manner will assist an organisation in meeting its requirements for good governance as well as assisting the organisation to deliver its services effectively. Some of the important benefits are listed below:

Good governance over the infrastructure portfolio

Reliable infrastructure levels of services

Management of infrastructure risks

Optimised infrastructure decision making

Improved infrastructure management procedures and systems.

• What infrastructure/ organisational capacity is needed to comply with the organisation’s strategic plan to support service delivery?

• What infrastructure/ organisational capacity does the organisation have (Asset Register)?

• What infrastructure/ organisational capacity is required/scheduled for disposal ?

• What alternatives to physical infrastructure/ internal organisational capacity can the organisation use/ develop?

• What options does the organisation have for providing the required infrastructure/ organisational capacity?

SupplyNeeds

Gap

Plans

Alternative Solutions

Determine Infrastructure

Options

• What are the plans (long, medium, short term) for providing the infrastructure/ organisational capacity defined in the documented and agreed options.



2.3 Risks Portfolio Management assists in mitigating risks associated with infrastructure management as follows: Infrastructure Planning Risks:

Inappropriate infrastructure for adequate service delivery is provided - too little, poor condition, poorly specified, too much (“white elephants”)

Quality of infrastructure is not suitable - too high or too low compared to norms and standards

Infrastructure Life Cycle Costs (LCC) are too high compared to norms

Capacity of infrastructure delivery industry declines due to unreliable demand and implementation

Insufficient operating capacity provided by organisation to achieve operating and maintenance norms and standards.

Programme Management Risks:

Poorly defined benefits of programme(s)

Poorly resourced programme management office (PMO)

Lack of effective management action.

2.4 Estimating and Budgeting In order to develop, review and implement an infrastructure plan and its related organisational support plan, resources have to be made available to the responsible unit within an organisation. The resources will include:

Funds (financial resources) to plan and implement work based on the life cycle of each asset and projected additional assets required in the future

Human resources to do and manage this work



Systems directly related to assisting infrastructure asset management, e.g. an asset register management system, GIS, Financial, etc

Support services such as HR development and management, communications, transport, offices, filing etc.

All these resources require financial support at particular times in the planning and implementation cycle of infrastructure assets. This financial support is quantified by developing estimated financial projections that are used to generate and review a long term estimate of the required cash flow for managing an organisation‟s infrastructure portfolio. The organisations budget is based on this cash flow. The costs for infrastructure work are related to the life cycle of each asset while the cost estimates for the organisational support work are based on the capacity required to manage this work effectively. The accuracy of estimates for work, initially included in the long term infrastructure asset plan (pre-feasibility study), improves as the plan is reviewed each year and as scheduled work is included in the MTEF period (feasibility study). This increasing accuracy of estimates is based on “progressive elaboration” of the scope of work. Figure 8 below shows the estimated budget for a single asset. The organisation‟s infrastructure budget is built up by combing all the infrastructure budgets over the long term. The budget is prepared for all life cycle stages including:

Acquisition (development, purchase, lease)

Rehabilitation (scheduled every 5 years)

Maintenance (routine and day to day)

Organisation and support costs required to manage the infrastructure through all its stages

Disposal.



Figure 8: Budget for new infrastructure showing acquisition and operating stages

Cost Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17

Infrastructue Asset A 9 000 23 600 42 000 27 400 3 060 3 060 3 060 3 060 3 060 7 140 3 060 3 060 3 060 3 060 7 140 3 060 3 060

Maintenance Current - - - - 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000 3 000

Rehabi l i tation Capita l - - - - - - - - - 4 000 - - - - 4 000 - -

Acquis i tion Capita l 8 500 23 100 41 500 26 900 - - - - - - - - - - - - -

Extens ion Capita l - - - - - - - - - - - - - - - - -

Upgrading Capita l - - - - - - - - - - - - - - - - -

Disposal Capita l - - - - - - - - - - - - - - - - -

Organisation & Support Current 500 500 500 500 60 60 60 60 60 140 60 60 60 60 140 60 60

Capital estimate for development of Infrastructure Asset A showing amounts required in each financial year

Capital estimate for rehabilitation after 5 years of use

Estimate for annual maintenance

Acquire/ Develop asset Use asset to deliver services



2.5 The “Alignment Model” The following paragraphs show the alignment required between the Infrastructure Planning and Budget Cycles, i.e. the “Alignment Model”.

2.5.1 MTEF Budget Cycle

Government has adopted very comprehensive Strategic Planning and MTEF Budgeting Cycles which supports the implementation of financial management reforms. It is important to note that the budget cycle takes 3 years to complete, with Preparation / Planning, Implementation and Close-out being the predominant phases undertaken in each year. Every year a new budget cycle is started resulting in budget cycles overlapping each other. Thus, in any one year, officials will be busy with activities relating to 3 different budget cycles each of which is in a different phase. Figure 9 below shows the MTEF Budget Cycle.

2.5.2 Infrastructure Delivery Cycle

In order to improve planning and efficiency in the delivery of infrastructure, minimum timeframes used in the Infrastructure Delivery Cycle are defined. These timeframes make provision for appropriate due processes in the cycle as well as to create critical linkages between the Infrastructure Delivery Cycle and the MTEF Budget Cycle. The Infrastructure Delivery Cycle is a longer cycle (approx 4 years) than the MTEF Budget Cycle (3 years) due to the lead time required for planning, design and project/works procurement.



Figure 9: MTEF Budget Cycle

9

A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J

Year 4Year 0 Year 1 Year 2 Year 3

3 Year MTEF Period

Bu

dg

et D

ay

MTEF Budget Cycle

Preparation of Annual

Performance Plan (APP)

Budget Preparation

Process

Closure

Processes

Quarterly Reporting

Implement Budget



Budget Preparation

Process

Closure

Processes

Quarterly Reporting

Implement Budget



Budget Preparation

Process

Closure

Processes

Quarterly Reporting

Implement Budget



Budget Preparation

Process

Quarterly

Reporting

Implement

Budget

In the past there has been a

tendency for annual budgets to be

prepared by updating the previous

year’s budget with a factor for

inflation.

The annual budgets submitted to

treasury did not appear to be

informed by actual projects to be

implemented in the following year.

Year 1 Budget Year 2 Budget Year 3 Budget

These are all the concurrent

budget activities that need to

be undertaken in any 1 year



2.5.3 Alignment of the Infrastructure Delivery Cycle with the MTEF Budget Cycle

The longer timeframe for the Infrastructure Delivery Cycle also means that the start of the infrastructure planning process leads the start of the budget planning process by at least one year. This clearly indicates a dependence of the MTEF Budget Cycle on the Infrastructure Delivery Cycle. Figure 10 shows the alignment of the two cycles.

2.5.4 Concurrent Infrastructure Delivery Activities

Similar to the Budget Cycle shown earlier, the Infrastructure Delivery Cycle is also a multi-year cycle with a new cycle that starts each year. This means that the cycles overlap each other and in any one year officials will be busy with activities relating to a number of different infrastructure delivery cycles, each of which is in a different phase. Figure 11 attempts to show this complexity.



19


Year 2Year -2 Year -1 Year 0 Year 1

Budget Preparation

Process

Closure

ProcessesImplement Budget

MTEF Budget Cycle

The improved Infrastructure

Delivery Cycle now facilitates the

alignment of the Infrastructure

Delivery Cycle with the Budget

Cycle.

The budget preparation process

can now be strengthened by

actual projects identified during

Infrastructure Planning.

Alignment of the Infrastructure Delivery Cycle

& the Budget Cycle

Project

Design

Project

Tender

Project

Implementation

Rolled Over

Unspent Budget

Previous Infrastructure Delivery Cycle

Infrastructure

Planning

Previously Infrastructure Planning

was undertaken too late to facilitate

effective alignment of the

Infrastructure Delivery Cycle with

the Budget Cycle.

Project

Design

Project Procurement

Project Works Planned Multi-year

Project WorksMonitoring & Reporting

U-AMP

update

O&S

Plan

IPMP

O&S Plan

IPIP

O&S Plan

C-AMP

update

O&S

Plan

Proc

StrategyProject

Planning

Improved Infrastructure Delivery Cycle



Figure 10: Alignment of the Infrastructure Delivery Cycle with the MTEF Budget Cycle

Figure 11 : Concurrent Infrastructure Delivery Activities in any one year

17


Year 4Year 0 Year 1 Year 2 Year 3

3 Year MTEF Period

Improved Infrastructure Delivery Cycle

LEGEND: O&S Plan – Organisation & Support Plan

IPMP – Infrastructure Programme Management PlanIPIP – Infrastructure Programme Implementation Plan

These are all the concurrent

infrastructure delivery activities that need to be undertaken in any 1 year

Infrastructure

Delivery Cycle

Project

Design

Project Procurement



U-AMP

update

O&S

Plan

IPMP

O&S Plan

IPIP

O&S Plan

C-AMP

update

O&S

Plan

Proc

StrategyProject

Planning

Project

Design

Project Procurement



U-AMP

update

O&S

Plan

IPMP

O&S Plan

IPIP

O&S Plan

C-AMP

update

O&S

Plan

Proc

StrategyProject

Planning

Project

Design

Project Procurement

Project Works

Monitoring & Reporting

U-AMP

update

O&S

Plan

IPMP

O&S Plan

IPIP

O&S Plan

C-AMP

update

O&S

Plan

Proc

StrategyProject

Planning

Project Procurement

Monitoring & Reporting

U-AMP

update

O&S

Plan

IPMP

O&S Plan

IPIP

O&S Plan

C-AMP

update

O&S

Plan

Proc

StrategyProject

Planning



2.6 Life Cycle Costing Analysis Life cycle cost analysis is an important component of infrastructure decision making throughout the infrastructure‟s life.

2.6.1 Life Cycle Cost Analysis processes

The key processes in life cycle cost analysis are listed below:

Define objectives and life cycle analysis assumptions & parameters

Establish alternative technical and operational solutions over the life cycle

Cost life cycle elements for each alternative

Conduct analysis including sensitivity, economic and reliability analyses

Select viable options based on projected outcomes.

2.6.2 The asset life-cycle

The key component of an asset‟s life cycle are briefly described below and shown in Figure 12.

The asset is obtained at an initial acquisition cost. Ordinary use of the asset leads to wear and tear, requiring preventative maintenance to ensure that the asset remains above its minimum required performance level

After an initial period preventative maintenance is no longer able to ensure the minimum level of performance and the asset requires renovation/rehabilitation. The renovation restores the assets to its original condition. Preventative maintenance now continues

During the asset‟s life it may be upgraded or extended, increasing the value of the asset

The asset could be renovated/rehabilitated a number of times. However (typically at the end of the asset‟s planned



life), systems supporting the asset can be expected to fail. The asset now requires major rehabilitation/refurbishment which may involve a major overhaul of systems and/or replacement of these systems or components

Once the refurbishment has been completed a new economic life cycle begins.



Figure 12: Asset Life Cycle



2.7 Components of Portfolio Management Portfolio Management is a continuous management function that produces plans, reports and management actions at scheduled times in the delivery cycle. Portfolio Management components are shown in Figure 13.

Figure 13: Portfolio Management Components

2.7.1 Infrastructure Planning

Infrastructure planning is the process where an organisation considers its service delivery mandate and determines the infrastructure assets it requires to provide the environment within which to deliver these mandated services. During this process organisations will also determine any non-asset solutions that it

DP1.1:

Infrastructure

Planning

DP1.2:

Programme

Management

IPMP ( including Construction Procurement

Strategy ( G2))

DP2: Project

Implementation

• Asset Register

• Service delivery mandates

• DP2 feedback

• DP 3 feedback

• Performance Management

DP3: Operations

& Maintenance

• Infrastructure Strategy

• Long term Asset Priorities

• Legislation & Policies

C-AMP G1(b)

Infrastructure asset management capacity:

• Organisation

• Custodian

• Industry

U-AMP G1(a)



may develop to assist in providing the environment for service delivery. Collaboration between the User and Custodian ensures that the User's service delivery objectives are supported by good asset management practices. Infrastructure requirements and management are based on the Portfolio Strategy and life cycle management plans. The key outputs of the Infrastructure Planning process are the User Asset Management Plan (U-AMP) and the Custodian Asset Management Plan (C-AMP). In the Gateway System the approval of the U-AMP is considered to be gate G1(a) and the C-AMP is considered to be gate G1(b). User organisations are accountable for preparing and submitting their U-AMP, while Custodian organisations are accounting for preparing the C-AMP. Table 2 below lists the processes involved in developing and reviewing these plans.

Table 2: U-AMP and C-AMP processes

U-AMP C-AMP

# Processes # Processes

1 Determine / Review Infrastructure Needs

1 Compile / Review portfolio profile

2 Review existing infrastructure (Supply based on Asset Register)

2 Compile / Review infrastructure performance report

3 Conduct gap analysis 3 Develop / Review infrastructure life cycle plans

4 Determine / Develop infrastructure & non-infrastructure solutions (including pre-feasibility study)

4 Conduct portfolio analysis

5 Develop / Review Organisational Support

5 Develop / Review work plans



U-AMP C-AMP

Plan (OSP)

6 Conduct budget analysis 6 Develop / Review Organisational Support Plan (OSP)

7 Prioritise and Select work for MTEF period (including feasibility study): Output: G1(a) U-AMP

7 Develop infrastructure management budget Output: G1(b) C-AMP

8 Identify and implement U-AMP improvements

8 Identify and implement C-AMP improvements

2.7.2 Programme Management

Programme Management, in contrast with project management, is the centralised, coordinated management of a group of projects to achieve the programme's strategic objectives and benefits. Programme Management is carried out by the User organisation. Programme Management Governance: The PMI Program Management Standard introduces a generic programme life cycle that “will apply to most programs most of the time”. The Toolkit uses much of this as a benchmark standard. Public sector infrastructure management has introduced the concept of managing joint programmes to accommodate co-ordination of common goals and to create synergy across organisations in implementing similar programmes. Programme Governance is shown as a process that spans the entire programme‟s life cycle phases, using phase reviews (of objectives, benefits, deliverables, performance, risks and issues) as the primary governance tool. The generic life cycle is shown in Figure 14 below (adapted from figure 2.2 in the PMI‟s Standard for Program Management, 2006).



Figure 14: Programme Life Cycle showing Programme Governance

Programme Management Outputs: The key output of Programme Management is the Infrastructure Programme Management Plan (IPMP), which includes the Construction Procurement Strategy (G2 in the Gateway System). The IPMP describes how the work listed in the prioritised MTEF work list is:

Packaged

Managed

Controlled Processes of Programme Management: Figure 15 below illustrates the processes of Programme Management.

Phase 0:Establish Joint Programme Management Fucntion

Phase 1:Pre-Programme Set Up

Phase 2:Programme Set Up

Phase 3: Establish Programme ManagementOffice

Phase 4:Programme Delivery Management

Phase 5:ProgrammeClosing

Programme Governance



Figure 15: Programme Management Processes

2.7.2.1 Construction Procurement Strategy

The formulation of the construction procurement strategy is detailed in the CIDB Practice Note 23: Construction Procurement strategy. The construction procurement strategy is developed by:

Analysing the medium term immoveable asset expenditure plan and identifying / confirming categories of projects

Performing an organisational and market analysis Formulating primary and secondary procurement

objectives

Making certain strategic management decisions

Packaging the works

G2: Construction Procurement Strategy, including:

(i) Work packages

(ii) Contracting arrangements

(iii) Procurement arrangements

Reviewed/revised IPMP

Implementation instructions

Reporting formats

Progress reports

Management actions

Review and continuation report

Close out reports

Infrastructure asset register updates

Impact assessments

Programme review &

Close Out

DP 1.1: Develop/

Review U-AMP

DP2: Project

Implementation

Develop / Review

Procurement Strategy

Develop / Review

Programme

Management Plans

Authorise

Implementation

Monitor and Control

DP3: Operations &

Maintenance



Allocating risks and deciding on a suitable pricing strategy for each package

Establishing requirements for outsourced professional services and the manner in which such resources are to be contracted

Deciding on the high level procurement arrangements

Documenting the choices made in relation to the delivery management strategy, the contracting strategy and the procurement arrangements in each category and subcategory of spend.

The main elements of developing and/or reviewing the Construction Procurement Strategy are shown in Figure 16.

Figure 16: Development of the Construction Procurement Strategy

2.7.2.2 Programme Management Plans

The various component programme management plans are consolidated into the IPMP. IPMP Component Plans:

Organisational Support Plan for programme management

Delivery Management Strategy

Contracting Arrangements

Procurement Arrangements

Review, identify and implement improvements

Work Packages

Contracting Strategy

G2:Construction Procurement Strategy



Procurement Plan

Time management plan

Cost management plan

Risk management plan

Quality management plan

Communications management plan Review and Implement Improvements to the IPMP: The IPMP incorporates a formal evaluation of the plan itself to critically review it and to identify and assess:

Gaps

Major risks and

Improvements to the IPMP 2.7.2.3 Authorise Implementation

They key approval in authorising work is the approval of the IPMP (including the Construction procurement Strategy) as well as the Service Delivery Agreement (SDA) between the User and an Implementing Agent. The required reporting formats and frequencies are also described in the plans. 2.7.2.4 Monitor and Control

The user organisation remains accountable for programme management, but typically uses the services of others (Implementing Agent, Custodian) to provide key information and skills. Monitoring and Controlling (evaluation of data, making management decisions and monitoring the implementation of these decisions) is therefore a key function of the user organisation. Collation of monitoring and controlling data is one of the key functions of the Programme Management Office (PMO), especially when the PMO is established as part of Joint Programme Management.



The key purpose of reporting is to communicate infrastructure programme progress and achievements and to provide managers with tools to monitor the projects, work and programmes and make management decisions. In addition the implementation of these decisions must be monitored. Monitoring by user programme managers should focus on outputs as opposed to activities. In practice a combination of monitoring the achievement of key progress milestones as well as achievement of desired outputs is required.

2.7.2.5 Review Programmes for Continuation or Close Out

Although programmes may continue indefinitely, they could also be closed out because the identified benefits have been achieved, e.g. strategic objectives met, priority has been incorporated into normal operations, etc. Generally, programmes are reviewed at least annually as part of Infrastructure Planning, where decisions about continuing a programme or starting a new programme are made, and as part of the review of the IPMP where methodologies (primarily the construction procurement strategy) are reviewed.

2.8 Conclusion Although the work and reports produced by the processes described in this module are often required to be delivered at specific times in the financial year, Portfolio Management is a continuous operation. The reports (feasibility studies, estimates, works lists, budgets, recommendations, evaluation of management actions, etc) are snapshots of the work at a particular time based on the available data. Effective collaboration with the custodian is essential in order to maximise the benefits of providing an infrastructure portfolio for the user within which it can deliver its services.



As the portfolio of assets is intended to be available for the long term, it is essential that all relevant documentation is captured and recorded so that future portfolio managers can build on successes achieved and lessons learned.



3. Delivery Process 2: Project

Management

3.1 Introduction Infrastructure projects in the South African Public sector are implemented individually as stand-alone projects or as a group of projects “packaged” for improved management and economic efficiency. The implementation of projects is managed according to the traditional approach to project management. This approach requires division of the project‟s life cycle into a number of distinct “phases” (also called “stages”), based on the intrinsic logic of the project development process. Each project phase has its own objectives, usually expressed in terms of the completion of one or more phase deliverables. Approval of these phase deliverables is normally a pre-requisite for commencing with the subsequent phase of the project. Public Sector infrastructure projects are implemented in four phases, i.e. (1) planning, (2) design, (3) works and (4) close-out, with each phase consisting out of a number of sub-phases. This Module contains guidelines for the setting up and formulation of implementation plans and provides guidance on the work to be done in each of the implementation phases for the implementation of different project types. The project phasing and control gates as described in this Module are aligned with the prescripts of the CIDB as contained in the CIDB Gateway Process.

Project implementation is defined

as „planning and executing of the

design and the associated works

required for the physical creation

of new or refurbished

infrastructure or immovable

assets‟



3.2 Projects in context of the Toolkit The implementation of packages and projects are preceded by a Portfolio Management process as described in DP1. The portfolio planning process is aimed at the identification, definition, appraisal and evaluation of “Potential Projects” to be listed in a User Department‟s U-AMP (Long Term Plan). Once evaluated and approved the priority projects will be listed as “Proposed Projects” on the User Department‟s Infrastructure MTEF Works List (Medium Term Plan). The Infrastructure MTEF Works List forms part of the User Department‟s Infrastructure Budget Proposal submitted for consideration in the Medium Term Expenditure Committee (MTEC) process. The Infrastructure MTEF Works List provides details of (1) “Active Projects”, i.e. current commitments to be continued or completed during the MTEF Period and (2) “Proposed Projects” to be released for implementation on approval of the User‟s Immovable Asset Budget for implementation during the MTEF Period. On completion of the works (as described in the project/package scope of works) the constructed/renovated/refurbished/repaired infrastructure or immovable asset is officially handed-over to the Operations and Maintenance Team for on-going management. The duties and responsibility of this Team is described in Delivery Process 3: Operations and Maintenance.

3.3 Project Management Framework The recommended Management Framework for the Implementation of Infrastructure Projects in the South African Public Sector is detailed in Table 3.



Table 3: Project Management Framework for Implementation of

Infrastructure Projects in the South African Public Sector

Phase Goals Phase Control Gate

No Description

1.0 Planning

1.1 Package Preparation To develop a Strategic Brief (a user requirement specification) for each

Package.

Acceptance by the Client of the Strategic Brief;

Approval by the Client of Project Execution Plan

(PEPv1)

1.2 Package Solution To develop a design concept that will enable the client to establish the feasibility of satisfying the package requirements.

Acceptance by the Client of the Concept Report; Approval by the Client of Project Execution Plan (PEPv2)

1.3 Works Planning To develop Work Plans in response the User Departments MTEF Works List.

Approval by the User Department

2.0 Design

2.1 Concept Design

To develop the accepted concept and to finalise the design and definition criteria.

Acceptance by the Client of the Design Development Report; Approval by the Client of Project

Execution Plan (PEP v3)

2.2 Detail Design and Specification

To produce the final detailing, performance

definition, specification, sizing and positioning of all systems and

components.

Acceptance by the Client of the

Production Information; Approval by the

Client of Project Execution Plan (PEP v4)

2.3 Manufacture, To produce the Acceptance by the




Fabrication and Construction

Information (if required)

manufacture, fabrication and construction

information based on the production information

Client of the Manufacture,

Fabrication and Construction

Information

3.0 Works

3.1 Construction/Delivery To construct/deliver the works according to the working drawings and specifications.

Acceptance of the completed works for occupation by the Client; Issue of a Practical Completion Certificate;

Approval of Project Execution Plan (PEP v5)

3.2 Handover To facilitate smooth transition of the completed works from the project team to the Operations and Maintenance personnel.

Acceptance by the Client of the completed works; Issue of a Works Completion Certificate; Approval of Project Execution Plan (PEP v6)

4.0 Close-out

4.1 Close-out To close out the project by verifying the scope of the work done by all PSPs and Contractors;

To effect final payments to all service providers; To archive all record information and statutory certificates.

Acceptance by the Client of record information and statutory

certificates; Issue of a Final Completion Certificate. Approval of

Completion Report. Acceptance of Project Execution Plan (PEP v7)

4.2 Post Project Evaluation

To assess the actual project benefits against the

Submit evaluation report.




expected benefits.

The Framework is based on the assumption that certain “pre-project” planning activities have already taken place. These activities are normally described as:

The conceptualisation and/or initiation of the project and include actions such as the identification of a need or requirement

The justification for addressing this need or requirement by means of a description of the benefits that the project will yield

The appraisal and evaluation of the proposed project against pre-determined criteria

The inclusion of, and budgeting for a project in a User Department‟s Infrastructure MTEF Works List.

Please note:

Procurement is not included in the above framework, because the point of insertion of a procurement phase depends on the selected contracting strategy.

The Framework contains four phases (and several sub phases) in order to cover the full spectrum of work and management activities encountered on most projects

There is no requirement for all projects to go through all the phases and sub-phases!

The following two examples show how procurement can be provided for within the project management framework:

Example 1: Renovation and Repair (R&R) Projects The package information as documented in the Concept Report (at the end of the package definition process) for packages involving Renovation and Repair projects (preventative, corrective, scheduled or routine maintenance) is usually sufficient for project implementation. There is thus no need for these projects to go through any Design Phase as indicated in Table 3. These



projects will therefore only have 3 implementation phases, except if the services of a contractor need to be procured for the execution of the renovation or rehabilitation project, in which case the project phasing will be as follows:

1. Planning 2. Contractor Procurement 3. Works 4. Close-out

Example 2: New Construction and Alteration (Upgrade) Projects Packages involving the construction, refurbishment and alteration of infrastructure require design services to further develop the concept. The package information accordingly needs to be refined and agreed to as the design is further developed. Physical construction of elements, components and assemblies can only take place after production information is produced and, if relevant, the manufacture, fabrication and construction information has been accepted by the client. If manufacture, fabrication and construction information is not required, then only two design sub-phases will be required. The contracting strategy, as determined during the portfolio planning process, will determine the number of procurement phases and their corresponding insertion points, e.g.

Project Phasing for Design and Construct Contracting Strategy:

o Planning o Contractor Procurement o Design o Works o Close-out

Project Phasing for Design by Employer Contracting Strategy:

o PSP Procurement



o Design o Contractor Procurement o Works o Close-out

The Project Management Framework requires strict adherence to the principle of phase controls, i.e. the approval of certain phase deliverables as a prerequisite for the commencement of the next phase of the project. The key deliverables at the end of each phase also need to be accepted by the client to ensure that scope creep and project risks are understood and agreed to before proceeding to the next phase of implementation. Where the cost estimate indicates that the available budget will be exceeded, either additional budget must be obtained or the package information adjusted such that the cost is within the available budget. This needs to be undertaken before proceeding to the next phase of implementation The end of each phase is regarded as a “control gate” which needs to be opened to allow access into the next phase of the project. These control gates play a very important role in the planning and control of a project: the actual date of approval can be measured against the planned date of approval in order to evaluate whether the project is before or behind schedule. Gate approval can also be seen as a “milestone” and indicator of overall progress.

3.4 Project Management Methodologies In general terms a methodology is a description of what to do to achieve a specific outcome. A project management methodology therefore describes what to do in every phase of the project to ensure that the goals of that phase will be achieved. The project management methodology contains a work breakdown structure (WBS) consisting of phases, activities and tasks with clear descriptions of the deliverables and responsibilities associated with each task. Project management methodologies are important:



To ensure that the management processes to achieve the desired outcomes are consistent and effective

To promote project governance through the implementation of a consistent and auditable process.

The development, acceptance and strict adherence to the recommended methodology will lead to improved standardisation and uniformity in public sector infrastructure delivery.

3.4.1 Impact of Contracting Strategy on Project Management Methodologies

Infrastructure Project Management Methodologies are impacted by the following two factors:

The need for the project to go through the design phases

The need for the procurement of professional service providers and/or contractors or builders.

The need for the procurement of these services is usually considered during the portfolio planning process. Decisions taken during the procurement planning process are documented in a procurement strategy. A procurement strategy is usually defined for a specific programme, but some procurement strategies may be applicable to the portfolio of projects in totality or, sometimes, to a single project only. The contracting strategy as contained in the procurement strategy is of specific importance because:

It determines the number of and the insertion point(s) for the procurement phases to be included in the project phasing

It determines responsibility for the development of the design



3.4.2 Design by Professional Service Providers

The responsibility for the development of the design has traditionally, in the South African public sector, been retained by the Client or Employer, hence the preference for the Design by Employer contracting strategy and the resulting procurement of consultants or professional service providers. International trends indicate a swing from previously predominantly being the traditional Design by Employer strategy, to include strategies in which the responsibility for design is contractually assigned to the contractor. These would include strategies as contained in the Design by Contractor approach. If the Design by Employer contracting strategy is selected and if the Employer does not have sufficient in-house capacity, then a separate Professional Services Procurement Phase may be required to procure the services of a PSP to:

Provide the necessary design, cost and programme inputs into the package information

Review the outputs of each phase prepared by the contractor‟s project team for general conformity with the scope of work associated with the contract

Administer the contract in accordance with the provisions of the contract

Provide monitoring services. The implementation of Framework Agreements (see CIDB Practice Note 15: Framework Agreements) is recommended for the provision of professional services when using the Design by Employer contracting strategy, because it will prevent the time delays normally associated with a separate professional services procurement phase. Task orders to proceed with a particular service may be given to PSPs where framework agreements are in place. In each of the other contracting strategies the responsibility for developing the design is contractually assigned to the contractor



and a separate professional services procurement phase will therefore not be required.

3.4.3 Design by Contractor

The selected contracting strategy shall, where design services by the contractor are required, normally determine when the procurement of a contractor can be initiated (see Table 2):

Table 4: Insertion point for Contractor Procurement Phase

Contracting Strategy Prerequisite for initiation of Contractor Procurement Process

Management Contract Availability of the Strategic Brief at the end of the Package Preparation Process

Design and Construct Availability of the Concept Report at the end of the Package Solution Process

Develop and Construct

Availability of the Design Development Report at the end of Design Development Phase

Design by Employer Availability of the Production Information at the end of the Detail Design and Specification Phase

Figure 17 (per the CIDB Gateway Process) provides a graphical interpretation of the information contained in Table 4. It shows that the „traditional‟ Design by Employer strategy results in a delivery method where Contractor inputs in the delivery process are delayed till the very latest. It is generally accepted that upfront availability of contractor inputs into the design processes should lead to increased efficiency during implementation and improved overall productivity.



Figure 17: Procuring the services of contractors to perform

construction works where design services are required

Where framework agreements (see CIDB Practice Note 15: Framework Agreements) have been entered into with one or more framework contractors, either:

A single contractor needs to be appointed in terms of the framework contract to perform the works associated with the package, or,

Competition between framework contractors needs to be re-opened.

3.5 Public Sector Infrastructure Project

Management Methodologies This module contains five project management methodologies for the management of infrastructure implementation projects:

A methodology for projects or Packages that do not require any design inputs (Figure 18) and where the services of a contractor need to be procured for the execution of the works

A methodology for the Management Contracting strategy (Figure 19) where the services of a PSP or contractor need to be procured for managing the planning, design, execution and close-out of the project

Management contract

Design by employer contract

Develop and construct contract

Design and construct contract

Contracting strategy

Package

preparation

stage

Package

solution

phase

Package planning sub-

phaseImplementation phase

Design

development

stage

Production

information stage Hand

over

stageManufacture,

fabrication and

construction

information stage

Production

stage



A methodology for the Design and Construct contracting strategy (Figure 20) where the services of a contractor need to be procured for the development of the design as well as the execution of the works

A methodology for the Develop and Construct contracting strategy (Figure 21) where the services of a contractor need to be procured for the detail design (based on a Concept Design supplied by the Employer) as well as the execution of the works

A methodology for the traditional Design by Employer contracting strategy (Figure 22) where the services of a PSP need to be procured for the development of the design and the services of a contractor need to be procured for the execution of the works

The Design by Employer is currently the contracting strategy most frequently used in the South African public sector. Given the lack of management and technical capacity in the public sector, more attention needs to be given to the other contracting strategies. These strategies can typically be used in the following circumstances:

The Develop and Construct contracting strategy can typically be used where Standard Designs is being utilised

The Design and Construct is typically regarded as the preferred strategy for projects where the Client has a clearly defined user requirement specification

The Management Contract is applicable if both the Client and the User do not have the capacity or expertise to manage the project.

The Infrastructure Project Management Framework as detailed in Table 3 serves as the foundation for the Public Sector Infrastructure Project Management Methodologies contained in the next five figures. Guidelines for the Work to be done in each of the Project Implementation Phases



The following five figures provide a brief schematic view of the processes to be followed in implementing projects according to the different types of project management methodologies.



Figure 18: Public Sector Project Management Methodology for Packages with no Design Inputs

1

Contractor Procurement

Gate

Approval of Contractor

Tender Award & PEPv3

Planning Gate

Approval of Concept Report

& PEPv2

Practical Completion Gate

Approval of Practical

Completion & PEPv4

Handover

Gate

Approval of Works

Completion & PEPv5

Closing Gate

Approval of

Closing Report & PEPv6

Phase 3:

Works

Phase 1:

Planning

Phase 6:

Handover

Package Preparation

Prepare Strategic Brief

Package Definition

Investigate alternatives

Analyse options

Prepare Concept Report

Works Planning

Prepare implementationplans

Preparation of Procurement Documentation

Request for Tenders / Quotations

Site Inspection & Tender Clarification Meeting

Closing, evaluation and award of tenders

Conclusion of Construction Contract

Contract Administration

Site Meetings

Quality assurance and control

Site Instructions

Progress monitoring

Scope control

Payment certification

Verification of works completion

Inspect works QC inspections

Preparation of completion list

Final account and settlement

Acceptance of project deliverables

Milestones

Initiation of projects by

User Departments based on Portfolio Planning Processes: (1) identification of needs in terms of „Condition Gaps‟ (2) listing of Potential Refurbishment/Renovation Projects on MTEF Project List

(3) approval of Infrastructure MTEF Budget

Handover to O&M

Strategic Brief

Concept Report

PEPv1

Tender Documentation

Evaluation Reports

Construction Contract

PEPv2

Minutes

VOS

Payment Certificates

Progress reports

PEPv3

Works Completion Certificate

PEPv4

Final Completion Certificate

Final payment certificate

Closing Report

PEPv5

Ta

sks

an

d A

cti

vit

ies

D

eliv

era

ble

s

Control Gates

2 3 4 5

Phase 7:

Close-out Phase 2:

Contractor

Procurement



Figure 19: Public Sector Project Management Methodology for Management Contract

1

Planning Gate

Approval of Concept Report &

PEPv2

D&C Contractor Procurement

Gate

Approval of Contractor Tender

Award &

PEPv3

Design Gate

Approval of Design &

PEP v4



Completion & PEPv5

Handover

Gate

Approval of Works Completion &

PEPv6

Phase 4:

Works

Phase 6:

Close-out

Phase 5:

Handover

Package Preparation


Package Definition


Analyse options


Works Planning






Conclusion of Design and Construct (D&C) Contract

Design work schedule

Design development

Production information

Manufacture, Fabrication and Construction

information


Site Meetings Quality

assurance and control

Site Instructions

Progress monitoring

Scope control



QC inspections and preparation of completion list

Completion of defects list

Verification of Final completion

Archiving of documentation and as-built drawings

Compilation of Completion

Report

Milestones

Initiation of projects by User Departments based on Portfolio Planning Processes: (1) identification of Needs in term of „Space Gaps‟, „Functional Gaps‟, „Standards Gaps‟, etc (2) listing of Potential New Build or Conversion Projects on MTEF Project List


Handover to O&M

Strategic Brief

Concept Report

PEPv1


Evaluation Reports

D & C Contract PEPv2

Design Report

Drawings

PEPv3

Minutes

VOS & Interim Payment Certificates

Definitive Cost Estimate

PEPv4


PEPv5



Closing Report PEPv6

Ta

sk

s a

nd

Ac

tiv

itie

s

De

liv

era

ble

s

Control Gates

2 3 4 5 6

Closing Gate

Approval of


Phase 1:

Planning

Phase 2:

D&C Contractor

Procurement

Phase 3:

Design



Figure 20: Public Sector Project Management Methodology for Design and Construct (D&C)

1

Planning Gate


PEPv3

Design Gate


PEP v4



Completion & PEPv5

Handover

Gate


PEPv6

Phase 4:

Works

Phase 6:

Close-out

Phase 5:

Handover





Conclusion of Management Contract

Package Preparation


Package Definition


Analyse options


Works Planning

Prepare implementation plans


Design development


Manufacture, Fabrication and Construction information


Site Meetings


Site Instructions

Progress monitoring

Scope control







Compilation of Completion Report

Milestones



Handover to O&M


Evaluation Reports

D & C Contract

PEPv1

Strategic Brief

Concept Report

PEPv2

Design Report

Drawings

PEPv3

Minutes



PEPv4


PEPv5



Closing Report

PEPv6

Ta

sk

s a

nd

Ac

tiv

itie

s

De

liv

era

ble

s

Control Gates

2 3 4 5 6

Closing Gate

Approval of


Phase 1:

Management

Contractor

Procurement

MngmtContractor Procurement

Gate


Award &

PEPv2

Phase 2:

Planning

Phase 3:

Design



Figure 21: Public Sector Project Management Methodology for Develop and Construct

1

Planning Gate


PEPv2

Dev&C Contractor Procurement

Gate


Award &

PEPv4



Completion & PEPv6

Handover

Gate


PEPv7

Phase 4:

Works

Phase 6:

Close-out

Phase 5:

Handover

Package Preparation


Package Definition


Analyse options


Works Planning


Concept Design work schedule

Investigation and analysis

Develop Design concepts

Prepare Concept Design Report


Detail Design and Specification


Manufacture, Fabrication and Construction information


Site Meetings


Site Instructions

Progress monitoring

Scope control








Milestones



Handover to O&M

Strategic Brief

Concept Report

PEPv1

Concept Design Report

PEPv2

Detail Design and Specifications

PEPv4

Minutes



PEPv5


PEPv6



Closing Report

PEPv7

Ta

sk

s a

nd

Ac

tiv

itie

s

De

liv

era

ble

s

Control Gates

2 3 5 6 7

Closing Gate

Approval of


Phase 1:

Planning

Concept Design Gate

Approval of Concept Design &

PEP v3

Phase 2:

Dev&C Contractor

Procurement

Detail Design Gate

Approval of Detail Design &

PEP v5

4

Phase 2

Concept

Design

Phase 2

Concept

Design





Conclusion of Develop and Construct (Dev&C) Contract


Evaluation Reports

Dev&C Contract

PEPv3



Figure 22: Public Sector Project Management Methodology for Design by Employer Packages

1

PSP Procurement Gate

Approval of PSP Tender Award &

PEPv3

Planning Gate


PEPv2

Design Gate


PEPv4

Contractor Procurement

Gate


Award & PEPv5

Practical Completion

Gate


Completion & PEPv6

Handover Gate

Approval of Works

Completion & PEPv7

Phase 5:

Works

Phase 7:

Close-out

Phase 6:

Handover

Package Preparation


Package Definition


Analyse options


Works Planning




Tender Clarification Meeting


Conclusion of PSP Contract

PSP briefing, work schedule and fee estimate

Design Review Meetings

Approval of drawings

Pre-Tender cost estimate





Conclusion of Construction Contract


Site Meetings Quality

assurance and control

Site Instructions

Progress monitoring

Scope control





Acceptance by User

QC inspections




Milestones


(3) approval of Infrastructure

MTEF Budget

Handover to O&M

Strategic Brief

Concept Report

PEPv1


Evaluation Reports

PSP Contract

PEPv2

Minutes of PSP Briefing

PSP Schedule & Estimate

Drawings

Pre-Tender Cost Estimate

PEPv3


Evaluation Reports

Construction Contract

PEPv4

Minutes



PEPv5


PEPv6



Closing Report PEPv7

Ta

sk

s a

nd

Ac

tiv

itie

s

De

liv

era

b

les

Control Gates

2 3 4 5 6 7

Closing Gate

Approval of Closing Report &

PEPv8 Phase 1:

Planning

Phase 2:

PSP

Procurement

Phase 2:

Contractor

Procurement

Phase 3:

Design



4. Delivery Process 3: Maintenance and

Operations

4.1 Introduction

Asset management Operations and Maintenance (O&M) consists of all operational work from the moment assets have been recognised into the asset register and handed over to Operations from Projects until the disposal of an asset taking into account the strategic and decision-making work that takes place during the asset strategy determination, asset portfolio planning and physical project implementation processes. The O&M process is linked to the overall service delivery plan of any department. This module addresses the following major topics related to asset O&M, namely:

Asset operations processes

Asset recognition

Mobilisation for Facilities Management

Asset operations, which include o Facilities management o Engineering infrastructure management o Property management o Condition assessment surveys and o Remaining life-cycle costing

Maintain assets

The demobilisation of Facilities Management. Apart from the above main aspects of O&M, specific explanations are given on the following topics related to O&M:

Acquisition and disposal of assets including land

Condition surveys

The asset register

Asset operations management

Maintenance



Remaining life-cycle costing. The Reader is advised to consult the following guidelines on immovable asset management when studying this Module, namely:

User Asset Management Plans, Guideline for Users, National Department of Public Works, Version 1, Dated 20 October 2008.

Custodian Asset Management Plans, Guideline for Users, National Department of Public Works, Version 1, Dated 20 October 2008.

4.2 O&M Processes

Schematic process maps are provided for each level of operation where each process is described with inputs to the process, outputs from the process, the process itself, controls to the process and mechanisms or tools supporting the process. Figure 23 below depicts the Level 2 process for the Asset O&M and indicates the most important input and output from and to other asset management processes.



Figure 23: Asset Operations and Maintenance Process Map

Recognise

asset and

accept from

Projects

Mobilisation for

Facilities Mgmt

Operations

of assets

Demobilisation of

Facilities Mgmt

Maintenance

(including

costing)

1

2

3

5

Capital Asset including a facility

Facility ready

for operations

Demobilisation Plan

Asset ready to be disposed of and

feedback to U Amp and C Amp

process namely Strategic Planning,

Portfolio Planning and Project

Implementation

Facilities Management

(soft & hard services)

Infrastructure Mgmt

(Custodian)

Property Mgt

(Custodian)

Condition Assessment

Surveys

Remaining Life Cycle

Costing

Trigger: Actual Handover from

Project Implementation and & U-

Amp (Acquisition Plan) from

Portfolio Planning

CIDB Toolkit Level 2 O&M Process

Engineering

Infrastructure Asset

U Amp (Operations Plan)

from Strategic Planning and

C Amp (Approved

maintenance activities and

cost) from Portfolio Planning

Implementation

Maintenance Plan

U Amp (Immovable Asset Surrender Plan) from

Strategic Planning) and C Amp Disposal Strategy

from Portfolio Planning

4

Feedback to Project

Implementation processes that

assets are ready for Major

Upgrades and Refurbishments

Feedback to Portfolio Planning

on the status of assets and cost

of maintenance

Feedback to Portfolio Planning

on condition of assets and

budget requirements for O&M

Approved

Infrastructure

Programme

Management Plan

(IPMP)



Asset Operations and Maintenance: O&M is the process of receiving assets into the portfolio of assets, manage and maintain it over the life cycle and eventually demobilise the asset when to be terminated. Excluded from Asset O&M are the strategy determination, portfolio planning, acquisition planning and acquisition implementation processes. Acquisition planning and implementation not only look at new assets but also at assets that need to be upgraded, refurbished or renovated or assets that need to be disposed of. By definition, asset O&M includes the day-to-day management of assets such as Facilities Management, Property Management and Engineering Infrastructure Management, all of which will require maintenance, costing and budgeting; and maintaining an asset register. Although Asset Disposal is seen as one of the life-cycle phases of an asset it does not form part of O&M. The physical disposal of an asset will be planned and executed by Projects whereas the demobilisation of facilities management will be planned and managed by O&M. Demobilisation of facilities management of assets that are earmarked for upgrades, renovation or refurbishment will also be planned and managed by O&M and then handed over to Projects for the physical execution. The generic process of Asset O&M is covered by the following sub-processes:

Asset recognition

Mobilisation for Facilities Management

Operations of assets

Maintenance

Demobilisation of Facilities Management

4.2.1 Recognise and accept Assets

The purpose of this process is to recognise the asset into the asset register and accounting system. This process includes the following sub-processes:



Sub-process 1.1: Accept the physical asset at handover This sub-process is subsequent to the Gate Approval to handover the project from the Contractor to Projects, which also requires the input and acceptance by O&M staff. The purpose of this sub-process is to ensure acceptance of the asset by O&M prior to the handover of the asset by the Contractor to Projects. Although O&M will be aware of what assets are to be handed over (as indicated in the input document, namely the Acquisition Plan from the U Amp (GIAMA 8.2)), they should also receive an early warning notice when the actual handover event will take place. Sub-process 1.2: Ensure that relevant information is captured into the asset register The purpose of this sub-process is to ensure that the required initial information on the new asset is captured into the asset register. It is important to capture the required and validated information in the Asset Register at the stage of handover and to ensure the physical or electronic storage of all documentation. Sub-process 1.3: Recognise the asset into the accounting system This sub-process starts when the general asset information is captured in the asset register and that Finances are notified as such.

4.2.2 Mobilisation for Facilities Management

The purpose of the process is to prepare a new facility for occupation and to ensure that all internal and Facilities Management (FM) service providers are ready and trained to manage the facility (asset). Sub-process 2.1: Mobilise user and custodian staff to manage assets



This sub-process starts well in advance to ensure that the facility is ready at least one week before occupation to allow for unforeseen systems failures as well as to ensure that all FM staff is acquainted with what they should do. It is imperative that O&M continuously follow up with Projects on the expected date for practical completion and handover so that the planning and implementation of the mobilisation process can be completed in time for occupation. Sub-process 2.2: Ensure that Facilities Management services are in place and operational The purpose of this sub-process is that the trained user and custodian staff now ensure that all FM contracts are in place and that the FM service providers have mobilised to conduct facilities management tasks and also to ensure that they have the skills and know-how to manage and operate the building and other engineering systems and structures. Asset, Facility and Engineering Infrastructure Managers should acquaint themselves with all systems, subsystems, assemblies and components in order to be able to handle any emergency situation with regards to breakdowns or mal-functioning of systems.

4.2.3 Operations of assets

This phase entails the operational management of all assets and includes facilities management, engineering infrastructure management, property management, technical condition assessment surveys, maintenance of assets and remaining life cycle costing. Sub-process 3.1: Conduct Facilities Management This sub-process entails the management of facilities (including planning and budgeting) and includes activities such as day-to-day soft and hard services are planned, contracted and managed. Sub-process 3.2: Conduct Engineering Infrastructure Management



This sub-process entails the management of engineering infrastructure such as engineering networks and plant, not included under facilities and property management and includes (i) the management of Condition Assessment Surveys (CAS) (ii) maintenance management and (iii) remaining life-cycle planning and costing. Sub-process 3.3: Conduct Property Management Property management includes all other property aspects excluding that of Facilities Management and Engineering Infrastructure Management such as:

Acquisition of property

Municipal rates and taxes

Lease agreements and

The maintenance of the asset register. Sub-process 3.4: Conduct Condition Assessment Surveys Although Condition Assessment Surveys (CAS‟s) refer to both functional and technical conditions surveys, this conditions assessment survey relates to the technical condition assessment survey only. The purpose of this sub-process is to ensure that CAS‟s are scheduled to take place at regular intervals as per GIAMA and that below standard assets are immediately addressed to improve the asset functionality and to bring it back to the original asset value if required. The results logged for further use in preparing the User Asset Management Plan (U-AMP) and Custodian Asset Management Plan (C-AMP). It is important to have updated data on the condition of all assets and to analyse this data with the aim to maintain assets at the required condition levels and functionality and to improve conditions where required. Condition surveys should be planned and scheduled and should form part of the functions of the Asset Management team‟s responsibilities



Condition surveys should cover all assets i.e. buildings/facilities, engineering infrastructure and all systems, subsystems, assemblies and components related to these assets. It is further important that assets are identified and tagged according to an asset hierarchy and that results of these condition surveys are clearly be linked to this asset identification and tagging. Sub-process 3.5: Conduct Remaining Life-Cycle Costing During the Planning and Budgeting process (in the Portfolio Planning Module), a complete life-cycle costing (LCC) is conducted from project initiation until the asset disposal stage including upgrades, refurbishment or renovations. This sub-process only addresses the planning costing of the remaining life of the asset.

4.2.4 Maintain Assets

This sub-process refers to the execution of maintenance plans, primarily preventive maintenance, and also the repair of breakdowns. Sub-process 4.1: Conduct Preventative (Servicing) Maintenance This sub-process relates to the implementation of the preventative maintenance plans and includes activities such as:

1. Managing the maintenance service provider 2. Maintain good record keeping of all maintenance activities 3. Monitoring performance of service providers 4. Consolidating monthly maintenance activities and

submitting a monthly preventative maintenance reports. Sub-process 4.2: Conduct Breakdown Repairs This sub-process relates to the work to be undertaken when a sudden breakdown of a system or damage to an asset has been reported.



4.2.5 Demobilisation of Facilities Management

Demobilisation of Facilities Management is required for assets that will be disposed of as well as assets earmarked for upgrades, refurbishments or renovations. This process refers to the demobilisation of facilities/engineering plants. Sub-process 5.1: Demobilise Facilities Management This sub-process entails the removal of staff and shut down of selected systems prior to the start of the physical disposal or upgrade, refurbishment or renovation of an asset.

4.3 Asset management team general activities

The asset management team consists of, for example, the asset manager, facilities manager, engineering infrastructure manager and a property manager. Below are typical activities the asset management team needs to execute:

Planning and execution of tasks/activities

Logging of performance and task results

Analysis of data

Corrective action/improvement

Feedback to other processes

Acquisition of assets

4.4 Disposal of assets The decision to dispose of an asset is taken at strategic and portfolio level but based on input given by the asset management team. The asset management team will be responsible to plan for the demobilisation of services but the Project team will be responsible for the specification and contracting for the final demolishing of the asset and reinstating the land (if required) to environmental minimum standards.



4.5 Asset Hierarchy It is important to categorise assets into an asset hierarchy according to which information can be captured in an asset register and also according to which records could be kept on operations and maintenance aspects.

4.6 Asset management: O&M

4.6.1 Facilities and Engineering Infrastructure Management

In general, the operational management of assets is divided into Facilities Management and Engineering Infrastructure Management and should be managed by the asset management team.

4.6.2 Maintenance Management

The maintenance management requirements are the same as for facilities management and infrastructure management except for land specific maintenance e.g. the prevention of erosion of soil due to storm water. This type of maintenance could be incorporated into the landscaping/gardening services under Facilities Management or managed within the property management function depending on the size of the land/property.

4.6.3 Asset Register

Although an asset register is required for both immovable and movable assets, this module only has reference to the immovable asset register. Ownership of Asset Register The Asset Management team (more specific the Property Manager) is the owner of the asset register and shall ensure that



the asset register is maintained and kept updated with accurate asset information including the registering of new assets and the deregistering of disposed assets. Purpose of Asset Register The purpose of an asset register is to have validated and updated information about all immovable assets at all times. This will allow users to access relevant and applicable information when analysing the portfolio of assets. Typical Information Captured in Asset Register The asset register should have as an example, three parts of information, namely:

Generic information e.g. asset identification, location

User information e.g. functionality related (entered/controlled by user)

Custodian information e.g. technical condition related (entered/controlled by custodian).

4.6.4 Maintenance

The management of maintenance is primarily the function of facility and engineering infrastructure managers. Although the two types of managers operate independently, it occasionally occurs that a facility manager consults an engineering manager and vice versa. In some organisations a maintenance division might be established to manage maintenance of all assets although the soft services within the facilities management function will still be managed by facility managers. It should be noted that engineers working in a maintenance environment are in general different than engineers working in the asset acquisition environment although knowledge could be shared among them. A major input to the maintenance process is the results emanated from the condition assessment surveys and analyses.



4.6.5 Remaining life-cycle costing

As opposed to the initial life-cycle costing exercise, which is conducted at the early stages of a project to determine the feasibility of implementation, the remaining life-cycle costing takes place during the Operations and Maintenance phase of an asset. Apart from the Asset O&M costing sub-elements, e.g. Facilities Management (Soft Services), utility costs, staffing, rates and taxes, rent, and other day to day maintenance requirements, the asset management team also needs to plan and budget for upgrades, refurbishments, renovations and disposal of assets. The asset management team will cost for operational expenditure (including mobilisation and demobilisation costs) while the members of the team responsible for capital planning (project planning) will cost for the capital expenditure for disposal, upgrades, refurbishments and renovations. Time-value of money Although covered in the Life-Cycle Costing Chapter in Module 3: Portfolio Management, the importance of the time-value of money is again reiterated here. Care should be taken not to mix estimated cash flows for costs with different time-values but rather conduct the costing exercise in constant money terms and then escalate the cash flows with the applicable inflation rates to convert it into current (nominal) money terms, which is comparable with the MTEF annual budgets. Costing of Asset Management: Operations There are four major components of costing of assets (excluding personnel costs) during operations, namely:

Utility costs, rates and taxes

Facilities Management: Soft services (assumed to be outsourced)



Facilities Management: Hard Services and engineering infrastructure maintenance costs (assumed to be outsourced)

Major upgrades, refurbishments and renovations Disposal costs will only be incorporated into the costing exercise as soon as it becomes apparent that a specific asset will be disposed.

4.7 Risks The following is a list of major risks (but not limited to) that need to me mitigated:

The proposed O&M processes need to be established and followed within the user and custodian departments in order to prevent unnecessary loss of important information (both input and output) that could lead to unsatisfactory service delivery

The late start and finish of all important activities could lead to the non-readiness of facilities for user occupation or custodian re-occupation in order to proceed with major upgrade/refurbishment projects, e.g. the timely placing of contracts for facilities management and maintenance

The lack of record keeping with regards to facilities or engineering downtime and why so that lesson could be learned when procuring similar systems/facilities in future

The lack of knowing and managing the complete hierarchy of assets insofar preventative maintenance is concerned

The under-estimating or over-estimating the remaining life-cycle cost that could have a negative impact on the budget

The employment of not suitably qualified people to management the asset management process

If the asset register is not maintained properly, wrong or outdated information might be used in crucial decision-making exercises.



5. Practice Guide 1: Provincial

Infrastructure Strategy

5.1 Introduction

A Provincial Infrastructure Strategy is an overarching, long-term plan of integrated operational infrastructure goals, activities, actions and responsibilities that will contribute to achieve the objectives of the national economic strategy of the nation.

5.2 Why is a provincial infrastructure strategy

important The output of the provincial infrastructure strategy process becomes the input into infrastructure Portfolio Management. It compares performance, best practices and lessons learnt from the previous financial year cycle, as continuous improvement input into the new strategic planning and budgeting cycle. The most important output(s) of the “revised” infrastructure strategy process becomes input into portfolio planning, project implementation cycles and helps to improve current operational and maintenance practices. Consequently the strategy is absolutely crucial in ensuring that limited resources are carefully matched to ensure maximum delivery of infrastructure. The strategy provides the foundation for the rest of the infrastructure planning and delivery process, and is therefore important in the following ways:

It provides an overarching operational plan with a long term vision to achieve and sustain infrastructure delivery as an enabler of the national economic strategy

It challenges all tiers of government to think holistically in terms of priorities and goals which need to be integrated prior to commencement of detail portfolio planning



It provides an opportunity to prioritise and integrate actions and goals at all spheres of government

It allows for agreement towards one aligned infrastructure delivery vision

It highlights operational support required for delivery

It aligns budget and planning activities based on design principles and priorities agreed during strategy formulation

It encourages cross-departmental collaboration

It improves sector-specific interaction across all spheres

It highlights the importance of the monitoring and measurement of strategic goals achieved as well as operational achievements

It encourages collaborative partnerships with private sector and communities and encourages co-creation and continuous improvement based on feedback

It highlights the need for standardised and on-time data (reports) and technology to enhance the visibility of infrastructure delivery

Highlights the required capacity required to deliver the strategy.

5.3 The broader context It is important for users to understand that the provincial infrastructure cannot be compiled in isolation to the national and municipal infrastructure strategies. Rather the province needs to ensure that their strategy is integrated into the broader context. The broader context when compiling the provincial infrastructure strategy is represented in Figure 24 below.



Figure 24: The broader context when compiling the provincial infrastructure strategy

Infrastructure Demand Planning Infrastructure Supply Planning

Provincial Infrastructure

Strategy

Provincial Budget

Economic Strategies

National Economic PGDS IDP

National Infrastructure Strategies

NIMSNational Infrastructure

StrategyInfrastructure

Legislation

GIAMA DORA

National Sector (User) Infrastructure Strategy

National Custodian Infrastructure Strategy

USER Department 1

USER Department 2

USER Department 3




Local Government (User) Infrastructure Strategy



Provincial User


Custodian Department

Local Government Custodian Infrastructure

Strategy

National Custodian Infrastructure Strategy

Provincial Custodian


Provincial Infrastructure Plan (10y)

Y1 Y2 Y3 Y4 Y5 Y6 71 Y8 Y9 Y10

U-Amp C-Amp

Projects & Programs

Service Delivery Targets Performance Dashboard

Goals & TargetsPrinciples for SLAsSpatial & High level prioritiesStrategic CommunicationOperational Support & Organisation Design Principles

ProgressBest PracticesTrends & NeedsRisks

Input in next cycle



Provincial leadership needs to engage and align around the following key strategic components in developing a common vision and goal for infrastructure delivery. This engagement is at a strategic level to agree on the purpose and goals of infrastructure as an enabler of economic growth. The output of these discussions should provide clear guidelines for portfolio planning:

What is the purpose of Infrastructure Delivery in the province (why does infrastructure delivery exist in the province) – provide guidelines for monitoring and evaluation of targets and progress

What does value mean in infrastructure delivery (what formulae is required to create value in the delivery of infrastructure) – provide guidelines for portfolio planning

How do we organise ourselves to deliver infrastructure? (Organisational character) – Guidelines towards the Operational Support Plans and other strategies such as Procurement and Outsourcing Strategies

What must we do and how will it happen? (Infrastructure goals, priorities and actions) – guidelines towards portfolio planning, project implementation and maintenance /operations

What infrastructure delivery message needs to be communicated? (Strategic conversation) – input into the strategic infrastructure delivery communication strategy and plan for the province

Trends and best practices feedback to ensure continuous improvement of the infrastructure strategy – input into the provincial infrastructure knowledge sharing and performance monitoring frameworks for the province

The compilation of the provincial infrastructure strategy will ensure the:

Emphasis on a long term view on infrastructure investment and investment partnerships

Development of effective long term plans and priorities, and



Improvement of infrastructure delivery.

5.4 Contents of a provincial infrastructure

strategy The provincial infrastructure strategy should contain elements as detailed in Table 5 below.

Table 5: Guidelines of the content of a Provincial Infrastructure Strategy

# Process Steps

Output User Infrastructure Strategy Requirements

Custodian Infrastructure Strategy Requirements

Final Provincial Infrastructure Strategy Requirements and Principles

To be completed by User Department

To be completed by Custodian Department

To be agreed and finalise by both User and Custodian Departments

1 Vision & policy context

Long-term infrastructure delivery vision for the Department (long term)

2 Establish a sustainable community strategy

3 Governance (refer to “protocol” managing joint programme in module 1)

Scope the strategic and operational governance requirements and establish to deliver infrastructure delivery and asset management



# Process Steps




4 Evidence gathering

Conduct an infrastructure delivery resource capacity assessment and map current availability of capacity

5 Identify and list public and private capital program commitments

6 Identify and list public service outlets and potential for joint use

7 Standards and deficits

Agree and list infrastructure delivery standards

8 Use infrastructure standards to identify existing local deficits

9 Use infrastructure standards to identify future local deficits

10 Consolidate standards and identify requirements for input to infrastructure



# Process Steps




delivery strategy

11 Integrated Delivery plan

Identify infrastructure requirements and resources in medium term periods

12 Introduce viability testing capacity and process

13 Undertake a sustainability appraisal of infrastructure the delivery plan schedule (start with one year and build a baseline, i.e. year on year comparison)

14 Validation Consult on infrastructure delivery plan schedule requirements

15 Prepare an infrastructure delivery strategy

16 Undertake a risk assessment

17 Delivery Map the high level delivery plan/



# Process Steps




program

18 Agree a visual annual monitoring and review progress on the infrastructure delivery

5.5 Role players in compiling the strategy

Since it is important that the provincial infrastructure strategy aligns with the National Infrastructure Strategy and local government strategies, it is important that the correct role players are engaged. The key elements identified therefore need to form the basis of an implementation and coordination compact between these significant parties. Whilst driven by the province and championed by the Premier, this must be on the basis of a collaborative effort that brings all relevant parties to the table. The Provincial Infrastructure Strategy will be the result of choices and trade-offs (based on prioritisation principles agreed) between these parties and must therefore reflect such. The process of agreeing these trade-offs and making the investment choices must be based on a sound analytical base and methodology as set by the PGDS and NSDP. The PGDS as well as the Provincial Infrastructure Strategy is the provincial perspective on where and what types of infrastructure investments should be prioritised in different localities. As such it must draw on national and sector infrastructure strategies and their geographical investment implications. This should include commitments made in terms of international treaties and protocols, and continental and global areas of advantage.



Coordination with other provinces where infrastructure sector strategies may be complimentary or contradictory must also be addressed. Based on the above understanding the following is a list of possible role-players that would need to collaborate in the formulation of the Provincial Infrastructure Strategy:

Table 6: Role players to collaborate with

Government Bodies:

Metropolitan, district and local municipalities;

Neighbouring or strategically linked provinces;

National government departments;

Provincial sector and line departments, including development and trade forums and organisations;

Parastatals; and

International donors, trade bodies and NGOs.

Private and civil organisations:

Organised business and labour;

National and regional community based organisations.

Communities

Individuals

Of particular importance to consider is the future role of the Infrastructure cluster as a potential governance structure at all spheres to enable a more integrated infrastructure strategy and planning macro environment.

5.6 Steps to develop a provincial infrastructure

strategy Important steps to follow in developing the Provincial Infrastructure Strategy include the following:



Alignment between PGDS and the IDP prior to Infrastructure Strategy formulation

Formulation of a user infrastructure Strategy (including input from both the National sector Department as well as the Local Government sector specific areas)

The same intervention is required from the Custodian Department

Once the above have been achieved, both parties can now present their demand and supply and align with provincial infrastructure budget availability. A final Provincial infrastructure Strategy can be signed off. The main outputs of this document are:

o Infrastructure Target s and Goals o Principles and guidelines for Infrastructure

Planning o Reporting and progress feedback o Roles and responsibilities o Timelines for main milestones o Governance structure and representation to

achieve the strategy

The Provincial Infrastructure Strategy should also be linked back via the M&E process to monitor progress against the National Economic, PGDS and IDP strategies.

The following figure provides a schematic roadmap on the processes involved in developing a Provincial Infrastructure Strategy. Please refer to the Delivery Management Guidelines for more details.



Figure 25: Provincial Infrastructure Strategy Development Roadmap

2. Provincial Infrastructure Strategy Development Roadmap

Pre

sid

en

t /

Off

ice

of

the

Pre

mie

rC

ust

od

ian

Tre

asu

ry

2.1 Determine

Provincial Economic Goals and Targets

Use

r

PGDS Guidelines

Provincial Growth

and Development Strategy (PGDS)

2.2 Determine local Government Goals and Targets

Integrated

DevelopmentPlan (IDP)

Sector (User Department) Provincial Infrastructure Strategy

2.3 Finalise the PGDS wih the IDP

feedback and amendments

Final PGDS

2.4 Present Final PGDS to

User Departments to determine infrastructure

requirements as an

enabler for the PGDS.

2.5 Determine Local Government Sector (User) Infrastructure Goals and Targets in

line with the PGDS

Sector (User Department) Local

Government Infrastructure

Strategy

2.6 Align National and Provincial User

Infrastructure Strategies

Integrated Sector

(User Department) National & Provincial


2.7 Feedback Final Provincial & Local User Infrastructure Needs, Gaps and

Recommendations

2.8 Determine Local Government Sector (Custodian)

Infrastructure

Goals and Targets and Capabilities

Provincial and Local Government

Custodian Infrastructure

Strategy

2.9 Present

final Provincial Infrastructure

Strategy to the Province

Final Provincial Infrastructure

Strategy

2.10 Align

National and Provincial

Infrastructure

Strategies

Final National


2.11 Align Provincial and Local

Government Infrastructure

Budgets

Final


Budget

2.12 Align

National and Provincial

Infrastructure

Budgets

Final

National Infrastructur

e Budget

2.13 Align Provincial Budget and PGDS

(including the Provincial

Infrastructure Strategy) to be

monitored as part of M&E function


Strategy and Final Infrastructure

Budget

Infrastructure delivery M&E

Sector National Infrastructure

Strategy

To National Infrastructure

Strategy Roadmap



5.7 Who is accountable Linking the delivery of services and performance information is crucial for improving accountability and service delivery. Accountability is a relationship based on the obligation to demonstrate and take responsibility for performance in light of agreed expectations. The roles of key role players during infrastructure strategy formulation and strategic planning can be developed as per Table 7 below. This table can be used to achieve agreement and alignment across the province and should therefore be customised for each province.

Table 7: Responsibilities in developing a provincial infrastructure

strategy

Activity Proposed

Output RASCI

Department/ Role

Responsib

le

Accounta

ble

Support

Consulte

d

Info

rmed

1.1 Present National Economic Goals & Targets. Align National Budget

National Budget National Planning Committee

National Treasury

Ministerial Committee on Planning

1.2 Present National Budget Goals and Targets

National Infrastructure Strategy; National Sector Infrastructure Strategy

National Treasury

National Custodian Department

National User Departments

1.3 Determine National Sector Infrastructure Goals and

National infrastructure Strategy

National User Departments




Activity Proposed Output

RASCI

Targets National Treasury

1.4 Feedback National Infrastructure Demand and Risks & align with National Economic Strategy and Budget

Final National Economic Strategy & spatial plans. Final national Budget

Minister: National Planning

National Planning Committee

National Treasury

Ministerial Committee on Planning


1.5 Present National Economic and Budget Goals & Targets to Provinces

Principles and Guidelines for the PGDS

Presidency Coordinating Committee

Office of the Premier


Provincial User Departments

2.1 Determine Provincial Economic Goals and Targets

PGDS Office of the Premier

Strategy Facilitator


Provincial Treasury


2.2 Determine local Government Goals and Targets

IDP Office of the Premier


Provincial Treasury

CoGTA





RASCI


2.3 Finalise the PGDS with the IDP feedback and amendments

Final PGDS Office of the Premier


Provincial Treasury

2.4 Present Final PGDS to User Departments to determine infrastructure requirements as an enabler for the PGDS.

Sector (User Department) Provincial Infrastructure Strategy


Department of Treasury

User Department


2.5 Determine Local Government Sector (User) Infrastructure Goals and Targets in line with the PGDS

Sector (User Department) Local Government Infrastructure Strategy


Department of Treasury

User Department

Local Government

2.6 Align National and Provincial User Infrastructure Strategies

Integrated Sector (User Department) National & Provincial Infrastructure Strategy



Custodian National Department

Provincial Custodian Departments

Provincial Treasury

2.7 Feedback final Provincial & Local User Infrastructure Needs, Gaps and Recommendations

Provincial Infrastructure Strategy and Final Infrastructure Budget


Provincial Treasury

User Department


2.8 Determine Local Government Sector

Provincial and Local Government Custodian


Provincial Treasury




RASCI

(Custodian) Infrastructure Goals and Targets and Capabilities


Local Government Custodian


2.9 Present final Provincial Infrastructure Strategy to the Province

Final Provincial Infrastructure Strategy



Provincial Treasury

User Department


2.10 Align National and Provincial Infrastructure Strategies

Final National Infrastructure Strategy



Custodian National Department

Provincial Custodian Departments

Provincial Treasury

2.11 Align Provincial and Local Government Infrastructure Budgets

Final Provincial Infrastructure Budget

Local Government Finance / Treasury

Provincial Treasury

2.12 Align National and Provincial Infrastructure Budgets

Final National Infrastructure Budget

National Treasury

Provincial Treasury

2.13 Align Provincial Budget and PGDS (including the Provincial Infrastructure Strategy) to be monitored as part of M&E function

Infrastructure delivery M&E

Provincial Treasury


M&E





RASCI

3.1 Feedback Local Government Goals and Targets to the Province

IDP Feedback for PGDS amendments

CoGTA



3.2 Feedback Local Government Goals and Targets to the Sector Provincial Infrastructure Strategy

IDP Feedback for PGDS amendments

CoGTA


User Departments


3.3 Feedback Local Government Goals and Targets to the Custodian Provincial Infrastructure Strategy

Final National Infrastructure Strategy

CoGTA

Custodian Departments


3.4 Feedback municipal infrastructure needs and budget issues

Final Provincial Infrastructure Budget

Provincial Treasury

Local Treasury / finance

3.5 Align Local Government Infrastructure Strategy across the Local Government areas

Planning and design

Local Custodian

Local Treasury / finance

Local Users

5.8 What are critical success factors The following lists some of the critical success factors in compiling a provincial infrastructure strategy:

Clear vision and direction

Common understanding

Consistency of implementation & results



Overcoming „turf‟/silo working culture

The support of National and Provincial Treasury

Synergy of intergovernmental linkages & interaction

Monitoring, evaluation and continuous improvement

Successful Implementation history

Middle Management Support

Consequence Management for deliberate non-achievement

Clear Communication

Time spend by leadership on teaching strategy

Always encourage Feedback

Senior leadership visible as operational champion

Credible, visible and on-time infrastructure delivery information.

5.9 How mature is the province‟s infrastructure

strategy process Infrastructure strategy is a journey and therefore requires a long-term vision and approach to ensure a culture of continuous improvement. Breaking away from silo thinking mentality and progressing towards internal integration, alignment and cross-sectoral collaboration is critical for improved infrastructure delivery in future. Figure 26 below depicts a model of this maturity improvement process. This continuous improvement process is depicted by milestones that benchmark when the province has reached states of maturity and the activities required to migrate from one state to the next.



Figure 26: Stages of strategy maturity

Stages of Strategy Maturity

Stage 1

Strategy Silo Thinking

Strategy Internal

Alignment

Internal Networking

External Alignment

World ClassExcellence

Stage 2

Stage 3

Stage 4

Stage 5

DisconnectedFragmented

StandardisedIslands of Excellence

Integrated RefineImprove

Self-generating

Service Delivery Visibility

Integrated Infrastructure Planning

Contractor / Service Provider Alignment & Collaboration

IsolatedImprovements

Data Availability

Process Alignment

Extended Marketplace Best Practices

Community Integration

Service Delivery Execution Integration

Key Measures

Industry Community Integration

Private Sector Partnerships

Strategic Collaboration



6. Practice Guide 2: Construction

Procurement Strategy

6.1 Introduction

Good strategy in the delivery and maintenance of construction works includes the skilful planning and managing of the delivery process. It involves a carefully devised plan of action which needs to be implemented. It is all about taking appropriate decisions in relation to available options and prevailing circumstances in order to achieve optimal outcomes. Procurement strategy is the combination of the delivery management strategy, contracting arrangements and procurement arrangements for a particular procurement. A procurement strategy can be developed for a single project, a programme of projects or a portfolio of projects to identify the best way of achieving objectives and value for money, whilst taking into account risks and constraints. Once the necessary decisions relating to the delivery management strategy, the contracting strategy and the procurement arrangements have been made, the procurement strategy may be implemented in respect of each package. Thereafter, depending upon the choices that are made, the design team might need to be managed, and the contract managed or administered in accordance with the provisions of the contract. Programme management will also be required where projects are delivered in terms of a programme. It is important to conduct an annual evaluation of the efficacy of decisions made. This will inform the choices made in the subsequent year and contribute to any improvements in decisions made in subsequent years.

6.2 Delivery management strategy

The first stage in developing a procurement strategy is to decide on the delivery management strategy. The development of a



delivery management strategy can, however, only be embarked upon for a portfolio or programme of projects after the deliverable at the end of the infrastructure planning stage has been produced i.e. a medium term expenditure infrastructure plan which links prioritised needs to a forecasted budget. The key activities in this stage are as follows:

6.2.1 Activity 1: Gather and analyse information

Table 8: Gather and analyse information

Step Description Output

1 Conduct a spend analysis

Spatially located work items in the infrastructure plan grouped into categories of spend with common attributes.

2 Conduct an organisational analysis

Descriptions of client organisational characteristics

3 Conduct a market analysis

Descriptions of market characteristics

6.2.2 Activity 2: Formulate procurement objectives

Table 9: Formulate procurement objectives


1 Formulate primary procurement objectives

Identified primary procurement objectives

2 Formulate secondary procurement objectives

Documented and prioritised secondary procurement objectives



6.2.3 Activity 3: Make strategic delivery management decisions

Table 10: Strategic delivery management decisions

Description Output

Decide on how needs are to be met i.e. through:

Proposition 1: a PPP

Proposition 2: an implementing agent

Proposition 3: another organ of state‟s framework agreement

Proposition 4: leasing of property

Proposition 5: outsourcing

Proposition 6: own resources

A delivery management plan which indicates how each categories of spend or portions thereof are to be delivered.

Depending upon the decisions that are taken, it may be necessary to:

Follow National Treasury PPP procedures

Enter into service level agreement with an implementing agent

Approach organ of state to make use of framework agreement

Procure a lease .

6.2.4 Activity 4: Decide on delivery mode (project or programme)

Table 11: Decide on delivery mode

Description Output

Decide on programme of projects or series of independent

Categories of spend or portions thereof delivered as a programme of projects or a series of independent projects



Description Output

projects

6.2.5 Activity 5: Package works

Table 12: Package works


1 Identify opportunities for framework agreements

Categories of spend or portions thereof to be implemented through own framework agreements.

2 Identify packages A package plan for construction and maintenance projects or a combination thereof which states the mode of delivery for and identifies each package



Figure 27: The concept of packages

6.3 Contracting arrangements The second stage in developing a procurement strategy is to decide on the contracting arrangements for each package and the professional services required to implement the contracting strategy. The organisational and market analyses and primary and secondary procurement objectives provide the basis for the making of decisions regarding the choice of contracting options.

6.3.1 Activity 1: Allocate risks for packages

The concept of packages

Projects are grouped together or divided into packages for delivery under a single contract or a package order issued in terms of a framework agreement.



Table 13: Allocate risks for packages


1 Decide service requirements and / or contracting strategy

Risk allocations for each package i.e. allocation of responsibilities, pricing strategy and standard form of contract

2 Decide on pricing strategy

3 Decide on form of contract

The options for service requirements are:

Table 14: The options for service requirements

Option Pricing strategy Form of contract

Construction only

Activity based / lump sum

Bill of quantities

Cost reimbursable

Target Cost

NEC3 Engineering and Construction Contract

NEC3 Engineering and Construction Short Contract.

FIDIC Conditions of Contract for Construction and Building and Engineering Works Designed by the Employer

FIDIC Conditions of Contract for Plant and Design

FIDIC Conditions of contract for EPC Turnkey Projects

FIDIC Short Form of Contract General Conditions (Short Form)

JBCC Principal Building Agreement

JBCC Minor Works Agreement

GCC 2010



Option Pricing strategy Form of contract

Maintenance only

Priced contract with a priced list

Cost reimbursable

Target cost

CIDB General conditions of contract

NEC3 Term Service Contract

NEC3 Short Term Service Contract

Maintenance and construction

As for maintenance and construction services

NEC3 Engineering and Construction Contract with or without NEC3 Term Service Contracts

Construction maintenance and operation

As for maintenance and construction services

FIDIC Conditions of Contract for Design, Build and Operate Projects

NEC3 Engineering and Construction Contract plus NEC3 Term Service Contracts

The responsibilities for design and management of the construction works can be allocated between the parties in terms of any of the following contracting strategies:

Design by employer

Develop and construct

Design and construct

Construction management

Management contractor

6.3.2 Activity 2: Establish requirements for outsourced professional services

Table 15: Establish requirements for outsourced professional services

Description Output

Identify services areas that are required

Identified professional services which need to be procured



6.3.3 Activity 3: Package professional service contracts

Table 16: Package professional service contracts


1 Decide on contracting strategy

Requirements for outsourced professional services categorized as single discipline or multidisciplinary

2 Decide on the type of contract

Requirements for outsourced professional services linked to a specific package or a programme or a number of undefined packages or programmes

The contracting strategy can be discipline specific or multidisciplinary service. The type of contract can be package specific, programme related or linked to a framework agreement.

6.3.4 Activity 4: Allocate risks for professional service contracts

Table 17: Allocate risks for professional service contracts


1 Decide on pricing strategy

Identified pricing strategy for required professional services

2 Decide on form of contract

Identified standard form of contract for a professional service contract

The options for pricing strategy options are priced contract, fee percentage based on cost of construction, cost reimbursable contract or target cost contract. Use can only be made of the NEC Professional service contract or the CIDB Standard Professional Service Contract.



6.4 Procurement arrangements The final stage in developing a procurement strategy is to decide on the procurement arrangements.

6.4.1 Activity 1: Decide on quality strategy

Table 18: Decide on quality strategy

Description Output

Determine quality strategy

Suitable quality strategies

Quality may be achieved through:

Specifications

Life cycle costing

Prequalification

Evaluation criteria

Undertakings at tender stage

Preferences

Eligibility criteria.

6.4.2 Activity 2: Decide on procurement procedure

Table 19: Decide on procurement procedure

Description Output

Determine procurement procedure

A suitable procurement procedure

The procurement procedures options involve the use of one of the following procedures with or without eligibility criteria:



Competitive selection procedure o Nominated o Open o Qualified o Quotation o Proposal procedure using the two-envelope system o Proposal procedure using the two-stage tendering

system

Negotiation procedure

Competitive negotiations procedure o Open o Restricted

6.4.3 Activity 3: Decide on targeted procurement strategy

Table 20: Decide on targeted procurement strategy

Description Output

Determine targeted procurement strategy

Suitable targeted procurement procedures

The targeted procurement procedure options are:

Preferencing

Incentives for attaining Key Performance Indicators (KPI‟s)

Mandatory subcontracting

Contractual obligations.

6.4.4 Activity 4: Decide on a tender evaluation procedure

Table 21: Decide on a tender evaluation procedure

Description Output

Identify the appropriate tender evaluation procedure

A suitable tender evaluation procedure



Tender evaluation procedure options are:

Method 1: Financial offer

Method 2: Financial offer and preferences

Method 3: Financial offer and quality

Method 4: Financial offer, quality and preferences.

6.5 Documenting a procurement strategy The procurement strategy arrived at by applying the aforementioned procedures needs to be documented in such a manner that the logic behind the choices that are made at each step can be communicated to and reviewed by others. Accordingly, the specific inputs and outputs of the actions at each step in the stages of the development of a strategy need to be documented. A procurement strategy at a portfolio level should be documented in a tabular form which links each category or portion of a category of spend to a number of high level descriptions. Procurement strategies at a programme level can be similarly presented, with perhaps, more detailed descriptors. The strategic brief that is developed for a package during the package information stage of the package planning phase must, however, set out all the choices made in relation to the package in sufficient detail to enable procurement documents to be drafted to enable the necessary procurement processes to commence.



7. Practice Guide 3: Performance

Management

7.1 Introduction

Performance Management is addressed in two ways in the Toolkit:

Practice Guide 3: Performance Management: There is a dedicated practice guide included in the Toolkit, providing the fundamentals of the subject matter

A customised section per Delivery Process: The principles embodied within the Performance Management Practice Guide have been adapted and customised so that performance management principles can be applied into each of the three delivery processes, namely:

o Portfolio Management o Project Management o Operations and Maintenance

The purpose of this management companion is to serve as an executive summary of the principles and concepts of performance management for infrastructure delivery management. The objective is that managers at all levels can be informed of the roles they are expected to perform in respect of these principle and understand the benefits and value that will flow from a successful application of this approach.

7.2 The benefits and value of outcomes based

performance management Managers in the public service of South Africa are under enormous pressure to perform, especially in the area of service delivery. Good service delivery performance is however dependent on many different service delivery components all coming together at the same time in an integrated manner. These are components such as human and financial resources for



operational and maintenance functions; technology; processes; tools and equipment and, most important in the context of this Toolkit, the physical infrastructure assets and facilities. These infrastructure assets cannot only exist, but must exist in the correct location, maintained in an appropriate condition and must be appropriately designed to fit the specific service delivery purpose. The performance management practice guide

1 and roadmaps

included in the Infrastructure Delivery Management Toolkit is an essential and vital process component to ensure that government‟s service delivery objectives in as far as infrastructure delivery will be achieved. The approach followed in this Toolkit is based on the outcomes (or results) based performance management approach adopted by Government. Consistent application of the principles of outcomes based portfolio, programme and project performance management will provide comfort and assurance at all levels of management that the desired impacts of the strategies that executive management decided to implement will be achieved in a transparent and accountable manner. These principles are defined in the outcomes based performance model. The benefits and value received by the organisation and its stakeholders when following the prescripts of outcomes-based performance management is presented below for each of the different management levels.

7.2.1 Benefits for the executive manager

Executive management, that is Ministers and MECs, Accounting Officers and senior executives in departments, will benefit from the assurance that executive instructions given to achieve planned and agreed strategic objectives of the department will be executed in a controlled systematic manner. This will in turn result in:

1 Delivery Management Guidelines Practice Guide 3 – Performance

Management Strategy – published October 2010 by the CIDB and the IDIP



A hierarchy of cascading plans with detailed, executable plans at the project and operational level

Plans, which will contain appropriate performance indicators developed at:

o The strategic or portfolio level, o The programme or senior management level o The project or operational level

Project and operational plans that will contain appropriately authorised, resourced and funded activities

The knowledge that all work activities at all levels will be focused only on work required to achieve the agreed objectives

Assurance that progress towards achieving output, outcome and impact objectives is reported in a transparent and accountable manner.

Assurance that responsible individuals will be held accountable for performance of the input, activity, output, outcome and impact indicators at all levels of the organisation in a cascading and traceable hierarchy of responsibility and accountability

Assurance that any funding gaps or un-funded mandates will be exposed and quantified for further action

Assurance that managers at all levels, from junior to the executive, will be provided with appropriate, accurate, transparent and accountable performance related information that will allow the relevant managers to take decisions in respect of the management action required to correct unacceptable performance and reward better than expected performance.

The value to the executive manager in being able to trust the underlying system and its imbedded performance management processes to deliver as planned will:

o Allow the department to function more effectively and efficiently and will allow the executives time to focus on broader service delivery objectives

o Free up executive time to focus on strategic issues to improve service delivery



o Protect the executive from surprises when internal or external reports are published on perceived performance

7.2.2 Benefits for the senior manager

Senior management will benefit in many ways, but primarily in that they will be better able to understand and implement the strategic directives of executive management; they will be better equipped to support and report to the executive and they will have the necessary tools and systems to manage the performance of middle and junior management to achieve the desired programme objectives and outcomes. This will result in:

Structured focus of limited resources on strategic objectives

Effective efficient deployment of resources

Performance information for improved decision making

Decrease in wasted effort dealing with unintended consequences

Better performance of individuals and organisation

Accurate decision information to take management action

7.2.3 Benefits for middle and junior management

The use of a structured performance management approach will simplify the lives of middle and junior management by providing:

Structured, planned day to day work, with reduced ad-hoc detractions will allow the focus required to get the job at hand done well

Comfort that planned work is adequately resourced to be delivered on schedule

Ability to demonstrate a clear link between inputs, activities and outputs and the desired strategic objectives being served by such

Protection to junior and middle management by their ability to substantiate exactly how the lack of input resources (financial and human) will affect the achievement of high level objectives.



An objective and impartial structured performance management system that can measure the performance of infrastructure related work performance so that those well-performing managers can be rewarded for their good efforts.

7.3 The principles

The principles of outcomes based performance management is presented in the diagram in Figure 28 below.

Figure 28: The Outcomes based performance management model

Performance management for service delivery (as illustrated in Figure 28 ) is:

An ongoing, systematic approach to improving infrastructure management and infrastructure delivery results. (Results are defined and categorised as inputs, activities, outputs, outcomes and impacts)

Agree desired Impacts

Agree necessary Outcomes

Specify Outputs

Plan Activities

Plan and

Provide Inputs

Confirm achieve-ment of Impacts

Monitor and Evaluate

Outcomes

Monitor and Evaluate Outputs

Perform Activities

Deploy Inputs

Outcomes Performance Management Approach

Compare actual against Planned



This is achieved through a clear sequence of events based on critical reflection and managerial action in response to analysis of the relationships between:

o Agreement on the desired impacts flowing from the agreed planned strategic objectives

o The planning of the necessary outcomes and specific inputs, activities and outputs required to achieve those outcomes and associated impacts

o The deployment of inputs and the generation of service delivery outputs through planned activities

o The achievement of associated outcomes and impacts resulting from the outputs delivered

The performance of programmes, projects and operations are mapped to the performance of those individuals responsible for the performance of the work and accountable for the results achieved

The results are accounted for through publication of reports recording actual performance against planned targets

Reviewing and appraising the performance of individuals responsible for the performance of deploying the inputs, performing the activities and measuring the performance is vital for the success of the performance management system. This step does not only happen once per year, but on an ongoing basis and must input into and be part of management action

Variances from planned performance are followed by management action to rectify, normalise and improve poor or unacceptable delivery performance of the portfolio, programme, project and individual. Management action must also exploit good performance by rewarding those responsible for achieving excellence and disseminating that learning in order to continuously improve the organisation.

Performance management is integrated into all aspects of a department‟s management and policy-making processes and transforms the department‟s programme management, project management and operational practices so that they are focused



on achieving improved service delivery results for the public in the spirit and letter of the Batho Pele principles. Performance management of individual departments are also integrated into the provincial delivery strategy and national sector and cluster service delivery strategies in the spirit and letter of the principles of the National Planning Commission and the Government-wide monitoring and evaluation policies of the Presidency.

7.4 The Practice The process of performance management applicable to an individual department consists of five different steps. These are presented in graphical form in Figure 29 below.

Figure 29: Performance Management - Overview and context of the

process

Performance management is an integral part of every topic covered in all of the other guides of this toolkit as it is an integral

Performance Management Roadmap

1 - Develop

Performance Indicators

2 - Monitor &

Evaluate Progr, Proj and Ops

Performance

3 - Publish

Performance Information

4 - Review &

Appraise Performance of

Individuals

5 - Take

Management Action

•What do we want to achieve?

•How will we know when we have achieved it?

•What are we going to do to achieve it?

•Who of us are responsible for what?

•How do we improve performance?Inputs•Plans•Budgets

Inputs•Resource input; activities; outputs•Performance Data

Controls•Policy•Strategy

Outputs•Improved Performance

Outputs•Accountability



part of the corporate fibre of every activity and process of any organisation in the public or private sector. Performance management is the responsibility of every single manager responsible for any part (big or small) of the service delivery value chain across all spheres of government, from the Director General or Head of Department or Municipal Manager down to the most junior manager tasked with the delivery of a specific project or the execution of a specific operational or maintenance function. The classical management process actions are:

The performance management process steps can be mapped to these management actions as follows:

1. Plan

o Develop performance indicators (Step 1)

2. Do

o Deploy the inputs, perform the activities and

produce the results

3. Measure

o Monitor and evaluate programme, project and

operational performance (Step 2)

o Publish performance information (Step 3)

o Review and appraise performance of individuals

(Step 4)

4. Act

o Take management action. (Step 5)

Plan

DoMeasure

Act



Taking the above one step further results in the following diagram, which represents the performance management system. The system combines and integrates the programme performance planning and monitoring & evaluation principles of National Treasury and the Presidency with the existing individual performance management approach of the Public Sector. The link between the two is managed through a responsibility assignment matrix as will be described below.

Figure 30: The Performance Management System for infrastructure

management in the Toolkit context

7.5 So what does this mean and why is it

different

The first point is that it is not a new approach. Nothing in this approach has not been required as part of basic management practice before. The principles and approaches are contained in several existing government publications, acts and regulations.

Numbers refer to Roadmap steps

Pu

blis

h P

erfo

rma

nce In

form

atio

n

Review / Appraise

Individual Performance

Lin

k In

dic

ato

rs a

nd

RA

CI to

Ind

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ua

l P

erfo

rma

nc

e A

gre

em

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ts

Ta

ke

Ma

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gem

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t Ac

tion

Monitor & Evaluate Impacts against plan

Develop Indicators from Strategic Plan Objectives

Develop Indicators from Programme Plans and Budgets

Develop Indicators from Project / Operational Plans and budgets

Monitor & Evaluate

Inputs, Activities and Outputs against plan

1

1

1

1 2

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Measure against

plan

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Monitor & Evaluate Outcomes against plan

Plan

Do

Measure

MeasurePlan

Act



The difference is that the approach focuses more on:

Clearly defining indicators to measure inputs, activities and outputs separately

Linking and mapping the accountability of the individual to the responsibilities embedded in the plans

Placing an increased focus on management to take decisive action every time performance metrics have been analysed and presented.

For example, the concept of a hierarchy of cascading plans has been part of the IDIP toolkit since its inception. So too the concept of a responsibility assignment matrix as well as references to the performance agreements of individuals already in use by all departments. What has been missing is a practical approach to link these together in order to understand towards whom management action must be aimed. In the past most performance plans focused exclusively on activities (attending meetings for example) with no real understanding of how these activities will help achieve objectives. Now individuals who merely report on “busy-ness” activities can be identified and confronted to account for the results flowing from their activities. With reference to the roadmap steps contained in Figure 29 and Figure 30, the discussion below highlights the key concepts, principles and advantages of the performance management approach presented in this Toolkit.

7.5.1 Step 1: A hierarchy of plans and indicators connected to the individual with a RAM

Lowest level plans must contain three types of information matched with three types of performance indicators. By differentiating indicators in this manner, managers are provided with the ability to track performance across the value chain and will be able to recognise where blockages occur. These indicator types are:



Input indicators – to measure the available of resources, both human as well as financial, required to perform the planned work

Activity indicators – to measure performance of the actual work. This is measured in terms of time, cost, scope and quality of the work being performed. The frameworks also require the planned activities to be mapped to the results- thereby reducing unnecessary activities that do not add value

Output indicators – these indicators measure completed products such as class-rooms or clinics and components thereof.

Programme level plans consolidate the project and operational level output indicators of several projects and functions into consolidated outcome indicators such as for example:- % of the population now served with adequate schools or primary health facilities. Strategic or portfolio level plans contain the highest order of indicators, namely impact indicators. These impacts can often only be measured long after the activities were completed. For example it could take up to ten years after completion of construction before the first engineers and doctors emerge from universities resulting from a programme to improve access to laboratories at rural schools. It is therefore vital to have broken down the indicators into shorter horizon measures at output and outcome level. The key to this approach is that every plan at every level, but especially the lower level plans, must contain a responsibility assignment matrix

2 or RAM. These matrices are merely a tool

used to map responsibility for activities to the names of individuals so that there can be accountability. The example presented below clearly shows how the matrix maps corporate structures to programme structures, thereby assigning responsibility and accountability.

2 A RASCI is one example of a responsibility assignment matrix



Figure 31: Example of a responsibility matrix

7.5.2 Step 2: Measuring and evaluating performance

In step 2 we measure performance by collecting data for each of our indicators. Measurement is defined by the Presidency as two distinct steps, namely monitoring and evaluation. 7.5.2.1 Monitoring

Monitoring involves collecting, analysing and reporting data on inputs activities, outputs, outcomes and impacts as well as external factors in a way that supports good management. Where ever possible it would be preferable to use technology systems to provide the measurement data. However it‟s not always possible to do so for various reasons and work-around solutions may be required. An important point to consider is how contractual obligations of service providers and contractors can be used to transfer monitoring obligations at project level through the

Programme

Structure

Corporate

Structure



contract in a manner that will result in data formats compatible with departmental systems. It is not possible or practical to appoint a team of three people to a national M&E office to “monitor” thousands of projects in a multi-billion rand programme. The project level monitoring is resource intensive and must be treated as and performed as a project deliverable. 7.5.2.2 Evaluation

Evaluation is a time-bound and periodic exercise that seeks to provide credible and useful information to answer specific questions in order to guide decision making by staff, managers and policy makers. Evaluation is performed through informal (internal) reviews or formal audits of the project or function being evaluated and these are done periodically or at the end of stage gates. This is a key learning and knowledge transfer exercise.

7.5.3 Step 3- publish information

In the interest of good governance practices it is imperative that monitoring and evaluation measurements must be published timely and accurate in order to fulfil transparency and accountability requirements. Firstly performance data must be published internally in order that management at all levels is provided with that most essential management input, namely decision making information. Of course it is necessary to collate, analyse, roll-up and summarise data. Busy managers cannot be expected to work through telephone books full of raw data on project or operational level indicators. Performance information must also be published in formats that promote understanding of the under-lying causes of both good and bad performance. The published information in addition must provide trend information – “is a bad situation improving or worsening? Is it improving

fast enough or do we need to take additional action?” Management cannot be make the right decisions on actions required to address service delivery performance when they are not able to critically reflect on appropriate decision support information. Refer to



Figure 32 and note how the pie chart on the left cannot possibly convey the facts that are so obvious in the right hand line-graph, namely that something has gone horribly wrong back in August and the current trend is strongly downwards. A manager reflecting on the left hand graph will not recognise that urgent and immediate management intervention is required. However this manager cannot yet decide on what action until she is presented with a more detailed analysis to understand the underlying root causes!

Figure 32: Information must be presented in a manner that promotes

understanding

Secondly performance data must be published for use by external stakeholders. External stakeholders varies considerably from our Parliament who has an oversight role sanctioned by our Constitution, to global stakeholders such as United Nations committees, and to the most important stakeholders of all, Mr and

Project 107 Performance

Apr-10

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Jun-10

Jul-10

Aug-10

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r-1

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Project 107 Performance

Target

Actual



Ms Taxpayer, members of the public, patiently waiting for the promised services to reach them and their children.

7.5.4 Step 4 –performance management of individuals

A good, analytical look at Figure 30 will show the different focus on the individual‟s performance supported in this Toolkit, namely the strong focus on linking the individual‟s performance appraisal with the project work assigned to that individual. Consistent application of this principle will avoid the unfortunate practice where some managers receive excellent appraisal reports as individuals whilst the programmes and projects they are responsible and accountable for perform abysmally. Conversely, application of this approach will provide the evidence and proof that is needed so that those well-performing and deserving managers can be identified and rewarded for their good efforts. This approach will prevent for example that a manager‟s appraisal targets contains vague objectives such as “promotes access to education for all” against which it is impossible to measure performance. This approach will rather allow the individual in our example to be confronted regularly with the following set of facts: “Project XXX, for which you are responsible as the Project Manager is 10

months behind schedule, 40% over budget and has had consistently failed quality control tests Please explain why we should not dismiss you.”

The following underlying principles are key to making this approach work:

Individual junior and project managers must be linked to their responsibilities at the lowest levels possible so that sufficient performance indicators are available to appraise the responsible individuals

This linking must be done consistently and in a structured systematic manner in a series of formally published responsibility assignment matrices.

The assignment matrices must be structured in such a way that the corporate structure and programme structures are represented and can be used to determine which higher level managers are responsible and accountable for the work at sub-programme and



programme level. The principle is that higher level managers will inherit the responsibilities of lower level managers and that they will be held accountable for the performance of the lower level manager‟s performance.

Regular, accurate measurement of performance metrics of key appropriate key indicators, which is published in a transparent and understandable format is essential for this approach to work.

Lastly, performance management of the individual cannot be reduced to a single brief formal appraisal discussion and note to file on an annual basis. Performance management of the individual is an ongoing management function at all levels and these difficult conversations must follow the publication of each performance data set as surely as night follows day.

7.5.5 Step 5 – Taking management action

Our hierarchical government system is not self-regulating or self-correcting and without appropriate management action, poor performance will trend downwards. This step is therefore the pivotal step of the whole performance management process as is illustrated in this quote from the government wide M&E policy: “A clear sequence of events based on critical reflection and managerial action in response to analysis of the relationships between the deployment of inputs, the generation of service delivery outputs, their associated

outcomes and impacts”3.

Managers are pivotal, but can only be expected to do the right thing when provided with the right decision making support information. Managers can therefore as easily cause much confusion and can fatally wound service delivery organisations when the wrong decisions are taken. The concept of critical reflection of accurate and appropriately analysed performance information is therefore key. If managers

3 Policy Framework for the Government-wide Monitoring and

Evaluation System, November 2007 , published by The Presidency



practice this before taking action, then the chances improves that the right decisions will be taken. Government service delivery takes place in a complex environment on which many and varied factors are constantly impacting. There are multiple complex relationships between multiple and varied components and stakeholders with differing agendas making it difficult to anticipate the outcomes of decisions. It is therefore of critical importance that managers really understand the root causes of symptoms before deciding on a course of action. Sticking superficial “plasters” on symptoms can never result in a cure. It is only when the underlying causes are understood and addressed, that the system will recover. Management‟s obligation to get this right is huge and cannot be accomplished without analysis and critical reflection of regular, accurate and timely performance information. Once there is understanding, then action must follow swiftly and action must be followed with relentless pressure to ensure that it filters down to the coal face and that regular feedback is received that the action is resulting in reversing the trends that prompted the action.

7.6 What must I do

Ministers and MECs, Accounting Officers and senior executives in departments must be aware of, and must understand, the high level principles embedded in the Infrastructure Delivery Management Toolkit, and specifically the principles and concepts relating to performance management for infrastructure delivery management. Executive management then has a responsibility to ensure that an enabling environment is created in which these principles can be implemented and used across organisations at all tiers and spheres of government. All role-players must be made to understand their respective roles and responsibilities, especially those cross functional responsibilities. Executive management must ensure that they take a constant, regular interest in the implementation of these principles and processes and that the



necessary financial, technical and human resources are prioritised to make this approach work for the organisation. Senior managers who are responsible for delivering government‟s programmes of action must not only be aware of and understand these principles, but must use the system on a daily ongoing basis to achieve their objectives, to identify non-performance wherever it exists, to critically reflect on the underlying causes and to regularly take appropriate management action to manage the achievement of inputs, activities, outputs, outcomes and impacts desired. All other managers must live and breathe the principles embedded in this guide on a daily basis. This will reduce your daily workload, will improve your ability to manage your projects and contracts, will enable you to better support your immediate managers, the people reporting to you and most importantly the public who depends on you to deliver the services they have been promised. However, most importantly, the daily systematic application of these performance management principles will ensure that you benefit by providing you with the proof at hand to demonstrate your good performance.



8. Selected Glossary of Terminology

Table 22: Selected Glossary of Terminology

Term Definition Source Asset (Immovable)

Any immovable asset acquired or owned by Government, excluding any right contemplated in the Mineral and Petroleum Resources Development Act 2002 ((Act No.

28 of 2002).

GIAMA (Act No. 19, 2007)

Asset Register A record of asset information including inventory, historical, financial, condition, technical and financial information.

International Infrastructure Management Manual – Ver.3.0 2006

Contracting Strategy

Strategy that governs the nature of the relationship which the employer wishes to foster with the contractor, which in turn determines the risks and

responsibilities between the parties to the contract and the methodology by which the contractor is to be paid

DIS / ISO 10845-1: Construction procurement- processes, methods and procedures

procurement- processes, methods and procedures

Custodian Custodians are responsible for

the efficient and effective management of immovable assets throughout their lifecycle and therefore must produce a custodian asset management plan (C-AMP) to ensure implementation.

Government

Immovable Asset Management Legislation

Design and construct

Contract in which a contractor designs a project based on a brief provided by the client and constructs it.

ISO 10845-1: Construction procurement- processes, methods and procedures

Design by employer contract

Contract under which a contractor undertakes only construction on the basis of full designs issued by the employer.




Term Definition Source Develop and construct contract

Contract based on a scheme design prepared by the client under which a contractor produces drawings and constructs it.


Infrastructure In the context of the toolkit means any building, construction or engineering works constructed fior the betterment of the build environment and includes maintenance works when referring to an infrastructure programme.

IDM Toolkit

Life-cycle costing /life cycle cost (module 3)

Life-cycle costing (or total cost of ownership) is estimation at the planning stage of an asset of all cost involved in the acquisition, operation, maintenance and disposal of an asset and forms the basis to

monitor the performance of the asset against the planned cost over the lifecycle of the asset. Depending on the policy of the organisation, lifecycle costing may include the services cost. The total cost of an asset throughout its life including planning, design, construction, acquisition, operation, maintenance, rehabilitation,

disposal and financing costs

International Infrastructure Management Manual – Ver. 3.0 2006

Management contract

Contract under which a contractor provides consultation during the design stage and is responsible for planning and

managing all post contract activities and for the performance of the whole of the contract.

ISO 10845-1: Construction procurement- Part 1: processes, methods

and procedures



Term Definition Source Monitoring & Evaluation

Monitoring is the systematic, regular collection and occasional analysis of information to identify and possibly measure changes over a period of time. Evaluation is the analysis of the effectiveness and direction of an activity and involves making a judgment about progress and impact.

IDM Toolkit

Package Construction works which have been grouped together for delivery under a single contract or a package order

IDM Toolkit

Package Order The instruction to carry out construction works under a framework agreement

Adapted from NEC3 Framework Contract

Performance Monitoring

Continuous or periodic quantitative and qualitative assessments of the actual performance compared with specific objectives, targets or standards.

International Infrastructure Management Manual – Ver. 3.0 2006

Portfolio Collection of projects or programmes and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives. The projects or programmes may not necessarily be interdependent or

directly related.

The Standard for Portfolio Management 2006; Project Management Institute, Inc.

Procurement strategy

Selected packaging, contracting, pricing and targeting strategy and procurement procedure for a particular procurement.

DIS / ISO 10845-1: Construction procurement- processes, methods

and procedures

Programme The grouping of a set of related projects in order to deliver outcomes and benefits related to the organisation‟s strategic

objectives which would not have been achieved had the projects been managed independently.

IDM Toolkit



Term Definition Source Project Risk An uncertain event or condition

that, if it occurs, has a positive or negative effect on a project‟s objectives.

PMI Guide to the PMBOK

Public Private Partnership (PPP)

A contract between a public sector and a private sector party, in which the private party assumes substantial financial, technical and operational risk in the design, financing, building and operation of a project over time.

Regulations issued in terms of the Public Finance Management Act of 1999

Risk Effect of uncertainty on objectives

ARP 070:2009 ISO Guide 73:2009

User User means a national or provincial department that uses or intends to use an (immovable) asset in support of its service delivery objectives {and includes a custodian in relation to an immovable asset that it uses or intends to use in support of its own service delivery objectives).

Government Immovable Asset Management Act(GIAMA)



9. Selected Abbreviations

Table 23: Selected Abbreviations

Abbreviation Description / Name in Full

C-AMP Custodian Asset Management Plan

CD Chief Director

CIDB Construction Industry Development Board

CoGTA The department of Co-operative Governance and Traditional Affairs

DBSA Development Bank of Southern Africa

DORA Division of Revenue Act

DP Delivery Process

DPW Department of Public Works

FM Facilities Management

GIAMA Government Immovable Asset Management Act

GWM&E Government wide monitoring and evaluation system

HR Human Resources

IA Implementing Agent

IDIP Infrastructure Delivery Improvement Program

IDM Infrastructure Delivery Management

IDMS Infrastructure Delivery Management System

IDMT Infrastructure Delivery Management Toolkit (The “Toolkit)

IDP Integrated Development Plan

IGR Intergovernmental Relation Framework Act

IIMM International Infrastructure Management Manual

IP Infrastructure Plan

IPIP Infrastructure Programme Implementation Plan

IPMP Infrastructure Programme Management Plan

KPI Key Performance Indicators

LCC Life-cycle costing



Abbreviation Description / Name in Full

LG Local Government

M&E Monitoring & Evaluation

MEC Member of Executive Council

MF&C Manufacture, Fabrication and Construction

MFMA Municipal Finance Management Act

MTEC Medium Term Expenditure Committee

MTEE Medium Term Expenditure Estimates

MTEF Medium Term Expenditure Framework

NEC New Engineering Contract

NT National Treasury

O&M Operations and Maintenance

OSP Organisation Support Plan

PC Procurement Milestone

PEP Project Execution Plan

PFMA Public Finance Management Act

PG Practice Guide

PGDS Provincial Growth and Development Strategy

PMBOK Programme Management Body of Knowledge

PMI Project Management Institute

PMO Project Management Office

PPP Public Private Partnership

PSP Professional Service Providers

RASCI “Responsible, Accountable, Support, Consult with, Inform”

responsibilities matrix

SCM Supply Chain Management

SDA Service Delivery Agreement

U-AMP User Asset Management Plan

VO Variation Order



10. Disclaimer

This toolkit is intended as a resource information document to be used by public sector clients for purposes of accelerating the delivery of infrastructure in government. The CIDB together with its partners do not accept any liability either direct or indirect for any action arising out of the use of the toolkit.

The copyright and ownership of the toolkit resides with the CIDB and it reserves the right not to allow any person to use the toolkit without prior written permission.

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