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Alignment of the Infrastructure Delivery Cycle with the Budget Cycle and Strategic Planning Cycle. Prepared by the Infrastructure Delivery Improvement Programme (IDIP). State of the Nation Address 2005. - PowerPoint PPT Presentation
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1
Alignment of theInfrastructure Delivery Cycle
with the Budget Cycle
andStrategic Planning Cycle
NATIONAL TREASURY REPUBLI C OF SOUTH AFRICA
Prepared by the Infrastructure Delivery Improvement Programme
(IDIP)
2
NATIONAL TREASURY REPUBLI C OF SOUTH AFRICA
State of the Nation Address 2005
“Certainly it is a reflection of weaknesses in the governance system that the plans to build school infrastructure are unfolding at a much slower pace than envisaged.”“We need massively to improve the management, organisational, technical and other capacities of government so that it meets its objectives.”
President Thabo Mbeki – State of the Nation Address 2005
3
NATIONAL TREASURY REPUBLI C OF SOUTH AFRICA
State of the Nation Address 2006
“We cannot allow that government departments become an obstacle to the achievement of the goal of a better life for all because of insufficient attention to the critical issue of effective and speedy delivery of services.”
“Integration of planning and implementation across the government spheres is therefore one of the prime areas of focus in our programme…”
President Thabo Mbeki – State of the Nation Address 2006
4
NATIONAL TREASURY REPUBLI C OF SOUTH AFRICA
The Infrastructure Delivery Improvement Programme
(IDIP)• IDIP is a continuous improvement programme which
guides & capacitates to improve infrastructure delivery
• IDIP is coordinated by National Treasury in partnership with DBSA, DPW & CIDB
• IDIP provides flexible tools that can be adapted to the province & sector
• IDIP is a key strategy of government to address inadequate capacity and skills in the infrastructure sector
5
Problem Statement
• Continuing under expenditure of infrastructure budgets.
• Inappropriate expenditure patterns characterized by the 4th Quarter expenditure spike.
• Currently there appears to be very little alignment between the Infrastructure Delivery Cycle and either the Budget Cycle or the Strategic Planning Cycle.
• Currently the budget for large multi-year projects is committed to 1 financial year instead apportioning the budget across the MTEF.
NATIONAL TREASURY REPUBLI C OF SOUTH AFRICA
6
Overview of Presentation
• This presentation covers the following topics:– The Strategic Planning Cycle– The Budget Cycle– The current Infrastructure Delivery Cycle– The improvements to the Infrastructure Delivery Cycle– The alignment and interdependence between these 3 cycles– An overview of the Infrastructure Plan,
Infrastructure Programme Management Plan (IPMP), & Infrastructure Programme Implementation Plan (IPIP)
– Budget allocation for Infrastructure Delivery Programmes– Managing cashflows across years to ensure 100% effective
expenditure– Benefits & Challenges
NATIONAL TREASURY REPUBLI C OF SOUTH AFRICA
7
Electoral Cycle
• Five-year Strategic and Performance Plans
Fiscal Years
Planning & Budgeting
2004 20122006 2007 2008 2009 2010 20112005 2013 2014 2015 2016
5 Year Election Mandate 5 Year Election Mandate 5 Year Election Mandate
Election Election Election
5 year Strategic & Performance Plan detailing Targets & priorities
5 year Strategic & Performance Plan detailing Targets & priorities
5 year Strategic & Performance Plan detailing Targets & priorities
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
APPFor
Year 2
LEGEND: APP – Annual Performance Plan
• Annual PerformancePlans and Budgets(with 3 Year MTEF)
8
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 JYear 4Year 0 Year 1 Year 2 Year 3
3 Year MTEF Period
Budget Day (15 Feb)
MTEF Budget Cycle
Draft 2 APP
Final APP
Budget Allocation Letter (Nov)MTEC Hearings (Sept)
LEGEND: Planning Processes
Implementation Processes
Closure Processes
ARFinal Budget
Update Budget
Draft APP
Draft Budget
Q1PR
Q2Rep
Q2PR
Q3PR
Q3Rep
Q4Rep
AFS
Q4PR
31 Aug
Mid Dec
17 Feb
Q1Rep
Implement Budget
31 Mar
Draft 2 APP
Final APP
AFSFinal Budget
Update Budget
Draft Budget
AR
Draft APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
Implement Budget
Q1PR
Q2PR
Q3PR
Q4PR
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
AFSFinal Budget
Update Budget
Implement Budget AR
Draft APP
Draft Budget
Q1PR
Q2PR
Q3PR
Q4PR
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Final Budget
Update Budget
Implement Budget
Draft APP
Draft Budget
Q1PR
Financial Reports(Section 32 PFMA)
& Non-Financial Data Reporting
APP – Annual Performance Plan
AFS – Annual Financial Statements
AR – Annual Report
PR – Performance Report
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 JYear 4Year 0 Year 1 Year 2 Year 3
3 Year MTEF Period
Budget Day
MTEF Budget Cycle
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
Budget Allocation Letter
These are all the concurrent budget
activities that need to be undertaken in any 1 year
MTEC Hearings
AFS AR
AFS AR
AFS AR
Final Budget
Update Budget
Final Budget
Update Budget
Draft Budget
Final Budget
Update Budget
Implement Budget
Implement Budget
Implement Budget
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Final Budget
Update Budget
Implement Budget
Draft APP
Draft APP
Draft APP
Draft APP
Draft Budget
Draft Budget
Q1PR
Q2PR
Q3PR
Q4PR
Q1PR
Q2PR
Q3PR
Q4PR
Q1PR
Q2PR
Q3PR
Q4PR
Q1PR
Draft Budget
LEGEND: Planning Processes
Implementation Processes
Closure Processes
APP – Annual Performance Plan
AFS – Annual Financial Statements
AR – Annual Report
PR – Performance Report
10
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 JYear 4Year 0 Year 1 Year 2 Year 3
3 Year MTEF Period
Budget Day
MTEF Budget Cycle
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
Budget Allocation Letter MTEC Hearings
AFS AR
AFS
AFS
Final Budget
Update Budget
Final Budget
Update Budget
Final Budget
Update Budget
Implement Budget
Implement Budget AR
Implement Budget AR
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Final Budget
Update Budget
Implement Budget
Draft APP
Draft APP
Draft APP
Draft APP
Draft Budget
Draft Budget
Draft Budget
Draft Budget
Q1PR
Q2PR
Q3PR
Q4PR
Q1PR
Q2PR
Q3PR
Q4PR
Q1PR
Q2PR
Q3PR
Q4PR
Q1PR
The following information is used as input to prepare the budget:Draft Budget due 31 August•Annual Financial Statements from last year due 31 May•1st Quarter Report from this year due mid July
Updated Budget due mid December•2nd Quarter Report from this year due mid October
Final Budget due 17 February•Budget Allocation Letter•3rd Quarter Report from this year due mid January
LEGEND: Planning Processes
Implementation Processes
Closure Processes
APP – Annual Performance Plan
AFS – Annual Financial Statements
AR – Annual Report
PR – Performance Report
Final Budget
Update Budget
Draft Budget
Budget Allocation Letter
11
Electoral Cycle
• Five-year Strategic and Performance Plans
Fiscal Years
Planning & Budgeting
2004 20122006 2007 2008 2009 2010 20112005 2013 2014 2015 2016
5 Year Election Mandate 5 Year Election Mandate
Election Election
5 year Strategic & Performance Plan detailing Targets & priorities
5 year Strategic & Performance Plan detailing Targets & priorities
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
MTEF (3 years)
Year 1Budget
APPFor
Year 1
Year 2Budget
Year 3Budget
APPFor
Year 2
APPFor
Year 3
LEGEND: APP – Annual Performance Plan
• Annual PerformancePlans and Budgets(with 3 Year MTEF)
Infrastructure Plan Update (10 Year Plan)Infrastructure Plan Update (10 Year Plan)
Infrastructure Plan Update (10 Year PlanInfrastructure Plan Update (10 Year Plan)
Infrastructure Plan Update (10 Year Plan)Infrastructure Plan Update (10 Year Plan)
Etc, etc, etc
12
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 JYear 4Year 0 Year 1 Year 2 Year 3
Infr. Plan update
Project Design
Project Tender
Project Implementation
Rolled Over Unspent Budget
3 Year MTEF Period
Current Infrastructure Delivery Cycle
Infrastructure Delivery Cycle
Better supervision of infrastructure projects undertaken by government will be introduced, to ensure that capital budgets are spent without roll-overs - President Thabo Mbeki - State of the Nation Address 2006
100%
RolloverBudget
Tim
eCumulative Cashflow
With the current Infrastructure Delivery Cycle, expenditure during the 1st half of the year is virtually impossible since most projects are still in the tender phase. The result is the 4th quarter expenditure spike and overall under-expenditure.
13
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 JYear 4Year 0 Year 1 Year 2 Year 3
Infr. Plan update
Project Design
Project Tender
Project Implementation
Rolled Over Unspent Budget
Infr. Plan update
Project Design
Project Tender
Project Implementation
Rolled Over Unspent Budget
Infr. Plan update
Project Design
Project Tender
Project Implementation
Rolled Over Unspent Budget
3 Year MTEF Period
Budget Speech
Current Infrastructure Delivery Cycle
Improved Infrastructure Delivery Cycle
LEGEND: O&S Plan – Organisation & Support PlanIPMP – Infrastructure Programme Management PlanIPIP – Infrastructure Programme Implementation Plan
Infrastructure Delivery Cycle
Infr. Plan update
O&S Plan
IPMP
O&S
IPIP
O&S
Each Infrastructure Delivery Cycle is characterized by under-expenditure and rolled over unspent budgets
14
Infrastructure Programme Management & Implementation Plans (IPMP & IPIP)
Client Department (CD)
Implementing AgentIA 1
IPMP Update
IPIPfor IA 2
Implementing AgentIA 2
SDA
with IA
1 SDA with IA 2
IPIPfor IA 1
FUNCTIONS OF CD:1. Planning2. Procurement3. Programme
Management4. Monitoring &
Reporting
FUNCTIONS of IAs:
IPIPs respond to
IPMP
1. Programme Management2. Project Initiation3. Procurement
4. Project Implementation5. Project Completion6. Monitoring & Reporting
IPMP issued to
IAs
Infrastructure Plan Update
15
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 JYear 4Year 0 Year 1 Year 2 Year 3
Infr. Plan update
Project Design
Project Tender
Project Implementation
Project Design
Project Tender
Project Implementation Planned Multi-year Commitments
Infr. Plan update
Project Design
Project Tender
Project Implementation
Rolled Over Unspent Budget
Rolled Over Unspent Budget
Infr. Plan update
Project Design
Project Tender
Project Implementation
Rolled Over Unspent Budget
3 Year MTEF Period
Budget Speech
Current Infrastructure Delivery Cycle
Improved Infrastructure Delivery Cycle
LEGEND: O&S Plan – Organisation & Support PlanIPMP – Infrastructure Programme Management PlanIPIP – Infrastructure Programme Implementation Plan
Infrastructure Delivery Cycle
Eg. Conditional Grant for FET
given to DoE by NT
Monitoring & Evaluation
Infr. Plan update
O&S Plan
IPMP
O&SPlan
IPIP
O&SPlan
16
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 JYear 4Year 0 Year 1 Year 2 Year 3
Project Design
Project Tender
Project Implementation
3 Year MTEF Period
Current Project Budgeting
Best Practice Project BudgetingInfr. Plan update
IPMP IPIPBudget
Tim
e
100%
Retention Period
Infr. Plan update
Project Design
Project Tender
Project Implementation
Implementation of Roll-Over
Budget
Budget
100%
Commit from Yr 1
Commit from Yr 2 Commit from Yr 3 Com-mit
from Yr 4
Cumulative Cashflow
Cumulative Cashflow
Monthly Projected Cashflow
Implementation of Roll-Over
Retention Period
RolloverRolloverWhole project budget is
committed to Yr 1
17
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 JYear 4Year 0 Year 1 Year 2 Year 3
Infr. Plan update
Project Design
Project Tender
Project Implementation
Project Design
Project Tender
Project Implementation Planned Multi-year Commitments
Infr. Plan update
Project Design
Project Tender
Project Implementation
Rolled Over Unspent Budget
Rolled Over Unspent Budget
Infr. Plan update
Project Design
Project Tender
Project Implementation
Rolled Over Unspent Budget
3 Year MTEF Period
Budget Speech
Current Infrastructure Delivery Cycle
Improved Infrastructure Delivery Cycle
LEGEND: O&S Plan – Organisation & Support PlanIPMP – Infrastructure Programme Management PlanIPIP – Infrastructure Programme Implementation Plan
Infrastructure Delivery Cycle
Monitoring & Evaluation
Infr. Plan update
O&S Plan
IPMP
O&SPlan
IPIP
O&SPlan
Project Design
Project Tender
Project Implementation Planned Multi-year Commitments
Monitoring & Evaluation
Infr. Plan update
O&S Plan
IPMP
O&S
IPIP
O&S
Project Design
Project Tender
Project Implementation
Monitoring & Evaluation
Infr. Plan update
O&S Plan
IPMP
O&S
IPIP
O&S
Project Design
Monitoring & Evaluation
Infr. Plan update
O&S Plan
IPMP
O&S
IPIP
O&S
These are all the concurrent infrastructure delivery
activities that need to be undertaken in any 1 year
Departments therefore need to have the capacity
to undertake all these concurrent activities.
18
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 JYear 4Year 0 Year 1 Year 2 Year 3
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
IPMP IPIP Project Design
Project Tender
Project Implementation Planned Multi-year Commitments
IPMP IPIP Project Design
Project Tender
Project Implementation Planned Multi-year Commitments
IPMP IPIP Project Design
Project Tender
Project Implementation
IPMP IPIP Project Design
MTEF Budget cycle
Infrastructure Delivery Cycle
AFS ARFinal Budget
Update Budget
Implement Budget
AFS ARFinal Budget
Update Budget
Implement Budget
AFS ARFinal Budget
Update Budget
Implement Budget
Final Budget
Update Budget
Implement Budget
These are all the concurrent activities that need to be
undertaken in any 1 year by a department
Draft APP
Draft APP
Draft APP
Draft APP
Draft Budget
Draft Budget
Draft Budget
Draft Budget
Monitoring & Evaluation
Monitoring & Evaluation
Monitoring & Evaluation
Monitoring & Evaluation
Infr. Plan update
O&S PlanInfr. Plan update
O&S PlanInfr. Plan update
O&S PlanInfr. Plan update
O&S Plan
LEGEND: O&S Plan – Organisation & Support PlanIPMP – Infrastructure Programme Management PlanIPIP – Infrastructure Programme Implementation Plan
LEGEND: APP – Annual Performance Plan
AFS – Annual Financial Statements
AR – Annual Report
PR – Performance Report
19
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 JYear 4Year 0 Year 1 Year 2 Year 3
Draft 2 APP
Final APP
IPIP Project Design
Project Tender
Planned Multi-year Commitments
MTEF Budget cycle
Infrastructure Delivery Cycle
AFS ARFinal Budget
Update Budget
Monitoring & Evaluation
Implement Budget
Q1Rep
Q2Rep
Q3Rep
Q4Rep
Project Implementation
Draft APP
Draft Budget
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
AFS ARFinal Budget
Update Budget
Implement Budget
Draft APP
Draft Budget
Draft 2 APP
Final APP
Q1Rep
Q2Rep
Q3Rep
Q4Rep
AFSFinal Budget
Update Budget
Implement Budget AR
Draft APP
Draft Budget
Considering a cycle with a common year of implementation
It is clear that the Infrastructure Delivery Cycle is a longer cycle & that infrastructure planning leads the budget planning process by 1 year. Therefore Infrastructure Planning & project design also become inputs into the Budget Planning process.
Budget Cycle
Infrastructure Delivery Cycle
Common year of implementation
Infr. Plan update
IPIP Project Design
Project Tender
Monitoring & Evaluation
Project ImplementationIPMPInfr. Plan update
The Draft APP in turn becomes an input into the current year’s infrastructure planning & IPMP update.
The inputs to the Budget process are the AFS from last year as well as the Quarterly Reports from this year.
IPMP
And the project tendering & implementation feed into the implementation of the budget, quarterly reporting & the AFS.
20
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 JYear 4Year 0 Year 1 Year 2 Year 3
IPMP IPIP
3 Year MTEF Period
Budget Speech
Planned Multi-year Commitments
Project Implementation
Project Design
Project Tender
Current year’s infrastructure delivery activities
Monitoring & Evaluation
Monitoring & Evaluation
Monitoring & Evaluation
Infr. Plan update
O&S Plan
The Infrastructure Plan sets out the infrastructure priorities for the next 10 years. It is updated annually on the basis of the:• Targets and priorities set out in the Strategic Plan & Annual Performance Plan• The anticipated MTEF Budget, and• The progress of the current projects.
Infr. Plan update
O&S Plan
21
The IPMP sets out in detail the work for the next 3 years.It is based on the updated Infrastructure Plan
as well as the Draft Annual Performance Plan (APP).
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 JYear 4Year 0 Year 1 Year 2 Year 3
IPMP IPIP Project Design
Project Tender
Project Implementation Planned Multi-year Commitments
Project Design
Project Tender
Project Implementation
Project Design
Project Tender
3 Year MTEF Period
Budget Speech
Planned Multi-year Commitments
Project Implementation Planned Multi-year Commitments
Project Design
Project Tender
Project Implementation Planned Multi-year Commitments
In Year 1(Very detailed)
In Year 2(Less detailed)
In Year 3(even less detailed)
Current year’s infrastructure delivery activities
Monitoring & Evaluation
Monitoring & Evaluation
Monitoring & Evaluation
Monitoring & EvaluationMonitoring & Evaluation
Monitoring & Evaluation
Monitoring & Evaluation
Monitoring & Evaluation
Monitoring & Evaluation
Monitoring & Evaluation
Monitoring & Evaluation
Monitoring & Evaluation
Infr. Plan update
O&S Plan O&SIPMP
O&SIPMP
O&SIPMP
O&S
IPIP
IPIP
O&S
IPIP
O&S
O&SInfr. Plan update
O&S PlanInfr. Plan update
O&S PlanInfr. Plan update
O&S Plan
IPMP
Infrastructure Programme Management Plan (IPMP)
NB: The total value of the work in each year must equal the Annual Budget for each year
22
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 JYear 4Year 0 Year 1 Year 2 Year 3
Infr. Plan update
IPMP IPIP Project Design
Project Tender
Project Implementation Planned Multi-year Commitments
Infr. Plan update
IPMP IPIP Project Design
Project Tender
Project Implementation
Infr. Plan update
IPMP IPIP Project Design
Project Tender
Infr. Plan update
IPMP IPIP
3 Year MTEF Period
Budget Speech
Planned Multi-year Commitments
Project Implementation Planned Multi-year Commitments
Project Design
Project Tender
Project Implementation Planned Multi-year Commitments
Project Implementation Budget = TOTAL INFRASTRUCTURE BUDGET– Planned Multi-year Commitments– Project Design & Tender (10%)– Infrastructure Planning (1%)– Funding of O&S Plan
O&S Plan
O&S Plan
O&S Plan
O&S Plan
O&S O&S
O&S O&S
O&S O&S
O&S
Infrastructure Budget Allocation
23
Example of Programme Budget to commit entire Annual Budget
R 50,000 R 60,000 R 70,000
PROJECT TOTAL PROJECT BUDGET
BUDGET FOR YEAR 1
BUDGET FOR YEAR 2
BUDGET FOR YEAR 3
Project 1 R 30,000 R 10,000 R 10,000 R 10,000
Project 2 R 20,000 R 5,000 R 10,000 R 5,000
Project 3 R 25,000 R 7,000 R 8,000 R 10,000
Project 4 R 15,000 R 12,000 R 3,000 R 0
Project 5 R 10,000 R 5,000 R 5,000 R 0
Project 6 R 20,000 R 11,000 R 4,000 R 5,000
Amount Committed R 120,000 R 50,000 R 40,000 R 30,000
R 0 R 20,000 R 40,000
Department's Annual Budget =
Amount remaining for new projects( = Annual Budget less Amount Committed)
24
Year 0D 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
Year 1 Year 2
Infr. Plan update IPMP IPIP
IPIPIPMP
Planned Multi-year Commitments
Project ImplementationProject Design & Tender
Project Implementation
Project Implementation
Project Design & Tender
Managing Cashflows Across Years
Planned Multi-year Commitments
But here we have clusters of projects that have been designed
and are ready to go to tender
In reality the neat chunks of work shown on the earlier slides are actually individual
projects or clusters of projects with different start & end dates
Some projects or clusters of projects in the current year can be
delayed causing potential under expenditure
NB: The total value of the work in this year equals the Annual Budget for this year
25
Year 0D 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
Year 1 Year 2
Infr. Plan update IPMP IPIP
IPIPIPMP
Planned Multi-year Commitments
Project ImplementationProject Design & Tender
Project Implementation
Project Implementation
Project Design & Tender
Managing Cashflows Across Years
Planned Multi-year Commitments
We need to tender these projects earlier and start implementation in Year 1 to offset the potential under expenditure
caused by the delayed projects
26
Identified Benefits
• Better linkage with Strategic Planning is achieved• Better alignment of the budget with the targets set out
in the Strategic Plan• Project planning & design is properly done resulting in
achievable & realistic cashflows• Multi-Year commitments are planned and budgeted for
thereby reducing rollovers• Improved clarity of roles & responsibilities between
client departments and implementing agents
NATIONAL TREASURY REPUBLI C OF SOUTH AFRICA
27
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 MYear 0 Year 1 Year 2
• Programme Manager with required skills is required– Planning for built environment– Quality Control– Contract Procurement
• Commitment by political heads to only implement what is on the Infrastructure Plan
• Understanding that if a project is entered as a new priority onto an Infrastructure Plan in Year 0 it must follow due process before implementation can begin
Infr. Plan update
IPMP IPIP Project Design
Project Tender
Project Implementation
NATIONAL TREASURY REPUBLI C OF SOUTH AFRICA
Possible Challenges
28
• That the Infrastructure Delivery Cycle be amended to include the Infrastructure Programme Management Plan (IPMP), the Infrastructure Programme Implementation Plan (IPIP), and the Service Delivery Agreement (SDA), and that these plans be made mandatory for all departments.
• That the timeframes of the Infrastructure Delivery Cycle be amended to allow for the alignment of the Infrastructure Delivery Cycle with the Budget Cycle so that departmental budgets are informed by actual projects. This means that plans for projects must be finalized in the year before the budget is prepared.
NATIONAL TREASURY REPUBLI C OF SOUTH AFRICA
Recommendations (1)
29
• That best practice budgeting processes be adopted so that budgets for large projects are appropriately committed across the duration of the project. In other words, multi-year projects must be appropriately budgeted over multiple years, and not budgeted for in a single year only, which results in roll-overs. This will enable budgets to be fully spent each year, and roll-overs to be avoided. It also means that Client Departments and Public Works must be willing to enter into contractual commitments for multi-year projects, and to budget for these projects over multiple years, rather than budgeting for the whole project in the first year. In addition, it must be accepted that this means that a portion of each year’s budget will have to be allocated to commitments from previous years.
NATIONAL TREASURY REPUBLI C OF SOUTH AFRICA
Recommendations (2)
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NATIONAL TREASURY REPUBLI C OF SOUTH AFRICA
Thank You
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