PRESENTATION TO PARLIAMENT

CONDITIONAL GRANTS AND CAPITAL EXPENDITURE

3 MAY 2006

Outline

• Background• Allocations and transfers conditional

grants• Actual expenditure - conditional grants• Actual expenditure – CAPEX• Monitoring capacity – 2005/06• Service Level Agreements• Conclusion

Background

• Report based on preliminary 2005/06 results

• Spending on the majority of grants satisfactory

• Spending patterns reflect improved capacity and effective monitoring mechanisms

Allocations and Transfers – Conditional Grants

• Total amount of R1,434,939,000 allocated under grants from National Government

• Total amount of R1,434,939,000 received

Grant Allocated Received

R’000 R’000

Comprehensive HIV and AIDS Grant 251,468 251,468

Health Professionals Training and Development

192,373 192,373

Hospital Management and Quality Improvement 23,778 23,778

Hospital Revitalization 223,939 223,939

Integrated Nutrition Programme 26,954 26,954

National Tertiary Services 691,451 691,451

Forensic Pathology Services 24,976 24,976

Total 1,434,939 1,434,939

Actual Expenditure – Conditional Grants

• Total budget of R1,434,939,000• Total expenditure of R1,285,893,000• Variance between budget and actual

expenditure of R149,046,000

Actual Expenditure – Conditional Grants (Contd.)Grant Allocated Spent Variance Comments

R’000 R’000 R’000

Comprehensive HIV and AIDS Grant 251,468 239,550 11,918

Expenditure misallocated, to be allocated against grant

Health Professionals Training and Development Grant 192,373 180,090 12,283

Development portion not spent pending finalization of posts – rollover to be requested

Hospital Management and Quality Improvement Grant 23,778 19,514 4,264

Expenditure due to shortage of capacity at institutions, as spending on grant was decentralized

Hospital Revitalization Grant 223,939 125,710 98,229 Under spending due to delays in project implementation as a result of appeals against contract totalling R99 million – rollover to be requested

Integrated Nutrition Programme

26,954 26,954 -

National Tertiary Services Grant

691,451 691,451 -

Forensic Pathology Services Grant 24,976 2,624 22,352

Under spending due to late receipt of funding – rollover of funds to be requested

Total 1,434,939 1,285,893 149,046

Actual Expenditure – Conditional Grants (Contd.)

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Comprehensive HIVand AIDS Grant

HealthProfessionalsTraining and

Development Grant

HospitalManagement and

QualityImprovement Grant

HospitalRevitalization Grant

Integrated NutritionProgramme

National TertiaryServices Grant

Forensic PathologyServices Grant

Allocated Spent

Actual Expenditure - CAPEX

• Total capital budget of R1,031,952,000• Actual expenditure of R943,216,000• Variance of R88,736,000• Variance mainly due to the following:

– Under spending due to delays in project implementation as a result of appeals against the contract awarded for the high rise building at King George V

– Delays in the acquisition of assets for the development of Forensic Pathology Services due to the late receipt of the grant

Monitoring Capacity – 2005/06– Improved monitoring capacity during 2005/06– Mechanisms included:

• Monthly reports by relevant managers• Monthly meetings with external service providers (e.g.

Public Works, Ithala, IDT)• Monthly project implementation reports by external

agents– Monitoring focussed on progress with implementation of

projects and the related financial implications– Project management capacity is being enhanced through

the creation and filling of the relevant posts for further enhancements to the monitoring process

CONTRACT MANAGEMENT– The Department utilizes the following agents for infrastructure delivery:

• KZN Public Works• Ithala Development Corporation• Independent Development Trust

– The relationship with the above is through signed SLAs– The details of the SLAs are as follows:

Agent SLA in place Date signed

KZN Public Works Yes 25 September 2003

Ithala Dev Corp Yes 22 March 2005

IDT Yes 16 September 2004

CHALLENGES– Delays in implementation of projects due to appeals against

tender awards– Delays in filling certain key project monitoring posts

pending finalization of restructuring process– Delays in project implementation by the Public Works

Department, resulting in continuous delays in addressing the infrastructure backlog especially in rural areas

– Impact of the multi-year nature of projects on funding requirements and planning

Fast tracking infrastructure delivery•Department currently utilizes Dept of Works to undertake all

development of physical structures in the Province

•Challenges of capacity due to countrywide skills shortage

•Impact on delivery

•Outsourcing of some of the infrastructure delivery services to alleviate

impact

•Outsourcing through sourcing of skills and expertise from the Private

sector through PPP

•Model to be introduced as a pilot with lessons learnt replicated to

reduce

infrastructure backlogs during the 2006/07 financial year

•Particular focus on construction of clinics, residential accommodation

and Revitalization projects

•SLA with clear milestones and performance plans among DOH, Works

And Outsourced Service Providers

Conclusion

Thank You