PUBLIC ENTITIES RISK FORUM PROJECT RISK MANAGEMENT Presenter: Chief Directorate Risk Management Support | 26 February 2014 INTRODUCTION Introductory of the topic of the day – Project Risk Management “Working towards eliminating project failures in the public sector through risk management” National Infrastructure Plan – NDP and New Growth Plan Chapter 4 of the NDP - proposes the improvement of infrastructure regulation to clarify roles, strengthen accountability and reform institutional design. Involvement and embedding risk management Some examples of mega projects 2 CHALLENGES FACED BY GOVERNMENT Twenty years into our democracy, there still major challenges of poverty, unemployment and inequality The New Growth Path sets a goal of five million new jobs by 2020 NGP identifies structural problems in the economy and points to opportunities in specific sectors and markets or job drivers The first job driver is Infrastructure (projects) 3 GOVERNMENT RESPONSE - PROJECTS National Infrastructure Plan was adopted by government in 2012 Infrastructure Development Bill_October 2013 Aims to transform economic landscape while simultaneously creating new jobs and strengthen the delivery of basic services Government to spend R827 billion to build new and upgrading existing infrastructure These investments will improve access by South Africans to healthcare facilities, schools, water, sanitation, housing and electrification 4 GOVERNMENT RESPONSE Cont… Establishment of Presidential Infrastructure Coordinating Committee (PICC): • Coordinate, integrate and accelerate implementation • Implementation and monitoring of NIP • Responsible people and hold them accountable • Develop a 20 year planning framework Developed 18 strategic integrated projects (SIPs) and adopted by Cabinet: • Durban-Free State-Gauteng logistics and industrial sector • Electricity generation to support socio-economic development • Revitalisation of public hospitals and other health facilities • Expanding access to communication technology • Water and sanitation infrastructure 5 PURPOSE OF THE BILL To provide for the: Facilitation and co-ordination of public infrastructure development which is of significant economic or social importance to the Republic; To ensure that infrastructure development in the Republic is given priority in planning, approval and implementation; To ensure that the development goals of the State are promoted through infrastructure development; To improve the management of such infrastructure during all life-cycle phases, including planning, approval, implementation and operations. 6 EXAMPLES OF MEGA PROJECTS Name of Project Budget Cost Actual Cost Targeted Time Gautrain R3.5 bn R30 bn March 2011 (June 2012) Medupi R105 bn On-going (Overruns) June 2014 Kusile R120 bn On-going Dec 2014 Further R30 bn Called off Pebble Bed R9.2 bn Modular Reactor 7 Gautrain Example Time…started in 2006 to be completed in March 2011…but on this date was 99.6% complete. Risks: Water seepage problems – From Rosebank to Park Station. • Costs – further R100m to fix • Service delivery (Use of buses and time commuters spent on traffic) • Major snags and defects in Marlboro station Quality of concrete work in Rhodesfield Politics – opposition parties …..final completion on 07 June 2012. 8 COMMON CHALLENGES OF PROJECTS Poor or Lack of planning (estimation) Objectives – non-alignment with the mandate or priorities of government; Integration with normal day-to-day service delivery, such as economic effect by Gautrain, etc. Role of Risk Officers – in project process; Time and Cost escalation; Involvement and embedding risk management – inadequate knowledge and skills; 9 THANK YOU!