PRESENTATION TO THE SELECT COMMITTEE

ON APPROPRIATION

19 OCTOBER 2010

CONTENTS• BACKGROUND• 0VERALL EXPENDITURE (01/04/2010-30/09/2010)• VRYBURG HOSPITAL DETAILS• MOSES KOTANE HOSPITAL DETAILS• BRITS HOSPITAL DETAILS• BOPHELONG HOSPITAL DETAILS• GENERAL de la Rey / Lichtenburg Hospital Details• PROJECTS UNDER PLANNING• PROGRAMME IMPLEMENTATION

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HOSPITAL REVITALIZATION PROGRAMME BACKGROUND IN NORTH WEST

• The North West Department of Health and Social Development has a huge health infrastructure backlog, which affects the lives of ordinary citizens of the province.

• Through the introduction of the hospital revitalization programme the Department hopes to address this backlog.

• The Hospital Revitalization Programme started in 2003, with Moses Kotane and Vryburg Hospitals as pilot projects. However Swartruggens Hospital project was introduced and fast tracked ahead of Moses Kotane and Vryburg Hospitals and is now completed.

• The Department is expected to submit to the Committee a comprehensive status report on the Hospital Revitalization Programme regarding every project within the programme that would indicate progress, status against targets, reasons for non-achievement of targets, and expenditure against targets.

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HOSPITAL REVITALIZATION PROGRAMME BACKGROUND IN NORTH WEST

• This presentation covers projects under construction and those under planning in hospital revitalization programme with regard to:

1. spending for the first two quarters of 2010/112. performance and monitoring of the hospital revitalization grant in 2010/113. coordination of the hospital revitalization projects4. performance of the contractors and consultants5. reporting and coordination between the Departments of Health and Public

Works, Roads and Transport as well as capacity to implement the hospital revitalization grant programme.

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OVERALL EXPENDITURE FOR HRP FROM

01/04/2010 – 30/09/2010

PROJECT NAME BUDGET EXPENDITURE BY 30/09/2010

EXPECTED EXPENDITURE BY

31/03/2011

ADJUSTMENT REQUIRED

Vryburg Hospital 47,000,000.00 54,925,005.00 93,925,005.00 -46,925,005.00 Moses Kotane Hospital 46,500,000.00 79,127,411.00 96,127,411.00 -49,627,411.00 Brits Hospital 96,000,000.00 43,248,811.00 111,248,811.00 -15,248,811.00 Bophelong Hospital 96,303,000.00 24,746,397.00 96,303,000.00 - Lichtenburg Hospital 35,000,000.00 - 35,000,000.00 - Grant Management 5,500,000.00 2,430,000.00 5,500,000.00 - TOTAL = R 326,303,000.00 R 204,477,624.00 R 438,104,227.00 -R 111,801,227.00

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VRYBURG HOSPITAL DETAILS Budget and Expenditure • The project was budgeted for R47 000 000.00 and by 30th September 2010 we had

spent R54 925 005.00. • We are projecting a total expenditure of R93 925 005.00 by end of 2010/11

financial year according to the outstanding work to be completed.Progress and Monitoring• The construction of the main hospital is practically completed and the practical

completion certificate was signed on 15th December 2009. • Currently the outstanding snag list items are being attended to by the contractor.

The expected revised works completion is 30th October 2010 given the installation of the medical equipment.

• The Department has Project Managers based in the District to ensure completion of the project as well as maintenance of the facility thereafter. These managers are also responsible for the coordination of construction, commissioning and training of hospital staff.

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VRYBURG HOSPITAL DETAILS ...continues Performance of the Contractor and Consultants • On this project the main contractor has been outstanding in terms of performance. • Nominated sub-contractors for air-conditioning and electrical works have

underperformed which has caused delays in the completion of the project. • Some consultants have done well, but the Civil and Mechanical consultants did not

provide information required in time to the contractor, which delayed the completion of the project.

• Due to these delays the main contractor is claiming time delays valued at R24 million excluding VAT from the Department of Public Works, Roads and Transport. The Department is still dealing with this through its legal directorate.

• Reporting and Coordination within Departments – The Department of Public Works, Roads and Transport provides monthly technical and financial report which is assessed and confirmed by the Department. We also provide monthly financial report as well as quarterly non-financial reports to the National Department of Health.

• Capacity to Implement – The department has appointed Project Managers stationed in the District to monitor the implementation of projects and also to ensure effective maintenance of the facility (refer to the attached organogram)

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MOSES KOTANE HOSPITAL DETAILS Budget and Expenditure• The project was budgeted for R46 500 000.00 and by 30th September 2010 we had

already spent R79 127 411.00. • We are projecting a total expenditure of R96 127 411.00 by end of 2010/11

financial year according to the outstanding work to be completed.Progress and Monitoring • Due to delays in February 2010 the department took over this project

uncompleted from the Department of Public Works, Roads and Transport.• The hospital started operating from the 17th May 2010 with the majority of

medical equipments installed and commissioned. • The IT installations are also completed as required. Most of outstanding work is

nearing completion and the final delivery is expected by 15th November 2010. • The Department has Project Managers based in the District to ensure completion

of the project as well as maintenance of the facility thereafter. These managers are also responsible for the coordination of construction, commissioning and training of hospital staff.

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MOSES KOTANE HOSPITAL DETAILS ...continues Performance of the Contractor and Consultants • On this project the main contractor has failed to deliver the project in

time and some of the installations were of poor quality. • Together with the Department of Public Works, Roads and Transport we

have put an intervention on the project in March 2010 to ensure progress and improve on quality as a result the practical completion was taken on 04th March 2010 and the final delivery is expected on the 15th November 2010.

• Reporting and Coordination within Departments – The Department of Public Works, Roads and Transport provides monthly technical and financial report which is assessed and confirmed by the Department. We also provide monthly financial report as well as quarterly non-financial reports to the National Department of Health.

• Capacity to Implement – The department has appointed Project Managers stationed in the District to monitor the implementation of projects and also to ensure effective maintenance of the facility (refer to the attached organogram) 9

BRITS HOSPITAL DETAILS Budget and Expenditure • The project is budgeted for R96 000 000.00 and by 30th September 2010 we had spent

R43 248 811.00. • According to the outstanding work to be completed on the new hospital, extensions

to the makeshift hospital, staff accommodation as well as feeder facilities, we are projecting a total expenditure of R111 248 811.00 by end of 2010/11 financial year

Progress and Monitoring • The project re-started on the 27th July 2010 after five months of stoppage due to the

termination of the previous contractors. • The progress to date is at 31% completion and currently Stock Stock / Maduna /

Kanonibo JV have been appointed to continue with the project. • There is however unresolved issue of the remedial work that still has to be done. • The staff accommodation and makeshift hospital extension projects have also started

which are expected to be completed by 31st March 2011; also the feeder facilities (Bapong CHC and Letlhabile CHC) are almost completed.

• The Department has Project Managers based in the District to ensure completion of the project as well as maintenance of the facility thereafter. These managers are also responsible for the coordination of construction, commissioning and training of hospital staff. 10

BRITS HOSPITAL DETAILS ...continues Performance of the Contractor and Consultants • On this project the main contractor was provisionally liquidated in August 2009

which was confirmed in January 2010, the contract was finally terminated by Department of Public Works, Roads and Transport on 08th March 2010.

• The second contractor was then appointed from 27th July 2010. • The consultants in this project have performed well. • There is an outstanding dispute with the Department of Public Works, Roads and

Transport in which they have entered into a settlement agreement with the former contractor without the knowledge of the client department amounting to R22 million excluding VAT. It is the view of the department that there is no legal basis for this claim.

• Reporting and Coordination within Departments – The Department of Public Works, Roads and Transport provides monthly technical and financial report which is assessed and confirmed by the Department. We also provide monthly financial report as well as quarterly non-financial reports to the National Department of Health.

• Capacity to Implement – The department has appointed Project Managers stationed in the District to monitor the implementation of projects and also to ensure effective maintenance of the facility (refer to the attached organogram)

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BOPHELONG HOSPITAL DETAILS Budget and Expenditure • The project is budgeted for R96 303 000.00 and by 30th September 2010 we had

already spent R24 746 397.00. • We are projecting a total expenditure of R96 303 000.00 by end of 2010/11

financial year according to the outstanding work to be completed.• (NB: IF OUR BUDGET ADJUSTMENT REQUEST IS NOT APPROVED BY NATIONAL

DEPARTMENT OF HEALTH AND TREASURY THEN WE WILL DELAY CONSTRUCTION ON THIS PROJECT TO AVOID OVER EXPENDITURE ON THE PROGRAMME)

Progress and Monitoring• The project is still on the design stage 3 and it is delayed by budget adjustment

and project approvals. • The Department has Project Managers based in the District to ensure completion

of the project as well as maintenance of the facility thereafter. These managers are also responsible for the coordination of construction, commissioning and training of hospital staff.

• Performance of the Contractor and Consultants – On this project the appointed consultants have performed outstandingly, the designs and the reports produced are very good. 12

BOPHELONG HOSPITAL DETAILS ...continues

• Reporting and Coordination within Departments – The Department of Public Works, Roads and Transport provides monthly technical and financial report which is assessed and confirmed by the Department. We also provide monthly financial report as well as quarterly non-financial reports to the National Department of Health.

• Capacity to Implement – The department has appointed Project Managers stationed in the District to monitor the implementation of projects and also to ensure effective maintenance of the facility (refer to the attached organogram)

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GENERAL DE LA REY/LICHTENBURG HOSPITAL DETAILS Budget and Expenditure • The project is budgeted for R35 000 000.00 and by 30th September 2010 we have

spend R0.00. • We are projecting a total expenditure of R35 000 000.00 by end of 2010/11

financial year, mostly on professional fees, bulk earthworks and site establishment. • (NB: IF OUR BUDGET ADJUSTMENT REQUEST IS NOT APPROVED BY NATIONAL

DEPARTMENT OF HEALTH AND TREASURY THEN WE WILL DELAY APPOINTMENTOF THE CONTRACTOR TO AVOID OVER EXPENDITURE ON THE PROGRAMME)

Progress and Monitoring • The project is still on the design stage 3 and it is delayed by budget adjustment and

project approvals. • The Department has Project Managers based in the District to ensure completion of

the project as well as maintenance of the facility thereafter. These managers are also responsible for the coordination of construction, commissioning and training of hospital staff.

• Performance of the Contractor and Consultants – The appointed consultants have performed outstandingly, the designs and the reports produced are acceptable

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GENERAL DE LA REY/LICHTENBURG HOSPITAL DETAILS ...continues

• Reporting and Coordination within Departments – The Department of Public Works, Roads and Transport provides monthly technical and financial report which is assessed and confirmed by the Department. We also provide monthly financial report as well as quarterly non-financial reports to the National Department of Health.

• Capacity to Implement – The department has appointed Project Managers stationed in the District to monitor the implementation of projects and also to ensure effective maintenance of the facility (refer to the attached organogram)

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PROJECTS UNDER PLANNING

Project Name Progress to date

Rustenburg Regional HospitalThe Business case of Rustenburg Regional Hospital is being amended to suit current requirements by National Department of Health. The submission will be made thereafter.

Klerksdorp Regional Hospital The Business case of Klerksdorp Regional Hospital is being amended to suite current requirements by National Department of Health. Submission is to be made thereafter

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PROGRAMME IMPLICATIONS

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Financial Implications• The revitalization budget for the current financial year is R 326,303,000.00. We have already spent

R204 477 624.00 (63,07%) of our budget to date.• Most spending is on medical equipment for the commissioning of Moses Kotane and Vryburg

Hospitals. Our new projects are already at the design stage which will require implementation soon. • Due to the current commitments and limited available budget for 2010/11 financial year, we will

require National Department of Health to adjust our allocation for this financial year in order for us to cover all our commitments accordingly.

Personnel Implications• The Department has employed about 100% of the required staff on the revitalization programme. We

just employed two new Deputy Directors for Organisational Development and Monitoring & Evaluation to complete the structure of hospital revitalization.

Communication Implications• Hospital Revitalization Programme directorate continuously communicate with all relevant internal

and external stakeholders, on technical advices and updates them about the progress of the projects. Political Implications• With two of the hospitals completed and operational this year 2010, the delivery on promises made

to improve the lives of our people by building and improving current public health facilities would be realised. The better life for all is slowly becoming a reality with every completed project.

Legal Implications• The department endeavours to implement all projects according to applicable legislation and

regulations.

THANK YOU

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