Alignment of the Infrastructure Delivery Cycle with the Budget Cycle (Abridged Version for

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Alignment of theInfrastructure Delivery
Cyclewith the Budget Cycle(Abridged Version
for
Prepared by the Infrastructure Delivery
Improvement Programme (IDIP)
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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

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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.

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3 Year MTEF Period
MTEF Budget Cycle
These are all the concurrent budget activities
that need to be undertaken in any 1 year
Closure Processes
Budget Day
Currently it would appear that annual budgets are
prepared by updating last years budget with a
factor for inflation The annual budgets
submitted to treasury do not appear to be
informed by actual projects to be implemented in
the following year.
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Infrastructure Delivery Cycle
3 Year MTEF Period
Current Infrastructure Delivery Cycle
Infrastructure Planning
Project Design
Project Tender
Project Implementation
Implement Rolled Over Unspent Budget
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President Thabo Mbeki in his 2006 State of the
Nation Address said, Better supervision of
infrastructure projects undertaken by government
will be introduced, to ensure that capital
budgets are spent without roll-overs
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.
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Improved Infrastructure Delivery Cycle
3 Year MTEF Period
Current Infrastructure Delivery Cycle
Project Design
Project Tender
Project Implementation
Rolled Over Unspent Budget
Infrastructure Planning
Improved Infrastructure Delivery Cycle
Infrastructure Planning
The Infrastructure Plan sets out the
infrastructure priorities for the next 10 years.
It is updated annually by the Client Department.
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Infrastructure Programme Management
Implementation Plans (IPMP IPIP)
Client Department (CD)

• FUNCTIONS OF CD
• Planning
• Procurement
• Programme Management
• Monitoring Reporting

Infrastructure Plan Update
SDA with IA 1
IPMP Update
SDA with IA 2
IPMP issued to IAs
Implementing Agent IA 1
Implementing Agent IA 2
IPIP for IA 2
IPIP for IA 1
IPIPs respond to IPMP
FUNCTIONS of IAs

1. Programme Management
2. Project Initiation
3. Procurement

4. Project Implementation 5. Project
Completion 6. Monitoring Reporting
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Improved Infrastructure Delivery Cycle
3 Year MTEF Period
Current Infrastructure Delivery Cycle
Project Design
Project Tender
Project Implementation
Rolled Over Unspent Budget
Infrastructure Planning
Improved Infrastructure Delivery Cycle
Project Design
Project Tender
Project Implementation
Planned Multi-year Commitments
IPMP
IPIP
Infrastructure Planning
Monitoring Reporting
IPIP Infrastructure Programme Implementation
Plan Prepared by Implementing Agent and submitted
to Client Department for approval. Contains the
details of how the list of projects issued by the
Client Department will be implemented.
The Infrastructure Plan sets out the
infrastructure priorities for the next 10 years.
It is updated annually by the Client Department.
IPMP Infrastructure Programme Management
Plan Prepared by Client Department and given to
Implementing Agent. Contains list of projects for
the next 3 years and where they are located.
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Alignment of the Infrastructure Delivery Cycle
the 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.
Currently Infrastructure Planning is undertaken
too late to facilitate effective alignment of the
Infrastructure Delivery Cycle with the Budget
Cycle.
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Required Capacity for Departmental Infrastructure
Units
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.
Improved Infrastructure Delivery Cycle
Project Design
Project Tender
Project Implementation
Planned Multi-year Commitments
IPMP
IPIP
Infrastructure Planning
Monitoring Reporting
LEGEND IPMP Infrastructure Programme
Management Plan IPIP Infrastructure Programme
Implementation Plan
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Example of a Programme Budget to commit the
entire Annual Budget
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Managing Cashflows Across Years
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
Planned Multi-year Commitments
Project Implementation
Project Implementation
Project Design Tender
Planned Multi-year Commitments
Project Implementation
Project Design Tender
IPIP
IPMP
But here we have clusters of projects that have
been designed and are ready to go to tender
Infr. Plan update
IPMP
IPIP
NB The total value of the work in this year
equals the Annual Budget for this year
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Managing Cashflows Across Years
Planned Multi-year Commitments
Project Implementation
Project Implementation
Project Design Tender
Planned Multi-year Commitments
Project Implementation
Project Design Tender
IPIP
IPMP
We need to tender these projects earlier and
start implementation in Year 1 to offset the
potential under expenditure caused by the delayed
projects
Infr. Plan update
IPMP
IPIP
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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

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STATEMENT ON THE CABINET MEETING OF 21st February
2007.

• Cabinet approved a framework to align
  infrastructure delivery cycles with the MTEF
  budget cycle in order to improve planning,
  implementation and better cash-flow management
  that would, among other things, deal with the
  fourth quarter expenditure spike. This framework
  accommodates the long lead time before
  infrastructure projects reach the construction
  stage. The infrastructure delivery cycle will be
  amended to include an Infrastructure Programme
  Management Plan (IPMP) and an Infrastructure
  Programme Implementation Plan (IPIP) which will
  be mandatory for all departments. Best practice
  approaches will be adopted to include budget
  cycles that commit funds for the duration of the
  project without leading to the so-called
  roll-overs. This framework will require the
  appointment of appropriately skilled
  built-environment professionals across all
  relevant departments, provinces and local
  government.

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THANK YOU