Infrastructure Procurement Strategy Module for Programme Management.

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Providing guidance to programme managers on applying management principles for infrastructure delivery, this module emphasizes synergy with Portfolio, Operations & Maintenance, and Project Management. Key topics include procurement strategy, timelines, reporting, risk management, and performance audit trails.

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INFRASTRUCTURE DELIVERY MANAGEMENT SYSTEM (IDMS) KNOWLEDGE CIRCLES Presented by: Title: Module 7: Programme Management Knowledge Circle on Infrastructure Procurement Strategy (IPS) Module 7: Programme Management Knowledge Circle on Infrastructure Procurement Strategy (IPS) Date:

INFRASTRUCTURE DELIVERY MANAGEMENT SYSTEM (IDMS) KNOWLEDGE CIRCLES Module 7: Programme Management Knowledge Circle on Infrastructure Procurement Strategy (IPS) PRESENTED BY: DATE:

MODULE 7 Programme Management (Version 5.0) 3

Purpose of Module 7: Programme Management To provide programme manager(s) with guidance to enable them to apply programme management principles, together with the relevant subject matter material pertaining to infrastructure delivery management, to plan and manage their respective programmes of work. It is important to note that the application of programme management on its own is not sufficient to plan and implement the work required to sustain the performance of infrastructure assets needed for public service delivery. It is reliant on working in synergy with the other three infrastructure delivery management modules of Portfolio Management, Operations and Maintenance Management and Project Management. 4

Purpose of Module 7: Programme Management Module 7 is reliant on working in synergy with the other three infrastructure delivery management modules of Portfolio Management, Operations and Maintenance Management and Project Management. MODULE 6 Portfolio Management Process MODULE 7 Programme Management Process MODULE 8 Operations & Maintenance Management Process MODULE 9 Project Management Process & Project Lifecycle 5

Table of Contents 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Executive Summary Introduction Infrastructure Programme Procurement Delivery Plan Contracting Arrangements Procurement Arrangements Infrastructure Procurement Strategy Timelines and Milestones Reporting Requirements and Performance Reporting Risk Management Plan Strategies To Achieve Effectiveness, Efficiencies And Value-for-money State of Readiness Performance Audit Trail Improvement Plan Conclusion Annexures 6

1. Executive Summary The executive should give an overview of the following: Summarise and emphasise key issues contained in the body of the IPS and provide readers with a concise overview on the entire IPS. Brief description of the institution s strategic objectives and alignment to IPS. Brief outline of the institution s infrastructure objectives as outlined in the IAM policy, SIAMP and IAMP. Summarise the delivery plan, contracting arrangements and procurement arrangements. 7

2. Introduction The introduction contextualises the IPS content and the structure for the reader 2.1 Purpose of the IPS The purpose of the IPS should include the content provided below: Indicate how the scope of work articulated in the IPMP will be procured in order to achieve the targets planned in the MTEF period. Assist in identifying the best way of achieving procurement objectives and value-for-money, whilst considering risks and constraints. Assist in elevating procurement issues to strategic and tactical levels of planning. Confirm the optimal combination of contracting arrangements and procurement arrangements for each contract in the Delivery Plan. Indicate the methodology for procurement of the resources per project, package or programme required to execute the delivery of infrastructure. Indicate how the IPS will be used to achieve efficiencies, effectiveness and value-for-money 8

2. Introduction 2.2 Background The Delivery Management Strategies are intended to: Provide guidance on the management of the demand for infrastructure assets; Provide guidance on the management of strategic infrastructure risks; Ensure the availability of funds for infrastructure delivery; Ensure the timeous identification of suitably capacitated human resources for the design, construction and management of the infrastructure asset related projects and operations and maintenance activities. 9

2. Introduction 2.3 The IPS in Context The following content must be considered when contextualising the IPS within broader infrastructure planning and procurement: Reference to the Framework for Infrastructure Delivery and Procurement Management (FIDPM) requirements, in so far as the IPS is concerned; Alignment and interrelationship between the IPS and other control point and stage gate deliverables (e.g., SIAMP, IAMP, IPMP, IPIP, OMP, MMP and RMP); Reflect on guidance from Module 7, Programme Management and the IDM Process diagram to locate the IPS and highlight the fact that it interacts with all the other processes and therefore should not be seen in isolation, but as an integral part of the IDM processes; Reference the CIDB Standard for Uniformity in Engineering and Construction Works Contracts; Reference your own organ of state s Infrastructure Delivery and Procurement Management policy and the broader SCM Policy, Existing Resourcing Strategy, IAM Policy and Portfolio Management Review Report; The control point deliverable is complete when the Infrastructure Procurement Strategy is approved; The Accounting Officer is to keep record of Procurement Gate approvals. The IPS indicates infrastructure procurement requirements, infrastructure procurement gates and procurement documentation. 10

2. Introduction 11

2. Introduction 12

2. Introduction 2.4 Legislative Framework This section should list key pieces of legislation, standards, guidelines and frameworks that have an impact on the IPS, which have to be considered when developing an IPS, to ensure alignment. These include but are not limited to the following: Constitution of the Republic of South Africa, Act 108 of 1996; Public Finance Management Act (PFMA), Act 1 of 1999; Broad Based Black Economic Empowerment Act, Act 53 of 2003; Preferential Procurement Policy Framework Act, Act 5 of 2000; Division of Revenue Act (DoRA) (for the applicable financial year); Council for the Built Environment Act, Act 43 of 2000; Construction Industry Development Board (CIDB), Act 38 of 2000; CIDB - Standard for Uniformity in Engineering and Construction Works Contracts; Framework for Infrastructure Delivery and Procurement Management (FIDPM); Departmental Supply Chain Management policy; Supply Chain Management Act Regulations 13

2. Introduction 2.5 Source Documents The organ of state should be aware of the purpose and submission schedule of the applicable IPS source documentation, and then demonstrate an understanding of the influence and application of the following documentation on the development of an IPS: Previous year Infrastructure Procurement Strategy (IPS); Programme Charters; Estimates of Capital Expenditure (ECE); Tabled B5 Project List; In Year Monitoring (IYM); The Infrastructure Reporting Model (IRM); Strategic Plan; Annual Procurement Plans; Infrastructure Strategy (e.g., SIAMP); Infrastructure Plans (e.g., IAMP, UAMP, RAMP, etc.); Infrastructure Programme Management Plan (IPMP); Infrastructure Programme Implementation Plans (IPIP); Infrastructure Programme End of Year (EoY) Report; Supply Chain Management reports (SCM); Commitments Register. 14

3. Infrastructure Programme Procurement 3.1 Procurement Scope Overview The scope of the procurement overview should consider the following points: Indicate the objectives of the infrastructure programme (Branch or unit responsible for infrastructure delivery within an institution), as articulated in the organ of state s strategic plan. Indicate the high-level IPS responsibilities (How government s vision to create opportunities for social and economic growth through infrastructure investment is supported by the procurement of resources in the IPS). Indicate the branch/division responsible for the procurement of infrastructure. Indicate the governance structures relevant to the IPS. Demonstrate alignment between the IPS and the Infrastructure procurement plan/schedule. Provide motivation of a Delivery Plan, Contracting Arrangements and Procurement Arrangements. Discuss strengths and weaknesses of the motivations (i.e., with regards to technical competence and capacity). 15

Below is a table derived from the IPMP to be used as the base to indicate the number of programmes, packages, and projects per the infrastructure programme, nature of investment, and the 3-year budget cycle. Medium-Term Estimates Total Number of Infrastructure Programmes / Projects Budget Total Infrastructure Programme / Project Cost (R'000) Expenditure to date from previous years (R'000) Source of Funding Budget Programme Name No Nature of Investment Sub-Programme Name 2022/23 (R'000) 2024/25 (R'000) 2023/24 (R'000) New Programmes 1 Operations 2 Maintenance and Repairs Renewals (Rehabilitation and Refurbishments ) 3 4 Upgrades and Additions 5 New Infrastructure Assets 6 Disposal 7 Non-Infrastructure Total New Programmes Existing Programmes 1 Operations 2 Maintenance and Repairs Renewals (Rehabilitation and Refurbishments) 3 4 Upgrades and Additions 5 New Infrastructure Assets 6 Disposal 7 Non-Infrastructure Total Existing Programmes Total New & Existing Programmes 16

3. Infrastructure Programme Procurement 3.2 Delivery Management Strategy The Delivery Management Strategy (DMS) is developed at a portfolio management level in Strategic Planning and it is an important input into Infrastructure Programme Planning and Programme Resourcing processes at a programme management level. The DMS consists of four strategies namely; Demand Management Strategy, Risk Management Strategy, Funding Strategy and the Resourcing Strategy. The Department should consider the following content: Analyse the Delivery Management Strategy of the Department as developed and articulated at a portfolio management process level. Summarise the organ of state s Demand Management Strategy, Risk Management Strategy, Funding Strategy and the Resourcing Strategy for purposes of alignment. 17

4. Delivery Plan The Delivery Plan documents decisions related to procurement objectives, delivery management and the packaging/grouping of work for delivery under a single contract, or an order (framework contract). Indicate actions to ensure resourcing is undertaken in accordance with the Delivery Plan in the attached Annexure B. Delivery Plan Steps Document procurement objectives Document delivery management arrangements Decide on packages / grouping of works Analyse information IAM Plan (Delivery Management Strategy) Own resources Delivery procurement objectives Package / group work for delivery under a single contract Implementing Agent (IA) Developmental procurement objectives IPMP (Programme briefs) Framework Agreement (including other organs of state) Package / group work for delivery as an order (Framework Agreement) Consolidated Lifecycle Management Plan for MTEF Outsource specific services Lease agreement PPP follow NT PPP procedures 18

5. Contracting Arrangements 5.1 Contracting Arrangements for Works Contractor for Works Contractor Documenting contracting arrangements for works contractors to include the following actions: Indicate decisions taken on contracting arrangements for works contractors per project, package or programme, as per Annexure B. Clearly indicate the contract arrangements selection that supports effectiveness and efficiencies of service delivery. Indicate contracting arrangement decisions in relation to service requirements for works, CIDB contractor grading, pricing strategy, form of contract, support of industrial and enterprise development, works classification to apply contracting strategy functionality, and contracting strategy as prescribed in the SFU. Note that deviations from the contracting arrangements should only be done on approval of the Client. Describe the application of the Contracting Arrangements for Works Contractors in the Word template and as listed in the attached excel spreadsheet (Annexure B). 19

5. Contracting Arrangements 5.1 Contracting Arrangements for Works Contractor for Works Contractor Contracting Arrangements Steps for Works Contractor: Identify service requirements for works Decide on contracting strategy Decide on pricing strategy Decide on form of contract Forms of contract selected for each contract type: Engineering & construction works contract Service contract Supply contract Contracting Strategy options: Management contract Design & Construct Develop & Construct Design by Employer Pricing Strategy options: Select standard pricing strategy according to contract type: Price-based contract or Cost-based contract Service requirement options: Construction, Maintenance, Construction & maintenance, Construction, operation & maintenance, Supply and install 20

5. Contracting Arrangements 5.2 Contracting Arrangements for Professional Services Documenting contracting arrangements for Professional Services include the following actions: Indicate decisions taken on contracting arrangements for Professional Services per project, package or programme, as per Annexure. Clearly indicate the contract arrangements selection that support effectiveness and efficiencies of service delivery. Indicate the selected complementary and/or appropriate contracting strategies, pricing strategies and forms of contract for the professional service areas that are needed to deliver the works in the Delivery Plan. Note that Deviations from the contracting arrangements should only be done on approval of the Client. Describe the application of the Contracting Arrangements for Professional Services in the Word templates and listed in the attached excel spreadsheet (Annexure B). 21

5. Contracting Arrangements 5.2 Contracting Arrangements for Professional Services Contracting Arrangements Steps for Professional Services: Identify Professional service areas Decide on contracting strategy Decide on pricing strategy Decide on form of contract Forms of contract options: Professional service contracts select from CIDB s approved list of standard forms of contract Contracting Strategy options: Single discipline Multi-disciplinary, Appointment mode: Programme/sub- programme Individual project Package (multiple projects) Framework agreement Pricing Strategy options: Select standard pricing strategy according to contract type: Price-based contract Cost of construction contract Cost-based contract Professional service areas include: Design Cost control Engineering Project Management Construction management 22

6. Procurement Arrangements for Works Contractor and Professional Services Procurement Arrangements enable the Programme Manager to identify the best way of achieving procurement objectives (delivery and developmental) and value- for-money, whilst taking into account risks and constraints. Deviations from the procurement arrangements decisions for both Works Contractors and Professional Services should only be done on approval of the Client. The application of the Procurement Arrangements for both Works Contractors and Professional Services should be described in the Word template and be applied in the attached excel spreadsheet (Annexure B). 23

6. Procurement Arrangements for Works Contractor and Professional Services Indicate Procurement Arrangements decisions taken for both the works contractor and professional services. Procurement arrangements decisions and steps: Decide on functionality and quality strategy Decide on procurement procedure Decide on targeted procurement procedure Decide on tender evaluation method Tender evaluation method options: Select from CIDB s Standard for Uniformity in Construction Procurement and SANS 1-845-1 list of permitted tender evaluation methods Procurement procedure options: Competitive selection Competitive negotiation Negotiation procedure Targeted procurement procedure options: Targeted procurement procedures select from list of permitted targeted procurement procedures Functionality and quality strategy options: Select permitted functionality and quality criteria from CIDB s Standard for Uniformity in Construction Procurement and SANS 10845-1 24

7. Infrastructure Procurement Strategy Timelines and Milestones For institutions where Performance Based Grants are applicable, indicate the additional IPMP drafts required before incentive allocation, and after the incentive allocation. Prepare a table, outlining the various Programme Timelines and Milestones. The table shown below is a baseline example, which is to be used and modified, as appropriate. Responsible Person / Unit MILESTONES Target Date 1. Annual IPS i. ii. iii. iv. v. Finalised IAMP Draft IPMP submission Draft IPS submission IPS assessed by the relevant Treasury Final signed IPS submission to the relevant Treasury 25

8. Reporting Requirements and Performance Reporting The IPS forms the base of, and informs, the infrastructure procurement plan, as it guides programme resourcing per project/ programme and package. Reporting requirements should include, but are not limited to: Alignment to the IRM, procurement performance reporting. BSC, BEC and BAC completed. Register of awarded contracts. Reporting on variations from the IPS. Contract orders closed and cross reference to the IRM. Reporting requirements for the IPS should be institutionalised through the identified operational and strategic governance structures. 26

9. Risk Management Plan Identify risks that will impact on the successful delivery of the IPS from an infrastructure delivery and an SCM delivery point of view (aligned to the applicable unit risk management processes and procedures). 27

10. Strategies to Achieve Effectiveness, Efficiencies & Value for Money Outline strategies that will be used to achieve effectiveness, efficiencies and ensure that value for money is derived based on the decisions taken on Delivery Plan, Contracting Arrangements and Procurement Arrangements. A key example of improvement in the procurement decisions taken could be whether contracting arrangements, other than that of Design by Employer, are explored and initiated to deliver and maintain infrastructure, in an effective and cost-efficient manner. 28

11. State of Readiness State of readiness can be demonstrated at various levels: A summarised version of the implementation readiness, as indicated in the project concept reports, covering the institutional capacity and a procurement plan. Indication of the capacity of both the infrastructure branch/unit and the Supply Chain Management unit capacity and performance to deliver and procure the planned infrastructure programmes and projects. Indicate the gaps, plan to address the gaps and provide indicative dates of when these gaps will be addressed. Provide a summary of audit outcome reviews, and indicate the mitigation steps included in this IPS. 29

11. State of Readiness As part of good governance: The Accounting Officer must keep a record of Procurement Gate approvals and documentation as part of good governance and audit trail. The delegated person or body should adhere to the Performance Audit Trail of all the deliverables required throughout the infrastructure delivery process, in compliance with professional infrastructure delivery disciplines, infrastructure-related supply chain management requirements and the IDMS. Proper document management system should be put in place. 30

12. IPS Improvement Plan The institution should propose actions to be implemented in the IPS to improve the evaluation / assessment results process. Provide a self-assessment on the contents of this document, and indicate the sections that could be improved. Provide a self-assessment on the alignment between the IDMS supporting documents for Module 7 Control Points and indicate the sections which could be improved. Obtain inputs from capacity and audit outcome reviews. IPS Improvement Recommendations No. Identified Issue Proposed Corrective Actions Date of Planned corrective Actions Responsible Person 31