SPAID Programmes SPAID Projects

 

The Support Programme for Accelerated Infrastructure Development / Projects

Limpopo Education Infrastructure Procurement Strategy (IPS)


Objectives

To pilot the development of a sectoral infrastructure procurement strategy with one Provincial line Department.


Background

In 2007, independent consultants, Castalia, were appointed to undertake an interview process, facilitate a workshop with key stakeholders and prepare a set of recommendations.

While the primary remit was PPPs, the research and engagement highlighted the need to engage with infrastructure sector issues more broadly. Specifically the findings indicated that
”PPPs are not integrated into sector planning.

The process for planning PPPs in South Africa is not integrated into the overall sector planning by the relevant implementing agency. Instead, PPPs are often done on an opportunistic basis which limits the extent to which they can be used effectively in any sector.” (Castalia, Key Challenges to Public Private Partnerships in South Africa Finding a Way Forward, 2007)

Furthermore several workshop participants in the PPP review process attributed South Africa’s most successful PPP transactions to careful, sector specific analysis and implementation.

In response to these issues Castalia proposed the establishment of a sector-specific planning process. The SPAID initiative expanded on this proposal. The idea as articulated in the SPAID business plan was to pilot the development of a sector specific infrastructure procurement strategy.

Given the priority status of education as well as a review of the School Improvement Programme (SIPs) it was agreed that the first pilot should be in education.


Rationale

Limpopo Education is faced with a number of challenges with respect to education infrastructure delivery. These relate to funding limitations, lack of capacity and a weakness in maintaining infrastructure.

Specifically the Province needs to find a mechanism to balance addressing education infrastructure backlogs and maintaining existing infrastructure properly. The scale of the requirement over the MTEF period is substantial – some 9700 facilities need to be addressed.

The Limpopo DoE has therefore requested National Treasury PPP Unit support to look into the development of a public-private partnership for schools delivery.

The Department faces a challenge with the development of systemic approach to determining: a) where education infrastructure should be developed and b) how this infrastructure should be procured. Additionally the process should assist with developing an approach to the ongoing maintenance of infrastructure.

The PPP Unit has indicated that the establishment of a PPP project will require such a process – typically addressed in the pre-feasibility process. Critically such a process is also required in order to demonstrate at a political level that proper consideration has been given to the assessment and that the requirements of equity have been considered. The concern (arising from the Free State experience) is that PPP project may result in inequitable outcomes which will need to be justified.

There are three overlapping interests and requirements as indicated in the figure below


Overview

The central objective of developing a sector procurement strategy is to guide the allocation of procurement resources in a more rational fashion and in this instance direct the most appropriate and best value procurement approach.

While good data exists in respect of current needs / backlogs, no adequate framework or methodology exists to help guide the appropriate procurement options that will maximise value-for-money and ensure long-term sustainability.

Importantly, the intention of the sector procurement is not primarily the promotion of PPPs, but rather the development of an appropriate methodology that will help guide implementers to select the most appropriate procurement methodology for the infrastructure taking into account its location and specific requirements.

As such the most appropriate procurement approach should encompass the following elements:

  • What infrastructure and where is it located (including scale)?
  • Nature of delivery requirements, e.g. build only, build and maintenance etc.
  • Procurement party – private contractors, PPP, maintenance outsourcers etc.
  • Procurement approach – public tender or PPP
  • Contract type – PPP, maintenance contract, partial outsource etc.

The intention is to develop a methodology that will enable planners to assess the infrastructure needs against a set of criteria and in light of key policy issues and data (e.g. the National Spatial Development Framework, Education Norms & Standards etc.).

The outcome of such an assessment should be the following:

  1. The identification of infrastructure “bundles” on a spatial and other criteria basis
  2. A clear understanding of which “bundles” are most appropriate to which procurement approach given the constraints and the desired outcomes (cost / benefit analysis)
    an indication of how this infrastructure should be procured, on what basis over what time, .e.g. one of the outcomes would be the identification of projects that could be procured and delivered on a PPP basis.

Strategic Partners

  • National Department of Education
  • Limpopo Department of Education
  • Limpopo Treasury PPP unit, National Treasuries

Outcomes

  • Development of a Sector Procurement Strategy piloted and tested
  • Strategic approach accepted and used in one Provincial Department
  • Education infrastructure project delivery in Limpopo province improves
  • There is recognition of the benefit of Sectoral Procurement Strategy by key national stakeholders (Treasury and National Education)

Outputs

  • Sector Procurement Strategy
  • Lessons learnt documented
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