2.6 OVERVIEW OF BUDGET FUNDING OVERVIEW OF BUDGET FUNDING
2.6.3 SAVINGS AND EFFICIENCIES
2.6.3.1 Costs Savings, Productivity and Business Process Improvement Initiatives:
A number of projects have been embarked upon by the Special Projects & Cost Savings, Internal Control, Energy Office, Organizational Development and Management Services Departments, in conjunction with the relevant operational departments to improve efficiencies and reduce costs Council wide.
112 Efficiency of Business Processes & Procedures
1. Contracts Register – Controlling Procurement Contracts
In the 2017 / 2018 financial year, the Municipality had a 89% signoff by the departmental unit heads and the status of the 2018 / 2019 register is currently sitting at 77% for contracts verified , thus creating a comprehensive list of all contracts that were awarded above R 200,000 for these respective financial years. The Council wide contracts register is a control document to monitor contracts that are expiring and may need renewal so that the procurement process can start well in advance (9 - 12 months), to ensure that goods and services can be procured in time for the relevant financial year of operation.
The first phase of automating the Contracts Register has been completed, in that this now resides within the JDE- E1 accounting system and the Contracts Register for 2019 / 2020 is being produced from the JDE-Lite System, with unit heads verifying the information quarterly.
The implementation of JDE-E1 ERP system and the added module to track budgeted expenditure against actual spend, allows managers to prevent over-spending on the budgeted and contract values. The tracking of the tender process is currently being rolled out via the e-Procurement System, which links National Treasury’s Central Supplier Database (CSD) to the e-Procurement System, integrating with the ERP JDE-E1 financial system, thereby creating a seamless electronic transaction trail in the vetting and compliance of suppliers and tracking of the award of tenders and creation of contract records in the ERP JDE-E1 system. This creates an improved control and compliance environment, which reduces costs, creates greater efficiency and prevents unnecessary irregular expenditure.
2. Deadline Monitoring System
The Deadline Monitoring System (DLMS) database is an interactive database on the Intranet for users to update the status of their key deadlines. There are various In the 2017 / 2018 financial year, the Municipality had a 89%
signoff by the departmental unit heads and the status of the 2018 / 2019 register is currently sitting at 77% for contracts verified , thus creating a comprehensive list of all contracts that were awarded above R200,000 for these respective financial years. The Council wide contracts register is a control document to monitor contracts that are expiring and may need renewal so that the procurement process can start well in advance (9 - 12 months), to ensure that goods and services can be procured in time for the relevant financial year of operation.
The first phase of automating the Contracts Register has been completed, in that this now resides within the JDE- E1 accounting system and the Contracts Register for 2019 / 2020 is being produced from the JDE-Lite System, with unit heads verifying the information quarterly.
The implementation of JDE-E1 ERP system and the added module to track budgeted expenditure against actual spend, allows managers to prevent over-spending on the budgeted and contract values. The tracking of the tender process is currently being rolled out via the e-Procurement System, which links National Treasury’s Central Supplier Database (CSD) to the e-Procurement System, integrating with the ERP JDE-E1 financial system, thereby creating a seamless electronic transaction trail in the vetting and compliance of suppliers and tracking of the award of tenders and creation of contract records in the ERP JDE-E1 system. This creates an improved control and compliance environment, which reduces costs, creates greater efficiency and prevents unnecessary irregular expenditurecategories of deadlines: the main categories being internal control deadlines and legislative deadlines.
The DLMS sends out reminders to officials of pending deadlines five working days and two working days before the deadline date. The deadline system enables the user to add attachments, to generate reports and to search for archived information. The objective of the deadline monitoring system is to enable managers / officials to be proactive, better manage their sections, improve service delivery efficiency, and to meeting critical deadlines, which includes National Treasury deadlines and compliance with the Municipal Finance Management Act (MFMA). If the deadline is not updated to complete before or on the deadline date, e-mail reminders will be escalated to Senior Officials weekly until the deadline is updated. The report is then sent to top management for review on a monthly basis.
3. Water & Sanitation Augmented Plumber’s Policy
The current Water & Sanitation Augmented Plumber’s Policy was approved by Council on 27th June 2013. In addition, the unit is, for the first time, going out to tender for augmented plumbing contractors to be part of a framework contract, and the existing policy needed to internalise this. As such, Internal Control - Special Projects, is currently engaged in a project to review and amend the existing Augmented Plumber’s Policy, firstly
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to comply with the approved policy format and template, but more importantly, to include clauses on procurement of plumbing contractors, submission of invoices and documentation, performance monitoring and evaluation, financial guarantees for possible loss / damage incurred by the Municipality and benchmarking of jobs and associated costing. The above interventions, once approved by Council and implemented by the unit, will add value to the repairs and maintenance process by improving the quality of workmanship, enhancing responsibility and accountability, reducing cost to the Municipality, and improving customer service turnaround times associated with burst pipes and leaks.
4. Automation of RMS & COINS Access Requests & Incident Reporting
Currently, the business process of requesting access and reporting incidents within the Revenue Management System (RMS) & COINS systems, is a manual one. Requestors complete a template form manually, which is then signed by the relevant line manager and submitted to the IS Helpdesk for logging and allocation. This process will now be automated. Internal Control - Special Projects, in conjunction with the Information Management Unit (IMU) are currently engaged in a project to automate all manual processes into the CA Catalog System, which entails developing existing manual forms and templates into specific fields within the system. Requestors will be able to log onto the system and capture their requests. A document workflow management tool within the system will facilitate the necessary electronic approvals. Once tested, signed-off by the business and implemented, this tool will reduce customer service turnaround times, ensure effective tracking of requests and incidents logged, and improve overall productivity as a result of the anticipated reduction in turnaround times. It aslo aligns with the Municipality’s vision of a green economy, due to the reduction in use of paper and other manual processes.
5. Work Procedure Manuals
Internal Control - Special Projects is currently engaged in an on-going project, whereby all departments and sections within the Finance cluster will be reviewing and updating their work procedure manuals. Business processes will be looked at critically, analysed to effect process improvements, in order to eliminate any bottlenecks and to implement innovative ideas to improve productivity. Overall, an institutional review has been conducted, which will result in units having restructured organograms and change in staff resources. This will streamline processes and ensure continuous improvements and efficiencies, and will lead to changes to work procedure manuals and standard operating procedures, that will be reviewed annually by senior management.
Revenue Billing / Generation
6. Water & Electricity Tariff Changes Based on Actual Property Use
For Water and Sanitation, the conversion of tariffs from residential to commercial were effected for all the 1,674 properties that were identified to be mis-matched. However, the back-dating of charges for prescription purposes, which accounts for three years or from the date of transfer of the property, is still underway, with 701 still to be back-dated, and is envisaged to be completed in the current financial year. Once the back-dating has been completed, the amount of additional revenue generated in respect of prior periods will then be quantified.
For Electricity, the conversion of tariffs from residential to commercial were effected for all the 839 properties that were identified to be mis-matched. However, the back-dating of charges for prescription purposes, which accounts for three years or from the date of transfer of the property is still to be effected, and is envidaged to commence in the 2020 / 2021 financial year. Once the back-dating has been completed, the amount of additional revenue generated in respect of prior periods will then be quantified.
7. Unread Water & Electricity Meters
Internal Control - Special Projects will undertake a review of meter readings from inception .i.e. from when the meter is first registered on the billing system. This review will assist in reducing the number of meters not read and improve accuracy and correctness of readings on the billing system. It is envisaged that clear communication lines will exist, in the event of a change of water and electricity meter or a change in use or replacement of a faulty meter. The above interventions will assist in the timeous identification of all unread meters, which will result in increase in revenue and reduction of customer queries relating to estimates.
114 8. Sundry Tariffs Standardisation
For the 2019 / 2020 financial year, Internal Control - Special Projects have undertaken a project to standardise stadium tariffs for all stadia falling under the Parks, Recreation & Culture unit. However, the scope of this project excludes Moses Mabhida Stadium, since it does not fall under the Parks, Recreation & Culture unit. Moses Mabhida Stadium will be benchmarked against the various World Cup stadia across the country, in order to ascertain effectiveness and efficiency of tariffs.
Cost Saving / Recovery 9. Telephone
Since the previous financial year, Internal Control - Special Projects has reduced the Telkom bill by a further R 500, 000 per month, by cancelling unused infrastructural (PRA connections) rentals and lines. The Municipality is currently negotiating with Telkom to reduce telecommunications costs even further by entering into a Master Service Agreement (MSA), in order to incorporate all services under a single agreement. This will enable the Municipality to negotiate competitive pricing and higher discounts, with the intention to go out to public tender in the next two years for voice, Wi-Fi, data and infrastructure rentals. The Telephone Usage policy is currently being drafted for Council’s consideration, approval and implementation in the 2019 / 2020 financial year. The policy intends to control staff telephone usage and reduce costs of outgoing calls. Data use is also being reviewed, in order to reduce costs and limit unproductive time, thereby improving efficiencies and effectiveness.
Internal Control Project Strategies:
The Internal Control Unit has continued to strive towards contributing to a culture of corporate governance by ensuring that line department’s processes and procedures are aligned and inclusive of reliable and adequate controls to ensure that the assets of the City are safeguarded. In summary, the Unit has planned to deliver on new and on-going projects during the 2018/19 period of reporting as follows:
New
· Process re-engineering - Review various sundry operating procedures (SOP’s) City Wide with the objective being to embed reliable touch point Controls within the existing SOP’s or develop SOP’s where they are non-existent;
· Overtime Analyses – Review excessive overtime worked in specific line departments, identify causes of overtime, and verify Management interventions to curb/limit the overtime by tracking month to month comparisons;
· Business Continuity Management - Deliver on the Cluster mandate to implement a fully operational Business Continuity strategy across all Units within Treasury;
· Authorised Signatories Database – review and enhance the signatories database to incorporate financial limits;
· Vehicle Auctions – Provide full support in the successful execution of vehicle auctions; and
· E=Procurement System – Review all controls in the Rollout of the e-Procurement System;
On-Going
· Provide bank reconciliation service Council-wide;
· Provision of banking services for 60 months – Tender No. IF964
· Senior Citizens Project (Adhoc) – The Vendors and deliverables are to be verified in line with the agreed specifications (Once a year);
· Commitments Project (Adhoc) – Verify the disclosure of all commitments on Contracts in the Annual Financial Statements for accuracy and completeness (at Year-end);
· Executive Acquisitions Committee (EAC) – provide a compliance verification support service to the EAC with regards to Contract awards above R 10 million;
· Human Settlements – Continuous support on financial performance and operational controls relating to all aspects of housing delivery;
· Taxi Incentive Programme – Provide ongoing support to GO! Durban with the payment process;
· Risk Management – provide ongoing support for the Cluster and Units risk management portfolio’s;
· Irregular Expenditure – verification of all reports for onward submission to Bid Adjudication Committee;
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· Trending of repeat offenders in respect of irregular expenditure;
· Interrogate irregular expenditure reports for root causes and compile quarterly report to MPAC;
· Internal Audit and Auditor General Logs – continuous monitoring and unpacking of findings to assist Line Departments in implementing controls to address the root causes which gave rise to the audit finding;
· Finance Management Capability and Maturity Model (FMCMM) – Follow up on the implementation of action plans relating to the FMCMM as set out by National Treasury in compliance with the Municipal Finance and Management Act on a quarterly basis;
· City Integrity and Investigations (CIIU) Unit Recommendations: Tracking of CIIU recommendations with regard to ensuring that the recommended disciplinary procedures are implemented; and
· Ensuring that the daily EFT/ Cheque Payment Service runs efficiently.