Project managers to explain cost overruns

Savings measures, procurement reform show results.

Projects managers on school construction projects will in future have to explain to provincial treasuries if they exceed their budgets.

This is one of several measures introduced by National Treasury to ensure tax payers get better bang for their buck. It will enable Treasury to interrogate cost overruns, track trends, make changes to the cost model and, where necessary, take corrective action, according to the Medium Term Budget Policy Statement (MTBPS). 

Since the introduction of austerity measures in December 2013 this, together with procurement reform and budget cuts, has resulted in a 7.7% drop in government spending on non-essential items. Expenditure on consultants declined by 12.6% in real terms since 2012/13.

The austerity measures related to items such as the hiring of consultants, travel, catering, entertainment and venue hire.

Real spending growth in selected goods and services, 2012/13 – 2015/16

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The cost of essential goods and services, including medicine, fuel, computer and laboratory services has however increased by 2% in real terms. Spending on infrastructure maintenance and contracted health services have also increased. 

Government will continue with procurement reform and will submit the Public Procurement Bill for approval to Cabinet before April next year. 

The Bill will consolidate the legal and policy framework for public sector supply chain management and provide for an apex procurement authority that will ensure that public procurement is fair, equitable, transparent, competitive and cost effective, as the Constitution requires.

Public procurement will be modernised over the next year and manual processes will be automated, which will simplify and speed up supply chain management. 

Government will expend its transversal contracts over the next three years. This enables different organs of State to buy goods and services at pre-negotiated prices. This system drives down prices and decreases the administrative burden.

There are currently 50 such contracts, covering 23 000 items to the value of R37 billion. 

National Treasury is currently negotiating contracts for property and leasing, health technology, medical devices, pharmaceuticals, banking services, information and communication technology and vehicles. It targets savings of R400 million per year just on the central procurement of telecommunication services.

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