Dube TradePort Company
Association incorporated under section 21 of the Companies Act
Annual Performance Plan 2009/10
1 Foreword
One of the most significant economic development infrastructure initiatives of the KwaZulu-Natal province is the Dube TradePort, which comprises an international airport, a Cargo Terminal, a TradeZone, an AgriZone, an IT Platform and associated property developments in the Support Zone. The key objective of the Dube TradePort is to establish a globally competitive integrated export platform to serve aviation linked economic sectors and to serve as a catalyst for sustainable job creation and private sector investment over the next 60 years.
The Dube TradePort flagship project of the province of KwaZulu-Natal, aligned to the national priorities of social and economic infrastructure and speeding up growth and transforming the economy, has made substantial progress over the last financial year. On the construction front more than 50% of the project has been completed and more than 3 500 people are currently employed on the site. What has been particularly impressive is that the contractor was able to bring the construction time back into the March 2010 deadline after 75 days were lost. A little over R3 billion has been spent during the 2008/9 financial year from the combined contributions of the DTP and our partners in the Airports Company of South Africa.
The Minister of Environmental affairs also issued his decision with respect to all the appeals lodged in the EIA process. No appellants litigated the Minister’s decision which clearly reflected the thoroughness and rigour in the EIA process. All the EIA obligations were programmed in the course of the year and in the next financial year these obligations will be implemented.
Draft legislation to convert the DTP TradePort Section 21 Company into a public entity was also developed, approved by provincial cabinet and tabled with the Provincial Legislature. The Portfolio Committee on Finance and Economic Development also held public consultations with respect to the Dube TradePort Corporation Bill. In the new financial year the Bill will be further debated and we expect it to be approved by the Legislature.
Good progress has also been made with respect to the competitive issues facing the Dube TradePort. Emirates have been convinced to provide an international air service from Durban to Dubai starting in October 2009. This is particularly pleasing as it indicates the confidence the airline has in our local market to grow their business.
We have also made good progress with Tongaat Hulett Property Developments and the eThekwini Municipality with respect to the broader land use allocations within a 30 km radius around the La Mercy site. This ensures that there will be proper planning and land use management to avoid the mistakes made in the past of locating residential uses in noise zones impacting negatively on the quality of life of our people.
2 As MEC of Economic Development and Tourism and on behalf of the Government of KwaZulu-Natal, I fully endorse the Dube TradePort strategy, programmes and targets as contained in this Annual Performance Plan and have no doubt that they reflect our policies, strategies and goals which are realistic, appropriate and deliverable.
Mr Michael Mabuyakhulu MEC for Economic Development & Tourism KwaZulu-Natal Province
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Table of contents
1 Overview ...... 9
1.1 Introduction ...... 9
1.2 Overall DTPC’s delivery targets on key delivery areas ...... 12 2 Strategic plan update analysis ...... 13
2.1 Recent Operational Developments ...... 13
2.1 The EPC Contract ...... 14
2.1.1 The Agency Agreement ...... 14 2.2 Vision, Mission, Principles and Values ...... 15
2.2.1 Vision ...... 15 2.2.2 Mission ...... 15 2.2.3 Principles and values ...... 15 2.3 Legislative and other Mandates ...... 15
2.4 The strategic planning process ...... 17
3 Programme 1: Administration ...... 19
3.1 Specific policies, priorities, and strategic objectives ...... 20
3.2 Progress analysis ...... 20
3.3 Analysis of constraints and measures planned to overcome them ...... 20
3.4 Description of planned quality improvement measures ...... 21
3.5 Sub-programme: Office of the CEO ...... 21
3.5.1 Specific policies, priorities, and strategic objectives ...... 21 3.5.2 Progress analysis ...... 22 3.5.3 Analysis of constraints and measures planned to overcome them ...... 22 3.5.4 Description of planned quality improvement measures ...... 23 3.5.5 Specifications of measurable objectives and performance indicators ...... 23 3.6 Sub-programme: Financial management ...... 23
3.6.1 Specific policies, priorities, and strategic objectives ...... 23
4 3.6.2 Progress analysis ...... 24 3.6.3 Analysis of constraints and measures planned to overcome them ...... 24 3.6.4 Description of planned quality improvement measures ...... 24 3.6.5 Specifications of measurable objectives and performance indicators ...... 24 3.7 Sub-programme: Corporate Services ...... 26
3.7.1 Specific policies, priorities, and strategic objectives ...... 26 3.7.2 Progress analysis ...... 26 3.7.3 Analysis of constraints and measures planned to overcome them ...... 27 3.7.4 Description of planned quality improvement measures ...... 27 3.7.5 Specifications of measurable objectives and performance indicators ...... 27 3.8 Sub-programme: Marketing ...... 28
3.8.1 Specific policies, priorities, and strategic objectives ...... 28 3.8.2 Progress analysis ...... 29 3.8.3 Analysis of constraints and measures planned to overcome them ...... 29 3.8.4 Description of planned quality improvement measures ...... 30 3.8.5 Specifications of measurable objectives and performance indicators ...... 30 3.9 Reconciliation of budget with plan ...... 31
4 Programme 2: Technical Services ...... 32
4.1 Sub-programme 1: Master Planning ...... 33
4.1.1 Specific policies, priorities, and strategic objectives ...... 33 4.1.2 Progress analysis ...... 34 4.1.3 Analysis of constraints and measures planned to overcome them ...... 34 4.1.4 Description of planned quality improvement measures ...... 34 4.1.5 Specifications of measurable objectives and performance indicators ...... 35 4.2 Sub-programme 2: EIA RoD ...... 35
4.2.1 Specific policies, priorities, and strategic objective ...... 35 4.2.2 Progress analysis ...... 36 4.2.3 Analysis of constraints and measures planned to overcome them ...... 36 4.2.4 Description of planned quality improvement measures ...... 37 4.2.5 Specifications of measurable objectives and performance indicators ...... 37 4.3 Sub-programme: Air Services ...... 38
4.3.1 Specific policies, priorities, and strategic objective ...... 38 4.3.2 Progress analysis ...... 38
5 4.3.3 Analysis of constraints and measures planned to overcome them ...... 38 4.3.4 Description of planned quality improvement measures ...... 39 4.3.5 Specifications of measurable objectives and performance indicators ...... 39 4.4 Sub-programme: Cargo Terminal Operations ...... 40
4.4.1 Specific policies, priorities, and strategic objective ...... 40 4.4.2 Progress analysis ...... 40 4.4.3 Analysis of constraints and measures planned to overcome them ...... 41 4.4.4 Description of planned quality improvement measures ...... 41 4.4.5 Specifications of measurable objectives and performance indicators ...... 41 4.5 Sub-programme: Spatial Planning ...... 42
4.5.1 Specific policies, priorities, and strategic objectives ...... 42 4.5.2 Progress analysis ...... 42 4.5.3 Analysis of constraints and measures planned to overcome them ...... 43 4.5.4 Description of planned quality improvement measures ...... 44 4.5.5 Specifications of measurable objectives and performance indicators ...... 44 4.6 Reconciliation of budget with plan ...... 45
5 Programme 3: Commercial Development ...... 46
5.1 Sub-programme: TradeZone...... 47
5.1.1 Specific policies, priorities, and strategic objectives ...... 47 5.1.2 Progress analysis ...... 47 5.1.3 Analysis of constraints and measures planned to overcome them ...... 50 5.1.4 Description of planned quality improvement measures ...... 50 5.1.5 Specifications of measurable objectives and performance indicators ...... 51 5.2 Sub-programme: Support Zone ...... 53
5.2.1 Specific policies, priorities, and strategic objectives ...... 53 5.2.2 Progress analysis ...... 54 5.2.3 Analysis of constraints and measures planned to overcome them ...... 55 5.2.4 Description of planned quality improvement measures ...... 55 5.2.5 Specifications of measurable objectives and performance indicators ...... 55 5.3 Sub-programme: Joint Venture ...... 57
5.3.1 Specific policies, priorities, and strategic objectives ...... 57 5.3.2 Progress analysis ...... 57 5.3.3 Analysis of constraints and measures planned to overcome them ...... 58
6 5.3.4 Description of planned quality improvement measures ...... 59 5.3.5 Specifications of measurable objectives and performance indicators ...... 59 5.4 Reconciliation of budget with plan ...... 60
6 Programme 4: Infrastructure & Development ...... 61
6.1 Sub-programme: EPC ...... 62
6.1.1 Specific policies, priorities, and strategic objectives ...... 62 6.1.2 Progress analysis ...... 62 6.1.3 Analysis of constraints and measures planned to overcome them ...... 63 6.1.4 Description of planned quality improvement measures ...... 63 6.1.5 Specifications of measurable objectives and performance indicators ...... 63 6.2 Sub-programme: Business Development ...... 64
6.2.1 Specific policies, priorities, and strategic objectives ...... 64 6.2.2 Progress analysis ...... 65 6.2.3 Analysis of constraints and measures planned to overcome them ...... 65 6.2.4 Description of planned quality improvement measures ...... 65 6.2.5 Specifications of measurable objectives and performance indicators ...... 65 6.3 Sub Programme: Regional Development Investment Programme ...... 66
6.3.1 Specific policies, priorities and strategic objectives ...... 66 6.3.2 Progress analysis ...... 66 6.3.3 Analysis of constraints and measures planned to overcome them ...... 66 6.3.4 Description of planned quality improvements ...... 67 6.3.5 Specifications of measurable objectives and performance indicators ...... 67 6.4 Sub Programme: IT Platform ...... 68
6.4.1 Specific policies, priorities, and strategic objectives ...... 68 6.4.2 Progress analysis ...... 68 6.4.3 Analysis of constraints and measures planned to overcome them ...... 68 6.4.4 Description of planned quality improvement measures ...... 69 6.4.5 Specifications of measurable objectives and performance indicators ...... 69 6.5 Sub Programme:AgriZone ...... 70
6.5.1 Specific policies, priorities, and strategic objectives ...... 70 6.5.2 Progress analysis ...... 71 6.5.3 Analysis of constraints and measures planned to overcome them ...... 71 6.5.4 Analysis of constraints and measures planned to overcome them ...... 72
7 6.5.5 Specification of measurable objectives and performance indicators...... 72 6.6 Reconciliation of budget with plan ...... 73
8. Medium-term revenues ...... 75
8.1 Summary of revenue ...... 75
8.2 Departmental revenue collection ...... 75
8.3 Donor funding ...... 75
9. Co-ordination, co-operation, and outsourcing plans ...... 75
9.1 Interdepartmental and local government linkages ...... 75
9.2 Public entities ...... 76
9.3 Public, private, outsourcing, etc ...... 76
10. Financial Management ...... 77
10.1 Strategies to address audit queries ...... 77
10.2 Implementation of PFMA ...... 77
11. List of acronyms and abbreviations used in the document ... 78
8 Part A: Overview and Strategic Plan Updates
1 Overview
1.1 Introduction
The Dube TradePort Section 21 Company (DTPC) was established to facilitate the development of a world class aviation linked export platform which will serve as a catalyst for sustainable job creation, and private sector investment. The Dube TradePort is a long term master planned development phased over the next 60 years. Key elements include: an international airport; a cargo terminal; a TradeZone; an AgriZone; an Information Technology Platform and associated property developments in the Support Zone.
The new international airport, includes a 3,700m runway (able to expand to 4,000m), a passenger terminal and a number of retail and other related concessions.
FIG 1: Passenger Terminal Building
With an initial capacity to handle approximately 7.2 million passengers, the passenger terminal is well geared to handle the expected influx of visitors to Durban for the soccer World Cup and beyond.
• The Cargo Terminal, includes development of a state-of-the-art cargo terminal with the ultimate aim of establishing reliable and effective cargo operations and positioning Durban as a Cargo Hub.
• The TradeZone, provides a specialised property and facilities environment adjacent to the Cargo Terminal for the import and export of air cargo where tenants, operators, producers and service industries can achieve high levels of productivity, logistical efficiencies and competitiveness.
9 • The AgriZone provides a growing area for perishables of export quality, pack houses and associated training facilities.
• The IT platform is an integrated platform created to provide value added services to DTP facilities, clients, tenants and users with the main objective of enabling our clients to operate efficiently within a paperless environment.
• The Support Zone 1 comprises a 12ha platform adjacent to the passenger terminal where land will be released for the development of office, hotel and retail facilities for companies that require location near the airport as well as providing an urban environment that will support developments which look to serve the adjoining communities and wider region.
It is planned that the Dube TradePort will be operational by 2010 and accommodate 7.2 million passengers and approximately 100 000 tons of cargo. These facilities will grow in terms of the long term master plan and capacity requirements as set out in the master plan.
The DTPC established in 2005, serves as a special purposed vehicle to oversee the project development, the planning and construction of the first phase of the master plan. New legislation has been presented to Cabinet to approve the KZN DTP Corporation Bill in order to create a public entity that would drive the operational phase of the project and fulfill the objectives set out in the long term master plan.
The strategic goals of the DTPC are therefore focused on:
Serving as a catalyst for aviation linked economic development Operationalising the core DTP business units Adhering to good corporate governance Proactively engage relevant stakeholders and manage processes
The strategic goals and associated strategic objectives (per goal as indicated below) drive the four programmes of the DTPC. The programmes are divided into administration; technical services; commercial development and infrastructure and development.
Strategic goal 1: To serve as a catalyst for aviation linked economic development Key Strategic objectives
To establish regional and international air connectivity To position the DTP Cargo Terminal as the terminal of choice To facilitate commercial opportunities and new business development To attract long term investment from the both the private and public sector To review the DTP Master Plan (2010-2015)
10 To draw down development rights with regard to Special Zone 10 and acquire further development rights as required with surrounding growth patterns To plan and secure additional development rights for specific projects within the Dube TradePort region To master develop and secure investment into the Support Zone To master develop and secure investment into the Joint Venture land
Strategic Goal 2: To operationalise the core DTP business units Key Strategic objectives
To develop and maintain strategic capability within DTP To optimise the operational model of DTP To co-ordinate and ensure the successful execution of the EPC Contract To effectively monitor implementation of and adherence to DTPC’s EIA obligations post commissioning of the project To establish effective operation, management and maintenance of the TradeZone To design, construct and operate the AgriZone efficiently To establish effective operation, management and maintenance of the Support Zone To establish and maintain an effective IT platform
Strategic Goal 3: To adhere to good corporate governance Key Strategic objectives
To ensure statutory compliance in respect of financial management To implement sound financial management practises To implement best practise in terms of corporate governance
Strategic Goal 4: To proactively engage and manage relevant stakeholders Key Strategic objectives
To commercialise DTP economic opportunities utilising strategic partnerships To identify and establish key public and private sector partnerships To promote project awareness and develop a DTP brand
Each of the programmes is linked to the strategic goals and objectives of DTPC to ensure harmonisation of goals and objectives. Programme strategic objectives are further broken down into measurable objectives which help define and determine concrete measurable action steps. Each action step should lead to an output with definable quality and or quantity characteristics.
11 Progress toward the achievement of the strategic objectives is measured quarterly and at the end of each year by a system of measures against predetermined targets, while progress toward the achievement of the DTPC’s strategic goals is assessed less frequently and toward the end of the time span of the DTPC’s strategic plan, against desired, specific outcomes, by a system of indicators.
The programme strategic objectives, measurable objectives, and performance measures or indicators, as well as targets that the DTPC has set itself for the new MTEF cycle are presented under the individual programmes as part of this Annual Performance Plan document.
In mirroring the nature of the project, DTPC boasts a highly skilled, dynamic and competent management team. The management team and indeed the entire staff complement are committed to deploying its energy, skills, and other resources toward the successful implementation of the programmes and activities identified in this Annual Performance Plan document.
1.2 Overall DTPC’s delivery targets on key delivery areas
The following table presents the overall minimum targets for the entire DTPC on key delivery areas.
2007/8 2008/9 2009/10 2010/11 2011/12 Key delivery areas (Actual) (Est) (Target) (Target) (Target)
Competitiveness: n/a Secured 1 1 1 1 Secure new routes to international DTP (cumulative) carrier to DTP 10,000 tons of 20,000 tons Export tonnage from export from of export DTP (cumulative) DTP from DTP
Job creation Number of temporary 1 200 2 600 1 200 800 n/a jobs created (Construction phase)
Number of permanent jobs 350 450 500 created (post construction)
Economic R 600 million R 1,3 billion R 1,6 billion R 500 million R 500 million empowerment impact
Investment leveraging n/a n/a n/a R 250 million R 350 million
Projected delivery targets for the MTEF period
12 2 Strategic plan update analysis
2.1 Recent Operational Developments
During the 2008/9 year our extensive acceleration programme was finalised, implemented and continues to be monitored, with most of the physical construction of the project expected to be complete by December 2009. In this regard we are proud to announce that the following projects are on track for timeous completion: Cargo Terminal TradeZone AgriZone Airside Support zone 1
A significant achievement has been the completion of the ATC tower in record time, when compared to other similar developments globally. This process called for innovation and we happy to say our team rose to the occasion.
The passenger terminal has progressed ahead of schedule due to the innovative methods used, such as commencing finishing of an area directly upon completion of physical contraction of that area instead of waiting until the complete building has been completed.
Passenger Terminal as at March 2009
Interactions with stakeholders have become more qualitative as the construction phase gets closer to completion. The private sector is very active with regard to the role it will play in the project, either via tenantPhoto take up, of retailactual concessions construction or commercial/propertyprogress on site – if opportunities. possible?
Another significant milestone achieved was the conversion of the 99 year notarial leases to free hold land purchased and owned by DTPC for TradeZone and AgriZone. In addition the DTPC now has a further 10% shareholder in the JV company responsible for the Support Zone.
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2.1 The EPC Contract
The Design, Construction and Maintenance for the Dube TradePort was procured as an EPC (Engineer, Procure and Construct) Contract. The EPC contract is a turnkey contract at a fixed price (R6.8 billion) where the EPC contractor (EPCC) agrees to deliver the “keys” of a commissioned plant to the owner on a stipulated date.
In December 2006 the ILembe Consortium was appointed as the preferred bidder in the Design, Construction and Maintenance procurement for the Dube TradePort. After lengthy negotiations, an EPC Contract was concluded between ACSA (as the Employer) and ILembe Airport Construction Services (Pty) Ltd (“ILembe”) (as the Contractor) on 6 June 2007.
Construction commenced on 31 August 2007. This represented a 77 day delay under the terms of the EPC Contract. As a result of this delay a further acceleration programme and costs were negotiated with the ILembe Consortium and the principle terms of the amendment to the EPC Contract were agreed in March 2008.
As the EPC Contract is essentially an outsourcing agreement, additional details are reflected in Section 9.3 of this document dealing with co-ordination, co-operation and outsourcing.
2.1.1 The Agency Agreement
Dube TradePort and ACSA signed an Agency Agreement in August 2007, and in terms of this agreement ACSA shall be appointed as DTP’s EPC Agent, and shall represent DTP insofar as the design, engineering, procurement and construction of DTP Works are concerned.
The Agency Agreement stipulates that DTP and ACSA will jointly monitor the design, engineering, procurement and construction of the Works through a jointly constituted La Mercy Board and La Mercy Exco.
In terms of the Agency Agreement, ACSA and DTP have appointed a Joint Monitoring Team (JMT) of experts and/or advisors to assist them in the monitoring and compliance issues with respect to the EPC Contract, EIA Compliance and Planning issues. The JMT appointment was made in September 2007.
14 2.2 Vision, Mission, Principles and Values
2.2.1 Vision
To be the catalyst for the creation of a globally competitive tradeport in Southern Africa.
2.2.2 Mission
To stimulate economic development through the provision of integrated world class air logistics facilities including a TradeZone, AgriZone, IT Platform and associated services
2.2.3 Principles and values
To ensure that the strategies it formulates are executed effectively and efficiently, DTPC upholds the principles of: Effective management and co-ordination of service providers Facilitating the participation of relevant stakeholders in the implementation of its strategies.
The agreed DTPC values are: Professional excellence: being passionate about value-adding professionalism; Ubuntu: creating open, honest relationships built on trust, mutual respect, dignity and fairness; Empowerment: actively embracing the economic transformational and developmental agenda of the stakeholders; Innovation and creativity: succeeding through innovative, creative and adaptable teams; Service Excellence: providing unsurpassed service excellence that our clients can be proud of
2.3 Legislative and other Mandates
The DTPC derives its mandates from a number of pieces of legislation; government policy frameworks and stakeholder agreements, which include the following:
Legislation Division of Revenue Act Act 12 of 2009 Promotion of Access to Information Act Act 2 of 2000 Basic Conditions of Employment Act Act 75 of 1997 Broad Based Black Economic Empowerment Act Act 53 of 2003 Companies Act Act 61 of 1973 Constitution of the Republic of South Africa Act 108 of 1996 Electronic Communications and Transactions Act Act 25 of 2002 Employment Equity Act Act 55 of 1998 Income Tax Act Act 28 of 1997 Labour Relations Act Act 66 of 1995
15 National Empowerment Fund Act Act 105 of 1998 National Small Enterprise Act Act 102 of 1996 National Treasury Regulations Gazette 225 dated 15/03/2005 Occupational Health and Safety Act Act 85 of 1993 Pension Funds Act Act 24 of 1956 Preferential Procurement Policy Framework Act Act 5 of 2000 Public Finance Management Act Act 1 of 1999 Public Service Act Proclamation 103 of 1994 Public Service Regulations No. R.1 of 5 January 2001 Promotion of Equality and Prevention of Unfair Discrimination Act, 2000 Framework for Supply Chain Management Gazette 25767 dated 5/12/2003 Skills Development Act Act 97 of 1998 Compensation for Occupational Injuries and Diseases Act Act 130 of 1993 Customs and Excise Act, as amended Act 91 of 1964 National Land Transport Transition Act Act 22 of 2000 National Land Transport Transition Amendment Act Act 31 of 2001 Airports Company Act; Airports Company Amendment Act,1998 Act 44 of 1993 International Civil Aviation Organisation (ICAO) requirements & Annexure Part 108 of SACAA ICAO Airport Planning Manual Agricultural Product Standards Act Act 119 of 1990 Perishable products Export Control Act (PPECB) Act 9 of 1983 Town Planning Ordinance 27 of 1949 Development Facilitation Act Act 67 of 1995 KwaZulu-Natal Planning and Development Act Act 5 of 1998 National Environmental Management Act Act 107 of 1998 National Key Point Act Act 21 of 1981 The Subdivision of Agricultural Land Act Act 70 of 1970 Plant Breeders' Rights Act Act 15 of 1976 Electronic Communications and Transactions Act (ECTA) Act 25 of 2002 Regulation Against the Interception of Communications Act Act 70 of 2002 Promotion of Access to Information Act (PAIA) Act 2 of 2000 National Archive Act of SA Act 43 of 1996
Contracts, Agreements, Etc DED Funding Agreements Co-Operation Agreement with ACSA EPC Contract between Ilembe Consortium and ACSA Agency Agreement between ACSA and Dube TradePort
16 International Air Transport Association (IATA) Design Guidelines COMSEC Guidelines International EUREP-GAP Guidelines HACCP Guidelines
2.4 The strategic planning process
The APP is aligned to the national strategic priorities with a specific focus on “speeding up growth and transforming the economy” and “social and economic infrastructure” while the essence of the remaining priorities are embodied in the various programmes of DTPC.
The success of the project to date is largely due to the fact that the management team and key stakeholders understand the dynamic nature of the project. Consequently, as events unfold a well thought out and swift response is obtained. This process ensures continuous stakeholder consultation with broad range of stakeholders which include all spheres of government (and specifically both the out going MEC and the new MEC); various communities; and key role-players within the private sector in the areas of logistics, infrastructure, tourism, etc. This approach, as well as the organizational values listed above, will continue to guide the DTPC and condition its efforts during the implementation phase.
Comprehensive strategy session was held in July 2008 and June 2009 to plan for the next 3-5 years, taking into account the recent developments (at that time) relating to the construction and the operationalisation of the various elements of the Dube TradePort. The DTPC Board has been actively involved in driving the strategy of DTPC and has reviewed this APP.
17 Part B: Programme performance targets
In order to efficiently carry out its mandate, the DTPC currently operates a four programme structure. The four programmes are:
Programme 1 – Administration Sub-programmes o Office of the CEO o Financial Management o Corporate Services o Marketing
Programme 2 – Technical Services Sub-programmes o Master Planning o EIA Record of Decision o Air Services o Cargo Terminal Operations o Spatial Planning
Programme 3 – Commercial Development Sub-programmes o TradeZone o Support Zone o Joint Venture
Programme 4 – Infrastructure & Development Sub-programmes o EPC & Infrastructure Investment o Business development o Regional Development Investment Initiative o IT Platform o AgriZone
18 3 Programme 1: Administration
The programme, Administration, provides support to the operational programmes of the DTPC, which in turn focuses on the development and operationalisation of the Dube TradePort and related activities. Support to the operational programmes takes the forms of administrative; financial and budgetary; performance; human resources management and development; information technology; marketing and communication services. A significant portion of the activities within this programme are transversal in nature as this programme facilitates the coordination and direction of all the operational programmes.
The following table presents the structure of the programme and its aim or purpose, as well as its strategic goals and strategic objectives.
Programme 1: Administration Aim/Purpose: Sub-programme 1: Office of the CEO
Strategic objectives: To provide leadership and strategic management in To provide strategic direction and ensure successful operationalisation of the Dube TradePort accordance with legislation, regulations and policies and To monitor the socio-economic impact emanating to provide appropriate from this project support services to all other Sub-programme 2: Financial management programmes Strategic objectives: To ensure statutory compliance in respect of financial DTPC Strategic goals: management
To proactively To implement sound financial management practises engage and Sub-programme 3: Corporate Services manage relevant Strategic objective: stakeholders To develop and maintain strategic capability within DTPC and to promote sound labour relations To adhere to good To provide efficient support services to DTPC in the corporate management of information technology and governance communication To implement best practise in terms of corporate governance Sub-programme 4: Marketing Strategic objective: To promote project awareness and market interest (public by-in)
19 3.1 Specific policies, priorities, and strategic objectives
Due to the transversal nature of this programme, it is imperative that it operates as efficiently and effectively as possible. Its main function is to ensure that DTPC’s strategic plan remains relevant (as circumstances surrounding the project change); is well implemented and effectively monitored. It also provides direction, integration and co-ordination of the various operational programmes of DTPC.
The design of this programme is influenced by various legislation, a number of new strategies and policy priorities (both provincial and national) including the Public Finance Management Act and the priorities of the Provincial Spatial Economic Development Strategy and the Provincial Growth and Development Strategy, to name a few.
3.2 Progress analysis
The financial management, internal control and payroll administration functions continue to be outsourced to maximise operational efficiencies. Legal services, as required are also outsourced. In addition, we have received our second consecutive unqualified audit report from the Auditor-General.
During the 2008/9 year under review the performance management framework has been improved and performance contracts are in place for all executive managers.
An internal audit was conducted in terms of the three year coverage plan as approved by the Audit Committee. Although, there were no significant items noted, all recommendations (of a house-keeping nature) are currently being implemented.
3.3 Analysis of constraints and measures planned to overcome them
The delay of the promulgation of the KwaZulu-Natal Dube TradePort Corporation Bill continues to create uncertainty around the statuary identification of DTPC. To this end, we are happy to report that the Bill has been approved by Cabinet and will be presented at Provincial Legislature in February 2009.
The overall cash flow difficulty experienced by Provincial Treasury (emanating from provincial over-expenditure) has resulted in delays in DTPC receiving the approved grant timeously. A cash flow crisis was averted by continuous proactive actions taken by the management team, led by the CEO.
Another constraint affecting the administration programme relates to the inherent nature of the project which boasts a significant number of variables resulting in continuous changes
20 being made to the business plan, strategic plan and budgets. More often than not, these variables are beyond our control. To this end, we engage relevant stakeholders on an ongoing basis to ensure that they are apprised of all significant developments timeously.
3.4 Description of planned quality improvement measures
Once the statutory identification of DTPC (as mentioned in 3.3 above) has been finalised, the Bill will be implemented and the relevant governance items reflected in the bill will be addressed. In addition, a comprehensive legislative compliance and operational efficiency review will be conducted. The objective of this exercise will be to identify gaps in terms of compliance with legislation (especially the PFMA and Treasury Regulations) and to implement measures to ensure compliance with the necessary legislation.
3.5 Sub-programme: Office of the CEO
3.5.1 Specific policies, priorities, and strategic objectives
One of the specific priorities that form part of this sub-programme is stakeholder engagement, which includes securing ongoing support from government and the creation of effective partnerships from both the private and public sectors. This priority is aligned to the key strategic objective of this sub-programme.
The monitoring of the socio- economic impact emanating from this project is the second strategic objective of this sub- programme as the provision of world-class facilities for inter- continental passengers and freight transfers will create an international trade platform capable of serving as a major source of permanent and sustainable employment. The creation of the Dube TradePort is estimated to have a significant impact on the level of economic activity . within KwaZulu-Natal and indeed throughout the country
21 3.5.2 Progress analysis
During the 2008/9 year we continued to engage with a wide range of stakeholders across both the private and public sectors. Extensive consultations were held with industry stakeholders regarding: Sourcing of suitable tenants in the TradeZone Sourcing adequately experienced joint venture partners to operate the cargo terminal Assessing the viability of a Single Electronic Window Exploring various options to unlock property development opportunities in the Support Zone
Although we have continued to comprehensively engage with national and provincial departments, we have discovered that this process is more effective when driven by our project sponsor, DED. To this end, DED has established a provincial master planning process.
All stakeholders are kept abreast of latest project developments through our regular report at Portfolio Committee, Cabinet, Local Government Portfolio Committee, etc. The success of the project to date, has also been enhanced as a result of the regular joint executive meetings held with project stakeholders such as ACSA, Customs, Airlines, etc.
3.5.3 Analysis of constraints and measures planned to overcome them
The single largest constraint in achieving our strategic goal of proactively engaging and managing relevant stakeholders within the public sector is the lack of alignment between the operational plans of the various departments and municipalities and the requirements of Dube TradePort, particularly in respect to the provision of bulk services and infrastructure. As an example, the budgeting and bulk services provision from eThekwini municipality (regarding the sewer treatment works and electricity substation) does not adequately cater for the operational requirements of the TradePort. We continue to extensively engage with the City to find appropriate solutions.
A slighter constraint faced during the 2008/9 year was the fact that we were unable to source a suitably qualified service provider to undertake a socio-economic impact study. As this study is important for us to quantify some of the economic spin-off’s emanating from this project, measures are currently being undertaken to assess potential, independent service providers. This study will be undertaken during the 2009/10 financial year.
22 3.5.4 Description of planned quality improvement measures
Once the statutory identity of DTPC has been finalised, the relevant shareholders agreement and compact will be created. In addition the financial delegations of authority will be finalised and implemented as one of our many efficiency enhancing measures.
3.5.5 Specifications of measurable objectives and performance indicators
Table 1 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programmed: Office of the CEO
Sub Programme Strategic Goal: To proactively engage and manage Office of the CEO relevant stakeholders
Strategic Measurable Performance 2007/8 2008/9 2009/10 2010/11 2011/12 Objective Objective Measure Actual Est. Target Target Target Indicator To provide To implement Achievement of 80% 85% 90% 90% 90% strategic direction mechanisms to APP targets and ensure monitor the successful DTPC’s operationalisation strategies of the DTP To facilitate No. of 4 (all) 4 (all) All on All on All on effective appraisals ¼ly ¼ly ¼ly performance (management basis basis basis management team) conducted annually
To monitor the Establish a Annual n/a Not Annual Annual Annual socio-economic monitoring and assessment compl impact emanation evaluation concluded with eted from the project framework and a report supporting indicating the mechanism impact Table 1: Office of the CEO Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
3.6 Sub-programme: Financial management
3.6.1 Specific policies, priorities, and strategic objectives
The strategic objective of this sub-programme is to ensure statutory compliance in respect of financial management and to implement sound financial management practises. Statutory compliance is primarily in terms of the Public Finance Management Act (PFMA) and related Treasury Regulations. Provincial and National Treasury guidelines are also taken into account in creating and implementing financial policies. Compliance with the relevant
23 standards of the Generally Recognised Accounting Practise (GRAP) and Generally Accepted Accounting Practise (GAAP) are a key priority within this sub-programme.
3.6.2 Progress analysis
The financial management component has continued to provide the required support to all operational programmes within DTPC. A budget policy has been created, approved and implemented. Cash flow projections are prepared on a monthly basis to enhance cash management of the province, as requested by the Department.
Specific milestones achieved include the approval of the integrated risk management framework and a fraud prevention plan. These were approved by the Audit Committee in May 2008.
3.6.3 Analysis of constraints and measures planned to overcome them
The current statutory identification status of DTPC as an agency has posed difficulty in applying some of the accounting principles relating to the recording and disclosure of certain assets. To this end, extensive consultations with both Treasury and the Office of the Auditor- General have assisted in identifying the correct interim treatment of assets, until the proposed Bill is promulgated. The inherent lack of capacity within this component has also resulted in specific items (originally planned to enhance operational efficiency) being postponed. Consequently, additional resources will be sourced to deal with the increasing demands of the organisation.
3.6.4 Description of planned quality improvement measures
A comprehensive review of all financial management policies is scheduled for the forthcoming year to ensure compliance with the relevant Treasury guidelines and other relevant legislation. This will include the creation all outstanding policies, including a procurement policy. Where necessary, a related procedure manual will be created to ensure sound implementation of the approved policy.
3.6.5 Specifications of measurable objectives and performance indicators
Table 2 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programmed: Financial Management
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Sub Programme Strategic Goal: To adhere to good corporate governance Financial Management
Strategic Measurable Perf. 2007/8 2008/9 2009/10 2010/11 2011/12 Objective Objective Measure Actual Estimate Target Target Target Indicator To ensure To provide timeous Submission statutory and accurate: of reports on compliance in - Annual Financial time respect of Statements (AFS) in 100% 100% 100% 100% 100% financial accordance with management gaap/grap. - Organisational performance reports such as quarterly 100% 100% 100% 100% 100% report; annual report; APP, etc.
To effectively guide Full 90% 100% 100% 100% 100% DTPC in complying compliance with all tax with SARS requirements requirements
To ensure full Unqualified Annual Annual Annual Annual Annual compliance with the audit report PFMA, Treasury Regulations & other
relevant regulations/legislati on
To develop and Implementati N/A N/A Approval 100% Review implement a on of of plan financial Transition management plan plan 40% for transition into a public entity Full compliance with Number of 5 5 4 4 3 policies and report points procedures included in the external audit management reports
To implement To ensure an Timeous Adhered to 100% 100% 100% 100% sound financial efficient and implementati deadlines management effective budget on of budget practises control process by policy leading the budgeting process and ensuring standardisation thereof
Develop effective Number of 7 5 3 5 3 internal audit report points controls on internal audit report
Table 2: Financial Management Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
25 3.7 Sub-programme: Corporate Services
3.7.1 Specific policies, priorities, and strategic objectives
The strategic objective of this sub-programme is to provide support services to DTPC in the areas of human resource management and development, information technology and to provide effective support to the Board. An independent service provider provides key IT support which is done in accordance with DTPC’s IT security policy, among other pieces of legislation and policies.
There are a number of human resource policies and associated legislation including the Employment Equity Act; Basic Conditions of Employment Act; etc, that provide the governance framework for human resource management. A key priority within HRM remains the development of our staff.
3.7.2 Progress analysis
A Human Resources plan was completed during the 2008/9 year. This was an inclusive and dynamic process focusing on the acquisition, utilisation, development and retention of employees with the relevant skills and competencies at the right place and time within the organisation. Relevant inputs used to develop the Plan included the DTPC Annual Performance Plan, the DTPC climate survey and an externally facilitated workshop. The Human Resources Plan provides information on: The staff numbers, skills / competencies required to achieve DTPC’s strategic objectives in a specified period of time and the availability of such human resources Surpluses/deficiencies in certain occupational categories & levels; and skills that impact on the organisation’s ability to achieve its strategic goals Availability of suitably qualified and experienced successors
In line with the progress of the construction phase, DTPC is projecting an increased work focus and work load. Therefore, new job roles were identified, job descriptions developed and posts graded. A total of 11 new posts were approved by the DTPC Board, which necessitated the revision of the organisational structure.
Our organisational performance management system has been reviewed and improved by establishing a system and using the APP to report against, resulting in standardisation of reporting.
In terms of IT support, the server has been replaced with an updated version which has the capacity to handle the increased volume and address the down time of emails, internet access, etc.
26 Support to the Board of DTPC in the form of preparation of board packs; minutes; co- ordination of meetings; etc, has been successfully executed during the year and no significant improvements in this respect has been planned for the next year.
3.7.3 Analysis of constraints and measures planned to overcome them
The constraints experienced by this sub-programme relate to the inherent dynamic nature of the project which means that other operational programmes experience difficulty in planning resource requirements and consequently, the human resource plan is constantly changing. In order to overcome this constraint, we will review the human resource plan (originally developed for the 2008/9 and 2009/10 financial years) periodically, to address any changes in strategic direction of DTPC. It is further understood that the dynamic nature of DTPC operations may necessitate an abrupt deviation from this HRP, in order to allow adequate response to the changing circumstances. In addition, the resignation of a staff member, actively involved in providing support to this sub-programme, serves as a constraint. A new incumbent has been identified and training, capacity building and the transfer of skills is currently underway.
3.7.4 Description of planned quality improvement measures
The implementation of the Human Resource plan will result in enhancing the overall performance of DTPC. In addition, a review of all human resource management policies is scheduled for the forthcoming year. This will include the creation all outstanding policies and the updating of potentially non-aligned policies. Where necessary, a related procedure manual will be created to ensure sound implementation of the approved policy.
3.7.5 Specifications of measurable objectives and performance indicators
Table 3 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programmed: Corporate Services
Sub Programme Strategic Goal: To adhere to good corporate governance Corporate Services
Strategic Measurable Performance 2007/8 2008/9 2009/10 2010/11 2011/12 Objective Objective Measure Actual Est Target Target Target Indicator To implement To establish DTPC as Registration of Draft Bill Cabinet Registrati Full Monitor best practise in a public entity public entity submit-ted to approval on of complian complianc terms of the obtained public ce e corporate Department in Nov entity governance for review 2008 and comment
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Sub Programme Strategic Goal: To adhere to good corporate governance Corporate Services
Strategic Measurable Performance 2007/8 2008/9 2009/10 2010/11 2011/12 Objective Objective Measure Actual Est Target Target Target Indicator To provide efficient No. of corporate Done Board met 0 0 0 and effective support governance 4 times as to the DTPC Board report items required included in the internal and Amendme external audit nts to reports Board compositio n effected
To develop To create a strategy HR Plan HR Plan Fill posts Impleme Review and maintain for Human Resource (aligned to aligned to per 2008 nt 2009 HR Plan strategic Management and operational APP and HR plan HR Plan capacity Development plan) Strategic for the within DTPC Plan was Develop public and to developed public entity promote in 2008 entity HR sound labour plan relations To efficiently monitor Updated Done Annual Annual Annual Annual
the performance of performance review review Review Review
staff plan/agreement s Review PMS in view of public entity
To review, update and Level of 80% 80% 100% 100% 100% amend relevant compliance with human resource employment management policies laws; HR and procedures directives and policies
To provide To efficiently and Availability of 90% 95% 98% efficient effectively facilitate the system to DTPC support provision of IT support users (%) services to services DTPC in the management of IT and communication
Table 3: Corporate Services Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
3.8 Sub-programme: Marketing
3.8.1 Specific policies, priorities, and strategic objectives
The Marketing sub-programme focuses on promoting project awareness through communication and building the Dube TradePort brand. It is effectively the “face” of DTPC to the larger community.
28 This sub-programme obtains its mandate from the co-operation agreement signed with ACSA. In addition all advertising is done in good taste and in compliance with the relevant regulations governing advertising. Its strategic objective is to promote project awareness and market interest (public buy-in). A priority of this sub-programme is to ensure the project receives sufficient media attention in order to attract investment thereby ensuring the sustainability and success of the project.
3.8.2 Progress analysis
During the 2008/9 year, a key milestone achieved was the approval of the marketing and communications strategy. This then set the scene for significant progress within the sub- programme, which included the updating of the Dube TradePort website (seven newspaper articles were uploaded onto the website by June 2008 in addition to the various graphics recently uploaded); placement of strategic advertisements in relevant magazines (e.g. Engineering news); and the placement of the Dube TradePort’s Mega Banner strip advert on a prominent engineering website (which resulted on 53 827 ad-views achieved within a seven day period.)
In order to further increase public and market interest in the project, the key focus of our campaign was to demonstrate progress. Consequently, we participated in two exhibitions and workshops hosted by the Department and made presentations to the following: Finance Portfolio Committee Cabinet Institute of Property Valuers Property Developers and Financiers
The focus over the next year will be in procuring expertise to develop and implement and 3 year marketing plan.
3.8.3 Analysis of constraints and measures planned to overcome them
The most significant constraint within this programme has been severe budget constraints as variations to other programmes required the marketing and communications budget to be adjusted during the 2008/9 financial year. This has been rectified during the subsequent MTEF period.
Due to the inherent nature of the project, the operational strategy has to be flexible to deal with the demands of the market. As a result, regular revision of the communications and marketing strategy is required. Once the “products” and opportunities emanating from the Trade Zone, AgriZone and Support Zone have been finely tuned, a more concerted marketing effort will be put in place to specifically cater for the potential customers/investors
29 and partners. In addition, the proposed DVD (as included in our marketing and communications strategy) will also be updated to include these products.
Another constraint affecting this programme is the lack of adequate human resources, and a marketing manager in particular. This post has been approved by the Board and the recruitment process will commence in the new financial year.
3.8.4 Description of planned quality improvement measures
A significant improvement measure planned for the 2009/10 period is the use of innovative advertising aids such as branded airport shuttles, mobile billboards, etc, which will serve to increase public and market interest in the project.
3.8.5 Specifications of measurable objectives and performance indicators
Table 4 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: Marketing
Sub Programme: Strategic Goal: To proactively engage and manage relevant stakeholders Marketing Strategic Measurable Performance 2007/8 2008/9 2009/10 Target 2010/11 2011/2 Objective Objective Measure Actual Target Target Target Indicator To promote To develop a Approved Comple 2008/9 strategy Procure agency to Implement Implem project comprehensive strategy ted approved and develop an ation entation awareness and effective Procur implemented in integrated 3 year (Phase 1) (Phase and market marketing and ement terms of budget marketing and 2) interest communications allowance communications (pubic buy- strategy strategy and roll in) out plan To increase public % increase in 298 47% from prior 30% from prior 10% from and market registrations of registra year year prior year interest in the interest on the tions of project database interest 438 registrations of interest Table 4: Marketing Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
30 3.9 Reconciliation of budget with plan
The funding trends over the period 2009/10 to 2011/12 take into account the expected increase in operating activities and the impact on the budget.
The increase in the administration costs (in comparison to the prior period) is largely due to provision for new staff members that we hope to recruit this financial year. While the increase in marketing costs is in line with the increased level of activity within this programme.
Table 5: Programme 1: Administration - Programme budget by sub-programme (R 000’s) Sub-programme 2007/8 2008/9 Average 2009/10 2010/11 2011/12 Average Actual Estimate annual Budget Target Target annual (Base) change change (%)1 (%)2 Office of the CEO, 9,198 11,792 28% 15,913 21,953 27,441 35% Corporate & CFO Services
Marketing 622 2,297 269% 9,000 10,000 10,000 291%
Total programme 9,820 14,089 78% 24,913 31,953 37,441 38% 1. Projected average annual change between base year and 2008/9 estimate. 2. Average annual change, calculated between 2009/10 and estimate, instead of base year, due to the level of activity.
Over the MTEF period, the increase in administration costs is largely due to the additional posts budgeted for. The significant projected increase in marketing costs is directly related to the level of activity reflected in table 4. The average annual change has been calculated using the 2008/9 estimate instead of the base year as the level of activity during 2007/8 was limited as the level of marketing activity is related to the level of progress of the construction and the need to attract the right level of interest at the appropriate time.
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4 Programme 2: Technical Services
The programme, Technical Services, is the building block of the Dube TradePort, referred to as Master Planning, which is essentially a high level integrated airport precinct planning exercise. This entails that the plan is based on the future forecasting of passenger and cargo markets in order to inform facility sizing and phasing for an unimpeded expansion of the airport in a methodical, cost-effective and sustainable manner. The overall integrated master plan then serves as a guide for the development of the specifications of the first phase of construction and a framework for future expansions.
In terms of developmental legislation an EIA was undertaken by DTPC prior to the commencement of the project. This was approved by DEAT with specific conditions as reflected by the RoD. Sub-programme 2 focuses on monitoring the adherence and compliance to EIA/RoD conditions.
Sub-programme 3, referred to as “Air services” focuses on attracting new carriers from identified routes to Durban by using IATA (MIDT) sourced data, business cases and securing DTPC representation on the bilateral air services commission. In addition the establishment of a Route Incentive Fund will positively contribute towards developing the airport as an International destination
The Cargo Terminal Operations, in sub-programme 3, is being planned to provide consistent; reliable and efficient cargo operations on the airport. The cargo terminal will be operated by a cargo terminal operating company
Sub-programme 4: Spatial Planning:. Spatial planning is aimed at acquiring further development rights as per the Master plan as well as re-zoning applications as per local government requirements.
The following table below presents the structure of the programme and its aim or purpose, as well as its strategic goals and strategic objectives.
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Programme 2: Technical Services
Aim/Purpose: Sub-programme 1: Master Planning
Strategic objectives: To provide technical expertise in Master Planning; To review the DTP Master Plan (2010-2015) Spatial Planning; EIA/ROD Sub-programme 2: EIA RoD monitoring; Cargo Operations Strategic objectives: and development of an Air To effectively monitor implementation of and adherence Services Strategy to DTPC’s EIA obligations pre and post commissioning of the project DTPC Strategic goals: Sub-programme 3: Air Services Strategic objective: To serve as a catalyst for To establish Regional and International Air Connectivity aviation linked economic development Sub-programme 4: Cargo Terminal Operations
Strategic objective: To proactively engage To position the DTP Cargo Terminal as the Terminal of and manage relevant choice stakeholders Sub-Programme 5: Spatial Planning
Strategic objective: To draw down development rights with regard to Special Zone 10 as well as acquire further development rights as required To comprehensively plan for specific projects within the Dube Tradeport region
4.1 Sub-programme 1: Master Planning
4.1.1 Specific policies, priorities, and strategic objectives
This sub-programme focuses on ensuring that the construction of the project adheres to the design and layout as prescribed in the Master Plan Phase1. . This adherence is undertaken through the Joint Monitoring Committee (JMT) which is composed of specialists in the different sub-disciplines of the project. It’s key role is to ensure that the construction of the project is timeous and adheres to the Master Plan. As the South African Civil Aviation Authority is a signatory to the International Civil Aviation Organisation (ICAO) strict compliance with the requirements of ICAO has been taken into account in the detailed design of the Master Plan. Any deviations or prescribed amendments to the Master plan will be factored into the 5 year master planning review cycle in 2009/2010.
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4.1.2 Progress analysis
To meet the original commissioning date an acceleration programme was finalised early in the 2008/9 financial year resulting in agreement with the EPC contractor to have the physical construction of the project completed by December 2009, inclusive of rain and other delays.
Another significant achievement within this sub-programme has been the approval of the design of the N2 interchange by both SANRAL and DEAT.
During the year ahead, we will continue to closely monitor the construction of the project .through the Joint Monitoring Committee.
4.1.3 Analysis of constraints and measures planned to overcome them
The design of the N2 interchange referred to above posed a significant constraint as consensus could not be obtained between SANRAL and DTPC. With the assistance of the National Department of Transport, a suitable solution was obtained that addressed the requirements of both parties.
The lack of a final integrated and comprehensive northern spatial plan has resulted in the inadequate supply of essential services (e.g. electricity) to the airport. Although this document is in draft form, it is only likely to be formally adopted towards the end of 2009. As the timeous supply of these services is imperative to the operationalisation of the TradePort, we continue to work closely with the eThekwini Municipality to unlock access to much needed essential services. In this regard we have concluded an agreement with the metro for the provision of bulk services.
Another constraint affecting this sub-programme has been the abnormal increase in the number of rain days experienced on site which results in a reduction of available construction days. In order to mitigate this constraint, additional resources were deployed on-site. In addition, adequate construction material is maintained on site in a secure location.
4.1.4 Description of planned quality improvement measures
The JMT (established to oversee the quality and delivery of the project in line with the Masterplan) has embarked on a co-ordination programme where the project has been broken down into different areas of specialisation, e.g. air side, land side, buildings, roads, bulk, etc. This effectively means that there are more specialists on the JMT, across the various disciplines. The following quality improvement measures are expected: Improved project management as each expert can focus on his/her area of specialisation Intense monitoring Ongoing pre-planning (working closer with the contractor) Providing more hands on support
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Increased frequency in inspections Daily technical audits
4.1.5 Specifications of measurable objectives and performance indicators
Table 6 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: Master Planning
Sub Programme Strategic Goal: To serve as a catalyst for aviation linked Master Planning economic development
Strategic Measurable Performance 2007/8 2008/9 2009/10 2010/11 2011/12 Objective Objective Measure Actual Est. Target Target Target Indicator To monitor To assess the Progress report Quarterly 4 4 n/a n/a the “As built” delivery of the highlighting key progress construction Master Plan Phase1 indicators reports development Aeronautical; Cargo (output = 4 submitted of the DTP Terminal and Bulk quarterly reports against the Infrastructure of the per annum) approved EPC contract via 1 Master Plan construction monitoring; acceptance testing and monitoring of commissioning phases
To review the To conduct a Master plan N/A N/A Publish Review Review DTP Master detailed review of review RfP in conclud Plan (MP) the MP inclusive progres ed 2010-2015 of construction s MP variations and revised forecasted demand and capacity requirements
Table 6: Master Planning Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
4.2 Sub-programme 2: EIA RoD
4.2.1 Specific policies, priorities, and strategic objective
The key priority of this sub-programme is to successfully implement the Environmental Impact Assessment (EIA) record of decision (RoD) obligations. The strategic objective of the sub-programme is
1 This strategic objective will be concluded at the end of the construction phase within the 2009/2010 financial year and has not been included in section 4 above.
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to monitor the implementation of the obligations (both by DTPC and those transferred to the EPC contract). Relevant environmental regulations; legislation and policies provide the framework for this sub- programme
During the current year, the following amendments to the RoD were proposed and accepted: Approval to build certain infrastructure in the conservation area Design changes (minor amendments) - storm water design and location Location change - waste water treatment plan Realignment of some of the road networks Location change - navigation equipment of aircraft Design change – N2 interchange Provision of the link to the R102
4.2.2 Progress analysis
During the 2008/9 year, 11 appeals were successfully overturned and an average score of between 85- 90% was obtained on the EIA audit performed by DEAT. In addition the monthly EMP audit results range between 80-90%.
An application has been made to DEAT to allow for the relaxation of dust mitigation. DTP in conjunction with ACSA will continue to work closely with Departments and municipalities in monitoring the implementation of their EIA obligations to achieve suitable alignment.
As an outcome of the appeals process, DEAT is of the position that the developer will be responsible for mitigating against noise. Towards this progress has been made in the re-zoning process of Mt.Moreland. Although the final application to re-zone the area as mixed use has not been submitted to the relevant authorities, a precinct plan is currently being formulated. This document outlines a vision including development guidelines for the area.
4.2.3 Analysis of constraints and measures planned to overcome them
Natural elements have provided a challenging constraint as heavy rains experienced during the last year resulted in soil erosion (and a deterioration of the surface of the construction site). Excessive winds transport significant dust from the construction site to the surrounding residential area which in turn solicits complaints from the surrounding communities. In order to mitigate against these measure we have Installed silt traps at various locations on site Created sedimentation ponds Built gabion walls, allowing water to seep through the barrier without compromising the integrity of the surrounding earthworks
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Installed dust monitors in the surrounding residential areas and used 18 dust carts to water down the construction site with dust suppressants.
Complaints were received from the crop growers and cane burners as the operational activities of the sugar cane farms will be affected by the arrival and departure of aircrafts. A broad consultation process was embarked upon to understand the issues raised. After extensive discussions, an amicable solution was reached between the parties.
4.2.4 Description of planned quality improvement measures
Some of the planned quality improvement measures include the installation of: A bird radar (used to record bird flight patterns) – ACSA: JMT Noise monitoring equipment (used to monitor noise decibels emitted by aircraft engines) – ACSA:JMT Submission of a re-zoning application for Mt .Moreland – in conjunction with TGH/ACSA
In addition, the rehabilitation of the wetlands within the conservation area is also planned. Although not a RoD obligation, we have embarked on a project to remove alien plants and replace them with indigenous plants. Each of these measures will improve compliance with the RoD obligations.
4.2.5 Specifications of measurable objectives and performance indicators
Table 7 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: EIA RoD
Sub Programme Strategic Goal: To proactively engage and manage relevant EIA RoD and RoD Mitigations stakeholders
Strategic Measurable Objective Performance 2008/9 2009/10 2010/11 2011/12 Objective Measure Est Target Target Target Indicator To effectively To track progress of the Audit result per 88% 90% monitor implementation of the DEAT audit implementation of EIA/RoD obligations conducted and adherence to To develop an Approved EOP N/A Appoint a Develop N/A DTP’s EIA environmental operations (2010/11) consultant plan obligations pre and plan (EOP) post To incorporate EOP % of Formulate 100% 100% commissioning of obligations into both development relevant the project development initiatives initiatives/ clauses and contractual contractual agreements (e.g. with agreements that lessees, tenants and incorporate EOP business partners for obligations implementation) Table 7: EIA RoD Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
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4.3 Sub-programme: Air Services
4.3.1 Specific policies, priorities, and strategic objective
This sub-programme focuses on establishing air services between Durban and viable destinations. This is done through the development of Business Cases based on IATA-MIDT references and presented to airlines. The bi-lateral agreements signed between South Africa and various countries has a significant impact on this programme as this agreement, more often than not, dictates which South African international airport will be used by the various carriers.
The strategic objective of this sub-programme is to secure international air services to viable source markets.
4.3.2 Progress analysis
In addition to securing daily flights to Durban with Emirates Airlines, an agreement has also been concluded with a major UK carrier. As a result of our involvement in the bi-lateral air services commission, revised bilateral agreements (adding Durban as a point of entry and a destination for additional frequencies) with the following countries have been concluded: United Kingdom United Arab Emirates Australia New Zealand Holland
4.3.3 Analysis of constraints and measures planned to overcome them
Given the global recession, there has been a reduction in the number of airline passengers, which forces airlines to start rationalising their routes. Factors such as the fluctuations in the crude oil price and delays in delivery of aircrafts also negatively impacted on airlines, making them wary of embarking on expansion and experimenting with new routes. The current global economic recession has severely impacted on airline revenues and profitability; resulting in reduction of frequencies and in some cases closing down of marginal routes. This recent development has negatively affected the Air Services Strategy implementation as airlines are reluctant to introduce new routes to their schedules.
To overcome this constraint, we have packaged attractive offers to airlines which include preferred arrival and departure slots; advantages of a sea-level operation; lower fuel costs and congestion free airspace. We will participate at the 2009 annual air routes conference and present our business cases supported by IATA –MIDT data. In addition DTP will continue liaising and conferring with selected airlines towards introducing schedules into Durban.
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In addition DTP is to establish a Route Incentive Fund (INCENTIVE FUND) to incentivise carriers that operate on a perceived marginal route. Based on trends derived from the most recent MIDT-DATA statistics; average load factors per route will form the basis of targets to be set with specific carriers. Carriers operating an average load factor below the agreed percentage will be compensated for a limited period, allowing for their growth strategy to develop. A quantum based on the probability of carriers not attaining the agreed load factor will determine the amount of the Incentive Fund. This will be effected in the 2010/11 year.
Discussions are taking place presently with British Airways who plan to resume services into Durban in 2010/11 and Lufthansa who have targeted 2011/12 for launching a service.
4.3.4 Description of planned quality improvement measures
As a planned improvement measure, we will position the development on a global airline website for maximum exposure to the industry. In addition we will embark on an aggressive marketing campaign in partnership with the travel and tourism industry.
4.3.5 Specifications of measurable objectives and performance indicators
Table 8 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: Air Services
Sub Programme Strategic Goal: To serve as a catalyst for aviation linked Air Services economic development
Strategic Measurable Objective Performance Measure 2008/9 2009/10 2010/11 2011/12 Objective Indicator Actual Target Target Target
To establish To refine business cases Number of business 5 1 2 2 Regional and for targeted carriers cases reviewed and International Air presented Connectivity To establish a Route Number of business 1 1 1 Development Fund and cases developed revisit negotiations with (non-cumulative) carriers
To establish regional No of routes identified 1 connectivity Table 8: Air Services Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
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4.4 Sub-programme: Cargo Terminal Operations
4.4.1 Specific policies, priorities, and strategic objective
The strategic objective of this sub-programme is to establish effective cargo operations. This entails the design and development of a facility that is technically “state of the art”; functional and approved by SARS. In addition, Part 108 of CAA regulations on Aviation security has been amended from January 2009, which results in the abolishment of the “known shipper concept.DTP will acquire specialised X-Ray machines for the screening of goods leaving the cargo terminal. The design and development of this facility will contribute towards changing the culture of air cargo operations in South Africa.
4.4.2 Progress analysis
To date, the development of the cargo terminal is on schedule and within budget. We have achieved synergy with SARS (Customs and Excise) regarding the operational process within the customs terminal, use of suitable information technology, design, layout and equipment.
FIG 3: Proposed Cargo Terminal
With an expected 20 000 tons of airfreight expected to be transported in the first year of operation, the Cargo Terminal is destined to become the principal airfreight hub of choice
The Cargo Terminal business plan has been approved by the DTP Board, SARS and the air cargo industry. The appointment of a Cargo Terminal Operator Company will be finalised in 2009/10. In addition, the cargo terminal has also received the support of the airline consultative committee working group (ACC) who was initially opposed to the design and operational concept of the cargo terminal. In the year ahead, we will closely monitor the quality of the final finishes. DTP will in addition develop a Valuable Cargo Facility in response to industry norms. This facility will not only add value to the cargo operations business but also confirm the DTP Cargo Terminal as a secure facility in line with ICAO and SACAA. The success of the cargo terminal operations will largely be dependent on appointing an experienced operator with a global standing in the industry.
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4.4.3 Analysis of constraints and measures planned to overcome them
The SARS approval of the transit shed posed a constraint as SARS did not initially approve the design layout of this component of the cargo terminal. After working closely with industry experts and SARS we amended the design to achieve a mutually agreeable solution and the necessary approval was obtained.
The operational layout of the cargo terminal posed a problem in that the ACC did not support the proposed layout. After extensive collaboration, the operational layout was divided into an International and Domestic section with the domestic section designed to accommodate the 3 operators presently operating at the DIA.
Owing to the global recession and its impact on the aviation industry; it has proved difficult to acquire the services of a globally networked cargo terminal operator that is prepared to risk a start-up an operation with no substantive record. DTP is in consultation with the wider global air cargo industry to source the appropriate cargo operator with extensive experience in small to medium cargo operations.
4.4.4 Description of planned quality improvement measures
A significant planned quality improvement will be the appointment of a world class cargo terminal operator. Discussions in this regard are currently underway. Once the operator has been appointed, we will integrate the operator’s system with the TradePort’s cargo facilities and IT infrastructure. A programme towards commissioning of the cargo terminal will based on a 3 phased approach i.e.pre- operations(documentation,recruitment,training,marketing); operational phase (commissioning of operations) and the post-operations phase(stabilisation).
4.4.5 Specifications of measurable objectives and performance indicators
Table 9 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: Cargo Terminal Operations
Sub Programme Strategic Goal: To proactively engage and manage relevant Cargo terminal operations Stakeholders
Strategic Measurable Performance Measure 2008/9 2009/10 2010/11 2011/12 Objective Objective Indicator Est. Target Target Target
To position the To appoint a cargo Signed management contract Signed Monitor Monitor DTP Cargo terminal operator with operator agreement contract contract compliance compliance Terminal as the Terminal of To monitor Approved license License to Monitor Monitor choice regulatory operate. regulatory regulatory compliance compliance compliance of the Lodge cargo terminal Performance operator Bond (SARS)
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Sub Programme Strategic Goal: To proactively engage and manage relevant Cargo terminal operations Stakeholders
Strategic Measurable Performance Measure 2008/9 2009/10 2010/11 2011/12 Objective Objective Indicator Est. Target Target Target
To increase Annual international volume 11 600 19 300 international cargo throughput2 tonnage throughput To appoint valuable Signed SLA with Operator Signed Monitor Monitor cargo operator agreement SLA SLA compliance compliance
To monitor Level of conformance with 100% 100% regulatory security regulations compliance of (%) valuable cargo operator
Table 9: Cargo Terminal Operations Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
4.5 Sub-programme: Spatial Planning
4.5.1 Specific policies, priorities, and strategic objectives
This sub-programme is responsible for providing a planning service to the other programmes within Dube Tradeport. This includes ensuring that the necessary regulatory approvals are obtained on the site, prior to construction, as well as specific identified projects within the Dube Tradeport region are effectively and comprehensively planned for.
The key objective of this sub-programme is to manage and facilitate the planning process relating to the DTP site and region, and to ensure that the ongoing development of the site is in line with the relevant planning legislation and within the development framework plan.
4.5.2 Progress analysis
In order to ensure that there is a co-ordinated approach to planning and administration of rights on the site; the Design and Review Panel was created early last year. It is responsible for lodging future applications on behalf of DTPC and ACSA and ensuring that all developments meet the requirements of the framework and precinct plans for the site. . An additional task that the panel will aim to achieve is the preparation of a colour palette, a landscape palette and a finishes palette. This will have an impact on the
2 International cargo volumes to be confirmed with cargo operator after review of business plan
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visual amenity of the overall site and will serve as a guide to developers. In addition, the Rights Bank (established to manage developmental rights over time) is operational and is administered by the Design and Review Panel.
Another project being undertaken under this sub-programme is the rezoning of Mount Moreland. An instruction of the EIA RoD was that this area needed to undergo a rezoning. DTP, in conjunction with ACSA and Tongaat Hulett developments are funding this exercise, which is due to be submitted to the relevant authority by the end of this financial year.
Concerning the regional planning for the area, DTP and Tongaat Hullett embarked on a regional planning exercise, in order to determine the preferred land uses within a 7.5Km radius of the site. This was completed, and specific projects identified to be explored further.
4.5.3 Analysis of constraints and measures planned to overcome them
The regulatory processes within the municipalities prove to be cumbersome. A further constraint is the inherent uniqueness of airport development as town planning schemes and regulations cater for more generic infrastructure developments. In order to overcome this constraint, we have embarked on a series on detailed discussion and negotiations with the relevant local authorities. Extensive consultations with eThekwini have resulted in amendments to town planning schemes being made to accommodate airport related land uses.
A constraint related to the onsite planning is that only a portion of the overall site as indicated in the Master plan is zoned for the development of an airport(Special Zone 10).The remainder of the land is zoned undetermined and is restricted to agricultural use. For future development of the site to occur, this will have to be addressed. This current financial year, an options analysis will be undertaken in order to assess the various possibilities with regard to drawing down further rights, and the costs and time constraints associated with each option.
Concerning the regional planning initiative, a detailed plan has been formulated and agreed in partnership with Tongaat Hulett developments. However, implementing the plan to a large extent depends on Tongaat Hullett, as they own the land. While DTP remains committed to negotiating with Tongaat Hulett, as the major land owner they fall outside of DTP’s control.
An additional constraint faced regarding the regional planning initiative is that its implementation also requires the support from the various local authorities within the region, including eThekwini Municipality, Ilembe District Municipality, KwaDukuza local municipality, and Ilembe District Municiplaity. Alignment with the various municipal IDPs will need to be achieved, but again this is a factor largely outside of DTP’s control. In order to mitigate against this constraint, DTP is developing a framework for a regional development council. This council would be responsible for planning over the entire region, and with the
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ultimate goal to achieve co-ordination across the various government stakeholders. However, government needs to take the lead in co-ordinating this council. Dube Tradeport does not have the necessary authority to ensure that this initiative is implemented.
4.5.4 Description of planned quality improvement measures
In order to enhance this sub-programme a GIS administration system is currently being developed. This will serve to expedite the process as access to relevant and updated information will be readily available. The system will cover the entire site, enabling users to access information relating to the site e.g. provide information regarding floor area ratios, lot coverage, design guidelines for developers as well as information on leases, rentals etc. The GIS system is due to be running by 2010.
As this sub-programme essentially provides a planning service to other programmes within DTP, a detailed set of guidelines as to when this department is consulted will be formulated with each programme. These guidelines will take into account the master plan and the development framework plan, and will serve to ensure that development rights are acquired well in advance of the planned commencement of construction.
As a part of the regional planning exercise undertaken with Tongaat Hulett, a spatial vision for the wider region (15Km radius from the site) was created. Phases for development, and specific projects were identified. These identified projects need to be planned for in detail, and then implemented under the regional investment sub- programme. Two projects (Inyaninga and the land between the tradezone and Watson Highway) are being explored further, and detailed layout and infrastructure costings are being prepared.
4.5.5 Specifications of measurable objectives and performance indicators
Table 10 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: Spatial Planning
Sub Programme Strategic Goal: To serve as a catalyst for aviation linked Spatial Planning economic development
Strategic Measurable Performance 2008/9 2009/10 2010/11 2011/12 Objective Objective Measure Indicator Estimate Target Target Target
To drawdown To acquire further Approved Conduct an Application Application development development rights development options prepared submitted rights with regard and/or rezoning application analysis to Special Zone 10 as well as acquire further To develop a GIS Stage completion 75% 100% Ongoing development system and rights (%) maintena rights as data base nce required.
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Sub Programme Strategic Goal: To serve as a catalyst for aviation linked Spatial Planning economic development
Strategic Measurable Performance 2008/9 2009/10 2010/11 2011/12 Objective Objective Measure Indicator Estimate Target Target Target
To facilitate the re- % of process Explore 100% Completed Complete zoning of Mt. completed land use d Moreland option To To create detailed Number of project N/A 2 2 2 comprehensively project plans plans completed plan for specific To conduct research No. of articles 1 1 1 projects within on international best published the Dube practice examples Tradeport region
Table 10: Spatial Planning Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
4.6 Reconciliation of budget with plan
The funding trends over the period 200/10 to 2011/12 take into account the expected increase in operating activities and the impact on the budget. The increase in the programme cost between the base year and estimate is largely due to costs that relate to Master Planning, given the current level of activity within this sub-programme. Expenditure related to the EIA/RoD sub-programme is reflected under Programme 4 as payments are linked to the EPC contract.
Table 11: Programme 2: Technical Services - Programme budget by sub-programme (R 000’s) Sub-programme 2007/8 2008/9 Average 2009/10 2010/11 2011/12 Average Actual Estimate annual Budget Target Target annual (Base) change change (%)1 (%)2 Master Planning 1,615 10,632 558% 20,000 10,000 5,000 88%
Air Services 1,216 1,881 55% 5,000 10,000 10,000 166%
Cargo Terminal - 1,015 n/a 80,500 50,000 - 783% Operations
Spatial Planning - - n/a 2,000 5,000 2,000 n/a
Total programme 2,831 13,528 378% 107,500 75,000 17,000 305% 1. Projected average annual change between base year and 2008/9 estimate. 2. Average annual change calculated between 2009/10 and estimate, instead of base year, due to the level of activity.
The reduction in costs over the MTEF period is in line with projections as the construction should be significantly advanced (and close to completion) by March 2010. The budget allocated to the air services programme takes into account the costs associated with developing the various business cases.
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5 Programme 3: Commercial Development
The programme Commercial Development, focuses on the economic development mandate of the DTPC and includes the operationalisation and commercialisation of the TradeZone, Support Zone1, and the Joint Venture Land. The TradeZone provides a specialised property and facilities environment adjacent to the Cargo Terminal for the import and export of air cargo where tenants, operators, producers and service industries can achieve high levels of productivity, logistical efficiencies and competitiveness.
Support Zone 1 comprises a 12ha platform adjacent to the passenger terminal where land will be released for the development of office, hotel and retail facilities for companies that require location near the airport as well as providing an urban environment that will support developments which look to serve the adjoining communities and wider region. Support Zone 1 will be undertaken by DTPC in terms of a 15 year exclusive notarial lease acquired from ACSA.
The Joint Venture land is 880ha falling outside of the footprints of the Aeronautical, TradeZone and AgriZone sites and will be developed commercially by the JV company in line with the objectives of the 2060 Master Plan, including Support Zones 2 and 3. It will also identify and undertake new commercial and/or property projects on its land holdings. The following table below presents the structure of the programme and its aim or purpose, as well as its strategic goals and strategic objectives:
Programme 3: Commercial Development Aim/Purpose:
Sub-programme 1: TradeZone To stimulate the economic Strategic objectives: development objectives of the To establish effective operation, management and maintenance of DTPC by securing both public the TradeZone and private sector investment into the TradeZone and Support To secure investment into the TradeZone Zone Sub-programme 2: Support Zone 1 DTPC Strategic goals: Strategic objective: To establish effective operation, management and maintenance of To operationalise the the Support Zone core DTP business units To master develop and secure investment into the Support Zone
To proactively engage Sub-programme 3 Joint Venture relevant stakeholders Strategic objective: and manage processes To master develop and secure investment into the Joint Venture
Land
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5.1 Sub-programme: TradeZone
5.1.1 Specific policies, priorities, and strategic objectives
The strategic objectives within this programme over the next three years focus on the ensuring that the TradeZone is fully functional as soon as possible once construction has been completed under the EPC Contract and DTP Variation Agreement. To this end the following strategic objectives have been established: • To establish effective operation, management and maintenance of the TradeZone, including the Trade House spec build facility. • To secure tenants and investment into the TradeZone, in particular the Trade House in the initial years. • To plan, design and construct bulk infrastructure to support ultimate development of the TradeZone • To acquire additional development rights on the un-zoned portions of the TradeZone.
This sub-programme receives its mandate from the Dube TradePort Strategic Plan as approved by the Board of Directors.
5.1.2 Progress analysis
Preparations for the operationalisation of the TradeZone have been undertaken on a phased basis and are now nearing the pre-operations set up stage.
The objective is for the TradeZone and Trade House (initial spec build facility) to be fully operational at the time of the hand-over of the TradeZone to DTP by the contractor in February 2010.
The first phase of operations planning was the completion of the TradeZone Property Business Plan, including financial and business models finalised in March 2008.
Trade House Spec Build Facility (Trade House) Core to determining the commercial approach of the business plan was market testing with potential tenants and users. An exercise was undertaken to test stakeholder interest in the TradeZone and to assess the needs of potential tenants (over 100 companies were approached). The most important finding from this consultation process was that although a significant number of companies indicated that they would require operations space at the TradeZone, the low volume quick turnaround nature of airfreight meant that companies’ space requirements were relatively low. They therefore indicated that it would be premature for them to establish stand alone facilities at the TradeZone.
A second round of consultations was initiated to address this concern. Companies indicated that their first preference would be to rent space in a purpose built environment in the early years of operation in which time they could better ascertain their long term space requirements.
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DTPC had through previous global benchmarking anticipated that such a requirement would be required and had made budget provision for the construction of a facility targeting mainly mid-size and smaller firms. However, a high number of larger logistics companies have shown keen interest in the development.
This interest was then formally pursued through an “indication of requirements” phase. Companies that had shown interest were interviewed and requested to indicate their specific preferences and requirements. The outcome of this process was very positive and as a result of firm market interest, a Logistics Spec Build Facility (or Trade House) is being designed to accommodate the requirements of these companies and will be constructed as part of the DTP variation order, to be completed and ready for occupation in May 2010.
An important design element of the Trade House will be its operational integration with the Cargo Terminal via a conveyor mechanism. This will reduce handling and transportation costs and increase operational efficiencies.
Operations During the next two years the focus of this sub-programme will be on the:
initiation of operations ( June 2009 to May 2010) including appointment of the following Human Resources: - Property Manager (2009/2010) - Finance Manager(2010/2011) - Operations Manager (2010/2011) - Administrative Assistant(2010/2011)
construction and rental of the Logistics Spec Build Facility securing further investment into the TradeZone Establishment of operational arrangements with regulatory agencies, in particular Customs.
The Establishment Plan for TradeZone Commercial Property Operations was started in September 2008. A detailed financial model is currently being finalised which will guide the commercial implementation of the TradeZone; establishing rental rates for the Logistics Spec Build Facility; levy rates, and lease rates for the remaining sites.
Implementation of the establishment plan will begin in June 2009 and completed by operations commencement in May 2010
Investment As part of the plan a tenant policy and phasing/land release plan are being finalised to guide the early commercial establishment of the TradeZone. The land release will be guided by a strict tenant profile policy. The intention of this policy is to ensure that the use of the TradeZone retains its strategic intention which is to provide specialist
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real estate for the air cargo industry. As is the case of most airports benchmarked globally this space is premium and high value and it is not appropriate to market to general domestic take up. Tenants will therefore need to be service providers to the air cargo industry such as freight forwarders, clearing agents, airfreight distributors/warehouses, integrators, ground handlers, express freight operators or airlines. Assemblers, manufacturers, and distribution centres wishing to locate in the zone will need to demonstrate a minimum of 50%- 60% air cargo usage.
The policy will also clearly outline the various development options available for sites. In summary these are: Tenant specific build and rental of facilities by DTP Land Lease to approved tenants Land lease to approved developers i.e. developers representing confirmed and approved tenants.
Commercial Support Facility A commercial support zone has also been planned for development in the initial years of operations, and a suitable site has been identified and reserved. This facility will serve the general day to day needs of those working and visiting the TradeZone. These include convenience shopping, postal and banking services, food outlets, taxi facilities etc. Although this facility will not be developed on opening, scoping, commercial assessment and high level design will be undertaken over the course of 2010/2011.
Other notable progress recorded in respect to the TradeZone was the conclusion of a Land Sale Agreement with ACSA in April 2009 converting the 99 year notarial leases to free hold. A major benefit of the change to free hold for DTP is that it greatly simplifies the legal leasehold relationship with tenants as well as allowing for a greater range of leasehold options.
Infrastructure and Planning The first phase of the TradeZone is 26ha which is being prepared under the EPC contract. However, the full extent of the zone is 250ha with the potential to extend a further 30ha to the Watson Highway on a portion of land known as Herwood. In order to truly establish the TradeZone as a world class development which can attract global tenants it is critical at this stage that: Design, costing and development of bulk infrastructure, particularly roads, is undertaken in the first years of operations in order to provide certainty to international investors and ensure a facility that can compete globally. Most critical to this is the northward road connection to the Watson Highway. In support of this infrastructure a rezoning process must be undertaken so that DTP acquires full development rights over the ultimate extent of the TradeZone. This process should be undertaken in conjunction with similar rezonings intended for the AgriZone and Support Zone where the intention is to expand the current footprint of Special Zone 10.
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5.1.3 Analysis of constraints and measures planned to overcome them
A major requirement for the efficient operations of the TradeZone is for an appropriately resourced and well integrated Customs and Excise operation to present on site. An initial constraint experienced in this respect was ensuring that all proposed activities at the Cargo Terminal and TradeZone were compliant and approved (from SARS Head Office) and that resource planning and allocation for the new operation was undertaken by Customs.
In order to progress the above a consultation and joint planning process was initiated with Customs Head Office. The process resolved the following: Confirmation of DTPs commitment to compliance with the warehouse licensing provisions of the Customs and Excise Act. Confirmation of compliance requirements for tenants of the TradeZone wishing to established Customs licensed facilities. Agreement of Cargo processing system and single access point for cargo from the airside. High level agreement on Customs operating and office space requirements SARS Human Resource planning
The process has now moved to a local level, and ongoing joint planning and consultation are in place to address problems as they arise. A significant constraint has been the requirement from Customs for projected volume throughputs for the Cargo Terminal. It has been agreed that resource allocation will be as per DIA and that quarterly reviews of volumes will be done once the terminal is operational in order to monitor activity and respond to resource requirements.
Other constraints encountered include: Physical and operational integration of the Cargo Terminal with the Logistics Spec Build Facility and wider TradeZone. The challenge being to ensure that consignments are not double handled over short distances. A design proposal to integrate the two facilities via a conveyor system is currently being designed. Ensuring security of the TradeZone whilst ensuring free flow of vehicles to the Logistics Facility, Cargo Terminal, and ACSA’s airside facilities. It has been agreed that the TradeZone will be fenced and the second access point closed. Access to the Zone area will be electronically monitored whilst the Logistics Facility will be accessed via a controlled gate. This will ensure free flow for traffic to the Cargo Terminal and ACSAs facilities.
5.1.4 Description of planned quality improvement measures
The Logistics Spec Build Facility (Trade House) is being designed to incorporate a shared screening facility for outbound cargo. This will ensure that tenants of the facility are Part 108 compliant which is a recently introduced mandatory screening obligation. The shared screening facility will provide a significant advantage to companies located in the facility as they will be able to avoid the high capital costs of purchasing their own screening equipment. The proposed conveyor system linking the Cargo Terminal and the Logistics Facility is a significant
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quality improvement as it will largely eliminate the requirement to move consignments to the terminal by vehicle over a short distance. This will reduce all risks and costs associated with double handling and decrease consignment handling times.
5.1.5 Specifications of measurable objectives and performance indicators
Table 12 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: TradeZone
Sub Programme Strategic Goal: To operationalise the core DTP business units TradeZone
Strategic Measurable Performance 2007/ 2008/9 2009/10 2010/11 Target 2011/12 Objective Objective Measure 2008 Estimate Target Target Indicator Actual
To establish To develop the Approval of Appr Annual Annual review of objectives and Annual review Annual effective TradeZone Business Plan oved review of targets of objectives review of operation, Business Plan objectives and targets objectives manageme and targets and nt and targets maintenan ce of the TradeZone To develop and Level of Draft final Partial operationalisation of the Trade Zone Ongoing
operationalise operational- estab. and TradeZone as follows: officially operation
the TradeZone isation ops plan First Quarter: launched and in of Trade Establishment complete full Finalise establishment Zone: plan: Operations, operation Monitor Management Plan Draft April 2010 and review and Second Quarter: Financial Ops Plan Maintenance model for Develop draft detailed specifications Plan for operational and maintenance Ongoing Trade operation House and services individual Third Quarter: of Trade Zone: Monitor and sites Finalise detailed specifications complete (operational requirements) and review performance criteria for security; Ops Plan Draft maintenance; landscaping; cleaning TradeZone services and IT support Land Finalise specifications for operating release and systems Phasing Fourth Quarter: Plan Establish services for maintenance; complete landscaping; security; cleaning services and IT support Office establishment and start-up of operations Procure operating systems for management hardware; standard operational software and property management software
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Sub Programme Strategic Goal: To operationalise the core DTP business units TradeZone
Strategic Measurable Performance 2007/ 2008/9 2009/10 2010/11 Target 2011/12 Objective Objective Measure 2008 Estimate Target Target Indicator Actual
To secure To develop and Complete Partial completion and start of First Quarter: Ongoing investment commission the design, commissioning of the Trade Construction operation into the Trade House construct and House complete May of Trade TradeZone Spec Build commissionin First Quarter: 2010 House g of Trade Concept and Preliminary Design House Complete Commissioning
Second Quarter: and opening June 2010 Detailed design complete
Agree tender price
Commence construction
Third Quarter: Ongoing
Manage and monitor construction operation progress
Finalise Trade House commissioning plan
Fourth Quarter:
Manage and monitor construction progress
Initiate Trade House commissioning % of tenants 40% 75% 100% secured for First Quarter: occupation of Occupanc the Trade Trade House y of Trade Undertake final consultation with House Trade House tenants on design and by December House 2010 operations Finalise tenant profile policy Second Quarter: Finalise rental rates and key rental terms with tenants Finalise tenant placement plan Third Quarter: Secure letters of intent for specific units from tenants Initiate rental negotiations with Trade House tenants
Fourth Quarter:
40% pre-completion rental agreements signed for Trade House
To secure To develop a Completed Approved ToR Complete investment commercial scoping First Quarter: scoping of into the centre for the for commercial Confirm site location of commercial TradeZone TradeZone centre centre
Procurement Second Quarter: of investor Procure private Complete Draft Terms of reference for scoping of Commercial Centre sector investor
development % Complete of 100% support centre Third Quarter: 10%
Finalise Terms of reference for
Scoping of Commercial Centre
development after feedback from
market assessment
Fourth Quarter: Undertake scoping of Commercial Centre Development
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Sub Programme Strategic Goal: To operationalise the core DTP business units TradeZone
Strategic Measurable Performance 2007/ 2008/9 2009/10 2010/11 Target 2011/12 Objective Objective Measure 2008 Estimate Target Target Indicator Actual
To Plan and Approved N/A develop support infrastructure 100% infrastructure for requirements
Phase 2 of the TradeZone % complete of design and construction of 10% infrastructure
To secure To effectively % of Initiate lease and development Ongoing Ongoing investment develop TradeZone negotiations marketing and marketing into the individual Trade Stands leased First Quarter lease/ and lease/ TradeZone Zone stands and/or Compile database of potential Development Develop- developed developers and institutional Negotiation mint (TradeZone investors Negotiatio sites will only n be leased in Second Quarter: Ongoing 2010/2011. Prepare marketing prospectus for conclusion of This measure TradeZone (as part if and in line with agreements Ongoing includes DTPC overall DTP marketing strategy) conclusion spec build, Third Quarter: of
tenant build, agreement Market prospectus and undertake developer calls for proposals s build,etc) Begin targeted marketing and invitation for proposals to interested companies Refine list of target companies identified in the market assessment exercise Fourth Quarter: Assess proposals received Initiate lease and development negotiations
Table 12: TradeZone 1 Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
5.2 Sub-programme: Support Zone
5.2.1 Specific policies, priorities, and strategic objectives
This sub-programme has been established in terms of the Co-operation Agreement with ACSA. The JV Shareholders Agreement with ACSA, (incorporating the DTP 15 year lease on Support Zone 1), will drive the initial mandate of this sub-programme.
The key objective of the programme is to provide an urban design and infrastructure environment to attract and support private sector investment in the zone. DTP’s first phase developments will lay the cornerstone for this investment to occur. Both local and international tenants will be targeted for investment, in particular those companies which can add value to the strategic objectives of the overall DTP development e.g. Hotels owned and /or supported by International Airlines.
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The overall strategic objectives of the sub-programme are to: Develop an operations and commercial plan for Phase 1 of the Support Zone Complete the design and construction of the first build lead development undertaken by DTP through the Variation Agreement. Complete an Urban Design Framework and phased site release plan for S1 Finalise a marketing and investment facilitation strategy Complete the design and construction of additional bulk services to the site boundary as required by the EIA RoD.
5.2.2 Progress analysis
DTPC and ACSA have concluded negotiations with respect to the JV Shareholders Agreement and the Land Sale Agreement. In effect, the 99 year notarial leases (provided for in the Co-operation Agreement) have been replaced with the acquisition of freehold land. In addition, DTP has acquired an additional 10% shareholding in the JV Company bringing its shareholding to 60%; and DTPC has acquired a 15 year lease over the first phase (12ha) of Support Zone 1.
The above provisions have been included in the JV Shareholders Agreement. These changes give DTPC more leverage in determining the development of commercial property within the broader 2000ha precinct and better enable DTP to fulfil its broad economic development mandate.
An urban design framework and commercial development plan are currently being completed for the 12ha lease area. The initial focus of this work is the Phase 1 development plan which will be funded through the variation order and will include DTP’s offices, supporting public infrastructure and landscaping, and provision for a hotel development.
Private Sector Investment The establishment of the Dube TradePort Office with its associated urban form and support infrastructure will be utilised to market and promote the phased release of adjacent sites to the private sector for development. There has been an overwhelming interest in these sites to date. However, the release of these for private development must support the vision intended for the development. A phased urban design framework is currently being finalised for the 12ha first phase. Once the detailed design of the DTP variation component is completed in June 2009 (with its associated precinct plan), the phased land release programme will be released publicly. This will begin the formal marketing and investment stage.
Infrastructure and Planning In addition to the pre-operations establishment infrastructure being undertaken by DTP to establish the urban core of the precinct (DTP Offices, square, landscaping, hotel) there are further infrastructure provision and planning
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issues which need to be started in the 2009/2010 financial year and concluded by 2011. These include the following: Bulk services to the boundary of the site (Mt.Moreland) as required by the RoD issued on the EIA. These include water, electricity, waste water and roads. The two most critical of these are sewage and roads as both have design requirements that extend beyond the site and impact on the rezoning of Mt. Moreland. The design of this infrastructure is now at an advanced stage. The provision of this infrastructure will also allow for the development of the second phase of the Support Zone beyond the current 12ha sub-division. As with the TradeZone the objective of providing this infrastructure up front gives greater certainty to the investor community and provides a product more on scale with similar global developments. The design and ultimately the construction of this infrastructure have been provided for as part of the DTP Variation Contract.
The above infrastructure will be provided through the Infrastructure Programme and DTP Variation Agreement.
5.2.3 Analysis of constraints and measures planned to overcome them
Design of infrastructure as required by the RoD is being undertaken in consultation with the Ethekweni municipality to ensure alignment and consistency with the relevant regional planning and infrastructure investment programmes, in particular roads and waste water. The risk was that DTP’s provision of infrastructure to the site boundary may at a later stage become an abortive cost or require significant restructuring to align it with future city plans.
5.2.4 Description of planned quality improvement measures
An addition to the original development objectives of the Support Zone has been the move towards including energy efficiency, green building design, and sustainability as elements of the commercial and design strategy.
5.2.5 Specifications of measurable objectives and performance indicators
Table 13 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: Support Zone
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Sub Programme Strategic Goal: To operationalise the core DTP business Support Zone units
Strategic Measurable Performance 2008/9 2009/10 Target 2010/11 2011/12 Objective Objective Measure Indicator Est. Target Target
To establish To develop Approved commercial Commence N/A N/A effective and implement and operations plan implementation of the operation, a commercial plan as follows: managemen and operations First Quarter: t and plan Finalise terms of maintenance Level of Reference for Market of the Assessment 100% Review plan Support Implementation operational Second Quarter: Zone Complete Market Assessment Third Quarter: Finalise commercial and ops plan with inputs from market assessment Fourth Quarter: Begin implementation of commercial and operations plan
To master To effectively % Complete of 15% 40% 100% develop and implement the DTPC building First Quarter: st secure 1 Phase of including detailed Agree concept plan for investment the layout plan design DTPC building into the Second Quarter: Support Zone Complete preliminary design Third Quarter: Complete detailed design Contractor negotiations Fourth Quarter: Construction commences % Complete of 10% 60% 100% Urban Design First Quarter: Infrastructure Agree concept plan Second Quarter: Complete preliminary design Third Quarter: Complete detailed design Fourth Quarter: Construction commences To efficiently Approved ultimate Finalise high level design, plan and infrastructure costing and phasing plan implement the requirements for ultimate infrastructure additional requirements
infrastructure
requirements for the ultimate % Complete of design 15% 40% S1 and construction of 5% development infrastructure
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Sub Programme Strategic Goal: To operationalise the core DTP business Support Zone units
Strategic Measurable Performance 2008/9 2009/10 Target 2010/11 2011/12 Objective Objective Measure Indicator Est. Target Target
N/A Initiate lease and To secure % of S1 sites development 20% sites 30% sites investment into leased/developed negotiations leased leased the Support First Quarter: Zone Compile investor and developer database Second Quarter: Undertake market testing with targeted investment and development companies Third Quarter: Advertise call for proposals for 1st phase of Support Zone Fourth Quarter: Lease and development negotiations
Table 13: support Zone 1 Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
5.3 Sub-programme: Joint Venture
5.3.1 Specific policies, priorities, and strategic objectives
The specific policies which will ultimately guide this sub-programme include: Tenant Profile policies and land use requirements Land Release Policies; Precinct Plans and Development Manuals; Property Act,etc Tender submission requirements
The strategic objective of this sub-programme is to master develop and secure investment into the Joint Venture land. The priorities which drive the programme are the strategic economic development objectives of the provincial government and commercial development objectives of DTP and ACSA. The objective will be to develop the land over time in response to both economic development and market needs in order to provide complementary and supporting developments to the overall DTP concept.
5.3.2 Progress analysis
The Joint Venture land in extent of 880ha has been surveyed and sub-divided and will be transferred to the JV Company by August 2009. The Joint Venture Shareholders agreement was signed in February 2009 and ratified in June 2009. DTP has a 60% majority shareholding in the company. DTPC has acquired a registered company through which the JV will be formed and the next immediate steps will be:
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The legal establishment of the JV Company including appointment of the board Provision of the start up funds from each party as outlined in the agreement the development of an interim land management strategy for the JV land holdings to address holding costs and revenues i.e. municipal rates, Tongaat-Hulett sugar leases, environmental requirements emanating from the RoD. The initial strategy will also need to address certain decisions required to taken in order to release some portions of land in the short term. This would include land for the Biogas plant, the Petrol Service Station and advertising billboards.
The land is currently zone “undetermined” and consists of sugar cane leases areas, sections of coastal forest, and infrastructure servitudes. It has extremely high commercial developed potential as large portions of the land sit adjacent to the N2 and N2 interchange, the R102 interchange, as well as bordering all of the key DTP and ACSA developments. The commercial development strategy (planned to be completed in 2013) will be developed in line with the rezoning of the land undertaken in Programme 2.
The objective for DTP is now to act as master developer of this land in its capacity as majority shareholder in the JV Company. A long term commercial development strategy will be developed to drive ongoing investment on this land. This will take into account land development planned under the 2060 master plan as well as the identification of new projects. It will then formulate detailed project plans as well as preferred implementation and/or commercialisation plans.
5.3.3 Analysis of constraints and measures planned to overcome them
The primary constraint of this project is to ensure that planned developments do not create negative competition with the TradeZone and Support Zone. This may result in a weakening or dissipation of market response to these projects as well as sending confusing signals to potential developers. To overcome this, the Joint Venture will identify key projects that are not accommodated in the existing DTP development but instead will be in support of the additional requirements of the overall development: These will include: Petrol Service Station R102 commercial zone Bill board advertising sites Biogas Plant site A further constraint is market demand for the projects identified for the JV land. In this respect the JV will closely monitor market demand and take-up in the TradeZone and Support looking to identify market gaps and better understand the wider requirements of developers. Each new project for the JV will be carefully assessed for: Positive or negative impact on the TradeZone, AgriZone, Support Zone Market conditions and requirements Economic development objectives of Government
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5.3.4 Description of planned quality improvement measures
As no functional structures are in place to take the JV forward at this point, the primary improvement measure required is to set in place an appropriate institutional mechanism to manage the first three to five years of the operations of the JV. Neither DTP nor ACSA have indicated their intent to immediately establish the JV as a fully operational company. However, both parties are bound by the requirements of the shareholders agreement which include establishing the board, developing a business plan, providing start-up funding contributions, and registration of the company. Some of the key operating activities planned include: Re-negotiation of Tongaat –Hulett farming leases Assessment of EIA RoD impacts on JV land Assessment of municipal rates policy on JV land holding plan
Developing and agreeing the most appropriate interim institutional structure will be agreed in consultation with ACSA over the course of July and August 2009.
5.3.5 Specifications of measurable objectives and performance indicators
Table 14 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: Joint Venture
Strategic Goal: To operationalise the core DTP business Sub Programme Units Joint Venture
Strategic Measurable Performanc 2008/9 2009/10 Target 2010/11 Target 2011/12 Target Objective Objective e Measure Actual Indicator To master To develop Approval and Approved JV Operationalise and Manage the interim develop and and implementation of business plan manage the interim structures set up for the secure operationalise the JV business structures set up implementation of the of investment the Joint plan for the the JV into the Joint Venture implementation of Venture Land commercial the JV development plan
To identify and Approved Initiate the Complete market Complete land develop key DTP implementation assessment and development investment commercial of DTP priority identify first JV commercial strategy projects for the strategy for commercial projects and identify first JV JV land projects phase projects (2011/12)
Table 14: Joint Venture Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
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5.4 Reconciliation of budget with plan
The funding trends over the period 2009/10 to 2011/12 take into account the expected increase in operating activities and the impact on the budget. As reflected in the table below, the bulk of the expenditure in this programme is directly related to the completion of the construction of DTP.
Table 15: Programme 3: Commercial Development - Programme budget by sub-programme (R 000’s) Sub-programme 2007/8 2008/9 Average 2009/10 2010/11 2011/12 Average Actual Estimate annual Budget Target Target annual (Base) change change (%)1 (%)2 TradeZone 86 710 726% 121,150 20,000 50,000 16963% Support Zone/Joint Venture - 1,267 n/a 152,500 20,000 20,000 11936%
Total programme 86 1,977 273,650 40,000 70,000
1. Projected average annual change between base year and 2008/9 estimate. 2. Average annual change calculated between 2009/10 and estimate, instead of base year, due to the level of activity.
The 2009/10 year absorbs most of the capital expenditure on this programme illustrating the expected level of completion of the TradeZone and Support Zone. The next two years of the MTEF allocation focus mainly on operational costs and monitoring of the various elements of these sub-programmes.
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6 Programme 4: Infrastructure & Development
The Infrastructure and Development programme focuses on four sub programmes: the Engineer, Procure and Construct Contract commitments for the first phase build, business development, the regional development initiative, IT platform and the Agrizone development.
The EPC programme consists of processing payments to the ACSA in respect of DTP financial commitments to the project. This involves monitoring the progress of the contract against the build programme and on the ground monitoring and verification of invoices received. To date more than 65% of the build has been completed.
The business development programme is aimed at scoping out and facilitating new business ventures related to increasing the volumes and capitalising on the passenger and cargo businesses. The stimulation of specific business opportunities, if successful is undertaken with the key objective of add value to DTP’s core business, in the trade zone, agrizone, support zone and demand for its IT services.
The regional development initiative is aimed at ensuring synergistic land uses and zonings for ease of private sector investment in a 15 km radius. The bulk of the land is owned by Tongaat Hullet Group. This programme has therefore entered into a partnership agreement with THG to develop a wider regional spatial plan to accommodate the new international airport and tradeport.
The IT programme focuses on developing an integrated platform in order to provide value added services to DTP facilities, clients, tenants and users. The key objective is to enable our clients to operate efficiently and in a paperless environment. The Agrizone is focussed on providing facilities for the production of perishable goods including flowers and vegetables in a supportive environment that meets international standards. The objective of the programme is to export products and penetrate global markets.
The following table presents the structure of the programme and its aim or purpose, as well as its strategic goals and strategic objectives. Programme 4: Infrastructure & Development
Aim/Purpose: Sub-programme 1: EPC
Strategic objectives: To facilitate and monitor the To provide effective implementation and management development of the Dube of the EPC related agreements TradePort and surrounding area. To implement the EIA Record of Decision Mitigations
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Sub-programme 2: Business Development DTPC Strategic goals: Strategic objectives:
To facilitate commercial opportunities and new To serve as a business development catalyst for aviation
linked economic Sub-programme 3: Regional Development Investment Plan development Strategic Objective:
To develop a shared strategic vision, strategy and To proactively projects within a 15 km radius of the DTP site and engage and within manage relevant
stakeholders Sub-programme 4: IT Platform Strategic objectives: To establish effective operation and management of the IT Platform Sub-programme 5: AgriZone Strategic objective: To design and construct the AgriZone To operate and investment into the AgriZone
6.1 Sub-programme: EPC
6.1.1 Specific policies, priorities, and strategic objectives
The EPC Contract requires effective management and oversight and represents the major expenditure item of the DTP budget. It is managed through a complex mechanism involving agreements between DTP and ACSA, namely the agency and co-operation agreements. The programme’s strategic objective is to ensure the effective implementation and management of the EPC related agreements.
6.1.2 Progress analysis
A significant milestone achievement within this sub-programme has been the conversion of the 99 year lease to free hold land, via the purchase of land from ACSA for the TradeZone and AgriZone. This effectively speeds up the mobilisation of these components of the project as necessary decisions can be made more efficiently. As mentioned previously, the original completion date of the project has been restored via the acceleration programme.
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All variation orders have been documented and the necessary approvals obtained. In addition, the construction of the following components of the project has been fast tracked to be completed by October 2009 instead on Sept-Dec 2010: Speculative warehouse DTP offices Valuable cargo building Tissue culture facilities
6.1.3 Analysis of constraints and measures planned to overcome them
The approval process within the relevant regulators pose a significant constraint as delays are experienced in obtaining plan approvals. This has a direct impact on the commencement of the construction. This matter has been brought to the attention of the relevant project sponsors as an intervention is often required.
The procurement process was challenged by the non-compliant bidder, Indiza Group, in December 2006. Indiza Group sought an urgent interdict to prevent DTP from concluding an agreement with the preferred bidder. The legal process is still ongoing.
6.1.4 Description of planned quality improvement measures
The increase in the number and types of specialist supporting the JMT will also have a significant impact on this sub-programme as it allows all queries to be timeously addressed.
6.1.5 Specifications of measurable objectives and performance indicators
Table 16 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: EPC
Sub Programme: EPC Strategic Goal: To serve as a catalyst for aviation linked economic development
Strategic Measurable Performance 2007/8 2008/9 2009/10 Target 2010/11 2011/12 Objective Objective Measure Actual Estimate Target Target Indicator To provide To secure Signed Drafted Updated and Signed SHA Monitor JV Monitor JV effective sufficient shareholders awaiting SHA SHA implementation land for the agreement clarity on o/s Est. and management development (SHA) issues Measurement of the EPC related of the criteria to monitor agreements TradeZone, SHA AgriZone and Support Signed sale Signed sale Zone agreements agreement
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Sub Programme: EPC Strategic Goal: To serve as a catalyst for aviation linked economic development
Strategic Measurable Performance 2007/8 2008/9 2009/10 Target 2010/11 2011/12 Objective Objective Measure Actual Estimate Target Target Indicator To monitor No. of disputed All All All All the successfully implementati resolved on of the co- operation agreement
To monitor % of 10% 73% 97% 100% n/a the construction development completed of Phase 1 (cumulative)
of the DTP 100% 100% 100% n/a infrastructur Adherence to e payment schedule
To provide % of deviations 10% 5% 5% effective from contract verification price (arising of the EPC from on-site contract verification reports and EPC compliance reports) To implement the To Rehabilitation of Initiated Ongoing Ongoing Ongoing EIA Record of effectively wet lands Decision implement Mitigations the EIA Provision of Design Constr. Complete Projects R102 link complete Constr. complete Provision of Design sewer treatment complete works
Table 16: EPC Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
6.2 Sub-programme: Business Development
6.2.1 Specific policies, priorities, and strategic objectives
This sub-programme’s strategic objective is to facilitate commercial opportunities and new business development. Various legislation and Regulations such as the BBBEE Act; BEE codes; Employment Equity Act; PFMA and other relevant BEE prescripts inform and shape the legislative environment of this sub-programme. In addition, the EPC contract is fundamental to this sub-programme as it clearly stipulates the B-BBEE targets that should be achieved. A key priority is to facilitate the creation of new businesses for BEE enterprises to enhance and improve Dube Trade port’s business.
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6.2.2 Progress analysis
At this stage, this sub-programme has been linked to the contractual obligations of the contractor in respect of preferential procurement, black ownership and management, skills development, socio- economic development and enterprise development which provides targeted support to SMMEs). The contractor has excelled in areas of procurement, ownership and management, while there are significant areas for improvement relating to socio-economic development and enterprise development. We are working with the contractor to address these issues. The focus will change to concentrate on the opportunities emanating from the operations of DTP.
6.2.3 Analysis of constraints and measures planned to overcome them
An inherent constraint is the unavailability of entities with adequate technical competencies in specific areas of aviation and new economic sectors brought about by the existence of DTP. To mitigate this constraint, we often suggest and encourage likeminded entities (across different racial barriers) to work together.
6.2.4 Description of planned quality improvement measures
The imposing of penalties in terms of the EPC contract will be implemented during the 2009/10 year to address insufficient progress relating to BBBEE as stipulated in the contract. However, we will also continue to provide support through focused attention on programmes that are lagging behind Furthermore, we would employ the services of the professionals in the various but relevant disciplines.
6.2.5 Specifications of measurable objectives and performance indicators
Table 17 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: Business Development
Sub Programme Strategic Goal: To serve as a catalyst for aviation linked Business Development economic development
Strategic Measurable Performance 2007/8 2008/9 2009/10 2010/11 2011/12 Objective Objective Measure Actual Estimate Target Target Target Indicator To facilitate To develop a Approved Approved Impleme commercial comprehensive strategy ntation opportunities and business development Now – new business strategy focus on development using the EPC delivery -
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Sub Programme Strategic Goal: To serve as a catalyst for aviation linked Business Development economic development
Strategic Measurable Performance 2007/8 2008/9 2009/10 2010/11 2011/12 Objective Objective Measure Actual Estimate Target Target Target Indicator To identify suitable No. of 2 5 4 5 4 opportunities opportunities emanating from the identified development of DTP and/or ventures that will enhance successfully passenger and cargo facilitated volumes
Table 17: Business Development Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
6.3 Sub Programme: Regional Development Investment Programme
6.3.1 Specific policies, priorities and strategic objectives
The DTP site is surrounded by private land ownership. Tongaat Hulett is the majority land holder with approximately 11 900 hectares in their possession. This represents a unique opportunity for DTP to create a win- win partnership to establish a synergistic land uses opening the way for private sector investment in compatible air related value chains that will benefit volume growth at DTP. We are currently finalising a co-operation agreement with Tongaat Hulett for the use of the land surrounding the airport.
6.3.2 Progress analysis
The most important achievement within this sub-programme has been the development of a regional investment plan, which involved a spatial planning exercise of the existing site. This strategic document has been synchronised with our 60 year master plan and demarcates and allocates various areas with preferred spatial uses. From this analysis we can consolidate the uses per category. The next step would be to share this plan with the relevant authorities within all three spheres of government ideally to have the area designated as a spatial node/precinct. The provision and co-ordination of infrastructure development (e.g. transport, housing, water, etc) also needs to be sourced. The plan has been agreed with Tongaat-Hulett as the major land owner.
In addition a study tour to Holland was conducted during the year including the representatives from eThekwini Municipality, ILembe and Tongaat-Hulett to showcase the opportunities that could be replicated in the area surrounding the Dube TradePort.
6.3.3 Analysis of constraints and measures planned to overcome them
A significant constraint is the lack of adequate input from the regulatory authorities. In this regard we need to conduct integrated planning with the regulatory authorities to guide zoning issues ranging from public
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facilities (e.g. schools, clinics, etc) to residential accommodation. We are currently exploring various options to identify the most suited vehicle to unblock this constraint.
6.3.4 Description of planned quality improvements
More international benchmarking will assist to develop ideas that could be replicated in the area surrounding the Dube TradePort. Faster zoning will enable us to market potential developments internationally. We are also looking to develop an integrated and sophisticated marketing strategy across the real estate value chain. Moreover, the focus is to be the leader in providing innovative spatial planning solutions to unlocking the economic potentials of areas surrounding the DTP and to provide global spatial solutions to attracting and capturing investment spend within the region.
6.3.5 Specifications of measurable objectives and performance indicators
Table 18 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: Regional Development Investment Initiative
Sub Programme Strategic Goal: To serve as a catalyst for aviation linked economic development
Strategic Measurable Performance 2008/ 2009/10 2010/11 2011/12 Objective Objective Measure 9 Target Target Target Indicator Estim ate To develop a To formulate an Influence IDP to secure secure Commence shared strategic agreed vision and account for purchase of purchase of construction. vision, strategy strategy shared vision and additional additional land and projects strategy land within a 15 km (DTP/THG) radius of the DTP site and within To agree both joint Initiation of on-site 1 project 2 projects and DTP specific DTP specific projects projects (No. of projects initiated)
To establish an Integrated Develop Operations Operations effective Regional development proposal for Development Council planning RDC (RDC)
Table 18: Regional Development Investment Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
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6.4 Sub Programme: IT Platform
6.4.1 Specific policies, priorities, and strategic objectives
The objective of this programme is to provide a full range of telecommunication and IT services to the tenants of the TradeZone, AgriZone and Support Zone utilising the telecoms infrastructure provided through the EPC contract. The intention is to develop a full range of value added services for tenants to support amongst other things trade support services and safe data storage.
The first value added service offering will be an electronic trading support platform. This will provide a seamless flow of cargo processing and trade information to all users of the Cargo Terminal. Structured as a messaging platform, it will provide real time data from Customs, Health, Agriculture, Airlines, Financial Institutions, and the Cargo Terminal Operator amongst others. The trade platform will provide a mechanism for local companies and logistics service providers to increase their level of communication and information throughout the import/export chain, better enabling their capacity to take opportunities within the global supply chain.
6.4.2 Progress analysis
Ducting of the main fibre optic bulk service is nearing completion and the location of the switch room in Support Zone 1 has been confirmed and construction is underway. The switch room will house the distribution points for Telkom, Neotel, Vodacom, MTN, and Cell C for the provision of bulk data and telecoms services throughout the site. Both DTP and ACSA will distribute and provide value added services off this bulk service to their tenants and zones.
As a first step to exploring options for an electronic trade platform, in October 2008 DTP signed a MoU with SGS (Switzerland) and Crimson Logic (Singapore) to conduct a feasibility study for the establishment of a Single Electronic Window (SEW) at the TradeZone. An SEW is an electronic messaging platform where all major players in the airfreight transactional environment are able to share data on a common system. This allows for seamless import and export procedures, improving time and cost of transactions. This process is well advanced and a final implementation proposal will be provided to DTP by end may 2009, after which a decision can be taken. DTP is also currently exploring alternative systems for the provision of the trade platform in order to assess best possible functionality and cost.
6.4.3 Analysis of constraints and measures planned to overcome them
A potential constraint in the establishing of a trade platform at the TradeZone is the potential early reluctance of companies to utilise the platform. In response to this DTP is assessing options for ease of use of the system such as the provision of support bureaus for small companies, and intensive training programmes. In addition, an intensive process of engagement is underway with the full range of potential users and information providers to the platform. Their current systems and future requirements are being assessed in order to ensure that the system provided is appropriate to their needs and adds value to their business processes. This includes an evaluation of
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options to accommodate existing systems and either support them via the platform or design for their migration to the system over time.
Linked to finalising this is the delay in implementing the new Customs Management System (CMS) by SARS. This is likely to only be completed over the next 18 months to 2 years. The CMS is an important precursor to establishing a final trade platform. However, and over this period DTP will utilise the existing EDI system whilst undertaking the first pilot for an entry point system of its type in South Africa. SARS have been consulted in this respect and have agreed to support the pilot with their existing systems.
6.4.4 Description of planned quality improvement measures
As this sub-programme is currently at its conceptual stages, there are no significant planned quality improvement measures other than the value added processes and services discussed above.
6.4.5 Specifications of measurable objectives and performance indicators
Table 19 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: IT Platform
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Sub Programme Strategic Goal: To operationalise the core DTP business IT Platform units Strategic Measurable Performance 2008 2009/10 Target 2010/11 Target 2011/12 Objective Objective Measure /9 Target Indicator Est. To To develop and Decision on First Quarter: Ongoing Ongoing establish implement IT and preferred option Completion of SGS operations and operations and effective Telecoms for Electronic requirements gathering exercise management of management operation common user Trade Platform and commercial negotiation IT Platform and of IT Platform and platform and and Complete high level DTP VAS services and VAS managem backbone for implementation of common user platform assess- Services ent of the TradeZone, platform mint May 2010 IT Platform Support Zone and Second Quarter: Trade Platform Ongoing AgriZone including: Finalise vision and strategic 75%% complete operations and Decision on scope management objectives of Trade Platform and first phase Finalise detailed implementation of IT Platform Electronic services of Trade Platform and VAS plan for common user Platform operational Trade common user Services facilitation Third Quarter: July 2010 platform and Platform implementation of Ongoing implementation of
Value Added platform. Trade Platform Ongoing Services Initiate implementation of Phase operations and Revenue 1 of DTP IT platform management of Fourth Quarter: Collection IT Platform and VAS Services functionality Ongoing implementation of Trade Platform Bulk service on-selling 50% complete towards
Electronic operations of Cargo Terminal
billboard and TradeZone warehouse
Advertising
Finalise implementation of Phase 1 of DTP IT platform
% Completion of 80% Cargo Terminal 50% 100% and TradeZone warehousing system
Table 19: IT Platform Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
6.5 Sub Programme:AgriZone
6.5.1 Specific policies, priorities, and strategic objectives
The aim of this sub-programme is to develop a cluster of facilities (including greenhouses, pack-houses and a tissue culture lab) and support services (in the form of a training centre and a research facility to assist growers in producing high value perishable products primarily for export purposes. The strategic objectives within this sub-programme over the next three years focus on ensuring that the AgriZone is fully functional as soon as construction and the necessary infrastructure has been completed.
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Some of the relevant regulations and policy directives affecting this sub-programme include PPECB; National Department of Agriculture Regulations; GLOBAL-GAP and HACCP (governing food safety standards, including tracking and traceability, use of insecticides, etc).
This sub-programme receives its mandate from Dube TradePort’s Strategic Plan which has been approved by the Board of Directors
6.5.2 Progress analysis
As part of the implementation phase of the AgriZone, both the master and the detailed design have been completed during the 2008/9 financial period. In addition the procurement of construction contractors has been concluded. A significant milestone achieved during the period has been the completion of the nursery. Negotiations have been held with tenants for the following facilities: . Cut Flower . Mushroom Production . Orchids Draft MOU agreements have been developed with two of these tenants. Negotiations are ongoing. An operator for the nursery was also appointed.
The eThekwini municipality has given Town planning approval for the AgriZone. A precinct plan has to be submitted before development can commence. An operational model which will assist in preparing for operations has been completed. This will be refined as required. As mentioned previously, the acquisition of land (from ACSA) was also achieved.
6.5.3 Analysis of constraints and measures planned to overcome them
The cost of procuring the greenhouses, mushroom facility and tissue culture lab has significant exceeded budget due to the increase in steel prices and other construction costs, fuelled further by a declinng forex currency. As obtaining significant additional funds does appear to be a plausible solution, at this stage, we now have to value engineer the project and focus on local sourcing of certain items and/or reduce the scope to bring it within budget. Specifications have been changed and the size of some greenhouses has been reduced i.e. the Research and development centre and the vegetable greenhouse.
Although the EIA approval process for the AgriZone has commenced, the EIA approval might delay the operationalisation of certain elements of the AgriZone. Finalising specialsit studies identified during the public participation phase has taken longer than expected. These studies (highlighting the major environmental impacts and the measures to overcome them) are currently being finalised for submission. It is also unknown how long the Department of Environmental Affairs will take to process the application.
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6.5.4 Analysis of constraints and measures planned to overcome them
Quality improvements planned for the year ahead include increasing the staffing of the AgriZone, monitoring of nursery operations and the site rehabilitation programme.
A value engineering process will be undertaken to reduce the price of the greenhouses. A redesign of the tissue culture facility will also be undertaken using green building techniques in order to reduce the need for extensive cooling systems. Furthermore, a process to seek an operator / partner for the facility will be initiated.
6.5.5 Specification of measurable objectives and performance indicators
Table 20 below presents the strategic and measurable objectives, performance measures or indicators, and targets for Sub-programme: AgriZone
Sub Programme Strategic Goal: To operationalise the core DTP business AgriZone units Strategic Measurable Performance 2008/9 2009/10 2010/11 2011/12 Target Objective Objective Measure Indicator Actual Target Target To design and To design and Approved Design 50% 100% N/A N/A construct the procure AgriZone Reports AgriZone facilities for Phase 1 Completed 100% procurement process for the construction contract, greenhouses and packhouses
To obtain regulatory No of approvals 1 1 N/A N/A approvals obtained To construct the % Construction 20% 60% 100% N/A AgriZone completed
To operate and To implement an Approved Financial, 80% 100% Finalise Phase 80% secure effective financial, Operational and 1 of Model investment into operational and Maintenance Model operationalisin operational the AgriZone maintenance model for the entire g the model AgriZone
Research & R&D Model 20% Development approved Model (R&D) facility Model operational
Completed Complet Implementatio business plan for e n of Ph. 1 Implementation the nursery Business DTPC to start of Ph 2 of Plan ops business plan
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To operate and To implement an Approved Training Approval of Appointment of secure effective financial, Programme training Service investment into operational and Programme Providers & the AgriZone maintenance model development of content / curriculum
Approved market Completion of Implementation Development and Plan of Phase 1 Market intelligence targeting Local Plan market
To secure tenants % of Agrizone for the AgriZone facilities occupied and to stimulate for each of the exports following facilities (to commence in 2010/11): 50% 100%
Greenhouses Draft agreements Block A with tenants 50% 100% Sign Heads Block C of Agreement 50% Local market Block D Sign mngt production contract
100% Initiate Sourcing RfP issued research into Tissue culture of operator own varieties facility or partner To establish a fully Necessary facilities Constructi 100% functional nursery and equipment on
sourced/established completed Operator 40 60 hectares 60 hectares Area of plant appointed hectares rehabilitation completed To conduct Approval of Develop Research Establish innovative research research model Programme research team / and development programme and for R&D Approved Select Operator for the intensive research output training agriculture industry To form effective No. of Approved 2 0 partnerships with SLA’s and Training ) relevant partnerships Research stakeholder
Table 20: AgriZone Sub-programme reflecting strategic objectives, measurable objectives, performance measures indicators and targets
6.6 Reconciliation of budget with plan
The funding trends over the period 2008/9 to 2011/12 take into account the expected increase in operating activities and the impact on the budget.
The most significant costs reflected on this programme relate to the payment of the EPC contract which is scheduled for completion in April 2010. The significant increase between the base year and the 2008/9 estimate take into account the fact that construction commenced in August 2007 while the 2008/9
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estimate reflects the EPC value for 12 months. Much of the spatial planning related costs co-incide with the final construction phases of the Dube TradePort.
Table 21: Programme 4: Infrastructure & Development: Programme budget by sub-programme (000’s)
Sub-programme 2007/8 2008/9 Average 2009/10 2010/11 2011/12 Average Actual Estimate annual Budget Target Target annual (Base) change change (%)1 (%)2 EPC 530,190 1,116,447 25% 560,191 10,000 - -11%
EIA Mitigations - - n/a 200,000 100,000 20,000 -37% Business - - n/a 10,000 20,000 20,000 100% development Regional Investment - 935 n/a 200,000 400,000 500,000 n/a Initiative
AgriZone 2, 003 10,015 n/a 146,000 35,600 40,000 1345%
IT Platform - n/a 76,000 20,000 5,000 n/a
Total programme 532,193 1,127,397 1,192,191 585,600 585,000
1. Projected average annual change between base year and 2008/9 estimate. 2. Average annual change calculated between 2009/10 and estimate, instead of base year, due to the level of activity.
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7. Implementation of capital investment, maintenance & asset management plan
The bulk of the infrastructure plans revolve around the construction of the Dube TradePort over the next 18 months. This will include the procurement of the necessary equipment that will be purchased to functionalise the TradeZone; AgriZone and IT Platform. Details of expenditure over the MTEF period have been included in the relevant programmes above.
8. Medium-term revenues
8.1 Summary of revenue
At this stage, DTPC is fully reliant on grant funding:
Table 20: Sources of funding for DTPC
Total Receipts 2007/8 2008/9 2009/10 2010/11 2011/12 Actual Estimate Budget Target Target Provincial Allocation 75,444,134 1,453,839,441 1,444,253,731 732,553,167 709,441,459
8.2 Departmental revenue collection
DTPC does not receive, nor does it generate own revenue.
8.3 Donor funding
DTPC does not receive donor funds
9. Co-ordination, co-operation, and outsourcing plans
9.1 Interdepartmental and local government linkages
The very nature and size of the Dube TradePort demands extensive co-ordination and co-operation across all three spheres of government. To this end, DTPC plays a fundamental role in establishing, maintaining and co-ordinating the necessary linkages between Departments (e.g. Department of Transport (national and provincial), Department of Agriculture, Department of Environmental Affairs and Tourism, etc) local government (e.g. eThekwini metro, KwaDukuza local municipality, ILembe District municipality, etc) and other stakeholders within the public sector. Success in this regard will be enhanced if all role players and stakeholders are focused on implementing the agreed project plan.
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9.2 Public entities
There are no public entities reporting to DTPC.
9.3 Public, private, outsourcing, etc
As reported previously, the entire construction of the Dube TradePort has been outsourced via the EPC contract which is monitored via sub-programme 4.1 EPC.
The ILembe Consortium was appointed as the preferred bidder in the Design, Construction and Maintenance procurement for the Dube TradePort and the EPC Contract was concluded between ACSA (as the Employer) and ILembe Airport Construction Services (Pty) Ltd (“ILembe”) (as the Contractor). The Contract encourages joint problem solving through a regime of determinations, negotiations, mediation and then arbitration.
The Contractor has committed to meeting certain B-BBEE targets (Procurement, Ownership, Management, Skills Development, Socio-economic Development and Enterprise Development which provides targeted support to SMMEs) and will be penalised for failure to do so.
Our acceleration programme, embarked on during the 2008/9 year, will reduce the construction period by 77 days, from the original 1 049 days, calculated from Commencement Date. The value of the contract, which is split between ACSA and DTPC is reflected in the table below:
Table 21: Financial Summary of EPC
EPC Details ACSA DTP Total
Original estimate 5,469,659,645 1,356,863,003 6,826,522,648
Contract adjustments 788,892,048 51,976,914 840,868,962
Variations 355,997,027 107,941,615 463,938,642
Total 6,614,548,720 1,516,781,532 8,131,330,252
There are daily liquidated damages payable for failure to meet completion deadlines for sections and for the entire Works. After completion, the Employer has 12 months after issuing the Taking-Over Certificate to inspect the Works and notify the Contractor of any defects (“Defects Notification Period”).
The Contractor’s performance obligations are secured by a Demand Guarantee of R625 million expiring on 8 July 2011 issued by Lombard Insurance Group. This Guarantee will be reduced by 50% at the completion of construction and taking over of the Works (on issue of Taking-Over Certificate). DTPC has not entered into any PPP’s as defined in the Treasury Regulations.
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10. Financial Management
10.1 Strategies to address audit queries
The 2007/8 regularity audit and the audit of performance information conducted by the Office of the Auditor-General resulted in yet another unqualified audit report. Although all five items noted in the management report received from the Auditor-General were classified as “other important matters”, there were no findings that impacted on the audit report. This is a remarkable achievement given the inherent nature of the organisation and the value of the budget managed.
The following table presents a summary of the issues and the action plans for dealing with them.
Other Matters reported Action Plan by the Office of the
Auditor- General The fraud prevention plan was approved and adopted by the Audit Fraud prevention Committee in May 2008. It has been implemented during the plan current year.
Materiality and This will be drafted and presented to the external auditors for their Significance review during the March 2009 regularity audit. It will also be Framework presented to the Audit Committee for comment.
The accounting treatment of the lease in question will be converted Operating Leases from an operating lease to a finance lease by March 2009.
Accounting The necessary accounting treatments to correctly account for the treatment of Grant grants received have been processed and verified by the external IAS 20 auditors.
The HR plan has been completed and was approved by the Board HR Plan on 9 September 2008
10.2 Implementation of PFMA
We are currently awaiting the promulgation of the KwaZulu-Natal Dube TradePort Corporation Bill which secures the status of DTPC as a Provincial Government Business Enterprise (Schedule 3, Part D) in terms of the PFMA. Once our statutory identity has been established, we will undertake a full compliance review to ensure comprehensive implementation of the PFMA and related Treasury Regulations.
The monitoring of compliance with the PFMA will, subsequently, be reflected in the annual performance plan of DTPC and will therefore form part of each employee’s performance agreement.
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11. List of acronyms and abbreviations used in the document
AMP Asset Management Plan ASGISA Accelerated Shared Growth Initiative of South Africa BBBEE Broad-Based Black Economic Empowerment BEE Black Economic Empowerment DEAT National Department of Environmental Affairs and Tourism DED Department of Economic Development DTPC Dube TradePort Company (Section 21) EAP Employee Assistance Programme EEP Employment Equity Plan EIA Environmental Impact Assessment EPC Engineer, Procure and Construct EXCO Executive Committee FET Further Education and Training GLOBAL-GAP Global Good Agricultural Practise HACCP Hazardous Analysis Critical Control Point HOD Head of Department HR Human Resources IDP Integrated Development Plan ITC Information Technology and Communication KZN KwaZulu-Natal MEC Member of Executive Council MTEF Medium Term Expenditure Framework NSIC National Small Industry Corporation PFMA Public Finance Management Act PGDS Provincial Growth and Development Strategy PPECB Perishable Product Export Control Board PSEDS Provincial Spatial Economic Development Strategy RSA Republic of South Africa SCM Supply Chain Management SITA State Information Technology Agency SLA Service Level Agreement SMME Small Medium and Micro Enterprises
End
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