Provincial Roads
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Performance and Expenditure Review Provincial Roads Final Report February 2018 Research commissioned by the National Treasury PER - Provincial Roads 2 Project Team: Jonathan Carter Senior Economist with Cornerstone Economic Research [email protected] Matthew Townshend Senior Economist with Cornerstone Economic Research [email protected] Lungisani Ragwala Researcher with Cornerstone Economic Research [email protected] Kobus Visser CEO at ERO-Engineers [email protected] Roger Purchase CEO at tpa Consulting [email protected] FEBRUARY 2018 PER – Provincial Roads i Table of Contents LIST OF ABBREVIATIONS AND DEFINITIONS .............................................................................................................. 3 EXECUTIVE SUMMARY .............................................................................................................................................. 4 1. INTRODUCTION ................................................................................................................................................ 7 1.1 OVERVIEW OF THE PROVINCIAL ROADS NETWORK ....................................................................................................... 7 1.2 SNAPSHOT OF PROVINCIAL ROADS EXPENDITURE ......................................................................................................... 9 1.3 PURPOSE AND SCOPE .......................................................................................................................................... 10 2. INSTITUTIONAL ARRANGEMENTS IN THE PROVINCIAL ROADS SECTOR .......................................................... 11 2.1 THE NATIONAL DEPARTMENT OF TRANSPORT .......................................................................................................... 11 2.1.1 Estimate national funding needs for provincial roads .............................................................................. 12 2.1.2 Technical norms and standards and indicator benchmarks ..................................................................... 12 2.1.3 Transferring officer of the Provincial Roads Maintenance Grant ............................................................. 13 2.2 PROVINCIAL TRANSPORT DEPARTMENTS .................................................................................................................. 13 2.3 COMMITTEE OF LAND TRANSPORT OFFICIALS .......................................................................................................... 13 2.4 SANRAL .......................................................................................................................................................... 13 2.5 CONSULTANTS AND CONTRACTORS ........................................................................................................................ 14 3. PROVINCIAL ROADS FINANCING .................................................................................................................... 15 3.1 FUNDING SOURCES ............................................................................................................................................. 15 3.1.1 Funding of provincial roads in the intergovernmental system ................................................................. 15 3.1.2 Discretionary funds ................................................................................................................................... 15 3.1.3 The PRMG ................................................................................................................................................. 15 3.1.4 Budget ratios ............................................................................................................................................ 16 3.2 SUMMARY OF THE EXPENDITURE ANALYSIS .............................................................................................................. 16 3.3 THE FUNDING SHORTFALL IN THE SECTOR ................................................................................................................ 17 4. ROAD MODELS AND ANALYSIS ....................................................................................................................... 19 4.1 BASELINE UNIT COSTS .......................................................................................................................................... 19 4.2 MAJOR COST DRIVERS ......................................................................................................................................... 21 4.3 ROAD NETWORK MODEL ..................................................................................................................................... 21 4.4 ROAD PROJECT MODEL ....................................................................................................................................... 24 4.5 FUNDING SCENARIOS .......................................................................................................................................... 27 5. PROVINCIAL ROAD PROJECT AND CONTRACT REVIEWS ................................................................................. 30 5.1 PER PROCESS AND FEEDBACK ............................................................................................................................... 30 5.2 ROAD PROJECT PROCESS ...................................................................................................................................... 31 5.3 MONITORING ROAD CONDITION AND DATA COLLECTION ............................................................................................ 32 5.4 PROJECT IDENTIFICATION AND NAMING .................................................................................................................. 32 5.5 APPOINTMENT OF CONSULTANTS .......................................................................................................................... 33 5.6 TENDER RULES AND PROCESSES ............................................................................................................................. 33 5.7 PROJECT DESIGN AND SPECIFICATIONS .................................................................................................................... 34 5.8 PROJECT WORK .................................................................................................................................................. 35 5.9 REFLECTING ON THE PROJECT PROCESS ................................................................................................................... 36 5.9.1 A mental map of the project process ........................................................................................................ 36 5.9.2 Skills and experience is crucial .................................................................................................................. 36 5.9.3 Activities that can be checked during oversight ....................................................................................... 37 6. CONCLUSIONS ................................................................................................................................................ 38 6.1 THE ROAD NETWORK MODEL AND ROAD PROJECT MODEL ........................................................................................ 38 6.2 ADDRESSING FUNDING SHORTFALLS IN THE ROADS SECTOR ......................................................................................... 38 6.3 GAINING MORE FROM THE EXPENDITURE REPORTING SYSTEMS .................................................................................... 38 6.4 MINIMISING RISKS IN THE PROJECT CYCLE ................................................................................................................ 39 REFERENCES ........................................................................................................................................................... 40 DRAFT OCTOBER 2017 PER – Provincial Roads ii 7. ANNEXURE 1 - WORKING PAPER 1: COST-EFFECTIVE PROVISION OF LOW-VOLUME ROADS IN SOUTH AFRICA 41 8. ANNEXURE 2 - WORKING PAPER 2: AN ECONOMICS-BASED ROAD CLASSIFICATION SYSTEM FOR SOUTH AFRICA ................................................................................................................................................................... 52 DRAFT OCTOBER 2017 PER – Provincial Roads 3 List of abbreviations and definitions BAS Basic Accounting System CIDB Construction Industry Development Board COLTO Committee of Land Transport Officials DoT Department of Transport IRM Infrastructure Reporting Model MinMEC Ministers and Members of Executive Councils PER Provincial Expenditure Review PES Provincial Equitable Share PMS Pavement Management Systems PRMG Provincial Roads Maintenance Grant RAMP Road Asset Management Plan RAMS Road Asset Management Systems RCB Roads Coordinating Body SANRAL South African National Roads Agency Limited SCOA Standard Chart of Accounts VCI Visual Condition Index DRAFT FEBRUARY 2018 PER – Provincial Roads 4 Executive Summary The South African road network consists of national, provincial and municipal roads. SANRAL, as an entity of the National Department of Transport (DoT), is the implementing agent of the national roads network and, along with the DoT, plays a key role in influencing policy and setting standards. Provincial roads are a provincial competence. Provincial road networks are maintained by the relevant provincial departments, although some roads have been