2.6 OVERVIEW OF BUDGET FUNDING 2
2.6.3 SAVINGS AND EFFICIENCIES
2.6.3.1 Costs Savings, Productivity and Business Process Improvement Initiatives:
A number of projects have been embarked upon by the Special Projects & Cost Savings, Internal Control, Energy Office, Organizational Development and Management Services Departments, in conjunction with the relevant operational departments to improve efficiencies and reduce costs Council wide.
Contracts Register – Controlling Procurement Contracts:
The Municipality has a detailed Contracts Register Database for all operational units, which was verified by the respective Unit Heads for all active contracts in the 2014/15 financial year. The Contracts Register is being used to control all payments above R 200,000.The first phase of automating the contracts register has been completed, in that the contracts register now resides in the JDE accounting system and the Contracts Register for 2015/16 will come from the JDE-Lite System. The automated contract tracking, monitoring and control on the JDE System, piloted within the City Fleet and rolled out in Water and Architecture units have been completed and will be standardized for the other units and clusters within the Municipality in the 2015/16 financial year. With the upgrade of the JDE system to the Enterprise One (JDE –E1) platform scheduled for 1 July 2016, the contracts register is expected to be verified the Unit Heads and 100% signed off by 30 June 2016.The second phase of the contracts register which addresses all contracts below R 200 000 has commenced in 2015/16. There will be on the automated tracking process and standardized contract monitoring on the upgraded JDE–E1 system in 2016/17. In addition the electronic capture, approval and independent verification of contract data will further enhanced controls over monitoring and payments of contracts.
Salaries and Overtime:
With salaries and wages being a major expenditure of the operating budget, overtime will continue to be monitored closely. Staff that work overtime on a regular basis or work excessive overtime will be closely scrutinized with departmental Heads held accountable. Projects on employee verification and tighter controls on the processing of salaries will be undertaken to ensure employee costs are accurate. Managers will also carry out monthly verification of active employees to certify that employees processed on the payroll have indeed been on duty and to ensure that terminated employees are timeously and correctly processed on the payroll.
Revenue Projects:
The review of the revenue value chain is being undertaken, focusing on reducing bad debts and improving revenue collection. Amongst the Revenue Projects is the matching of property use for rates to services for water and electricity to ensure that the correct service tariffs are being charged to the property owner and recovering any revenue understated. The Processes from customer registration, billing, credit control including disconnections and finally legal action will be reviewed to reduce the value and number of written off as bad debts. Verification of the debtors’ take-on balances from the legacy (Coins) system to the new revenue management system (RMS) will continue in 2016/17, with monthly consumer and general ledger revenue reconciliations to ensure the integrity of consumer account balances and the revenue billed and reflected in the financial statements.
Data and Telephone Costs:
The Telephone Usage policy is currently being drafted for Council to consider for approval and implementation in 2016/17. The policy intends to control staff telephone usage and reduce costs of outgoing calls. Data and internet use is also being reviewed to reducing costs and limit unproductive time on the internet and telephone.
SCM Benchmarking:
Internal Control Unit has conducted a benchmarking exercise to determine the pricing and total spend of the top 100 stock items for the previous and current financial years. The main objective of this project is the analysis of the spend trends and prices to be included in the municipality’s SCM pricing catalogue. This price catalogue will be used to ensure that the prices that the municipality pays are reasonable and fair. The exercise also help identifying all non-stock items that need to be converted to stock items ensuring savings economies of scale, from bulk purchases thus reducing the cost of goods for the municipality.
Human Settlements Turnaround Strategy:
An initiative to improve the business processes and systems efficiencies within Human Settlements Unit was embarked upon, by the Internal Control, Expenditure and Human settlements Departments as part of the Human Settlements Unit Turnaround Strategy. Implementation and monitoring of controls relating to housing projects, in line with business processes developed is ongoing.
Procedure Manuals/SOPs:
All sections, within Treasury will be reviewing and updating procedure manuals. Business processes will be looked at critically, analysed to effect process improvements, to eliminate any bottlenecks and to implement innovative ideas to improve productivity. Overall an institutional review has been conducted which will resulting in Units having restructured organograms and change in staff resources this will streamline processes and ensure continuous improvements and efficiencies. This will also lead to changes to procedure manuals and standard operating procedures that will be reviewed annually by senior management.
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2.6.3.2 Energy Office – Addressing the Climate Change Issues and Energy Efficiencies
The Energy Office in collaboration with the Environmental Planning and Climate Protection Department (EPCPD) jointly developed the Durban Climate Change Strategy (DCCS), via a participatory and consultative approach. The DCCS was adopted by the eThekwini Council in 2015. In essence the DCCS recognises the harmful impact on human activities on the environment and seeks to reduce further anthropogenic greenhouse gas emissions through various mitigation interventions and protect against the potentially disastrous effects for climate change (climate change adaptation). This is further catalysed by the recent agreed at COP21 by most States from around the world, including South Africa, to limit temperature increase to 1.5 degrees.
The Energy Office is responsible for climate change mitigation with the eThekwini Municipal Area. In conjunction with the DCCS, the eThekwini Energy Strategy of 2008 sets targets for the reduction of greenhouse gas gases at 27.6% by 2020.
While eThekwini Municipality is generally viewed as a climate change mitigation champion and leader, the discipline is new for local government. As a result a phased and carefully planned and tested approach is needed to embedding mitigation throughout traditional municipal functions.
Some of the key projects being undertaken by the Energy Office include:
- METIS: This is the largest research project that is currently being spearheaded by the Energy Office and will culminate in a plan that will guide the eThekwini Municipality to a sustainable energy future.
- Durban Solar Map: This is a nifty, interactive tool that allows residents to calculate the amount of electricity that they can generate from a photovoltaic (PV) installation on their roof. The tool is based on GIS technology and incorporates latest solar irradiation data, financial model and some technical details.
- EOS: This is a pilot project that will see the eThekwini Municipality install 500kWp of PV on municipal owned buildings.
- Energy Efficiency Demand Side Management Programme: the eThekwini Municipality participates in the National EEDSM programme, managed by the Department of Energy. This programme aims to retrofit existing technologies (lights, pumps, etc.) with more energy efficient alternatives.
2.6.3.3 Management Services - focussing on Productivity, Business Processes and Waste Elimination:
- Productivity Assessments: Thus far during the 2015/ 16 Financial Year, productivity assessment has been undertaken at the Trading Services Cluster. However, in January 2016 productivity assessment will be undertaken at the CES Cluster, this will continue in other Clusters in 2016/17.
- Business Process Management: Thus far during this financial year BPM was undertaken at the Human Settlements Unit. From Jan 2016 BPM will be undertaken at SCM and Engineering Units
- Wastage Elimination: In this regard, Overtime reduction interventions were undertaken at Security Management and Water and Sanitation Units. From Jan 2016 overtime reduction interventions will be undertaken at Parks Leisure and Cemeteries (PLC), Fire as well as Electricity Units.
- ISO Standards: The ISO9001 standards has been introduced as a pilot within the Treasury - SCM Unit, as the Quality Management System and will be rolled out to all other clusters in a phased approach. Thus far ISO 9001 (Quality Management System) strategy has been developed and a gap analysis will be undertaken for 43 UNITS within the Municipality.