From Enthusiasm to Claims from Nonparticipants
There is an old project management adage that a project entails six phases, which have been jocularly described as:
- 1. Enthusiasm
- 2. Disillusionment
- 3. Panic
- 4. Search for the guilty
- 5. Punishment of the innocent
- 6. Praise and honour for the nonparticipants
On 20 June 2014, the Premier of the Western Cape Government (WCG), Helen Zille, announced in the ‘State of the Province’ (SOTP) address that one of the province’s main priorities is to make the Western Cape a leader in broadband access [1]. This announcement built on progressive statements made in SOTP addresses given by Zille in 2011, 2012 and 2013.
BMI-T has been intimately involved in this process, mostly around the ‘enthusiasm’ phase. Now that the WCG has progressed to the ‘praise and honour for the nonparticipants’ stage, we welcome the opportunity to outline how the project came about and to identify our role in the process.
Enthusiasm
In 2010, the WCG recognised that broadband is an economic enabler and tasked the Department of Economic Development and Tourism (DEDAT) and the CeI (Centre for e-Innovation, Department of the Premier) to create a telecommunications strategy and action plan for the Western Cape. A process was initiated to develop the strategy in consultation with a broad range of stakeholders including provincial, national and local government, the wider public sector (SOEs and agencies), private investors and the public. A few priority areas were identified, including government service delivery, education and access of citizens, as well as economic development.
DEDAT conceived seven parallel projects falling under a ‘Connected Leadership’. A process was developed to understand where the province was then (the ‘as is’ state), where the province needed to get to (the ‘to be state’), what the province needs to do (the analysis, strategy and business case development stage), and how it will do it (the development of a project plan and budget). The outcomes of these parallel stages were to converge into an integrated master plan, which detailed the implementation plan and roadmap for broadband in the Western Cape.
The parallel projects considered the following areas:
- Connecting government
- Connecting schools
- Connecting communities
- Connecting households
- Low-cost computing devices
- Connecting businesses
- Connecting to the world
Through a competitive tender process in mid-2011, BMI-T was awarded the contract to determine the business case for the connecting government, connecting households and connecting to the world projects. The timeframes for the projects were extremely demanding as the WCG sought to have budget approved for the start of the 2012/3 financial year. This meant that a compressed and efficient program with tight project management was needed to achieve this.
Connecting government project
Prior to the start of this project, the WCG had set itself goals which were published in the June 2011 Provincial Telecommunications Infrastructure Strategic Framework. These included the target of connecting all government buildings in the Western Cape at a minimum network speed of 10Mbps, with large government buildings and specific targeted industries in the metropolitan area connected at speeds in excess of 100Mbps via FTTP (fibre to the premises).
As is study
The determination of the ‘as is’ state for the connecting government project involved an investigation – consisting of both desktop research and on-site fieldwork – into existing infrastructure connecting all government facilities in the Western Cape. This included all facilities such as national, provincial and local government offices, healthcare institutions (clinics, day hospitals, and hospitals), libraries, government community centres and recreational centres. In total, data for some 8 000-odd locations was collected and plotted using a geographic information system.
To reinforce the research, interviews were conducted with representatives of various custodians of public infrastructure in order to understand the factors that could help or hinder the use of the particular infrastructure to stimulate and speed up the development of telecommunications infrastructure. In total, 90 unique interviews were conducted with the interviewees, including SteerCom members, IT personnel, finance personnel and municipal managers. In addition, further qualitative and quantitative data concerning broadband was sought through nearly 200 face-to-face and over 450 telephonic interviews. The data from the interviews was collated, quality checked and analysed using a statistical package.
Data on the provincial and municipal spend on ICT was determined through a detailed analysis of financial records. This was vital in understanding the affordability of any proposed scheme.
To be study
Best practices from several international case studies were determined, including the determination of practical measures for stimulating infrastructure development. National targets and plans for connecting government were researched and documented. The outlook for broadband network development in the Western Cape was determined through interaction with industry and BMI-T’s knowledge of the sector. Technology choices and recommendations were given.
Strategy synthesis
Based on existing knowledge and analysis of new information gained, BMI-T synthesised a recommended strategy centred on building an optical fibre backbone where the private sector was unlikely to provide on an ‘open access basis’. A phased plan was proposed to connect different tiers of government, making best use of facilities available from Broadband Infraco.
Technical proposal
An overarching, phased plan was derived for the WCG. This ran from the project initiation, through the design and build programme, to the eventual maintenance of the network. The resultant fibre network conceived was around 4 000km, to be monitored from a regional network operations centre.
Project financing
BMI-T undertook a study into the project financing mechanisms available to the WCG. Best practices were distilled from other National Treasury-approved projects. Sources of funds were determined from the public and the private sector.
Economic rationale
The net present value (NPV), a benefit cost ratio (BCR) and an internal rate of return (IRR) were determined for the project, taking into account the expected CAPEX and OPEX profiles. The economic analysis included all costs to society and was done by adjusting for shadow prices and wages and removing the distortions caused by taxes and subsidies.
The overall contribution to GDP, tax generation and job creation (direct and indirect) potential were calculated using best economic practices. A break-even analysis was performed to show that the proposed strategy will allow the WCG to transition services off the private sector networks and build capacity on the network, allowing it to offer services internally that might not otherwise be affordable or available viz. constrained by budget and/or not offered by the market due to lack of general business interest.
The economic analysis was done in conjunction with Strategic Economic Solutions, a Cape Town-based firm of economists.
Connecting households project
The connecting households project considered the use of wireless technology as the access mechanism to allow broadband communications to be extended to many more households than the current commercial mechanisms allow. The project centred on finding two pilot projects that could be used to best demonstrate the capabilities of wireless. Wireless mesh technology was looked at in detail and its characteristics documented. The latter included an appreciation of the benefits of the technology (advantages and disadvantages), typical applications, standards and best deployment practices.
Pilot sites were identified in the Western Cape. The profile of these areas was compared and contrasted with an ideal case that considered a wide number of factors including population, demographics, geography, topography, scatter and clutter, power, backhaul options, sources of interference, client types, level of demand and current services.
In consultation with the WCG, pilot projects for the Khayelitsha and Mitchells Plain and Saldhana Bay areas were conceived. These projects were tested for practicality. Technical and financial estimates were made to provide wireless mesh coverage to a suitable specification. A model to allow the maximum involvement of the private sector through the creation of an open-access architecture was included.
Project funding options and the economic justification for the project were derived. A preliminary economic impact assessment was performed.
Connecting to the world
In this project, the WCG wanted to look at ways to reduce international bandwidth costs to the Western Cape. It was postulated that the government could act as a demand aggregator and an anchor client to obtain dedicated international capacity. Moreover, it was considered that the WCG could utilise the spare capacity to reduce the cost of international connectivity to targeted businesses in the Western Cape, to assist in making these businesses more productive and competitive.
The project considered the ‘as is’ state by determining the current level of demand for international bandwidth for the WCG. This was derived from data collected from primary and secondary research. The outlook for demand was calculated using an approach developed by BMI-T. Using knowledge of the dynamics of the industry, BMI-T was able to deduce the profile of the WCG’s spend on international bandwidth so that the effectiveness of any benchmarks could be benchmarked. BMI-T then determined the ‘to be’ state with various interventions that could be put into play. Secondary research into the target benefits for interventions in international connectivity was conducted, and the principal choices for the WCG determined. A local case study of a demand aggregator was studied in depth and supplemented with primary research.
BMI-T derived four scenario-based outcomes and strategies around these scenarios. Each scenario had different direct and indirect benefits to the WCG. A recommended solution was concluded and the CAPEX and OPEX of this approach determined. This was done on a worst-case basis to give the WCG comfort in the findings. A breakeven analysis showed the benefits of following the preferred approach. As for the other projects, the economic rationale for the project was prepared, resulting in GDP and job creation estimates to motivate for the project.
Outcomes
BMI-T completed the project to create the business cases for the three areas on time, to cost and to the client’s immense satisfaction. Integration into the master plan was completed in time to allow DEDAT to work with the Provincial Treasury and have the projects included in the forthcoming financial year’s budget. The two pilot projects for connecting households were publically announced in the Premier’s February 2012 SOTP address and have now progressed to the tender stage. Other factors directly stemming from BMI-T’s recommendations were also included in the address.
Disillusionment, panic and the guilty
In the February 2013 SOTP address, Zille confirmed that they were on track with the roll-out of their broadband project. However, the broadband project was delayed by the enforcement of national compliance requirements, which threatened the delivery targets that the WCG set itself. In late 2013, the procurement process stumbled as State IT Agency (SITA) failed to extend the deadline for the tender and so it had to start from scratch for a third time [2].
Praise and honour for the participants
Despite the delays and obstructions, in June 2014 the WCG was able to announce that it had signed a strategic agreement with SITA and Neotel to provide broadband services to approximately 2 000 government sites, including schools, libraries and health facilities over the next two to three years. Under this agreement, by May 2016 all sites will be connected with minimum speeds of 10Mbps. By August 2018, most sites will be connected by fibre optic cables with 90% of them enjoying 100Mbps speeds and 10% enjoying 1Gbps speeds.
BMI-T is immensely proud to have played a fundamental role in the formulation of this plan. We applaud the WCG, and particularly the DEDAT team, for their vision, perseverance and professionalism. We have tremendous respect for this team and their choice in Neotel.
We look forward to watching this programme become a reality and being replicated elsewhere in South Africa.
1 Source: http://www.westerncape.gov.za/speech/state-province-address-2014
2 Source: BDLive, Helen Zille slams national departments, Sita, 23 February 2014