Back to Insights

Exploring the benefits of Capital Expenditure Frameworks (CEFs) in the Municipal Environment

8 March 2024

In the challenging environment of municipal governance, the need for a strategic and sustainable approach to infrastructure investment has never been more crucial – we simply have to make the right choices from the onset. Moreover, those choices absolutely need to be the most effective choices with the biggest overall impact. Fortunately, the Spatial Planning and Land Use Management Act (SPLUMA), 2013 (Act 16 of 2013) provides us with a solution.

A Capital Expenditure Framework is a strategic tool used in municipal planning to guide the allocation of resources for long-term investments. It serves as an important component within the municipal planning landscape, mandated by SPLUMA. Under the SPLUMA legislation, municipalities are required to develop a Municipal Spatial Development Framework (MSDF) that “determine a Capital Expenditure Framework for the municipality’s development programs, depicted spatially”..

What is a Capital Expenditure Framework, why do we need them and how can Novus³ help? Capital Expenditure Frameworks are a comprehensive, long-term view of a municipality’s infrastructure investment needs, and how to prioritise and finance them sustainably.

To better understand CEF’s, one can think of them as a strategic tool available to municipalities to quantify the investment needs over the next ten years, and how to finance capital expenditure so that it aligns with the municipality’s long-term financial strategy.

This framework is adaptable to changing realities, priorities and circumstances – which renders it important to review a CEF frequently. This is to ensure that municipal investment initiatives, through the Medium Term Revenue and Expenditure Framework (MTREF) is focussed and aligned with the bigger strategic intent of the municipality.

The most exciting element of a Capital Expenditure Framework is that it practically enables and engage three key disciplines in municipalities to work together; that is infrastructure planning, urban planning and financial planning – the result of such a collaborative effort is extraordinary as it fosters a common understanding and appreciation for work done by different disciplines, reduce duplication of work, and creates a framework for continued collaboration around a joint vision.

At Novus³, we recognize the critical role CEFs play in integrated planning. We believe that understanding this framework is fundamental to navigating the challenges and seizing unique opportunities within a municipality effectively. We are committed to empowering municipalities through insightful strategies and innovative solutions. Our expertise in crafting and implementing Capital Expenditure Frameworks ensures that your municipality is not just prepared for the present but is also strategically positioned for sustainable growth.

#CP3 #LocalGovernance #Development #Collaboration #Transparency #CommunityEngagement #DataDriven #SustainableDevelopment #Innovation #Accountability #Empowerment #Efficiency #RegionalPartnerships #LocalVoice #ProgressMonitoring #Budgeting #SystemSupport #CapacityBuilding #Partnerships #LocalisLekker #CEFs #Frameworks

Read more

Share

© 2021 Novus3 Pty (Ltd).

Capital investment prioritisation

Novus3’s innovative and celebrated approach to prioritsation, stems from significant multi-disciplinary experience that was gained in-situ at local government level, firmly rooted in an understanding of the built environment. Through the use of the CP3 system, our clients have the ability to appraise large and complex capital demand requirements within minutes, resulting in defendable, evidence based budgets. The results are often challenged and stress tested by politicians during political debates – the process therefore repeatedly have been proven to be beyond reproach and consistently reliable.

IDP Process Plan and change management

Novus3 provides advisory services to our clients, supporting them in setting up the correct structures and mechanisms internally which becomes the basis for sustainable and collaborative planning and implementation. The IDP process plan has a number of inter-related complexities that plays out on a cyclic basis year-on-year. Pre-empting and reacting to upcoming requirements in the IDP process pro-actively, renders the process into a constructive and demonstratable outcomes-based process.

Public sector budget and fiscal impact simulation

The financial management of public sector funding at local government level, even on a small scale, often rivals the complexity encountered at huge, listed, multi-national companies in the private sector.. Local governments have to operate and make smart financial decisions within a complex and exceedingly stressful environment. Compliance with legislation, policy frameworks and accepted accounting practices have to be maintained. Simulating these complexities allows our financial executives to ask “What if?” questions and reliably peer into the future with a long-term understanding of the implications of decisions that are taken in the present.

Spatial Development Frameworks

Novus3’s specialised knowledge and access to bespoke and purpose-made spatial and other analytic tools, provided the company with the opportunity to develop unparalleled experience in the development of Capital Expenditure Frameworks (CEFs) by bringing a practical angle to the formulation of implementation plans. A realistic roadmap is provided on how to realise the objectives developed in the Spatial Development Frameworks of the municipalities where we were involved. In return for the development and submission of these CEFs, these municipalities were awarded with significant additional funding from central government.

Built Environment Performance Plans

As part of the National Treasury City Support Program, Novus3 was regarded as specialist advisors on the built environment value chain – a process embedded in Built Environment Performance Plans (BEPPs). BEPPs were intended to form the bedrock of municipal capital planning and management for larger cities (metros). Novus3’s specialist knowledge played a big role from an advisory and capacity building perspective during the development of a number of BEPPs that were developed for a number of metros.

Infrastructure Capital Investment Plans

Infrastructure investment has to find a balance between addressing historical backlogs and inequalities, maintaining satisfactory prevailing functionality and level of service and strategically investing in unlocking future opportunities and growth whilst acknowledging a plethora regulatory constraints, policies and rules. In the process, certain strategic outcomes are sought which may manifest spatially strategically or environmentally. Our infrastructure capital investment plans provide the strategic guideline and provide the recommendations to find this balance.

Capital Expenditure Frameworks

Novus3 has developed multiple capital expenditure frameworks (CEFs) for multiple municipal clients and are regarded as the sector leaders in this area. These CEFs are financial roadmaps providing clear direction on financial constraints, the most important capital and investment priorities, an understanding of the unique local fundamentals and a sustainable response to these multiplicity of challenges.

Project preparation processes

The efficient planning and execution of projects from the moment of idea conception until the last brick has been laid has been the subject of study from as early as the reign of the Roman Empire. The governance process within the public sector has to play an important role in the journey of project preparation. The under-expenditure of allocated funding regrettably is often the only element in the built-environment that consistently re-occurs. All too often, funding is allocated to projects that simply are not ready to proceed to the next step. Novus3’s CP3 system is used to aid clients in the progressive steps involved in the project preparation journey.