Transmission Gully could need new bulider – Infrastructure Commission review

The Transmission Gully roading project is still unfinished and a new report says it may need a new builder to complete it.

The Infrastructure Commission’s long overdue independent review has found the public-private partnership (PPP) was not the “root cause” of the project’s time and cost overruns.

The motorway’s construction costs blew out, its operation has upset environment regulators and the wrap-up of it is being fought over in court.

The commission said the builder CPBHEB joint venture did not anticipate the complexity of the consenting system.

An interim review in 2021 found serious planning flaws at the motorway north of Wellington.

The commission echoed those conclusions which highlighted significant failings in the accuracy of the project’s initial cost estimate, as well as early governance of the project.

It said the project was effectively always underpriced given the complex risks involved. As a result, it was inevitable the projects costs would change during the construction phase.

The fact it was a PPP meant it was a fixed-price contract, making it vulnerable to inaccurate or optimistic cost estimates early on.

But it said given the risks and events like the Kaikōura earthquake, bad weather and Covid-19 there was no evidence that it could have been done better under a non-PPP model.

It said key findings were that the builder did not anticipate the complexity of the New Zealand resource consenting system, and was not able to secure all necessary consenting approvals.

Recurring relationship issues hampered progress.

After significant delays the road was opened before all the works and compliance checks were completed on the basis that it was safe to operate.

The report said its understanding from NZTA is that it was “unlikely that the project will be completed by the current consortium, and likely that NZTA will need to implement alternative arrangements in order to complete the project and then maintain and operate the road going forward”.

RNZ has contacted NZTA to clarify who will finish the build, and has also approached the consortium.

Te Waihanga chief executive Ross Copland said there were cost overruns on PPP and non-PPP projects alike, causing decision makers to lose confidence in business case numbers.

He said this made clear that unusually high-cost overruns were a deeper issue than just selecting the right project model.

“We can also improve our consenting system for both regulators and the regulated when it comes to managing big infrastructure projects.

“I’d like to see us getting good value across the board – including that consent conditions are proportionate to risk and really do provide environmental benefit.

“The case for wholesale reform in how we manage the environmental risks of big projects has never been stronger.”

The commission said its review was delayed because Transmission Gully had not yet been completed to the standard required by Waka Kotahi.

It said its final assessment of the project’s costs and benefits may not be available for some time.

Report must be ‘approached with caution’ – Transport Agency

NZTA said it supported ongoing learning on large project planning and delivery through a review of what had worked well and what could have been improved.

“We do not intend to provide a detailed response or commentary on all aspects – some of which we have a different view on.”

It said the report was based on a confined set of documents and discussions with selected interviewees.

“Given the complexities of the issues involved, it is understandable that reasonable individuals may hold differing recollections, interpretation or opinions of events that took place over a period spanning many years.”

It said to date there had been no forensic investigation (nor any expert delay or quantum analysis) as to the time and cost impacts of various events and the identification of “root causes impacting on the TG Project” must be approached with caution.