The project is being built through a public-private partnership, the Wellington Gateway Partnership (WGP), with CPB Contractors and HEB Construction sub-contracted to carry out the design and construction.
The Transport Agency is keeping the pressure on the builder to get the road open by September 27, 2021, with a quarter of a million dollars in penalties each day past the due date.
It's also appointing a minder within the project team to keep a close eye on things.
On top of that, the builders will be providing letters of credit to the value of $35 million, which NZTA can claim straight away from the bank rather than fighting for it in court if something goes wrong.
Interchange with SH1 at Linden working on the southbound connection. Photo / NZTA
Transport Minister Phil Twyford said the latest settlement provided certainty but it was not good enough that the project has repeatedly been delayed and plagued by escalating costs.
"It appears the agreement signed up to by the former Government was loose and failed to protect taxpayers' money. It seems to have been rushed through without the necessary due diligence being carried out," he said.
Infrastructure Minister Shane Jones said an independent international expert would lead the review.
"Both Government and the private sector need to have the confidence to carry out large complex infrastructure projects together.
"We can't have problems with Transmission Gully putting us off from using innovative procurement models to tackle our infrastructure deficit.
Transport Minister Phil Twyford says construction has been plagued by delays and increased costs. Photo / Mark Mitchell
Rumours have been swirling for months around the project that has already blown its budget, suffered significant delays and faced criticism for being run like a circus.
Covid-19 was considered to be outside the builder's control and therefore a Force Majeure Event, meaning contractors were not liable.
Negotiations between the four parties started about halfway through alert level 4 earlier this year and have since involved daily meetings.
NZTA transport services general manager Brett Gliddon said the negotiations focused on cost and time.
The Transport Agency was trying to get the cheapest price and the earliest opening date, while the builders wanted as much money and flexibility as they could wrangle.
"At a high level those are the trade-offs you're making," Gliddon said.
Pre-paving work in the Horokiri Valley. Photo / Supplied.
The builder is getting $145.5 million to cover the costs of delays due to the five-week lockdown.
An initial sum will be paid to contractors with the remainder to be paid in monthly instalments, but the final $7.5 million will only be paid if the road opens by the agreed date.
On top of the settlement, another $17.5 million is being paid to WGP and Ventia to cover their own costs from Covid-19 and associated issues.
NZTA has previously bought more time for the project by making advance payments of what's now the final total settlement.
Gliddon said he was confident the builder would get the job done, but NZTA also recognised the "massive" amount of taxpayer money involved and was mindful this wasn't the first settlement over the project.
NZTA will appoint a monitor, who will report back monthly on progress.
"It's in the interests of all of us to make sure that we keep the pressure on the builder and we keep a really close eye on what's going on up there", Gliddon said.
He said the $35m bond was a lot of money for the builder and a "pretty big" incentive, as well as the $250,000 a day penalties.
But even so, Gliddon said there was still a risk the completion date could change.
"We're in a changing world where we're going up and down alert levels in the pandemic, we're still exposed to weather and earthquakes."
The four-lane highway is due to be fully open in September 2021 but there will be an additional six months of work around the edges.
"Out to the side you may see people in orange jackets planting plants, you may see diggers down banks tidying up streams and tidying up bits to the side of the road", Gliddon said.
Surfacing work on bridge 20 at Cannons Creek. Photo / Supplied
NZTA has also agreed to an extra $45.5m for a different road surface on some sections.
This "deep lift" pavement is more resilient to poor weather during construction meaning the work to lay it can continue during marginal conditions, bringing forward the estimated opening date by four months than would otherwise be possible.
It's not the first time the Transport Agency has shelled out to keep spades in the ground.
In February it was revealed the cost of the project blew out to more than $1 billion after NZTA agreed to pay the contractor another $190.6m in a settlement over delays caused by the 2016 Kaikoura earthquake, and flooding around the same time.
The total cost of the Transmission Gully project following the latest settlement payment and contract variation is now $1.25 billion.
