This is welcome news for the new Government, considering one of Infrastructure Minister Chris Bishop’stop priorities for his portfolio is improving funding and financing, including greater use of PPPs.
Then Finance Minister Grant Robertson said the PPP established under the previous National government lacked proper rigour and consideration.
“The review found there was a lack of transparency as to how key PPP decisions were being made, less than ideal consenting risk management, a non-PPP scheme design used in the PPP procurement, and the price was set far too low from the beginning.”
Former Prime Minister Dame Jacinda Ardern opened Transmission Gully in 2022. Photo / Mark Mitchell
A post-construction review summary, released last week, found that while aspects of the PPP model could have been done better, the model alone was not to blame for the project’s challenges.
“We believe nearly all of the key events and risks that we identified could have happened under any procurement model,” the review said.
Infrastructure Commission Te Waihanga chief executive Ross Copland said infrastructure delivery challenges were wide ranging, many things could impact agreed budgets and schedules, and this could erode confidence.
“Decision-makers are losing confidence in the numbers presented to them at the business case stage”, Copland said.
“We’ve seen unusually high cost overruns in PPP, alliance and traditional contracts alike so it’s clear the issues run much deeper than selecting the right commercial model.”
The Transmission Gully review said it would be unfair to solely use the problems during construction to determine the PPP’s overall success.
NZTA transport services general manager Brett Gliddon has previously said the dispute relates to incomplete works on the road and the expectation these should be completed to the standard in the project’s contract.
Transmission Gully was the first road in New Zealand to be built through a Public Private Partnership (PPP). Photo / Mark Tantrum
At the time Gliddon confirmed the legal action, in November last year, the outstanding works included a new State Highway 59 connection between Mackays Crossing and Paekākāriki, works at the Pāuatahanui interchange, a recreational track along parts of the route, and maintenance access tracks.
The review noted the construction phase is still to be completed contractually, yet the operations phase has already commenced with the early road opening.
“This is not an ideal situation to be in for a PPP project, which usually has an orderly handover from construction to operations.
“The sooner this transition is effected, the better is the chance of PPP delivery success being realised – this is important because a PPP is not just about the construction phase; it is the long-term service phase where a PPP project can show the benefits that the PPP model is designed to deliver.”
In a statement attached to the review’s executive summary, NZTA said work on the project was ongoing.
“The construction phase was due to be completed by 30 June 2023 but there is significant work outstanding, and the pathway to final completion and resolution of disputes will be complex.”
Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.
