Puhoi to Warkworth project: value for money procurement and property investment approval

Applicant

NZ Transport Agency

Purpose

This paper seeks Transport Agency Board approval to advance property acquisition and preliminary procurement work for the Pūhoi to Warkworth section of the Ara Tuhono Pūhoi to Wellsford Road of National Significance, and to support next steps in ensuring value for money is achieved through the procurement process.

Date of decision

12 December 2014

Resolutions

The New Zealand Transport Agency Board:

1. noted the current investment profile for the Pūhoi to Warkworth project is high strategic fit, high effectiveness, and has a BCR of 1.1 to 1.2
2. agreed that, given the estimated cost ranges for the project and the Agency's ability to leverage the National Land Transport Fund revenue flow, this project can be accommodated within the forthcoming programme
3. approved funding of up to $48 million for procurement, geotechnical investigations and advisory services needed during the procurement, design and construct phases of the Pūhoi to Warkworth project
4. approved a funding increase of $20 million, in addition to the previous $33 million, for property purchase associated with the Pūhoi to Warkworth project
5. noted thatthe project's detailed business case value for money assessment is largely complete, but cannot be approved by the Board until the value for money proposition is finalised
6. noted that prior toconsideringthis major financial commitment, key Board decisions will include:
   • April 2015 – advice on potential changes in the timing of repayments to minimise financing costs
   • July 2015 – approval of the value for money case for the project
   • September 2015 – approval to issue the request for proposal (RFP)
   • July 2016 – approval to appoint the preferred bidder
   • October 2016 – approval to execute the contract.

Reason for the decision

1. The Pūhoi to Warkworth project has been assessed using the Transport Agency's Investment and Revenue Strategy.
2. It is estimated that if traffic increases at current rates and no capacity improvements are made to the route, by 2021 the section of SH1 between Pūhoi and Warkworth will operate close to capacity. Currently SH1 is the only realistic route connecting the residents of Northland and the rest of New Zealand and the majority of the existing state highway is of low and inconsistent quality (in particular Schedewys Hill) and a crash black-spot. Crash rates in these locations are high in comparison with the national average with the Pūhoi to Warkworth section ranked 16th worst in New Zealand in terms of collective risk.
3. The Pūhoi to Wellsford project plays a strategic role in connecting the Auckland and Northland regions and looks to future regional growth as well as improving the safety of the route and making journey times more reliable. When completed the project will provide a four lane median divided highway from Pūhoi through to Wellsford that will deliver the following benefits:
   • Enhanced inter regional and national economic growth and productivity on a key freight route carrying more than 1,000 heavy commercial vehicles per day.
   • Improve movement of freight and people between Auckland and Northland's 150,000 residents.
   • Improved connectivity between the growth areas in the northern Rodney area.
4. A more resilient transport network through a more robust and safer road between Auckland and Northland.
5. The project has a funding profile of High Strategic Fit, High Effectives and has a BCR range of 1.11 to 1.19 (with wider economic benefits included).