(SH1) Auckland Harbour Bridge structural upgrade – cost increase funding

Applicant

NZ Transport Agency

Purpose

To seek the Board’s approval for funding a cost increase for construction of the New Zealand Transport Agency’s Auckland Harbour Bridge Structural Upgrade project in the Auckland region.

Date of decision

30 October 2009

Resolutions

The NZ Transport Agency Board:

1. notes that the Auckland Harbour Bridge is one of the key assets in the State Highway network with an estimated replacement of costs of between $2-3 billion;
2. notes the bridge consists of a slender, light weight steel structure which is carrying loads in excess of what was envisaged when it was originally designed and subsequently is under continual stresses;
3. notes that since its construction the bridge has been subject to a robust continuous maintenance schedule;
4. notes that its predecessor agencies, Transit NZ and LTNZ, were informed in 2007 of major structural issues on the extension structures on the AHB and resolved immediately to address these issues through a Bylaw restricting heavy vehicles and commencing strengthening works;
5. notes that the original preliminary cost estimates were based on the best information available at the time (and peer reviewed) and that there was considerable uncertainty given the complexity of the structure and engineering involved;
6. notes that as work was undertaken it became apparent that the extent of the work needed to achieve the required strength over and above that originally estimated and therefore further work was necessary at additional cost to complete the strengthening;
7. notes that costs have increased largely due to the extent of the work required and the estimation of the difficulty in actually undertaking the work and actual escalation exceeding original estimates (particularly for steel);
8. notes the updated cost estimate including the additional works is $86.00 million (expected estimate) within a funding range of $76 million to $96 million (5% to 95%);
9. approves additional funding of $41.00 million from N funds to complete the construction of the NZ Transport Agency’s (NZTA’s) Auckland Harbour Bridge Structural Upgrade project to the required standard, increasing the total estimated cost of the project from the previously approved $45.00 million to $86.00 million;
10. notes management’s view that for similar projects in the future where urgent works are required, funding requests should be clearer about the scope and range of estimates and the risks associated with the work required;
11. notes reasons for this decision as modified by the Board and set out in the Reasons for recommendations section;
12. notes that further engineering investigations are underway on the bridge so that NZTA can complete a comprehensive asset management plan for the AHB and so that a proactive approach to bridge strengthening works can be taken;
13. notes that management will continue to refine the asset management plan (and associated maintenance plan) to ensure the integrity of the bridge is maintained;
14. notes that we need a focussed management strategy for the existing and future use of the bridge;
15. notes that the AHB has a limited life (which will be informed by the asset management plan) and that NZTA is also investigating options for an alternative/additional harbour crossing (and ensuring land is designated to provide for these options);
16. agrees to take Board paper 09/10/0272 out of Committee when the Board has published the notice of decision.

Reason for the decision

The assessment profile for the activity following the cost scope adjustment remains unchanged as being of high seriousness and urgency, high effectiveness and high efficiency.

The original funding resulted from a fast tracked commitment to commence construction in response to a then recognised problem. The commitment was made at the time to advance the response as soon as practicable but in the knowledge that limited investigation or design meant that, even though based on the best information available at the time (including an independent peer review), the initial estimate was subject to considerable uncertainty. This cost increase brings the original first estimate amount up to a current estimate of $86.0 million (with a funding range of $76 million to $96 million (5% to 95%)).

The Board also recognised that AHB is a unique asset, critical to a well functioning national transport network, and that factor, together with the need to maintain public confidence in the integrity and functionality of the bridge, was considered paramount.

We confirm that the matters in sections 20(2) and 20(5) of the LTMA have been satisfied and that the matters in section 20(3) have been taken into account.

If you would like details of how the assessment profile for this activity was determined, please email us at boardsecretariat@nzta.govt.nz.