WC 532: low-cost, low-risk public transport improvements

This page relates to the 2024-27 National Land Transport Programme.

Introduction

Work category 532 provides for low-cost, low-risk public transport improvements, to a maximum total approved cost per project of $2 million.

Low-cost, low-risk definition

A low-cost, low-risk activity is an improvement activity with a total maximum cost of $2 million and low risk for implementation.

The $2 million implementation cost for approval is inclusive of all costs such as professional services, administration and related overheads, property and construction/implementation costs.

Note: for passenger services activities, the $2 million threshold is the net implementation cost to be shared by the regional council and us (NZ Transport Agency Waka Kotahi (NZTA) as investor) after forecast farebox revenue has been accounted for over the proposed duration of the activity for which approval is sought (a maximum of 3 years). For example, if the net cost of a 3-year service is estimated at $1.8 million based on the following gross cost and revenue:

• $1 million per year gross – forecast gross cost = $3 million
• less $400,000 per year revenue; three years revenue = - $1.2 million
• net cost (regional council and NZTA as investor) = $1.8 million.

Therefore, the net cost is the within the maximum total approved cost and would be an eligible activity.

Low-risk refers to activities where there is a low risk of not delivering on the project or its outcomes. This is usually the case where there is a track record in terms of design and delivery of the type of improvement, with costs, benefits and risks understood. Less well understood improvements may also be included in accordance with our Innovation, Trials and Pilots Policy.

Innovation, Trials and Pilots Policy (webpage yet to come)

Qualifying activities

Qualifying activities comprise the design and implementation of low-cost low-risk public transport improvements.

Work category 532 is available to the following activity classes:

• public transport services
• public transport infrastructure.

Public transport services and infrastructure

Examples of qualifying activities

Examples of qualifying activities include, but may not be limited to:

• public transport service improvements that qualify as public transport improvement activities and which have a whole-of-life cost of no more than $2 million (net of any fare revenue generated) and that are low risk
• public transport infrastructure improvements that qualify as public transport improvement activities and which have a cost of no more than $2 million (net of any fare revenue generated) and that are low risk
• small-scale new services or service trials of up to 3 years only (with a whole-of-life cost of no more than $2 million (net of fare revenue generated)) – refer to the Innovation, Trials and Pilots Policy
  Innovation, Trials and Pilots Policy (webpage yet to come)

• travel demand management directly or primarily related to public transport.

You can discuss with us whether other potential activities not listed above might also be eligible for inclusion in this work category.

Exclusions

Work category 532 excludes:

• any local improvement project funded with a funding assistance rate (FAR) other than the approved organisation’s normal FAR
• any improvement project with an estimated total cost for approval (after deducting third party/supplementary funding) of over $2 million – these must be developed as individual improvement projects under the appropriate work category.

Conditions of funding

Funding from work category 532 is subject to conditions concerning project inclusion in the programme as well as the programme’s submission and management.

Conditions of funding for projects included in the programme

Each low-cost, low-risk improvements programme must be supported by a list of projects using the NZTA public transport improvements template. This template can be downloaded from Transport Investment Online (TIO).

Transport Investment Online(external link)

The total cost for approval of any multi-party funded low-cost, low-risk improvement project must not exceed $2 million across all funding parties.

The $2 million total approved cost includes professional services, administration and related overheads, property and construction/implementation costs.

Professional Services and Administration Funding Policy

A low-cost, low-risk public transport improvement project cost must be claimed only under work category 532 in a single activity class. It may not be split or claimed over multiple work categories and activity classes.

A project must not be split into more than one low-cost, low-risk improvement project to circumvent the $2 million total approved cost limit.

During the implementation phase, if the low-cost, low-risk activity is expected to exceed the $2 million total approved cost limit (inclusive of fees and administration) then the approved organisation or NZTA (for its own activities) must immediately seek approval to fund the activity under their low-cost, low-risk programme. We will exercise our discretion to either retain the activity within the low-cost, low-risk programme or require the activity to be submitted as a stand-alone activity supported by an appropriate business case, together with the preparation of a corresponding cost–scope adjustment to reduce the funding allocation to the low-cost, low-risk programme.

We will give consideration to the following factors:

• the reason for the activity exceeding the $2 million total approved cost limit
• the amount by which the activity’s cost is expected to exceed the $2 million total approved cost limit
• if the activity’s scope changed
• any other instances a low-cost, low-risk activity within the approved organisation’s or NZTA (for its own activities) programme exceeds the $2 million total approved cost limit
• the extent to which risk is already adequately addressed.

Any adjusted cost for an activity will be managed within the approved organisation’s or NZTA (for its own activities) existing funding allocation for its low-cost, low-risk programme. No additional funding will be provided, meaning the adjustment will need to be offset by the deferral or reduced expenditure of other activities within the approved organisation’s or NZTA (for its own activities) low-cost, low-risk programme.

Any approved organisation or NZTA (for its own activities) that commits to expenditure on an activity in excess of the $2 million prior to our approval, does so at its own funding risk.

Conditions of funding regarding programme submission and management

Funding approval for low-cost, low-risk programmes at the start of a new National Land Transport Programme (NLTP) is conditional on each programme being supported by an approved list of projects and on the cash flows of these projects being captured in the low-cost, low-risk public transport improvements template.

The template list is expected to be maintained and updated regularly by the approved organisation, and NZTA (for its own activities). A condition also exists for claiming in the new financial year and so the template must be updated by 31 August of each year.

This means that by 31 August:

• of the first year of the new NLTP the template relating to the previous NLTP must be updated with final cash flows for individual projects
• for each of the second and third years of the current NLTP, the low-cost, low-risk template must be updated to reflect actual project expenditure in the previous year and cash flows for committed activities and projects planned to commence in the balance of the NLTP period.

We will place the processing of claims for payment for low-cost, low-risk programmes on hold until the conditions above are met.

Key principles

Key principles for low-cost, low-risk programmes include:

• The activities in these programmes will be optimised by following a straightforward process to reflect the government’s priorities. Approved organisations and NZTA (for its own activities) can apply their own assessment framework during their programme prioritisation, but there is a clear expectation they will assess an individual project’s alignment with the appropriate activity class results alignment criteria as set out in our Investment Prioritisation Method.
  2024–27 NLTP Investment Prioritisation Method (webpage yet to come)

• We prioritise low-cost, low-risk activities (based on the Government Policy Statement on land transport (GPS) alignment) against other improvement activities in the public transport services and public transport infrastructure activity classes.
• If funding availability is an issue across or in any of the above-mentioned activity classes, we may adjust the scope and scale of the low-cost, low-risk programme and its approved allocation based on the priority of activities within the programme for the relevant activity classes. The allocation will also consider the quality of supporting business cases, including activity management planning documents.
• It is important to have flexibility to adjust the programme over the 3-year NLTP period, particularly where parts of the programme are not well developed at the time the NLTP is adopted.
• Projects within a low-cost, low-risk programme will not need to calculate a benefit–cost ratio. They will need to identify the principal benefit the project is seeking to achieve and, if requested, the approved organisation or NZTA (for its own activities), must demonstrate that value-for-money has been considered when including the project in the proposed low-cost, low-risk programme.

Links to planning

We expect low-cost, low-risk programmes to be firmly linked to activity management planning documents (for example regional public transport plans, activity management plans, and regional land transport plans, as well as long-term plans).

Funding assistance rate

The usual funding assistance rate is:

• the approved organisation's normal FAR
  Normal funding assistance rates

• 100% of the NZTA costs (for its own activities).

Submitting activities for NLTP consideration and funding approval

Approved organisations and NZTA (for its own activities) submit these activities using the low-cost, low-risk improvements template in TIO.

Transport Investment Online(external link)

For guidance on using TIO, see the TIO learning and guidance page on our website:

Transport Investment Online (TIO) learning and guidance

End-of-year carryover

Between NLTP periods

There is no carryover of funding from one NLTP to the next. The remaining cash flows of any uncompleted projects started in the previous NLTP need to be included in the request for funding for the new NLTP. We will apply the programme funding allocation approved for the new NLTP to these projects.

Within the NLTP period

Within the NLTP period, approved funding from one financial year to the next may be carried over within the low-cost, low-risk programme at the activity class level. There is no funding allocation at a project level and we will apply the remaining approved funding allocations for each activity class in the programme to low-cost, low-risk projects that may span more than one year within the NLTP period.