While Auckland remains waiting on the government to commit to its share of funding for the most transformative transport project since the Harbour Bridge – the City Rail Link – the NZTA have just announced that they’ve shortlisted three groups of companies to build the Puhoi to Warkworth motorway as Public Private Partnership.

Confirmed route

In the past the NZTA have said the project could cost around $760 million however as PPPs are just glorified hire purchase arrangements it means that over the course of the loan it will cost us considerably more than that. As an example the Transmission Gully project in Wellington costs around $1 billion however after the interest accrued during construction is capitalised it pushes up the cost to about $1.3 billion. That cost is then paid off back to the private companies which the NZTA say will likely be $120-$130 million annually.

That cost might be justified if the current road was heavily used however it isn’t and even the NZTA’s own analysis during the consent hearings admitted it was only really busy a few times over summer. Neither is it the economic saviour of Northland like the government and some other politicians claim. For starters it finishes just north of Warkworth and from there north traffic is normally around 10,000 vehicles per day. Also if this new road was really going to make a difference in connecting Northland with the rest of the country then why hasn’t the existing toll road done that, or even the extension that got the motorway to Orewa/Silverdale in the early 1990’s.

Unfortunately we’ve not been allowed to see the business case for the project as in the past when asked the NZTA they’re keeping if secret until after they’ve awarded the tender.

Here’s the press release:

The NZ Transport Agency has today taken another step towards building the new Pūhoi to Warkworth motorway by announcing the consortia shortlisted to progress to the next stage of the project.

Transport Agency Chief Executive Geoff Dangerfield says the building of the motorway is a significant step towards improving the safety, reliability and resilience of State Highway 1 between Northland and the upper North Island freight triangle of Auckland, Waikato and Tauranga.

In September 2014, a Board of Inquiry confirmed approval of the Transport Agency’s application for designation and resource consents for the project. This was followed, in May 2015, by the Cabinet approving an application by the Transport Agency to procure the motorway through a Public Private Partnership (PPP).

The Cabinet approval came after the Transport Agency determined, following an extensive business case analysis, that the project met the Treasury’s criteria to be procured as a PPP.

The consortia shortlisted to receive a Request for Proposal (RFP) for the financing, design, construction, management and maintenance of the Pūhoi to Warkworth project under a PPP are:

  • Northlink – made up of Cintra Developments Australia Pty Ltd, InfraRed Infrastructure III General Partner Ltd, John Laing Investments Ltd, Ferrovial Agroman Ltd, Fulton Hogan Ltd.
  • Northern Express Group – Made up of Accident Compensation Corporation, HRL Morrison & Co Public Infrastructure Partners, Acciona Concesiones S.L., Fletcher Building Ltd, Macquarie Group Holdings New Zealand Ltd, Acciona Infrastructure Australia Pty Ltd, The Fletcher Construction Company Ltd, Higgins Contractors Ltd.
  • Pacific Connect – made up of Pacific Partnerships Pty Ltd, VINCI Concessions S.A.S., ACS Infrastructure Australia Pty Ltd, Aberdeen Infrastructure Investments (No.4) Ltd, Leighton Contractors Pty Ltd, HEB Construction Ltd.

Mr Dangerfield says the announcement of the shortlisted consortia comes after a rigorous evaluation and selection process.

“We are very fortunate to have such high-quality companies and organisations showing an interest in the Pūhoi to Warkworth project. All of these companies and organisations have sound experience in delivering large infrastructure projects.

“I’m confident that any of these consortia can deliver a high-quality motorway which will provide greater resilience, improved road safety and journey time reliability, and a better connection for freight, tourism and motorists.”

Mr Dangerfield says the RFP will be issued to the shortlisted consortia later this month and the Transport Agency expects to announce a Preferred Bidder by mid-2016.

Subject to successful contract negotiations with the Preferred Bidder, the PPP contract for the project is expected to be awarded in October 2016.

He says the Pūhoi to Warkworth project seeks to procure a PPP contract that would deliver a value-for-money motorway which will assist economic growth in Northland.

“A PPP contract will likely see the PPP consortium manage and maintain the motorway for the 25 years that will follow the anticipated six-year period to build it.”

“PPPs are a particularly suitable procurement method for delivering great results for large-scale and complex infrastructure.

“Using a PPP for key infrastructure projects will open the door for private sector innovations that are not always achievable under traditional public sector procurement methods.

“PPPs allow specific outcomes to be established and measured – and for risks to be identified and transferred to the private sector.

“An outcomes-based PPP for the Pūhoi to Warkworth project will also allow great flexibility within the designation to achieve optimised innovative outcomes.”

Mr Dangerfield says that under a PPP, full ownership of the motorway will always remain with the public sector.

“The nature of the contract to be used will provide a strong incentive for the successful PPP consortium to deliver the best possible results for road users.”

Tentatively, construction of the Pūhoi to Warkworth motorway, under a PPP arrangement, could possibly start in late 2016 with the road completed and open by 2022.

Mr Dangerfield says no decision has been made on tolling for the Pūhoi to Warkworth route but should the motorway be tolled, the Transport Agency would retain responsibility for tolling.

“The public would be fully consulted on any tolling proposal which must also obtain Ministerial approval,” he said.

He says the Transport Agency will continue to consider PPPs for other large-scale and complex infrastructure projects which could potentially benefit from the innovation and value-for-money that can be achieved through a PPP approach.

The first state highway in New Zealand to be delivered through a PPP is the Transmission Gully (MacKays to Linden) project in Wellington.

In July 2014, the Transport Agency signed a PPP contract with the Wellington Gateway Partnership (WGP). Work on Transmission Gully began in September last year, and the motorway will be open for traffic by 2020.

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82 comments

  1. Its a great piece of forward planning. Why wait until there is congestion before building such routes? That is the problem in Auckland – only when things are at a standstill do they get any attention. It will never get any cheaper.

    1. It might not get cheaper, but then neither will all the hundreds of other even more worthwhile projects that NZTA could be funding but won’t be able to if it didn’t tie its money for decades with PPPs like this one.
      Many have much higher BCRs than this one will ever have and yet sit there languishing while the debt and the road toll mounts.

      Typical central Government – foisting its own “solutions” on to the region that it clearly says it doesn’t want now.
      Its a bit like an inattentive husband giving his wife a new toaster or jug instead of what she said she actually wanted.
      And acting surprised when she doesn’t seem keen on it.

      “But its what you’ve always wanted”? Yeah right.

    2. Why wait, simple, there are heaps of other projects that combined will have a far greater impact on safety and the economy that aren’t being funded out even progressed due to this sucking funding away

    3. Well RB what happens at the end of the new PPP built road. The probelms for the North aren’t in that section. The problems lie in the route to the far north over the Brynderwyns’ and the Mangamukas’. The heavy vehicles and the lack of passing bays. Safety is said to be paramount for NZTA and this PPP really does not meet that criteria.

    4. LOL

      There’s not going to be any congestion on that road ever except at holiday times when Aucklanders leave for the week and then come back. Why else do you think we call it the ‘holiday highway’. It’s really not going to make any difference 99% of the time making it a wasted effort and we’re getting it at a premium cost because we’re stupidly using private contractors to do it.

  2. So that means Whangerei has met the city centre growth target and the road has met the vehicle trip target – oh hang on that just applies to public transport in Auckland, roads don’t need justification.

    1. They can’t transfer risk from tolling as private sector not that dumb anymore. The PPPs are what is known as availability PPPs in which the companies get paid providing the road is open to a certain standard, not based on how many use it. Even better if a natural disaster were to occur taxpayers often have to pick up the costs to repair it.

      1. If revenue and natural disasters can’t be transferred, what can be transferred?

        That the government bond rate will suddenly skyrocket?

        1. You make a good point. None of the PPP providers can borrow money as cheaply as the Government and as Matt points out, this is really a glorified HP agreement. So ultimately it will cost more this way. I believe the real driving force behind PPPs is more to do with the state of the government books (less debt on the balance sheet) than any cost advantage.

          Many of the Australian toll roads were set up as true risk sharing PPPs and the traffic projections turned out to be wildly optimistic and they went bust. As George points out, this means they can’t be financed this way anymore.

          1. Yes it’s partly surplus obsession. But also they know they’ll be gone eventually and it seems that Joyce’s biggest aim while in government is to sign up for as much motorway building into the future as possible, tie the hands of the next government, totally empty the coffers into the future [and mandate and subsidise ever bigger trucks etc]. The same is behind the destructive haste with AWHC. What on earth is Joyce’s deeper motivation? Is it just, as Bridges said to me, ‘because they’re popular with their demographic’? Joyce really does seem to be working for certain very particular interests very consistently; NZ’s version of the military-industrial complex; the highway-trucking complex…. really?

          2. I believe the real driving force behind PPPs is more to do with the state of the government books (less debt on the balance sheet) than any cost advantage.

            That’s certainly a part of it but, IMO, the main reason for PPPs is that it increases government guaranteed profits for the private sector. As Matt L said, if there’s a natural disaster the government gets the bill to fix it anyway which will mean huge windfall profits for the PPPs.

            It is simply cheaper, easier and better to use the now closed Ministry of Works so why are we using private providers which cost more?

          3. It’s the story of this century in a nutshell, right? 20thC had the liquid gold with which to conjure economic growth and infrastructure out of thin air. With cheap oil gone there’s no apparent miracle drug and the national spreadsheet shows it. Whether it’s private or public there’s no new wealth really, hence all the current hand wringing over dairy, China, etc. I wouldn’t put my money into roads if I were a private investor looking for returns. Govt will just walk away eventually.

          4. Yes it clear that this is a sunset industry to anyone looking at the big picture, and I suspect that the smarter players, like Joyce, get that deep down, but for whatever reason that’s just making them rush to sign up as much of last centuries projects as they can before the bubble completely bursts. Extraordinary really. Reckless, in fact.

          5. When was cheap oil gone??? Oil is super cheap today – especially if inflation adjusted – and even without oil, cars will be with us for years and years to come.

          6. @Local Resident

            Peak Oil

            Oil is still going away. People are driving less because it costs far too much and, if we actually had an economic system, we wouldn’t have personal cars at all.

  3. The private sector won’t take full-risk PPPs anymore. Too many bankruptcies mean that banks won’t finance them, even if a company was stupid enough to try. So what we have are arrangements in which the Government covers all substantial risks, pays for the project (usually greatly above the total cost of ownership) and pays extra to the private sector if the project is “successful”.

    Who ARE these people? What right do these people have to waste our money so obviously?

      1. There are no benefits to taxpayers other than the debt is kept off the government’s books so they can claim not to increasing debt by as much as they are

  4. “That cost might be justified if the current road was heavily used however it isn’t and even the NZTA’s own analysis during the consent hearings admitted it was only really busy a few times over summer. Neither is it the economic saviour of Northland like the government and some other politicians claim. For starters it finishes just north of Warkworth and from there north traffic is normally around 10,000 vehicles per day. Also if this new road was really going to make a difference in connecting Northland with the rest of the country then why hasn’t the existing toll road done that, or even the extension that got the motorway to Orewa/Silverdale in the early 1990’s.”
    Except that over the past couple of years in particular the road to Warkworth has become very busy (particularly weekends with general traffic and weekdays with commuters+trucks). The toll-road has getting busier and the non-toll road portion to Orewa has gotten busy.
    The main issue I have with this proposal (besides it’s cost) is the lack of distance/time saving. There is a big-ass dogleg in the middle of the damn thing (near Moirs Hill Road) which means that the proposed route barely saves any distance over the old route and in periods of light traffic virtually no time-saving (in busy periods – weekends, rush-hour, holidays it will save considerable time). If they could straighten out the route for maybe 5-10% extra cost then it would certainly be worth it.

      1. The toll section is busier than the old road anyway. Also being a toll road it is paying for itself.
        The free section to Orewa certainly has plenty of cars on it in the morning and evening (same as other roads), other times not that busy but it does connect and isn’t an urban motorway as such anyway. Even Patrick has in the past said that roads are important in the regions to move cars around as it isn’t economically feasible to have PT outside of urban areas in most cases.

        1. The difference is that, for the Orewa – Waiwera section, the toll road makes a significant difference to travel even during quiet times.

        2. The toll covers repayment of a construction loan that covered under half the construction cost of $372m. Then there is the cost of ongoing maintenance. The idea that the toll is making the road ‘pay for itself’ is incorrect.

        3. As Conan says, the tolls collected only cover the repayments on a loan for half of the construction cost and even then I think it’s under-performing. It certainly doesn’t pay it’s way.

      2. Is it any more busy than other roads that aren’t motorways?

        A hell of a lot more busy than SH16, and long may it remain so.

    1. Hi Bruce, love your assertion that “over the past couple of years in particular the road to Warkworth has become very busy” and would love to see the numbers. Can you share please. Especially how these are progressing versus the business plan.

      1. Hi Mr Plod. Lets do some maths shall we? Warkworth and surrounding area has grown by many thousands of people and most of them aren’t working in Warkworth… I wonder where they go?
        Would of course be good to see a bus service extend to Warkworth (even better would be a spur from Kaipara and have rail down to Auckland although I think a lot them are working around Albany etc).

          1. Considering the last census was in 2013 how would that capture the past couple of years? (Couple being 2 so the last 2 years which would take us back to…2013)……….

  5. No surprises at the secrey regarding the P2W business case. This is the same government that won’t be transparent over the TPPA. Or Saudi farm bribes.

    The longer this govt remains in office ramming through these dodgy deals, the greater the surge of revulsion when the slumbering public finally wakes up.

      1. Yeah nah.

        Seven years into this government’s reign and thus far very little journalistic effort has been expended on waste or poor decision making in transport. This is despite much of the work being done for them by the opposition and by this blog’s authors (among others). I think that is unlikely to change, and the average person is not going to work it out without assistance by the media, because the cost of bad and expensive decisions is not immediately obvious.

        The fight is with the involved agency (ie, NZTA) directly, and against bad projects directly when they have negative effects on particular communities.

  6. “PPPs are a particularly suitable procurement method for delivering great results for large-scale and complex infrastructure.”

    Name one great result, Geoff. There aren’t any roading examples in New Zealand, and the Australian examples have been a disaster, so maybe he means the Vector Arena, described by the boss of Mainzeal as the worst job in a decade they’ve taken on.

    “Using a PPP for key infrastructure projects will open the door for private sector innovations that are not always achievable under traditional public sector procurement methods.”

    So the existing procurement methods, that already utilise private contractors through a competitive tender process, have been lacking innovation all this time? Like the crane used to build the Newmarket viaduct? Like the tunnel boring machine used for the Western Ring Route? The only potential “innovation” that I can see happening is cost cutting on construction and operation.

    So much spin my head hurts.

    1. The innovation comes from things like using processes, materials or designs that might cost more up front but that save money long term. Thing is I’ve been told by some NZTA staff that they get all those benefits from the partner model they’re using at Waterview. They also said PPPs were shams.

  7. Love transportblog and everything it stands for.

    However… Matt always uses “however” as a conjunction instead of “but”. “However” is an adverb.

    “In the past the NZTA have said the project could cost around $760 million however as PPPs are just glorified hire purchase arrangements…” This should be: “In the past the NZTA have said the project could cost around $760 million, but as PPPs are just glorified hire purchase arrangements…” Or: “In the past the NZTA have said the project could cost around $760 million. However, as PPPs are just glorified hire purchase arrangements…”

    Otherwise you are just running two sentences together. The content on this blog is great and it’s well written. Ironing out this little wrinkle would be the icing on the cake!

    Apologies if this is not the appropriate way to raise this point. I expect some people are going to pile into me now. I’m going to take it on the chin and not reply!

    1. Good to keep the grammatical standards up. Otherwise blog quality descends to the likes of Whale Oil.

      Badest comman misteak I notis regulally is wen peeple rite *your* insted ov *you’re*. Eye h8 thatt.

          1. Please alert us when you discover the next split infinitive………………..and gently explain what a split infinitive is.

          2. “To boldly go where no man has gone before”, is a famous example of a split-infinitive, instilled into the minds of a generation of Star Trek watchers..

            However I believe split-infinitives are officially OK now, as they often sound so much more natural than the alternatives. Which are:-

            – “Boldly to go where no man has gone before”, or
            – “To go boldly, where no man has gone before”

    2. Here’s my chance! Can I point out a temporal error? Paragraph three, line four: The Northern Motorway extension to Silverdale/Orewa was completed in the late 90s (20 Dec.1999 to be exact).

  8. huh…. I thought the road was Puhoi to Wellsford. They are only building 1/2 the road. Shouldn’t the tender be for the full road?

        1. But looking at the route, won’t it be quicker to enter Warkworth from the south? This road will make it further to drive to get to Omaha.

          1. I haven’t got a link to hand but there is a plan to build a new direct to east coast beaches link from the end of tis project; east, not north. Presumably they’ve gone quiet on this because of their fatuous attempts to deny the ‘Holiday Highway’ tag. It will follow along nicely, no doubt pitched as a bypass for the poor people of Warkwork, in a shocked reaction to the holiday rush still causing problems there, which we be presented as some sort of measure of the success of the Holiday Highway itself.

            bottom of this post: http://greaterakl.wpengine.com/2014/03/06/hill-street-blues/

          2. Thanks right, which is why NZTA don’t know whether they can charge a toll for this new motorway without significantly reducing its usage.

  9. On a recent trip on the Motorway from Whangaparoa South, from Snow planet south it was noticeable that there are base course failures on the new road and punching which indicate poor supervision of the construction or poor specifications. Does anyone know what has happened? Surely we can build roads better than that.

    1. What sections of the road are you referring to?

      The Greville to Silverdale section was built as two contracts: A1 and A2. The A1 section (Greville Rd to the Okura River) was constructed by Stevenson’s Construction. They were allowed to do their own quality assurance testing… After that I don’t think they got any more Transit NZ/NZTA work. All I know for certain about that section was that a large embankment just north of Lonely Track Rd was found to not be constructed to design specifications and that this delayed full lane opening to allow for remediation.

      As for A2 (north of the Okura River to Silverdale); Opus International Consultants was the engineering and QA testing contractor and a Downer-Works consortium was the main constructor with a number of sub-contractors involved. (To be continued)

      1. I am not an civil engineer and my memory hazy but IIRC the bulk fill material was referred to as “Onerahi Chaos’ and was present from Bawden Rd to just south of the Silverdale interchange. If worked upon when over-wet it quickly became unsalvageable as suitable fill – it was finicky stuff. There were also at least two large swampy patches requiring excavation including swamp Kauri. The top 300 mm of subgrade was (at least) lime-stabilised and a pavement of 200 mm subbase and 180 mm basecourse compacted in two layers (greywacke from Wharehine Quarry, Matakana).

        Sorry for the wall of words. Some of you must be engineers.

        Possible reasons: 1. The rock/soil conditions were not favourable; 2. It was the 1990s – self regulation will save money/time/not lead to cheating or create perverse incentives; 4. It was the 1990s – the perpetual sinking-lid required a low budget for this very large project; 3. Design errors in the pavement? (IANACE).

        1. Thank you Kevin. It was the area just south of Snow Planet. From your answer the work was not supervised by the cntracting agency (NZTA) and reliance on the contractor was not justified in my opinion.
          I noticed some of the Queensland Contrctors building roads in fashions that would have been unacceptable to the MWD in the early 90’s.
          It would appear that we are going to go through the same experience now of rebuilding these failed systems or at least having a very expensive maintenance schedule for a lot of these items as we have lost the knowledge or are not using it, we are certainly not applying it.

  10. This is my proposal for metropolitan ( light rail public transport) and in Auckland city’s case; Airport Rail Connection.
    https://www.linkedin.com/pulse/midline-line-rail-corridor-craig-basham ( image of what it would look like at this link)
    Concept; This proposal suggests A Middle Lane Rail Corridor, in which the two inner lanes of a motorway which connect to a major city hubs have barriers and tracks layed for a light rail train system. A platform is erected either site of an existing over – bridge ( one platform for each train direction ) then stair units are built connecting the platform with the over bridge ( the stairs and the platforms are both fenced) .
    Advantages of this system is that motorways normally always run to all the populated areas of cities, making every over bridge along the network a train platform point, and as the trains run down the center of the motorways they never cross any lanes or off-ramps this allows for easily implementation into existing infrastructure. every train could potentially take 300-600 cars off the road
    Disadvantage The two inner lanes are given up for public transport,
    Post is not a business proposal just a exercise in problem solving, seeking to solve the problem of how to introduce mass transport without expanding public works corridors through populated areas

    1. First problem Craig is that people and destinations are not in the middle of motorways. Light Rail works because it can access destinations directly, like city centres and streets, the opposite of motorways.

      1. I understand that , obviously I was implying a Park and ride structure , I would image a small amount of foot traffic is currently required in public transport in Auckland currently? I was focusing solving one problem at a time using existing infrastructure
        and indicating that there was an existing arterial access corridor currently being used by cars with usually one passenger

        1. You could fit 200 carparks at every overbridge on the Southern motorway, get that many people again to walk and still have half of the passengers the individual rail lines manage. Stops where people are please.

    2. This sounds like the Green Line LRT route in Los Angeles. Railway sandwiched between the east and westbound motorway lanes. However the ambience for rail passengers is awful. Stations are accessed from the dismal underbelly of motorway overbridges. Platforms are dominated by the noise and fumes of traffic. View from the trains is the motorway, on both sides.

      It’s good that rail is there at all, but it is very much tacked-on extra in an otherwise completely road-dominated environment. Yuck.

      1. But does it reduce congestion?
        Does the commuter move more freely on the Green Line LRT?
        Does it move people without further invading the built environment?
        Can the emissions control change the harmful affects of the fumes?
        I feel that the commuter would be able to pass those in cars and give the car driver a chance to look enviously at the faster LRT.
        Does the LRT connect to where you want to go or are there feeders to the LRT.

        1. for every problem there is a solution , I generally start be asking what if and how can we , the green line sound like an interesting project , I’m not saying we do it exactly like they did , the future requires us to think differently about problems not transplanting a existing way of thinking about trains , platforms and such things into this concept,

          urban center connection I was thinking small scale pod connection -which may or may not connect and form part of the main rail way system

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