Wellington Northern Corridor
CRAIG NICHOLSON (Principal Project Manager - Transmission Gully)
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Transmission Gully
Public Private Partnership (PPP)
Presentation to the Building & Construction Conference
24 September / 22 October 2015
Presentation will cover:
• Strategic context
• Overview, history and scope of Transmission Gully
• Overview of NZ PPP’s
• Transmission Gully PPP model
• Project progress
Focus will be on our experiences / lessons learnt
Presentation Summary
Wellington Northern Corridor – Transmission Gully 1
Strategic Context - National
Wellington Northern Corridor – Transmission Gully 1
Roads of National Significance:
• Puhoi to Wellsford
• Auckland Western Ring Route
• Victoria Park Tunnel
• Waikato Expressway
• Tauranga Eastern Corridor
• Wellington Northern Corridor
• Christchurch Motorways project
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Wellington Northern Corridor – Transmission Gully 1
Strategic Context – Wellington Region
Eight project sections:
• Airport to Mt Victoria Tunnel
• Basin Reserve Transport Improvements
• Terrace Tunnel duplication
• Ngauranga to Aotea Quay
• Linden to Mackays (Transmission Gully)
• MacKays to Peka Peka
• Peka Peka to Otaki
• Otaki to Levin
1919
1940’s
1980’s
1995-96
2004-06
First known reference
- Interest by local MP reported in Evening Post newspaper
U.S. Marines stationed at Paekakariki
- “Urban myth” about offer to build Transmission Gully
MoW/WRC “GATS” Study
- Desktop study – concept route design & cost estimate
Designation Process
- Designation established, but resource consents not sought
Western Corridor Transportation Study
- Compared alternative strategies (across all travel modes)
- Consultation showed strong public preference for TG
- Western Corridor Plan adopted by RLTC, GWRC & Transit NZ
Transmission Gully - Historic Development
Wellington Northern Corridor – Transmission Gully 1
2007-08
2009-11
2011-12
2012-14
July 2014
Detailed Investigations & Scheme Assessment
- Compared options and determined “Preferred Alignment”
Preparation of Consent Applications
- Detailed assessment of environmental effects
Board of Inquiry Process
- Hearing of technical evidence and public submissions
PPP Contract development
- PPP proposals sought, evaluated and negotiated
PPP Contract let
Transmission Gully - Recent Development
Wellington Northern Corridor – Transmission Gully 1
Route Overview
Wellington Northern Corridor – Transmission Gully 1
Key Features of the Project
Wellington Northern Corridor – Transmission Gully 1
Project Scope:
• MacKays Crossing to Linden (27km)
• “Motorway” design standards
• Interchanges rather than intersections
• Minimum of two lanes in each direction with median barrier
• Extra “crawler lane” on steep uphill sections
• Associated link roads
– Kenepuru link road (state highway “ramp”)
– Two local road links to/from eastern Porirua
Project Challenges
Wellington Northern Corridor – Transmission Gully 1
Major construction challenges: • Earthworks ~ 6.5M m3 earthworks • Cut heights up to ~ 70 m • Reinforced soil embankments (~ 4 km), some up to 40 - 50 m high • Significant number of bridges (~ 30) • Cannons Creek Bridge 260m long, ~ 60m high
Careful management required of environmental effects Impacts on other Infrastructure:
• Transpower, Vector (Gas), GWRC (Bulk Water) • Existing SH1 & SH58
“A long term contract for the delivery of a service, where the provision of the service requires the construction of a new asset, or the enhancement of an existing asset, that is privately financed on a non-recourse basis, and for which full legal ownership is retained by the Crown.”
PPP Definition in New Zealand
Wellington Northern Corridor – Transmission Gully 1
“A long term contract for the delivery of a service, where the provision of the service requires the construction of a new asset, or the enhancement of an existing asset, that is privately financed on a non-recourse basis, and for which full legal ownership is retained by the Crown.”
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Treasury Standard Form PPP Contract
Wellington Northern Corridor – Transmission Gully 1
PPP Team established in the Treasury:
• Owners of the Standard Form PPP Contract aimed at providing consistency across NZ PPP portfolio
Key features covered:
• Lease arrangements
• Completion (full or partial, testing, service commencement)
• Events (extension (construction), intervening (operations))
• Change mechanism (incl. profit margin)
• Unitary Charge, Refinancing
• Step-in, Termination, Disputes
• Hand-back
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Treasury Standard Form PPP Contract
Wellington Northern Corridor – Transmission Gully 1
NZ Transport Agency:
• Adopted Standard Form PPP Contract for Transmission Gully
• Treasury resource embedded in TG project team throughout procurement phase
• Sought consistency with previous PPP contracts
Wellington Northern Corridor – Transmission Gully 1
The Transport Agency’s Procurement Portfolio
Wellington Northern Corridor – Transmission Gully 1
Model Form: Traditional vs PPP Procurement
Traditional (Output based) Model:
• The client sets the specification, to match desired outcomes
• No recourse if desired outcomes not met
• Contractual constraints reduce the potential for innovation
PPP (Outcome based) Model:
• Pay for the outcome/performance you get
• Need to let go of output based approach
• Can be hard to define everything you want
Wellington Northern Corridor – Transmission Gully 1
Payment Profile: Traditional vs PPP Procurement
Wellington Northern Corridor – Transmission Gully 1
The Transport Agency’s PPP Model
PPP Model Philosophy:
• Long term contract (30+ years) to design, construct, finance, maintain and operate the project.
• Long term collaborative relationship to deliver the key project outcomes.
• Transfer design, construction and operational risk to PPP consortium, which is incentivised to bring innovative and efficient approaches, including “whole of life” asset management.
• Pay quarterly Unitary Charge for 25-years following road opening, based on availability and performance.
• Does not transfer demand risk (i.e. payments don’t depend on toll revenue).
Wellington Northern Corridor – Transmission Gully 1
The Transport Agency’s PPP Model
PPP model structured to achieve full road availability and delivery of four project outcomes:
• Safer journeys
• Reduced travel time;
• Improved travel time reliability and resilience; and
• Satisfied Customers.
Wellington Northern Corridor – Transmission Gully 1
PPP Performance Regime – Drives Good Performance
Abatements of quarterly unitary payment for any reduction in either road availability or required performance levels. Abatements of quarterly unitary payment for any reduction in either road availability or required performance levels.
Availability
Abatements of quarterly unitary payment for any reduction in either road availability or required performance levels.
Availability Average Speed
Transmission Gully PPP Procurement
Wellington Northern Corridor – Transmission Gully 1
PPP Procurement Process and Timeframes: • Detailed PPP Business Case approved by Cabinet Nov 2012 • “Expressions of Interest” (5 received) Jan - Mar 2013 • Shortlist (of 2) announced Apr 2013 • Request For Proposals (RFP) released May 2013 • Interactive tender period June – Sept 2013 • Proposals received Oct 2013 • Preferred Bidder announced Dec 2013 • Contractual negotiations Dec 2013 – July 2014 • Contractual & Financial Close (i.e. contract signing) July 2014
Wellington Gateway Partnership Consortium Structure
ACC (45%)
NZTA
Wellington Gateway Partnership
Design & Construction
Operations & Maintenance
LHJV (Leighton Contractors / HEB Construction JV)
Leighton Contractors
Consortium / SPV Manager
Leighton Contractors
Debt Provider / Financial Advisor*
BTMU
Equity Investors
Leighton Contractors (10%)
InfraRed (45%)
Debt Providers
Bank Group*to Financial Close
Ventia (formerly Leighton
Contractors)
Transmission Gully PPP Structure
Wellington Northern Corridor – Transmission Gully 1
PPP Consortium Structure:
Transmission Gully PPP – Financial Outcomes
Wellington Northern Corridor – Transmission Gully 1
Affordability Threshold (AT) $830M NPV
• Sought “best offers below AT” in RFP
Public Sector Comparator (PSC) $875M NPV
• Equivalent cost using Transport Agency’s normal procurement options
• Held as “commercial in confidence” until PPP contract was executed
Final negotiated contract value $850M NPV
• NZTA purchased a number of “additions” to WGP’s initial commercial, D&C and O&M offerings
Wellington Northern Corridor – Transmission Gully 1
Delivery Phase Programme
Contractual Milestone Dates:
• Sod turning Sept 2014
• Site office establishment & enabling works Jan 2015 –
• Main construction Jan 2016 –
• Open for traffic Apr 2020
• End of operating period (and unitary payments) Apr 2045
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Lessons / Learnings
Wellington Northern Corridor – Transmission Gully 1
A number of learnings for NZTA (and for other “horizontal infrastructure”):
• Crown guarantee
• Performance regime
• Property acquisition programme
• Risk allocation
• Form of sub-contracts and risk transfer
Current Puhoi to Warkworth PPP procurement, using the learnings from TG
Questions?
Wellington Northern Corridor – Transmission Gully 1