Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation...

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Wellington Northern Corridor CRAIG NICHOLSON (Principal Project Manager - Transmission Gully) 1 Transmission Gully Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015

Transcript of Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation...

Page 1: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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

Page 2: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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

Page 3: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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

Page 5: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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

Page 6: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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

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Route Overview

Wellington Northern Corridor – Transmission Gully 1

Page 8: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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

Page 9: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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

Page 10: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

“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

Page 13: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

Wellington Northern Corridor – Transmission Gully 1

The Transport Agency’s Procurement Portfolio

Page 14: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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

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Wellington Northern Corridor – Transmission Gully 1

Payment Profile: Traditional vs PPP Procurement

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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).

Page 17: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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.

Page 18: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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

Page 19: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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

Page 20: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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:

Page 21: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

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

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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

Page 24: Transmission Gully Public Private Partnership (PPP)...Public Private Partnership (PPP) Presentation to the Building & Construction Conference 24 September / 22 October 2015 Presentation

Questions?

Wellington Northern Corridor – Transmission Gully 1