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Its official – Transmission Gully is a fiasco

Written By: - Date published: 11:10 am, April 20th, 2021 - 19 comments
Categories: Gerry Brownlee, national, privatisation, Public Private Partnerships, same old national, transport - Tags:

I always struggled with the concept of the Transmission Gully motorway.  Building motorways over active fault lines seems to be a crazy thing to do.  And using a PPP with promises of lots and lots of savings was

A recently released review thinks so as well.  From Thomas Coughlan at Stuff:

A review into Wellington’s much-delayed and heavily over budget Transmission Gully has found multiple problems with the way the road project was established nearly a decade ago.

The review is scathing in parts, noting that the Government tendered the private contract out at an unrealistically low price by essentially “double counting” cost-savings the private sector could bring to the project.

Worse still, no one spoken to at the review knew or remembered how this tender price was arrived at – an all-important detail, partly responsible for years of delays and hundreds of millions of dollars in cost overruns.

The project was initially estimated to cost $850 million in 2012, but the most recent estimate is $1.25 billion.

However, the review stopped short of saying the Public-Private Partnership model used for Transmission Gully is intrinsically flawed. Instead, it says that key errors made at the beginning of the Transmission-Gully Project, when it switched from being a public sector led project to a PPP back in 2012, have led to lasting problems with the project.

Radio New Zealand has this damning comment on the original price set for the project:

The report said the maximum price the government would pay was set too low and the project’s bidders soon worked this out.

That decision meant proposals were “value managed down” or made cheaper on designs and timelines to make costs look acceptable.

“These value management changes represented risks that would eventually manifest themselves after procurement once construction commenced,” it read.

The budget was later reviewed twice after feedback from bidders who were having difficulty meeting the figure.

It was increased by $151.5 million in the middle of the proposal process because it had not properly included road safety, seismic or geotechnical risks.

Changes to road design standards and structural upgrades for bridges also inflated the initial price.

The project never made sense.  As this exchange between Julie Anne Genter and Bill English from as long ago as 2012 shows.

Some of the barbs:

  • Under the PPP model settled on by National the total cost including financing costs would have been $3 billion.
  • The project was predicted to increase congestion south of Levin through to central Wellington
  • The project would only return $360 million to $500 million worth of benefit and even this was dubious.

As James Henderson said on this blog at the time:

So, a $3 billion borrowing programme for a project that would deliver, at most $500m of gains, and would actually deliver far less because traffic volumes aren’t increasing as modeled. Seem like a good use of taxpayer money to you?

Subsequently the desire to toll the project was not proceeded with after it became clear that tolling would mean that no one would use the road.

So who is to blame for this fiasco?

The Minister in charge at the time needs to take at least some of the blame.

Guess who it was?

19 comments on “Its official – Transmission Gully is a fiasco ”

  1. Patricia Bremner 1

    Like the "Ghost Chips" "Ghost Quotes?"

  2. ghostwhowalksnz 2

    Good catch on the 'no one can remember by who or how the low tender target price' was arrived at.

    Its always the person in charge they are covering for.
    I can remember thinking at the time that $850 mill seemed ridicously low for such an earthworks heavy project. And it didnt include the cost of the land underneath. Still dont think the road gradient out of Paekakariki for heavy trucks will mean they will want to use it.

  3. Ad 3

    The Minister will take this report and bury it under the tarmac, since he is going to have to open it this year, and with triumphant fanfare.

    • Marcus Morris 3.1

      Why don't you stay on Farrar's blog where you would feel much more at home. His incessant negativity is pathetic. He was slagging off at the new Hamilton – Auckland rail link the other day. The cost of that initiative pails in comparison to Transmission Gulley – a project that was talked about and dismissed when I was living in Palmerston North fifty years ago. I will await his comment on this fiasco with baited breath and feel that your comment above misses the point entirely. I wish someone could tell me how I can negate my twitter feed.

      • ghostwhowalksnz 3.1.1

        "Another $49m was used to purchase and modify rolling stock, reinstate a maintenance facility at Te Rapa and to construct a new station at The Base at Rotokauri and upgrade the Huntly station."

        Thats where most of the money went. Running costs are only$5 mill per year ( and they have counted 6 yrs of that in the budget)

        https://www.rnz.co.nz/news/national/436142/new-hamilton-to-auckland-train-service-announced

        Dont worry about Farrars little blog its atypical right wing grievance machine. More worrying for him was his close connection to the leadership going from English ( who he was close to) and then Bridges ( even closer , as we would stay at his home when in Tauranga on business) has disintegrated with Muller and Collins and could affect his business.

  4. tc 4

    Like national ever get blamed for the crap they foist onto the population.

    Electricity prices, Broken health system, overweight trucks ruining NZ roads, national standards etc

  5. Cricklewood 5

    Best not make too much noise wont suprise me to find the same happens with the rail link… years late way over budget…

  6. DukeEll 6

    Hullo!?

    my name is m1cjey.

    my job is to polish (not the country) this governments turds. Everything can be blamed on someone in power 1 or 4 years ago.

    there will be no discussion about this.

    refards

    Ja .,. Mickey

  7. Sacha 7

    Making the up-front ‘cost’ unrealistically low helped Joyce, Brownlee and that other guy they worked with juke the official benefit-cost ratio, knowing the contractors would come back for top-ups when it was too late to stop.

  8. Peter 8

    Haven't heard Chris Bishop slobbing into it yet.

    Maybe he'll be on with Hosking being drilled. Or maybe it's school holidays and Mike won't be in to work.

  9. Lucy 9

    My father used to live in Paekakariki and remembered the yanks offering to build the road. They did the survey and pulled out saying the engineering corp couldn't build it as the gradient would be to steep and the ground was not suitable for a road.0

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