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Costing three times as much, before work had started

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Wellington.Scoop
Seven years ago, before work had started, the Transport Agency explained how Transmission Gully would cost taxpayers three times as much as the $850m which was being stated as its “present cost”. In seven years since then, the cost is now being stated as $1.25billion.

NZTA said the cost would be $25m more if the project wasn’t a public private partnership. The enormous increase in price shows the partnership failed to deliver on the costs that were promised.

News from NZTA – September 8, 2014
The Transmission Gully project’s net present cost is $850 million. This is the “whole of life” cost, for the Wellington Gateway Partnership to build and then operate the road for 25 years. Because the costs are spread over time, they are expressed in today’s terms.

This is $25m less than what the contract would be expected to cost through conventional procurement, and hence meets The Treasury’s value for money test for public private partnerships.

The cash payments will be around $125 million per year, starting only when the project is finished and open for use, and lasting for 25 years. This stream of cash payments brought back to today’s dollars is $850 million and is the “net present cost”.