Fletcher Building joint venture resolves dispute with NZTA over Puhoi motorway delay

Fletcher Building has settled with NZ Transport over the delayed Puhoi to Warkworth motorway. Photo / Supplied

Fletcher Building and its 50% joint venture partner Acciona have reached a settlement with the NZ Transport Agency and the Northern Express Group over Covid-related delays to the construction of the Puhoi to Warkworth motorway.

The motorway opened in June 2023, well beyond its original December 2021 scheduled opening.

The joint venture’s claim related to the impacts and delays to the project arising from Covid-19 and other weather events.

It lodged a claim with Northern Express Group (NX2) and the NZ Transport Agency (NZTA) to recover costs associated with Covid-19-related delays and additional weather-related disruptions.

“These claims were the subject of an agreed dispute resolution process, but have now been resolved by agreement between the parties,” Fletcher Building said.

“The settlement, whilst less than the expected recovery that had formed part of Fletcher Building’s provision associated with the project, represents a commercial resolution to a longstanding issue and avoids a drawn-out dispute,” it said.

As a result of the settlement, the group expects to recognise a loss on claims receivable of $16.4 million against the project position in the 2025 financial year.

This loss related to revenue recognised over the life of the project and had not previously been anticipated in prior commentary regarding the 2025 earnings outlook.

Fletcher Building said the settlement means that further cash proceeds from the project of $56m will be received by the group in 2025.

“This represents further progress in closing out the legacy project issues that have absorbed significant management time and cost,” Fletcher Building managing director and group CEO Andrew Reding said.

The construction JV has separately submitted material claims under the Contract Works Insurance policy for damage to the project caused by the landslips and weather events during construction.

These claims are still the subject of negotiations with the insurers.

There is also a range of less material matters to be resolved in relation to the project, the company said.

The resolution of these matters, together with the insurance claims, will determine the final project outcome, it said.

The joint venture partner, Acciona, is a Spanish multinational construction firm.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.