Analysis: Taxpayers in the dark over final cost of Transmission Gully

ANALYSIS:

Taxpayers still don't know what the final cost for Transmission Gully will be after it already skyrocketed from $850 million to $1.25 billion.

The new motorway out of Wellington will almost certainly end up costing even more, but just how much remains to be seen.

Waka Kotahi NZ Transport Agency is once again in negotiations with the road's builder after two previous settlements.

This time it's over the Delta outbreak, which led to a nationwide lockdown and supply chain constraints while the road was still being built.

Negotiations have continued well after the road finally opened at the end of March.

Transmission Gully was built through a public-private partnership (PPP), the Wellington Gateway Partnership (WGP), with CPB Contractors and HEB Construction subcontracted to carry out the design and construction.

Waka Kotahi transport services general manager Brett Gliddon recently said they were still working with partners on an ongoing basis to assess the impacts of any claims or information submitted relating to the Delta outbreak.

"These are complex negotiations and because of their commercial nature Waka Kotahi is not able to comment further."

It's an all too familiar situation.

The first settlement was announced in February 2020 with promises the road would be open by that Christmas.

Waka Kotahi paid the builder $190.6 million in financial relief.

This was after difficulties with an increased earthworks programme, disruption due to additional consent requirements, several storm events, and the Kaikōura Earthquake.

Waka Kotahi made specific mention at the time that all historic claims by the builder had been resolved without resorting to court action "which would have resulted in further costs and delays to the project".

But the settlement would by no means be the last, with Covid-19 just around the corner.

The country was plunged into lockdown for five weeks after cases of the virus first emerged in New Zealand. Construction on the motorway had to be paused.

That August Waka Kotahi paid the builder another $145.5m to cover the costs of delays and other impacts resulting from the Covid-19 restrictions.

The total settlement was $208.5 million and there was a new opening date of September 2021.

NZTA Waka Kotahi transport services general manager Brett Gliddon. Photo / Mark Mitchell

At the time Gliddon gave a small glimpse into what it was like around the negotiating table.

"While the negotiations were very tough and there was a heck of a lot at stake and very commercial, they were done very professionally," he said.

Patience with the builder was clearly wearing thin though.

CPB HEB agreed to provide letters of credit to the value of $35m, available to be called on by Waka Kotahi until the project was fully completed.

Waka Kotahi appointed a monitor to the project team to track progress.

It was also agreed the builder would incur penalties of more than $250,000 per day if the road was not open on time.

The country went on to enjoy a period of being "Covid-free".

Come July 2021, Waka Kotahi did not appear to share the builder's confidence the road would open by the agreed date, which was less than three months away.

Waka Kotahi took the trouble to lay out at great length just how much work there was left to do on the project, including a reminder of the consequences if the road wasn't ready when it should be.

Weeks later the Delta variant arrived in August and the country was again plunged into lockdown.

Transmission Gully still wasn't finished.

Transmission Gully motorway viewed from McKays Crossing. Photo / Mark Mitchell

The issue with this third round of negotiations has been untangling Covid-19 restrictions and supply chain constraints from any pre-existing problems.

This was made even more difficult by the fact parties were still trying to get the road open at the same time.

When the road opened in March this year Gliddon confirmed a claim had been lodged, but said parties had "parked" it over recent weeks to focus on opening the road.

"So we'll pick that up and we'll have to work through the entitlement of that claim and we'll do that over the coming months and make sure that we get value for the taxpayer and whatever we agree is the right, fair amount for the impact that Covid had on them," Gliddon said.

Gliddon could not provide a timeline for when that claim might be resolved.

Four months later and Waka Kotahi will not outline any outstanding matters to be agreed on, nor a timeline for negotiations.

Motorists may finally be able to drive on Transmission Gully, but they're yet to find out how much it will cost them.