Waka Kotahi NZTA's billion-dollar budget blowout on Bay of Plenty projects

Seven out of the Bay's eight active roading projects are over budget or have delayed completion dates, including the SH33 Te Ngae Junction to Paengaroa project. Photo / Andrew Warner

The cost of major Bay of Plenty state highway projects has almost doubled - going from $632 million to an eye-watering $1.2 billion - because of shortages in materials, the impact of Covid-19 and other delays.

Only one of the eight projects, costing $10m or more, remains on budget and on time.

Figures provided through the Official Information Act show one of the biggest increases from Waka Kotahi NZ Transport Agency's original budgets involved Stage 1 of Tauranga's Takitimu North Link project, which swelled from a spend of $286m in 2018 to $655m.

In Rotorua, a 2016 budget for SH33 Te Ngae Junction to Paengaroa was $30.4m and was expected to be completed by June 2021. Now, the project has cost $39.6m and won't be done until March 2023.

An Ōkere Falls resident, who did not want to be named, said he had not seen consistent work on the SH33 project, which involved a shared path at Ōkere Falls, and the increased cost and delayed completion date "was destined to happen".

"I'm not seeing regular progress. There's about a 50m stretch of a footpath to be done; they started it before Christmas. Two weeks ago, a digger came and dug a part of it up, put fill in and rolled it but didn't complete it. We've had heavy rain and the top surface has been washed away, so they have to do that again.

"They are not working on this from start to finish."

The resident had little faith the current cost and completion date would remain.

"If they got stuck in, they could finish it in a week. Will it be finished by March 2023? Who knows?"

Another Ōkere Falls resident, who also declined to be named, said they would like to see more effort in getting the project completed.

"I just want them to get it done and for me to see people there every day, not once every two weeks or so."

Asked for reasons behind the cost increase, transport agency national manager of infrastructure delivery Mark Kinvig said the provision of a SH33 speed limit review, incorporation of a shared user path extension, and "collaborative delivery of several maintenance improvements" had impacted the project.

Work to build a shared path at Ōkere Falls, SH33, was seven months behind schedule when this photo was taken in April this year. Photo / Andrew Warner.

So had Covid-19, Kinvig said.

The 2017 budget for Stage 1 of a SH30 Eastern Corridor Connect project also increased, growing from $21.9m to $26.4m.

This was because of several issues, notably the Te Ngae Rd and Hamiora Place intersection showing "extreme distress", prompting intervention, Kinvig said.

In addition to this, "further services either not identified or not in the locations showing on the utility provider records clashed with design elements such as lighting columns/feeds, stormwater pipes, and new water main alignments".

"These clashes required additional resources to investigate along with re-design to suit."

Kinvig said "unforeseen ground conditions" also prompted design changes, particularly in the retaining walls and depth of extra pavement.

A labour and materials shortage, increased costs of construction materials and ongoing impacts from Covid-19 restrictions were also factors, Kinvig said.

Asked for a greater breakdown of increased costs of construction materials, transport agency regional manager of transport services Jo Wilton said the price of diesel, a key input in construction projects, had almost doubled in the last year.

"Another key road construction material, bitumen, is at a 10-year high. Steel is also driven by similar international demand and shipping constraints, where the local price has risen by more than 30 per cent over the past year," Wilton said.

Western Bay of Plenty mayor Garry Webber, pictured at the Ōmokoroa and SH2 intersection, part of the next stage of TNL plans. Photo / George Novak

Rotorua's SH30/33 Te Ngae Junction project which began in October 2020 was still expected to be completed in February 2024 but its budget had increased from $6.3m to $6.6m.

In the Western Bay of Plenty, mayor Garry Webber said the increased Takitimu North Link cost was ultimately worth it.

"If you go back to the original $200m or so, that was quite some considerable time ago and it was more of an estimation than a fully calculated, financially analysed project," Webber said.

"This is the [result of] normal escalation."

The route had "many issues" including swampy and challenging geotechnical terrain and bridges," Webber said.

"The thing that heartens me the most is at least they are going to do it. We are past the talking stage. It's great the project is progressing to be completed by 2026."

Construction on the project began in May.

The 2019 budget for SH2 Waihī to Ōmokoroa safety improvements also increased, rising from $101m to $169m. Its completion date has been delayed a year from 2024 to 2025.

This was because of an increased scope of the project, approved in December 2021, to include extra infrastructure.

Minister of Transport Michael Wood said the Government was committed to supporting the effective movement of people and freight around the Bay of Plenty, which these projects were aiding.

Asked where the extra money was coming from to cover the escalating costs, and what this meant for projects not approved, Wood said: "The Government has already allocated increased contingency and put in place processes to help manage cost pressures across all New Zealand Upgrade Programme projects in mid-2021."

Costs were expected to be managed within the overall fixed funding for the upgrade programme "and ministers have regular discussions with Waka Kotahi about the impact the changing cost may have".

There was no budget change to the SH30 Eastern Corridor Stage 2 which began in September 2020 and was meant to be completed in June 2023. It is now expected to be completed in November 2023.

The SH2 Wainui Rd to Ōpōtiki project which began in March 2016 is the only project with no change to its budget or timeline. It is still expected to be completed in May 2025 and there has been no change to its budget of $32m.