The Transmission Gully motorway north of Wellington will be open by September 2021 as part of a settlement agreement reached following the conclusion of negotiations related to the commercial impacts of the COVID-19 shutdown on the project.
The in-principle agreement between Waka Kotahi NZ Transport Agency, the project contractor (Wellington Gateway Partnership), the builder (CPB HEB Joint Venture), and the maintenance contractor (Ventia), includes a compensation payment of $145.5m to the CPB HEB Joint Venture to cover the costs of delays and other impacts resulting from the five-week COVID-19 shutdown, and separate payments to the Wellington Gateway Partnership (WGP) and Ventia to cover their own costs from the COVID-19 delays and associated issues. The agreed payment to WGP is $12.5m. The payment to Ventia is still to be finalised, but is expected to be approximately $5m.
The $145.5m payment to CPB HEB includes $19m in advance interim payments which have already been made by Waka Kotahi to allow the winter construction programme to continue on the project while commercial negotiations were finalised to agree on the new opening date and costs for the COVID-19 delays. An initial payment of $47.5m (less the $19m already paid) will be made now, with the remainder to be paid in monthly instalments until the agreed opening date. The final $7.5m of the $145.5m settlement will only be paid if the road opens by the agreed date of 27 September 2021.
Once open, there will be further work required before the project is fully completed, including landscaping and testing and commissioning of new technology systems. This work is expected to take approximately six months to complete after the road has opened to traffic. The work will not impact on traffic, with all four lanes of the road to be opened without restrictions by September 2021.
As part of the settlement agreement, CPB HEB has agreed to provide letters of credit to the value of $35m, available to be called on by Waka Kotahi until the project is fully completed. CPB HEB has also agreed that a monitor appointed by Waka Kotahi will be embedded in the project team to track progress towards completion. Under the terms of the settlement, penalties will also be incurred by the builder if the road is not open by 27 September 2021. The penalties would be in the form of liquated damages of more than $250,000 per day.
Waka Kotahi has also agreed to a contract variation for construction, costing an additional $45.5m, to allow for the use of a different road surface to be applied on some sections of the road, which will enable the road to be built more quickly by ensuring work continues at pace throughout the year. The new ‘deep lift’ road surface will be used in areas approaching and over the Wainui saddle, and on other sections of the motorway with steep gradients, accounting for roughly one-third of the road’s 27km length. The earthworks on these sections of the motorway account for the majority of the remaining pre-surfacing work yet to be carried out on the project, where work has been significantly impacted by the five-week COVID-19 shutdown and associated disruptions. The ‘deep lift’ pavement being used is much more resilient to poor weather during construction, meaning that work can continue to be carried out during marginal winter conditions, bringing the new opening date forward by an estimated four months than would otherwise have been possible.
Waka Kotahi General Manager Transport Services Brett Gliddon says the Transmission Gully project is now approximately 85% complete, and the settlement agreement will ensure that the road is completed to a high standard, meets the needs of customers and still achieves good value for money for New Zealanders.
“Waka Kotahi has taken a careful and considered approach to these negotiations. We understand that people are keen to see the road finished as soon as possible, and getting the road open at the earliest possible date at the least additional cost has been front of mind in our negotiations with the contractor and the builder. Transmission Gully is a highly complex project being built on 27km of very difficult terrain, and the COVID-19 stand down period and subsequent work restrictions have caused much longer delays than the five weeks of Level 4 due to the loss of valuable summer construction and other factors.
“While any delay is disappointing, we’re pleased that we are now able to provide people with certainty that the road is scheduled to open in just over a year. The winter works programme agreed to while negotiations were being finalised has ensured that the builder has been able to source and bring onto site critical materials to allow the project to progress through the winter construction season. If materials, such as aggregate, were not sourced during winter, the materials may not be have been available later in the season and this could have caused further delays to the project’s completion.
“The financial settlement which we’ve now agreed to acknowledges that the COVID-19 pandemic and the resulting disruptions and delays were out the control of CPB HEB and not something they could have reasonably anticipated. The inability to access the work site during COVID-19 Alert Level 4, the loss of productivity at Levels 3 and 2, border restrictions, and pushing the work programme into the winter season, have all contributed to increased costs and delays for the project.
“Waka Kotahi, WGP and CPB HEB are committed to working together under the terms of the agreement to complete the project as soon as possible. We look forward to the opening of Transmission Gully next year, and the many benefits that it will bring,” Mr Gliddon says.
The settlement agreement does not change any of the warranty conditions within the contract for the project. Any aspects of the road which do not meet the standards required by the contract would need to be remedied by the contractor or by the builder, at their own cost. The contract requires WGP to operate and maintain the road for 25 years following its opening in 2021, after which time the road will be handed over to Waka Kotahi at an agreed standard.
While the settlement agreement closes out all contract claims and issues up to the date of the settlement, as with all large capital projects changes in alert levels due to the impact of COVID-19 in the future could still have an impact on the project. As is also the case with all large projects, expected opening and completion dates may also be impacted by severe weather or seismic events.
The updated total cost of the Transmission Gully project, including the settlement payments and the contract variation detailed above, is now $1.25 billion.
Transmission Gully is a four-lane, 27km motorway running from Mackays Crossing at Paekākāriki to Linden.
Transmission Gully will make travel on the route between the city and the lower and central North Island safer and more reliable. Importantly Transmission Gully will also provide the region with a key route that will be more resilient to extreme weather and other events including storms and earthquakes.
Four interchanges and two link roads will connect the motorway to Mackays Crossing, SH58, eastern Porirua and Kenepuru.
It includes over 10.2 million cubic metres of earth moved, and cuts of up to 70 metres.
There will be 25 structures (bridges and major culverts) equating to a total length of more than one kilometre; the largest structure is the bridge over Cannons Creek – 230 metres long and 60 metres high.
More than 534 hectares of ecological mitigation areas and 27km of stream remediation, restoring native landscapes and mitigating the sedimentation effects of the project on waterways.
The Transmission Gully Private Public Partnership (PPP) project agreement is between the NZTA and WGP, while the design and construction sub-contract is between WGP and CPB HEB JV.
WGP is a group of private financiers and contractors who together are responsible for the design, construction, financing and then operation and maintenance of the new motorway for the 25 years following the construction period.
Under the PPP contract all operational decisions related to construction, including materials and the size of the workforce, sit solely with the contractor and the builder, CPB HEB Joint Venture and WGP, not Waka Kotahi.
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