To assess this aspect of the IR, we took into consideration that the New Zealand "commercial case" approach to determining if a project is potentially suitable for PPP delivery has two components:
1) A qualitative "suitability" assessment is done comparing a project's key features against several PPP filters/criteria; and
2) A quantitative assessment is done (i.e. using a "Proxy Bid Model") to identify, hypothetically, the private sector's cost to deliver the Crown's risk adjusted reference project with the addition of private sector financing, tax and PPP specific costs. The Proxy Bid Model (PBM) is then used to establish a benchmark of likely efficiency savings/benefits that may accrue using PPP delivery.
We note that the above approach is currently used by several international jurisdictions (e.g. Australia and Canada) and was used by the United Kingdom prior to 2018.
Several project-related documents that we reviewed clearly show that the commercial case for the PPP decision was justified using both the qualitative and quantitative screening criteria. Examples of these review documents include:
• The DBC has a summary (including Appendix J) of a comparative, qualitative analysis of PPP against likely other procurement methods (e.g. D&C and Competitive Alliance). This analysis was undertaken by an experienced adviser at the request of Waka Kotahi. Ten qualitative "filters" were used in this assessment including project scale, complexity and scope for innovation, and tangible demonstration of value for money, amongst others. This Appendix J summary uses accepted PPP/procurement filters that are fair and reasonable.
• Also, the DBC provides a quantitative determination of likely PPP "efficiencies" based on the PBM calculations. The identified efficiency factors included a notional point estimate and also, appropriately, presented a range of possible efficiency outcomes.
• Waka Kotahi Board Papers explaining that TGP-specific characteristics match the following six value themes (otherwise known internationally as accepted PPP suitability criteria):
- Innovation in design, enhanced by adopting an outcomes approach to the project;
- Synergies between design and operation, a whole of life approach;
- Improved risk management;
- Outcome focused approach to delivery;
- Improved quality and scope control in design, construction and operation; and
- Additional competitive tension in the RFP process driven by the Special Purpose Vehicle (SPV) and lenders.
We also noted that several other Crown documents explained broader policy/funding considerations that also played a factor in the decision to consider the PPP model to deliver the TGP. These documents explained that at the time of the DBC, the Government was discussing how to maintain delivery momentum for the RONS programme in the context of then identified funding constraints with the National Land Transport Fund (NLTF). These funding constraints were as a result of the impact of the catastrophic Canterbury earthquakes, including the need to divert resources to the reinstatement of local roads in Canterbury.