During the interviews we collected the following responses regarding the development of the PSC, specifically with relation to the supporting analysis and assessments of costs:
• One interviewee commented that it was known at the time that the PSC estimate was based on the consented scheme design that would be subject to change;
• Some interviewees noted that Waka Kotahi was able to draw upon historical capital construction cost data from their extensive history and experience in delivering roads using traditional procurement methods (e.g. D&C and Alliance contracts). As such, there was greater confidence in the capital cost estimates used in the PSC for TG;
• Several interviewees confirmed a Service Need specification had not been completed as part of the development of the Business Case;
• One interviewee noted that the consented scheme design was not developed with a "PPP lens" and was considered suboptimal as it did not reflect the new standards (e.g. Austroads and RONS) that had to be met and did not consider a whole-of-life view;
• An interviewee commented that the consents for TG were granted by the BOI in 2012 and therefore it was self-evident that it was not for a PPP consented scheme design. They noted that PPP compliant/planned consenting packages do not exist in the New Zealand context. This is because the time it takes to receive consents in New Zealand means that the procurement decision tends to come later down the track.
• No interviewees were able to confirm exactly if O&M costs used in the PSC were benchmarked when developing the 2012 PPP Business Case. Certain interviewees noted that as Waka Kotahi had delivered projects using traditional D&C's and Alliances, they did not typically consider (or collect data) on the whole-of-life costs associated with roading projects;
• Another interviewee noted that the reason for the revisions to the PSC and AT during the RFP process was that there were concerns raised by one of the shortlisted bidders on being able to meet the AT. That interviewee also noted that it was difficult to determine if this issue was genuine and material as the other shortlisted bidder's strategy involved not sharing information (presumably to avoid sharing of Intellectual Property);
• Some other interviewees commented that potential reasons for the changes in the PSC and AT during the RFP process were to reflect changes in design/scope such as adoption of the RONS standards (i.e. horizontal design speed of 110km/h) that were Waka Kotahi initiated policy changes post the DBC;
• Another interviewee commented that: (i) when developing the EOI and RFP, a lot of work had to be done to scope a whole of life understanding; and (ii) when both RFP bids came in, both priced the service element significantly differently to Waka Kotahi's own estimate; and
• The Base Estimate and O&M costing advice provided was used as input into the development of the PSC, but not all advisers may have been consulted/involved in the finalisation of the PSC as it was taken forward.
When we asked selected interviewees about provisions for inherent and contingent risks in the project cost estimates, we received the following responses:
• A provision for inherent contingency had been included in the project's cost estimates;
• The Base Estimate in the 2011 Scheme Estimate (which was used in the PSC for the PPP Detailed Business Case) excluded contingency allowances as per Waka Kotahi's SM014 costing guidelines;
• Contingency allowances (for contingent and funding risk) usually done for traditional road costings were taken into account by the financial/commercial adviser when deriving the estimates for Transferred and Retained Risks included in the PSC;
• Benchmarking of the Base Estimate construction cost was done on selected cost lines (e.g. earthworks) using experience from past projects; and
• No specific benchmarking of the Transferred Risk estimate (on comparable PPP projects) was done.