The following table summarises and explains key terms used in this Report.
Term | Definition |
In the New Zealand PPP policy/approach, the AT is disclosed to parties participating in a procurement process for a PPP project (the respondents) as the maximum 'price' that the procuring entity is prepared to pay a contractor for delivery of the project. Derived from the PSC, any proposal with a net present cost in excess of the affordability threshold will be considered non-compliant. |
When a relevant Minister decides a proposal is nationally significant, under Part 6AA of the Resource Management Act 1991 a proposal may be directed to an independent BOI for a decision. |
A project's scheme design that has been considered and approved by a BOI (subject to any conditions). |
Project costing prepared during the pre-implementation phase once the design has been completed. A Design Estimate costing is more developed than a Scheme Estimate prepared for the Detailed Business Case phase. |
Generally for a design and construct contract, government prepares a design brief which outlines the functional and key user requirements (in performance terms) for works. The government then seeks tenders for completion of the detailed design, consistent with the design brief and construction of the works described in the design brief. |
Under New Zealand's Better Business Case Framework, a business case is the vehicle to demonstrate that a proposed investment is strategically aligned, represents value for money, and is achievable. It is also a reference point during the implementation phase to support delivery and used in the review phase to determine whether the benefits in the business case were realised. |
The EOI phase is the first step in the formal bidding process. The main purposes of the invitation for EOI are to formally advise the market of the project and the services that government seeks to have delivered and advise government's timeframes and evaluation approach. The key outcomes sought are EOI responses from the market which allow government to short-list bidders to proceed to the RFP phase who are most capable of meeting project objectives over the project term. |
Financial Close is the point at the end of the procurement phase where after the PPP contract has been signed, any conditions precedent are met and financing can then be drawn down so that the PPP Project Company can commence construction. In the New Zealand PPP approach, prior to Financial Close the government is briefed on the value-for-money proposition from the signed the PPP contract. |
The National Land Transport Fund is a dedicated fund for maintaining and developing local and national transport services. It is a partnership between Waka Kotahi, which uses the National Land Transport Fund to invest on behalf of the Crown, and approved organisations, which invest local funding on behalf of ratepayers. |
All recurrent costs required to deliver the PPP services and maintain the constructed asset in fit-for-purpose condition over the life of the PPP contract. |
After the outcome of the RFP evaluation process, a Preferred Bidder is identified as the party that government intends to enter into a PPP contract subject to the completion of negotiations and legal arrangements. |
The Proxy Bid Model (PBM) calculates the estimated periodic service charge that a contractor would require to finance and deliver the project to the level of performance specified in the PPP contract. Known also as the "Shadow Bid Model" in other PPP jurisdictions, the PBM is used in the New Zealand PPP approach as one of the sources of information to confirm the PPP decision. |
In the New Zealand context, a PPP is a long-term contract for the delivery of a service, where provision of the service requires the construction of a new asset, or enhancement of an existing asset, that is financed from external (private) sources on a non-recourse basis, and full legal ownership of the asset is retained by the Crown. Under the availability PPP model, whole-of-life services are purchased under a single long-term contract with payments to the contractor based on availability and performance of the asset. Payments do not commence until after construction and when the asset is certified as ready for use. |
The PSC is an estimate of the risk adjusted whole of life cost of a project if it were to be delivered by the procuring entity using conventional procurement methods. It is primarily used as a benchmark against which to assess the net present cost of procuring the project as a PPP. |
Following the short-listing of bidders during the EOI phase, the RFP phase involves the release of the RFP documents to seek formal bid proposals, and evaluation of proposals by government to select a Preferred Bidder. |
The value of those risks or parts of a risk that government bears under a PPP project. |
The allocation of responsibility for dealing with the consequences of each risk to one of the parties to the contract; or alternatively, agreeing to deal with a particular risk through a specified mechanism which may involve sharing that risk. |
The New Zealand National government in 20xx identified essential road routes as requiring significant investment that require work to reduce congestion, improve safety, and support economic growth. Seven roads of national significance were identified - TGP comprises part of the Wellington Northern Corridor of the Road of National Significance programme. |
The service need (or output) specification underpins the entire PPP procurement process. The purpose of a Service Need Specification is to comprehensively and accurately state the outcomes and services required (rather than the assets wanted) and the service standards expected by the government (regardless of who will deliver the services). |
A project cost estimate prepared as part of the Investigation Reporting (I&R) project development phase, which is equivalent to Waka Kotahi's Detailed Business Case phase. |
In establishing a PPP project consortium, the PPP Consortium establishes a special purpose vehicle (SPV) which contracts with government. The SPV is simply created to act as the legal entity of a project consortium. |
Set of model PPP commercial terms to inform the development of project specific PPP contractual documents |
The value of those risks (from government's perspective) that are likely to be allocated to the private party under a PPP project. |
Value for money is a key principle of PPP projects and includes both a quantitative and qualitative assessment of the benefits of the private sector proposals. The quantitative assessment is assisted by comparing the net present value of a private sector bid against the PSC. The qualitative assessment looks at all other factors including certainty of delivery, quality, efficiency of design etc. |
The integration of up-front design and construction with ongoing maintenance and refurbishment elements over the life of the asset under the PPP arrangement. |