The new Infrastructure Commission, Te Waihanga, released its second pipeline of planned infrastructure projects today.
The first version of the pipeline was published in May, before the commission had evolved from the Treasury Infrastructure Transactions Unit. The commission’s board was only appointed in August.
That first pipeline contained data from 5 capital-intensive Government agencies, covering 174 projects to the value of $6.1 billion. The second pipeline
The second pipeline contains data from 15 organisations, which have identified 506 credible & committed projects over the next decade, with a combined estimated value of $21.1 billion. Contributors include Government agencies & local councils, as well as council-controlled organisations & a university.
One of the commission’s objectives is to improve New Zealand’s infrastructure procurement and the pipeline is a key part of this, delivering greater certainty to infrastructure builders & investors.
Bollard: Early stage, but useful guidance
Te Waihanga’s chair, former Reserve Bank governor Dr Alan Bollard, said the pipeline would provide some useful guidance to the market, even though it was still in development.
“As might be expected, transport is the largest sector in the pipeline, comprising nearly a third of the total estimated value. Water & energy are represented for the first time and the latest version incorporates data from across the Manawatu, in an effort to test the value of regional infrastructure overviews.”
Dr Bollard said pipeline development was an iterative process with more, better quality data being incorporated all the time. In this version, project phase dates were provided for roughly 30% of projects by volume & value.
“Taking those caveats into account, early indications are that nearly $670 million of works are expected to move from business case to procurement between now & March 2020, with an increase in construction activity throughout 2020 & 2021.”
The pipeline is intended to increase co-ordination between procuring entities as planned works are made visible, and to enable smoothing of the market. Dr Bollard said data quality & volume were imperative to deliver an increasingly robust picture of New Zealand’s forward works programme.
Dr Bollard said the commission would consult stakeholders at the earliest opportunity to begin the process of developing a 30-year strategy by the end of 2021.
Sector group sees momentum towards comprehensive forward book
Infrastructure NZ’s new chief executive, Paul Blair, said introduction of local government projects in the second pipeline was particularly pleasing as it continued momentum towards a single, comprehensive forward works programme for the country.
“Having a clear pipeline of work is essential for construction & engineering firms to understand what projects are on the horizon and where their labour & capital will be needed next.
“If projects are slowing down in one region or sector, it is important for firms to be able to readily identify other opportunities around the country.
“Greater transparency & certainty of work is critical to supporting investment in the skills, technology & systems necessary to improve poor productivity and manage risk across the construction sector.
“Once the country has an identified pipeline in place, we can really look to optimise investment.
“Via this approach, Watercare in Auckland expects to reduce the cost of its infrastructure programme by 20%. Even just a 10% saving across the national programme over the next decade would allow some $13 billion of investment to proceed which otherwise would not have.
“That’s sufficient to deliver the Let’s Get Wellington Moving transport plan and clear the country’s backlog of water supply & wastewater needs, delivering great outcomes for everyday kiwis.”
15% of projects worth $50 million-plus
15% of the second pipeline’s projects are valued at over $50 million, representing about three-quarters of the estimated total pipeline value.
The commission assigned project phase dates to 169 projects with an estimated value of $7 billion – data that suggested construction activity would increase substantially in 2020-21.
Transport the biggest sector, water & energy added
The largest sector is transport, comprising projects from the NZ Transport Agency, KiwiRail, Palmerston North City Council & the Manawatu District Council. The 102 projects have a $6.5 billion anticipated spend – 20% of all projects and around a third of the estimated total pipeline value.
Water utilities & energy join the mix
The largest contribution of previously uncaptured projects comes from water utility providers, including Wellington Water & Auckland Council’s Watercare Services. The sector has 170 projects in the pipeline with an estimated value of $5.8 billion, which are expected to be procured through to 2028.
In the energy sector, Transpower contributed 9 projects with an estimated value of $9 billion out to 2033.
Education projects make up 24% of the pipeline. The Ministry of Education added 47 projects and Otago University 23. The sector’s projects equate to about $2 billion in capital investment, or 9% of the pipeline.
The NZ Defence Force contributed 5 more projects, taking the number of defence sector projects to 52, with a total value of $1.1 billion. All Defence Force projects are in business or investment case development.
Attribution: Commission release.