‘Risk pool’ hoped to promote build

A digger works on part of the Arterial Road Project in March 2024. PHOTO: ODT FILES
A digger works on part of the Arterial Road Project in March 2024. PHOTO: ODT FILES
Queenstown council’s planning and infrastructure general manager Tony Avery has slapped down any suggestion the Whakatipu Transport Programme Alliance should be given any more carrots to finish the controversial Arterial Road Project.

This week an independent report, prepared by independent assessor Dave Brash, was presented to the council’s Audit, Finance & Risk committee, looking at lessons learnt from the council’s experience with the alliance in constructing what is colloquially dubbed the "road to nowhere" and other projects, including CBD upgrades.

Mr Brash came up with short- and long-term lessons — in the former he suggested the council consider negotiating a "risk-sharing arrangement" with non-owner participants for the remainder of the project, where there was "enough time to make a difference".

He suggested creating a "risk pool" with some of the contingency budget to incentivise completion of the road on, or ahead of, time and budget.


Earlier in his report Mr Avery noted the arterial was 10 months behind schedule.

However, the council had already increased funding to achieve the current timeline and there had been "sufficient funds provided to complete the works", he said.

"The other partners are already well incentivised to complete the work so that they can move on from their current pain-sharing position, and therefore no risk-sharing arrangement is appropriate," his report said.

Mr Brash’s report was requested by councillors in February after the alliance sought an additional $17.65 million to complete the road, taking the revised total budget to $128.02m, up from the initial cost estimate of $66m, and the initial budget of $88.23m.

The report said at the time councillors decided to proceed with the alliance approach, there seemed to be little discussion of the nature and scale of risks of the investment arrangements, and the programme itself, especially how best to manage them.

Included in Mr Brash’s long-term recommendations are that governance arrangements at council and senior management levels should better reflect the risk profile of large infrastructure projects, and ensure there is adequate capability to support it.

He also recommended the Audit & Risk or Infrastructure committee be delegated an oversight role.

Another recommendation was for the chief executive and property and infrastructure general manager regularly review progress and budget — and escalate to the council as appropriate. He also recommended the chief executive report back to the council on the outcome of a procurement plan process, including pros and cons of options and rationale for preferring an alliance.

He also said "greater effort" was needed to ensure councillors and key council staff "fully understand the alliance model and how to implement it successfully", and he also wanted any future alliance agreement to consider what happened when "pain" exceeded the overheads and profit margin, removing risk-sharing incentives.