What assumptions, including risk and optimism-bias adjustments, if any, underpinned the $3.9 billion Public Sector Comparator for Warkworth to Te Hana approved by Cabinet in March 2025?

Answer

The $3.9 billion Public Sector Comparator (PSC) approved by Cabinet in March 2025 was a risk-adjusted estimate of the whole-of-life cost of delivering the project through conventional public sector procurement. It was developed in accordance with Treasury PPP Guidance and included capital, operating and maintenance costs, allowances for transferred and retained risks, pricing uncertainties, and a competitive neutrality adjustment to enable like-for-like comparison with a PPP delivery model. The PPP Guidance is available on the Treasury’s website and further information on the PSC has been publicly released in the January 2025 Investment Case on NZTA’s website: https://www.nzta.govt.nz/assets/projects/ara-tuhono-warkworth-to-te-hana/SH1-Warkworth-to-Te-Hana-Investment-Case-for-Implementation-Procurement-Commencement.pdf