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Introduction

Waka Kotahi NZTransport Agency develops an assessment profile for prioritising activities in the National Land Transport Programme (NLTP) by merging the results alignment assessment and cost–benefit appraisal for each project. In the development of the NLTP and in its investment decisions, Waka Kotahi reviews the assessments made and prioritises activities within each activity class using the assessment profiles. Waka Kotahi may also consider additional factors that have been identified.

Programmes and activities assessed with a low, medium, high or very high results alignment will progress to prioritisation.

Programmes and activities assessed as not meeting results alignment criteria remain at the strategic case stage.

A prioritisation table lists all possible profiles and assigns a priority based on: 

  1. results alignment

  2. cost–benefit appraisal.

Prioritisation for improvement activities

Prioritisation is the basis for including improvement activities in the NLTP. Depending on the amount of funding available for an activity class, activities with sufficiently high priority are included in the NLTP. Activities are assessed for funding approval at the time they are ready to progress, following the development and assessment of an appropriate business case.

  • Activities prioritised as improvements

    The following activities are prioritised as improvements (in no particular order):

    • public transport improvements
    • rapid transit improvements
    • rail improvements (public transport)
    • walking and cycling improvements
    • regional improvements
    • local road improvements
    • state highways improvements.

     

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  • Priority order for improvement proposals

    The table below summarises the priority order for improvement programme proposals based on the scores achieved for results alignment and cost-benefit appraisal.

    Results alignment

    Cost-benefit appraisal

    Priority order

    Very high

    L/M/H/VH

    1

    L/M/H

    Very high (BCR 10+); PV EoL*

    2

    High

    High (BCR 5-9.9)

    3

    High

    Medium (BCR 3-4.9)

    4

    Medium

    High (BCR 5-9.9)

    4

    High

    Low (BCR 1-2.9)

    5

    Medium

    Medium (BCR 3-4.9)

    5

    Medium

    Low (BCR 1-2.9)

    6

    Low

    High (BCR 5-9.9)

    7

    Low

    Medium (BCR 3-4.9)

    8

    Low

    Low (BCR 1-2.9)

    Exclude 

     Note: BCR = benefit–cost ratio; PV EoL = Present value end of life

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Two-stage process for prioritising improvement activities

 Improvement activities that have yet to be approved, other than low cost, low risk improvements, are assessed and prioritised in two stages.

 

  • Two-stage process

    Improvement activities that have yet to be approved, other than low cost, low risk improvements, are assessed and prioritised in two stages:

    1. Inclusion in the NLTP: 
      Waka Kotahi reviews the approved organisation’s and Waka Kotahi's (state highways) assessment and then determines the assessment profile. Activities proposed for inclusion in the NLTP are prioritised based on Waka Kotahi’s assessment profiles and those at or above the funding threshold are included in the NLTP. In many cases, full information for the activity will not be available at this early stage of its development, which means its assessment profile is still tentative.
    2. Funding approval:
      During the course of the NLTP, when improvement activities are submitted for funding approval, the project owner and Waka Kotahi review and confirm the assessment profiles or revise them. At this stage, the project owner must be prepared to provide full information to inform the investment decision. Waka Kotahi then compares the resulting priority order with the funding threshold for the activity class and decides whether to fund the activity.

    See below for information on the investment thresholds for the 2018–21 NLTP and the funding priorities for improvement activities.

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Prioritisation for continuous programmes

Funding decisions for these programmes are usually made when the NLTP is adopted. This provides the sector and Waka Kotahi's investment partners with the certainty of continuous funding, which is reinforced by the appropriate assessment of the proposals received by Waka Kotahi.

Applying the IAF to continuous programmes supports decisions on cost-effective levels of investment to maintain an appropriate customer level of service, rather than providing definitive investment decisions.

 

  • Priority order for continuous programme proposals

    Waka Kotahi develops an assessment profile from merging the results alignment and cost–benefit appraisal for each continuous programme proposal, and uses this profile for determining the priority for these activities in the NLTP.

    As Waka Kotahi and investment partners collaborate in assessing business cases for continuous programmes, these business cases are expected to achieve a medium or above rating from the IAF assessment. If a business case has any inadequacies, a condition is applied to its funding (eg one year of funding approved with the subsequent funding contingent on resolving the inadequacies during the NLTP period). 

    Funding levels will be informed by the assessment profile and will take account of Waka Kotahi's intervention hierarchy (see Planning and investment principles ’Right outcomes, at the right time and at the right cost’.

    Results alignment

    Cost–benefit appraisal

    Rank

    Very high

    N/A

    1

    High

    High

    3

    High

    Medium

    4

    High

    Low

    5

    Medium

    High

    4

    Medium

    Medium

    5

    Medium

    Low

     

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One-stage process for prioritising continuous programme activities

Continuous programmes are assessed and prioritised in a single stage. 

 

  • One-stage process

    Approved organisations and Waka Kotahi (state highways) assess their own programmed activities, including public transport services and operations, road maintenance, promotion of road safety and demand management, and low cost, low risk programmes.

    Waka Kotahi takes this into account in making its assessment and determining the assessment profile. Sufficient information usually exists at the time of including these activities in the NLTP to make the investment decision and approve their funding, most often for all three years of the NLTP.

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Prioritisation for other programmes and activities

 A number of activities are hybrids of core improvement and continuous programmes.

 

  • Investment management

    Waka Kotahi assesses results alignment only for investment management proposals.

    The investment management activity class is considered under its component parts, with each part assessed and prioritised separately. Some parts are allocated a default profile eg regional land transport planning, sector research and investment in the funding allocation system, recognising that these are either core activities (ie non-discretionary) or have a robust process for assessing and prioritising the activities within them.

    Some parts of transport planning are assessed and prioritised for results alignment in a similar way to improvement activities, i.e. transport modellingactivity management planning improvements, and programme business case development.

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  • Promotion of road safety and demand management

    The majority of road safety promotion activities are low cost, low risk activities, ie below $1m in total cost, and therefore are assessed as a programme in the same manner as low cost, low risk programmes for road improvements.

    Road safety promotion activities above $1m in total cost are assessed and prioritised separately, in the same way as an improvement activity in other activity classes.

    Demand management is a new component of this activity class and the activities are assessed and prioritised separately, also in the same way as an improvement activity.

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  • Road policing programme

    The road policing programme is made up of a base programme which maintains current levels of enforcement, and an improvements programme.

    The base road policing component is assessed at a programme level, in a similar way to continuous programmes. Improvements to the road policing programme are assessed and prioritised in the same way as an improvement activity in other activity classes.

    Road policing is under review and a range of recommendations are expected regarding delivery of, and investment in, the road policing programme.

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  • Low cost, low risk programmes

    There is a streamlined approach for assessing low cost low risk improvement programmes for projects less than $1m in total cost . The IAF identifies the criteria for results alignment of low cost low risk programmes as follows:

    • The assessment is made at the programme level. The generic rating for results alignment for low cost, low risk programmes is high.
    • Results alignment for each activity in the programme is captured in the relevant low cost, low risk template and it is critical this is completed and kept current.
    • A strong linkage to activity management planning documents (eg activity management plan, regional public transport plan) should provide insight to the quality and value proposition of these programmes.
    • The generic rating for cost-benefit appraisal for low cost, low risk programmes is medium.

    Key principles for low cost, low risk programmes include:

    • Activities in these programmes will be optimised following a straightforward process to reflect the Government’s priorities. Investment partners can apply their own assessment framework during their programme prioritisation, but there is a clear expectation they will assess an individual project’s alignment with the appropriate activity class results alignment criteria.
    • Walking and cycling activities that form part of an investment partner’s low cost, low risk programme should be cross-checked for alignment with activities out of the walking and cycling activity class.
    • Flexibility exists to adjust the programme over the three-year NLTP period, particularly when parts of the programme are not well developed at the time the NLTP is adopted.
    • Projects within a low cost, low risk programme will not need to calculate a benefit-cost ratio. They will need to identify the principal benefit the project is seeking to achieve.
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Allocation of funds from the National Land Transport Fund 

As a rule, National Land Transport Fund (NLTF) funds are allocated first to the highest priority activities in the NLTP.

 

  • Allocation of R, C and N funds

    R funds

    Any remaining regionally distributed (R) funds are allocated to the highest priority improvement projects in each region until the funds are fully allocated. Collection of R funds ceased on 31 March 2015. Under the legacy R funding policy, projects with low strategic fit and/or effectiveness may be allocated R funds if they are of highest priority in the region. 

    R funds can be allocated to the following activity classes, including minor improvements:

    • state highway improvements
    • local road improvements
    • walking and cycling Improvements
    • public transport (infrastructure improvements only)
    • regional improvements.

    C funds

    Crown (C) funds appropriated prior to full hypothecation of the NLTF, and now included in the NLTF, are allocated to the highest priority activities pertinent to the specified purpose for which they were originally appropriated.

    N funds

    Remaining projects are allocated nationally distributed (N) funds in each activity class until the total allocation of funds to that activity class is fully provided. Waka Kotahi will decide the funding allocations to each activity class within the range defined by the Government Policy Statement on Land Transport.(external link)

    All continuous programmes are eligible for NLTF funding within the relevant activity class. The allocation of NLTF funds to continuous programmes will take account of the priority ranking when considering the distribution of available funds.

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Investment threshold

The priority order at which funding becomes fully allocated to an activity class is the investment threshold.

 

  • Investment thresholds for the 2018-21 NLTP

     

    Activity class

    Investment threshold – funding priority order

    State highway improvements (metropolitan areas, see Regional improvements activity class for list of areas)

    6

    State highway improvements (non-metropolitan areas)

    6

    Local road improvements

    6

    Public transport improvements

    6
    Walking & cycling improvements 6
    Regional improvements 6
    Transport planning 6

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Funding priority

Waka Kotahi categorises improvement activities under the funding priorities, based on their priority order.

 

  • Funding priorities

    Waka Kotahi categorises improvement activities under the following funding priorities, based on their priority order.

    Committed* Projects approved in a previous NLTP 
    Approved Projects approved within the current NLTP
    Probable Funding has not yet been approved for the activity but, based on its profile and the robust evidence provided in developing the NLTP, funding approval is likely for an application made in 2018–21, subject to funds being available
    Proposed Funding has not been approved for the activity in the 2018–21 NLTP. Based on its profile and the evidence provided in developing the NLTP, funding approval may be given when an application is made in 2018–21. Further evidence is required to confirm the assessment profile and provide confidence in the funding priority and availability of funds
    Not included in NLTP Projects which are below the funding threshold, have cash flow outside of the NLTP period, or have been excluded for eligibility reasons

    *Committed activities do not have to be prioritised because they have already been approved by Waka Kotahi.

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Crown appropriations outside of the NLTF

Crown appropriations outside the NLTF, such as the Accelerated Regional State Highway Programme, will be allocated to the specified activities or according to the allocation rules applicable to each appropriation.

 

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