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Introduction

Benefit realisation assesses whether the expected benefits of an activity/programme/package are being achieved at their expected cost. In the future this will involve reviewing the funded activity/programme/package at different stages of their lifecycle from planning and design through construction and implementation.

The Transport Agency's benefit realisation assessment has two parts:

  • benefit realisation reviews
  • performance measures.

 

Benefit realisation reviews 

Benefit realisation reviews include a review of the performance measures for an activity/programme/package. As part of this, the actual benefits achieved are reviewed against investment performance targets and pre-implementation baseline performance.

For further information about benefit realisation reviews, see Benefit realisation reviews.

Performance measures

The Transport Agency expects that approved organisations and the Transport Agency (state highways) will monitor the impacts of their land transport investments. This is good business practice and an important part of the delivery of any project.

To make measuring investment performance easier, the Transport Agency has developed a framework for investment performance measurement. This includes a range of performance measures. Appropriate measures are selected by approved organisations and the Transport Agency (state highways), and agreed with the Transport Agency.

 

Frequently asked questions about the requirement for performance measures

 

  • What is the requirement about?

    Approved organisations and the Transport Agency (state highways) need to provide performance measures for:

    • road improvement activities with a total cost of $10m or more
    • public transport improvement activities with a total cost of $4m or more
    • walking and cycling improvement activities with a total cost of $4m or more
    • all activities with funding contribution from the Urban Cycleways Fund (UCF).

    This information is mandatory in order to receive funding approval from the Transport Agency.

    For new activities/programmes/packages under the above thresholds, the Transport Agency has the option of selecting specific activities/programmes/packages for monitoring. In this case, the affected approved organisation or NZ Transport Agency (state highways) will then be asked to provide the performance measures (if they have not already done this).

    In future, a 10% sample of further activities/programmes/packages will be selected by Transport Agency auditors. Approved organisations and NZ Transport Agency (state highways) will need to complete monitoring requirements for these activities.

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  • Why is it important to measure investment performance?

    There are a number of benefits to be gained for approved organisations, the Transport Agency (state highways) and the Transport Agency:

    • Better investment decision making will provide valuable information on the effectiveness of the types of interventions we invest in and test the validity of the assumptions in the Economic evaluation manual.
    • More useful reporting – in time, the feedback on activities/programmes/packages will be reported, and this may lead to changes in assumptions included in the Economic evaluation manual (based on actual performance).
    • Shared learning – case studies can be used to showcase the benefits for all.
    • Improved network optimisation will allow for greater recognition of the opportunity cost of different types of investment. This will give approved organisations, NZ Transport Agency (state highways) and the Transport Agency greater confidence in certain solutions, and may allow such projects to be fast-tracked.
    • A formal process for best practice – including performance measures as part of the approval process will create discipline to ensure completion of the benefits realisation stage, which is part of best practice project management.
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  • How will the Transport Agency use this investment performance information?

    This information will allow the Transport Agency to:

    • track themes and inform decision making
    • better target benefit realisation reviews
    • validate assumptions in the Economic evaluation manual
    • share learnings with approved organisations and NZ Transport Agency (state highways).

     It will also mean that future audits or reviews can focus more on validation and will allow deeper investigation of outliers (good and poor).

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  • How does this requirement affect approved organisations and the Transport Agency (state highways)?

    Aside from the mandatory requirement to provide performance measures for new initiatives that fit the above criteria, the impact should be minimal.

    Approved organisations and the Transport Agency (state highways) using the business case approach will have been through a ‘benefits mapping’ exercise to determine the benefits that an activity is expected to deliver. Creating a benefit–cost ratio (BCR) will entail measurement and estimation of some key factors. The required performance measures are aligned with these same key factors. Approved organisations and NZ Transport Agency (state highways) that use best practice will already be completing benefit realisation reviews for their projects, for accountability purposes and for their own education.

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  • Since when has this requirement been in effect?

    The requirements have been in effect for funding approvals since 1 July 2012.

     Initially only applying to investments over or equal to $10m, for the 2015–18 NLTP the threshold for public transport, walking and cycling was lowered to $4m, and the requirement extended to include all activities with Urban Cycleways Fund contribution.

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  • Why did the Transport Agency introduce this requirement?

    The main reasons the Transport Agency requires this additional information are to:

    • help demonstrate that we are achieving value for money with land transport investments
    • enable us to learn from our investments and apply what we learn to future investments
    • align our investment review process with the Transport Agency’s business case approach
    • facilitate more efficient and effective post-implementation reviews by providing more comprehensive performance/benefits information.

     

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