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Rising costs dampen value of SH2 project

New data obtained through an Official Information Act request shows a significant drop in the expected benefit to cost ratio [BCR] of Waka Kotahi’s SH2 safety improvement project between Masterton and Carterton.

Due to “a number of factors, including design changes, inflation and cost escalation, the final cost of the project increased from that calculated in the 2019 business case”, Waka Kotahi national infrastructure manager Mark Kinvig said in the OIA response.

Waka Kotahi spent $2.5 million on the project before contractors physically started work in August 2022.

Waka Kotahi had spent $23.9 million on the project’s physical implementation as of August 31 this year, bringing the running tally to $26.4 million.

The final cost won’t be known until after the project’s completion, which is currently scheduled for December 14.

A BCR is an indicator that summarises the overall value for money of a project.

In the case of the SH2 safety project between Masterton and Carterton, Waka Kotahi assessed the cost of the project against things like the social cost of road deaths and serious injury [DSI] and travel times.

The Wairarapa Times-Age previously reported that the BCR had been calculated at 1.2 – or delivering $1.20 worth of benefits for every $1 of spending – but the new data shows that in 2019 the expected BCR was actually between 2.2 and 2.8.

In other words, the value of benefits for every dollar spent was originally calculated as being $2.20 to $2.80.

The option chosen for the project was the second most expensive of the options outlined in the draft single-stage detailed business case from 2019, with the expectation it would deliver 60 per cent DSI saving on the mid-block and 64 per cent for the intersections – meaning that the safety measures being implemented are anticipated to result in a significant reduction in death and serious injury.

“The option has an expected BCR of 2.2 to 2.8 given the significant safety improvements as well as the travel time savings through improving the access to the corridor,” the 2019 report said.

The other three options outlined in the report had expected BCRs of 0 to 0.4, 2.4 to 3, and 1.8 to 2.4.

All four options in the report included the installation of a median barrier between Norfolk Rd to East Taratahi Rd and Wiltons Rd to Chester Rd.

Reducing the speed limit to 80kmh at the Cornwall and Norfolk Rd intersection and at the mid-block between Chester Rd and Carterton to 50kmh was also included in each of the four options.

Kinvig has previously said the speed limit was reduced to 80kmh in an effort to stop people from dying or being seriously injured if they crashed.

“Each death and serious injury on our roads has a devastating and wide-reaching impact,” Kinvig said.

The transport agency conducted community consultations on the safety project and speed review in 2018 and 2021.

As previously reported, the 2021 consultation caused public controversy because – despite receiving feedback from 1300 members of the public and community organisations opposing much of the proposal – Waka Kotahi made no changes to it afterwards.

The majority of submitters supported the roundabouts but opposed the open highway speed limit reductions and the closing of passing lanes.

1 COMMENT

  1. What a joke 🙄 take away the razor fence and the clareville turning area and costs would be much less plus why do we need to truck down from Palmerston north the asphalt that’s a big cost 🤔. I think the road safety management need to treat drivers as drivers it’s overwhelming the so called safety measures in place.

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