2015-18 NLTP Investment Assessment Framework - Overview

Introduction

This section provides information, processes and procedures to assist Approved Organisations and the Transport Agency in using the Transport Agency’s Investment Assessment Framework (IAF The NZTA framework which identifies the investment priorities and expectations for project assessment. The IAF interprets the strategic priorities and impacts of the government identified in the current Government Policy Statement on Land Transport Funding. ) to assess and prioritise programmes, plans, projects and other activities.

The framework and priorities will be used by the Transport Agency in developing the National Land Transport Programme Interrelated and complementary combination of activities that, when delivered in a coordinated manner, produce synergies – can span more than one work category and more than one activity class, e.g. a programme could include a road improvement and public transport improvement activities. (NLTP A National Land Transport Programme Interrelated and complementary combination of activities that, when delivered in a coordinated manner, produce synergies – can span more than one work category and more than one activity class, e.g. a programme could include a road improvement and public transport improvement activities. adopted by the NZTA under section 19 of the LTMA, as from time to time amended or varied ) and to make subsequent investment decisions.

Investment Assessment Framework

The Government Policy Statement on Land Transport (GPS A Government Policy Statement on Land Transport Funding issued under section 86 of the LTMA ) establishes the government investment strategy; defining the results desired from National Land Transport Fund (NLTF The fund established under section 10 of the LTMA ) investment. The IAF The NZTA framework which identifies the investment priorities and expectations for project assessment. The IAF interprets the strategic priorities and impacts of the government identified in the current Government Policy Statement on Land Transport Funding. is the Transport Agency’s first step in operationalising the GPS A Government Policy Statement on Land Transport Funding issued under section 86 of the LTMA to enable it to give effect to the GPS. The principles and high level criteria of the IAF have been approved by the Transport Agency Board The NZ Transport Agency Board. .

The IAF The NZTA framework which identifies the investment priorities and expectations for project assessment. The IAF interprets the strategic priorities and impacts of the government identified in the current Government Policy Statement on Land Transport Funding. uses three factors (strategic fit, effectiveness, and benefit and cost appraisal) to determine how well proposed activities meet the government’s investment strategy as defined in the GPS A Government Policy Statement on Land Transport Funding issued under section 86 of the LTMA .

The Transport Agency refers to a number of tools that support assessment. These relate to achieving GPS A Government Policy Statement on Land Transport Funding issued under section 86 of the LTMA results, as well as demonstrating good process and efficient allocation of resource or effort.

Value for money

When evaluating programmes and projects, the GPS A Government Policy Statement on Land Transport Funding issued under section 86 of the LTMA requires Approved Organisations and the Transport Agency to consider best value for money Selecting the right things to do, implementing them in the right way, at the right time and for the right price. .

Value for money has been defined in a variety of ways. In general, it means:

• selecting the right things to do (strategic fit),
• implementing them in the right way (effectiveness),
• at the right time and for the right price (benefit and cost appraisal).

This requires taking a long-term, whole of life view of the total value for money Selecting the right things to do, implementing them in the right way, at the right time and for the right price. attributable to a programme or activity, not just the initial capital cost. A whole-of-life assessment will consider:

• the social, environmental, cultural and economic impact of outputs Goods or services delivered by an activity or combination of activities.
• on-going maintenance and operation costs of the asset or service, and
• costs associated with disposal and renewal.

The Transport Agency uses the IAF The NZTA framework which identifies the investment priorities and expectations for project assessment. The IAF interprets the strategic priorities and impacts of the government identified in the current Government Policy Statement on Land Transport Funding. to assist it achieve value for money Selecting the right things to do, implementing them in the right way, at the right time and for the right price. in selecting the right investments, as it:

• assesses the contribution that programmes and activities make against the results sought by the GPS A Government Policy Statement on Land Transport Funding issued under section 86 of the LTMA and wider purpose of the LTMA The Land Transport Management Act 2003, as amended from time to time. ,
• provides a consistent means of comparing and prioritising land transport activities based on their relative contributions to results
• takes into account the strategic potential offering of proposed activities and considers the effectiveness and benefits and costs of solutions in a balanced way.
• when assessing an activity’s readiness to proceed, a number of criteria are considered that can impact on value for money Selecting the right things to do, implementing them in the right way, at the right time and for the right price. , including project management and delivery, consultation, peer review and audit, risk assessment (consent, designation, environment, land, engineering, contracting, etc) and management.
• the further components of enhancing value for money Selecting the right things to do, implementing them in the right way, at the right time and for the right price. (implementation in the right way for the right price) are addressed by the Transport Agency’s procurement policies and procedures.

Assessment

Assessment using the IAF The NZTA framework which identifies the investment priorities and expectations for project assessment. The IAF interprets the strategic priorities and impacts of the government identified in the current Government Policy Statement on Land Transport Funding. involves rating programmes, projects or other activities across three factors, being the:

• strategic fit of the problem, issue or opportunity identified through the business case and alignment with the GPS A Government Policy Statement on Land Transport Funding issued under section 86 of the LTMA results
• effectiveness of the proposed solution, consistency with business case, and how well it delivers on the results identified in the strategic fit assessment
• benefit and cost appraisal of the proposed solution, assessing the whole of life benefits and costs based on Economic Evaluation Manual procedures or comparative cost effectiveness and performance benchmarking Benchmarking is undertaken when the NZTA makes comparisons against similar regions and the national average. A lack of information supporting differences from regional and national averages may result in changes to the efficiency rating for public transport or maintenance programme or a requirement for a study as a condition of investment approval. Trends in these measures over time are used rather than just annual values. measures.

Strategic fit and Effectiveness are given a rating of

• L: low,
• M: medium, or
• H: high.

Benefit and cost appraisal is given a numeric (benefit cost ratio) or relative (comparative benchmarking Benchmarking is undertaken when the NZTA makes comparisons against similar regions and the national average. A lack of information supporting differences from regional and national averages may result in changes to the efficiency rating for public transport or maintenance programme or a requirement for a study as a condition of investment approval. Trends in these measures over time are used rather than just annual values. ) rating of

• No rating - BCR The NZTA uses the BCR as a measure of economic efficiency from a national perspective as defined in the NZTA's Economic Evaluation Manual. The ratio compares the benefits accruing to land transport users and the wider community from implementing a project or providing a service, with that project or service's whole of life costs. < 1
• 1* - insufficient information at the time of NLTP A National Land Transport Programme Interrelated and complementary combination of activities that, when delivered in a coordinated manner, produce synergies – can span more than one work category and more than one activity class, e.g. a programme could include a road improvement and public transport improvement activities. adopted by the NZTA under section 19 of the LTMA, as from time to time amended or varied inclusion,
• 1 - 2.9 for improvements (L: low for programmes),
• 3 - 4.9 for improvements (M: medium for programmes), or
• 5+ for improvements (H: high for programmes).

A priority order is assigned to activities using each of the three factors:

1. Strategic fit and Effectiveness, are gateways for activity development
2. Benefit and cost appraisal, determines final prioritisation

As a rule, only proposals assessed with at least a medium strategic fit and medium effectiveness will progress to prioritisation for inclusion in the NTLP. Proposals assessed as having low strategic fit remain at the strategic business case stage and proposals assessed as having low effectiveness do not progress beyond programme business case. 

Reviewing and updating the assessed profile

The assessment profile The three-part rating for an activity, rated as high, medium or low e.g. HMM, and representing the assessment for Strategic Fit, Effectiveness, and Benefit and Cost Appraisal respectively. assigned to individual activities must be reviewed at each stage of the activities development and updated as necessary to reflect the latest information and any changed circumstances.

An activity’s profile assessed at the time of NLTP A National Land Transport Programme Interrelated and complementary combination of activities that, when delivered in a coordinated manner, produce synergies – can span more than one work category and more than one activity class, e.g. a programme could include a road improvement and public transport improvement activities. adopted by the NZTA under section 19 of the LTMA, as from time to time amended or varied inclusion must be confirmed prior to any investment and funding decision. This may result in a reduced profile if the Transport Agency considers the evidence to be insufficient or that the risks around delivery of the activity’s outcomes are too high.

Use of the Transport Agency Investment Assessment Framework

The Transport Agency requires all Approved Organisations and Transport Agency groups to use the IAF The NZTA framework which identifies the investment priorities and expectations for project assessment. The IAF interprets the strategic priorities and impacts of the government identified in the current Government Policy Statement on Land Transport Funding. to assess activities and combinations of activities they propose for inclusion in the NLTP A National Land Transport Programme Interrelated and complementary combination of activities that, when delivered in a coordinated manner, produce synergies – can span more than one work category and more than one activity class, e.g. a programme could include a road improvement and public transport improvement activities. adopted by the NZTA under section 19 of the LTMA, as from time to time amended or varied .

Regional Transport Committees (RTCs) may choose to prioritise the activities in their Regional Land Transport Plans Plans describe the tactics to give effect to a strategy. They are specific in content, action oriented and outputs focussed, resulting in a tangible set of activities to be delivered within a clear timeframe. (RLTPs Regional land transport plans, prepared under Part 2 of the LTMA, as from time to time amended or varied. ) in any way they may determine. However, if RTCs use the IAF The NZTA framework which identifies the investment priorities and expectations for project assessment. The IAF interprets the strategic priorities and impacts of the government identified in the current Government Policy Statement on Land Transport Funding. to prioritise activities proposed for NLTF The fund established under section 10 of the LTMA funding in their RLTPs Regional land transport plans, prepared under Part 2 of the LTMA, as from time to time amended or varied. , this provides greater consistency with GPS A Government Policy Statement on Land Transport Funding issued under section 86 of the LTMA results.

RLTPs Regional land transport plans, prepared under Part 2 of the LTMA, as from time to time amended or varied. are also required to include all other regionally significant expenditure on land transport activities to be funded from sources other than the NLTF The fund established under section 10 of the LTMA . We encourage RTCs to apply the same assessment to these other activities to assist in the overall transparency and integrated planning For the NZTA, integrated planning means leading and working with central, regional and local government, private developers and other partners such as Kiwi Rail and port companies, to bring land use planning, and transport planning and investment together, to deliver an affordable Demonstrates that adequate funding to deliver the activity, or combination of activities, is available from identified sources, e.g. a funding plan has been identified. transport system that supports a growing economy, safe and vibrant communities and a healthy environment, now and in the future. It is an approach we follow to deliver on the outcomes we seek. of all land transport activity.