Part 1: Introduction

1.1
In this Part, we describe:

• why we carried out our audit;
• our expectations of the New Zealand Transport Agency;
• how we carried out our audit; and
• what we did not audit.

Why we carried out our audit

1.2
The management of major infrastructure assets is a core area of interest for our Office and the state highway network (the network) is one of the country's most important assets. This audit is one of a series of performance audits that we are carrying out on infrastructure assets.

1.3
Almost 11,000 kilometres of state highway roads extend from the top of the North lsland to the bottom of the South Island. Although the network makes up only 11% of the country's total road length, it carries about half of the country's traffic each year. The network is valued at almost $29 billion, and the total cost of maintaining and operating¹ the network in 2009/10 was about $514 million.

1.4
Appendix 1 sets out information about the assets that make up the network. These include roads, structural assets such as bridges, tunnels, and minor structures (for example, small culverts, retaining walls, lighting, and traffic signals).

1.5
We carried out a performance audit to examine the effectiveness of the New Zealand Transport Agency (NZTA) in collecting information about the network and using it to plan for maintenance and renewal work. This report sets out the results of our audit.

1.6
This is the first of two reports that we intend to publish on the maintenance and renewal of the network. We intend to publish the results of our second performance audit in 2011. The second report will focus on how well NZTA is carrying out the maintenance and renewal work. We split our work across two audits because good information and planning is an important precursor to delivering effective maintenance and renewal work.

About the New Zealand Transport Agency

1.7
NZTA is responsible for maintaining, renewing, and operating the network. NZTA was set up in August 2008, bringing together the functions that were previously the responsibility of Transit New Zealand and Land Transport New Zealand. Appendix 2 sets out more details about NZTA's responsibilities and organisational structure.

1.8
NZTA's Board decides how funds from the National Land Transport Fund (NLTF) are allocated and invested for land transport activities. The NLTF funds the operation, maintenance, and renewal of the network.

1.9
The National Land Transport Programme (the Programme), which is determined by NZTA, sets out those transport activities that the NLTF will fund for the next three years. The Programme also includes activities that have been proposed by "approved organisations" such as local authorities and the Police. Because NZTA controls the NLTF funds and provides services from those funds, it is required to give the same level of scrutiny to the funding of its own activities in the Programme as it does to activities proposed by other organisations.

1.10
The 2009-12 Programme² outlines plans that represent one of the country's biggest infrastructure investments for several years. As well as allocating funding for the continuing maintenance, renewal, and operation of the network, the latest Programme outlines plans to advance work on the Government's "roads of national significance". These roads are parts of seven state highways, located around the country's largest urban centres, where major capital works will focus on moving people and freight between those urban centres more safely and efficiently. Planning for and carrying out the work on the "roads of national significance" is an important strategic priority for NZTA.

1.11
NZTA's Highways and Network Operations Group (the Group) is responsible for maintaining and operating the network. Area managers from the Group are based in NZTA's regional offices. The managers are responsible for preparing regional asset management plans, and for generally managing the network management consultants and contractors that NZTA engages to carry out maintenance and renewal work on the network.

About the consultants and contractors that the New Zealand Transport Agency engages

1.12
Consultants and contractors in 25 nationwide sub-networks – called "network management areas" (areas) – carry out the maintenance and renewal work on the network. NZTA manages these consultants and contractors through a range of different procurement models.

1.13
Network management consultants and contractors carry out the day-to-day management of the network, including annual and long-term works planning, information management, physical works contracts, and superficial inspections of structures on the network. Physical works contractors carry out a range of maintenance and renewal work. Nationwide, there is one network management consultant for each area, and numerous physical works contractors working for those network management consultants.

1.14
Regional bridge consultants, working throughout the country in nine regions, are specifically responsible for carrying out more detailed inspections of bridges and other structures on the network, and planning when and how components will be maintained or replaced.

Our expectations of the New Zealand Transport Agency

1.15
There are several aspects to managing infrastructure assets, including:

• maintenance – work that keeps an asset in good working order;
• renewal – work that replaces an asset that has reached the end of its life with a modern, equivalent asset;
• upgrades – providing a totally new asset, or replacing an existing asset with something better; and
• disposal – decommissioning and removing assets.

1.16
Maintenance and renewal activities need to be regarded as core "business as usual" if an infrastructure manager is to provide a consistent level of service over time. In our view, it is also important for the manager of a major infrastructural asset, such as NZTA, to have as complete and accurate information as practicable that is relevant and useful to understanding and managing the asset. Such information underpins effective planning about how the asset should be maintained and/or renewed.

Accurate and complete information

1.17
We expected NZTA to:

• have complete and accurate information about the network, including the demands placed on it (for example, by traffic volume), and the maintenance, renewal, and capital work carried out on it;
• use consultants and contractors who are appropriately trained to collect and maintain the information NZTA needs; and
• have appropriate quality assurance measures to ensure the completeness and accuracy of any information that is collected and stored.

Planning how the asset should be maintained and renewed

1.18
We expected NZTA to have:

• clear performance expectations and long-term objectives and priorities for maintenance and renewal work; and
• comprehensive long-term asset management and operational plans for maintenance and renewal work, underpinned by complete and accurate information that is clearly linked to the plans.

How we carried out our audit

1.19
We examined relevant documents, plans, and reports and spoke to NZTA staff, including:

• national office staff and managers from the Group; and
• other Group staff, and the network management consultants, physical works contractors, and regional bridge consultants responsible for four areas – Northland, Auckland Motorway, Wellington, and Southland – and Auckland Harbour Bridge (which, for our audit, we classed as equivalent to an area).

1.20
During our audit, we examined NZTA's planning for maintenance and renewal work for these areas. We chose these five areas because they are managed through a range of contracting models and differ in many of the major factors influencing maintenance and renewal work (such as climate, topography, and traffic volumes). We included Auckland Harbour Bridge because it is one of the most significant structures on the network (both in terms of its size and risk), and because there is a separate management contract specifically for its maintenance.

1.21
Figure 1 provides an overview of the five areas we focused on during the audit. It shows that Auckland Harbour Bridge is different in many respects from the other areas that we looked at. Where relevant in this report, we refer to Auckland Harbour Bridge separately from the other four areas.

Figure 1
Overview of the five areas that we focused on during our audit

1.22
For each area, we examined how complete the information was for a sample of network assets from NZTA's two major asset inventory databases: the Road Assessment and Maintenance Management (RAMM) database and the Bridge Data System (BDS) database. Appendix 3 lists the asset information that we checked, with a particular focus on the completeness of that information.

1.23
We also examined maintenance and renewal activity reporting, the information provided about capital works, training and certifying of consultants and contractors in asset information, quality assurance processes, and asset validation checks carried out by consultants and contractors.

What we did not audit

1.24
We did not audit:

• the carrying out of maintenance and renewal work on the network (we will examine this in our second performance audit);
• the appropriateness of the level of funding for network maintenance and renewal;
• how NZTA manages and maintains Crown-owned property held for future capital infrastructure projects;
• new and improved capital infrastructure or upgrade work, or disposals of assets on the network; or
• the maintaining, renewing, and funding of local roads managed by local authorities.

1: "Maintenance and operations" work includes road maintenance and operations, road renewals, property management, preventative maintenance, and emergency work.

2: New Zealand Transport Agency (2009), National Land Transport Programme 2009-2012, Wellington.