City Rail Link Brief to Incoming Ministers Simeon Brown and Nicola Willis 24 November 2023

City Rail Link Brief to Incoming Ministers Simeon Brown and Nicola Willis 24 November 2023 1.0

Project History

Britomart Station was opened in downtown Auckland in 2003. With the relocation of Auckland’s CBD passenger rail station from the Strand to the better located Britomart station, there was an almost immediate 25% increase in passenger rail patronage.

A major upgrade of the core Auckland passenger network (Project DART) was carried out from 2006 2011. This upgrade, in addition to the better located CBD station and increased train frequency, saw passenger growth figures increase by 250% from 2005-2012.

train patronage (1000s/month) 1,000.0 800.0 600.0 400.0 200.0 -

The combination of line electrification and the provision of new rolling stock enabled modern electric commuter train services to commence in 2014. This resulted in a further increase in rail patronage from 2013-2019 (up 500% since 2005). Patronage since 2020 has been severely impacted by COVID-19 but it is recovering slowly now.

1

Consideration of the works required to convert the existing Britomart station from a terminating station to a through station started in 2003 shortly after it opened. Auckland Transport (AT) commenced work in 2010 on City Rail Link (CRL) route selection and options. Analysis showed that by converting Britomart into a through station and building a new rail line extending from Britomart through the CBD via Albert St to Mt Eden, the CRL would enable a substantial increase in rail capacity into the CBD. In 2012, AT identified the CRL route as the most important transport investment for Auckland and it commenced work on the CRL design. In 2014, the CRL project was consented.

Early work on CRL started in 2016 under the management of AT. This initial work was separated into two contract packages, C1 and C2. The reason that the work needed to commence in 2016 was to ensure that the planned CRL future route under the existing Downtown Shopping Centre and into Albert St could be constructed concurrently with the Commercial Bay Development which was about to commence construction at the same time. This early work was funded solely by Auckland Council.

In 2017, the Crown agreed to co-fund the whole CRL project on the condition that the project was taken out of the management of AT and was set up to be managed by a special purpose Schedule 4A (Public Finance Act) company called City Rail Link Ltd (CRLL) which would have two shareholders (Auckland Council 49% and the Crown 51%). CRLL would also have an independent Board answerable to those two shareholders.

As a result, in April 2017, CRLL was established and took over the project delivery responsibility from AT. CRLL is currently chaired by John Bridgman and has a further four board members: Russell Black, Brian Harrison, Anne Urlwin and Malcolm Gibson. Refer Appendix 1 for more details of the CRLL Board and Executive Management.

2.0

CRL scope and benefits

2

City Rail Link aerial perspective layout

Longitudinal route cross section

Network route map

3

As the diagrams show, CRL is an extension of the existing Auckland commuter rail network. It involves the conversion of Britomart station into a through station, the construction of three new stations; Te Waihorotiu, Karanga-a-Hape, Maungawhau which are connected by twin 3.4 km underground tunnels which run 70m uphill from the waterfront Britomart station to Maungawhau. Britomart station will be renamed to Waitematā on the opening of the CRL. One of the drivers for the CRL project is the need to improve the capacity of the rail network to carry a greater share of the public transport demand, as the Auckland CBD has almost reached the capacity for the number of buses that can deliver passengers into it during rush hours.

By changing the Britomart station into a through station and increasing the train capacity from 6-car trains to 9-car trains, the rail capacity for trains running into the CBD is increased from the current 14,000 passengers per peak hour (pph) to 27,000 pph in each direction which equals 54,000 pph total in both directions (the equivalent of 16 lanes of highway or 2 Auckland Harbour Bridges in capacity).

The CRL will double the number of people who live within a 30-minute train journey of the CBD. The CRL also significantly reduces the commute times from the West of Auckland by providing a direct route into the CBD rather than the current Newmarket interchange.

3.0

Contracting strategy

The initial contracting strategy was developed by AT and was heavily based on the approach taken by CrossRail in London. The strategy envisaged 13 separate construction packages tendered generally under lump sum fixed price (hard dollar) conditions of contract.

As CrossRail was to find out, this contracting strategy was flawed. There were too many contracts and interfaces to manage easily, and the NZ construction industry refused to accept the lump sum fixed price terms of contract for the largest contract package (C3 - main tunnels and stations package). This was demonstrated by Fletcher construction withdrawing from the C3 tender in early 2018 citing concerns around risk/form of contract.

To regain market interest, in 2018 the new Board of CRLL revised the contracting strategy and converted C3 into a project alliance contracting approach.

A project alliance is a form of project delivery where the client, designers and constructors form an informal joint venture and commit to working together in the best interests of the project. To direct the right “solution focused” behaviours, under the contract (called the Project Alliance Agreement) there are “no-blame” provisions and alliance participants give up their right to bring proceedings against each other (other than in certain, very limited, situations). The designers’ and constructors’ potential losses are limited to their overhead and profit margins with the client ultimately underwriting the project.

There is a gainshare/painshare regime to try to incentivise good performance.

C3 was retendered as a project alliance in late 2018 and awarded in 2019 to an international consortium called the Link Alliance. The Link Alliance is made of: Vinci Construction Grands Projects (Constructor France); Soletanche Bachy (Constructor - France); Downer (Constructor - Au/NZ); Aecom (Designer 4

USA); WSP (Designer - Canada); and Tonkin and Taylor (Designer - NZ). CRLL is also a member of the Link Alliance.

In late 2018 RCR Tomlinson went into liquidation and its C5/C7 contract was terminated. These works were then included in the C3 Alliance package as a negotiated variation to the Project Alliance Agreement in 2020.

Accordingly, the various contract packages are now as follows: Contract Name Downtown Shopping Centre C1 C2

C3/C5/C7

C6 C8

C9

4.0

Contract Description Underground tunnels from Downtown Shopping Centre to Waitemata Tunnels under Chief Post Office Commercial Bay / Lower Albert Street trenching and tunnelling Alliance Tunnels and Stations package including rail systems integration and testing and commissioning Stormwater line replacement in Mount Eden Wider network improvements

Start Date 2015

Status Complete – April 2019

July 2016

Complete – October 2021 Complete – October 2020

July 2017

Waitemata Station upgrades (agreed scope to be completed before opening).

2019

Underway – Contract Practical Completion Date November 2025

2017

Complete – August 2019

Commenced.

Henderson works still being planned and costed.

Multiple packages.

Commenced.

Underway – multiple completion dates.

Underway – multiple completion dates.

Time and cost

The initial budget estimate was $2.5bn in 2015, this was increased in 2016 to $3.4bn as the design progressed. This budget and the then 2023 completion date were highly optimistic and, in retrospect, the amounts for time and cost contingency were clearly inadequate. The AT project team, at that time, were under severe pressure to ensure that the overall cost was less than $3.5bn.

A comprehensive budget re-assessment carried out by CRLL in 2018 produced a new project cost of $4.419bn and a December 2024 Project Practical Completion date. This reassessment also included

5

increased scope to allow for an increase from the current 6-car configuration to 9-car train running, and significantly increased contingency allowances.

The Project was heavily impacted by COVID-19 from early 2020 through till mid-2022.

In March 2023, a major commercial negotiation with the Link Alliance to resolve all the commercial impacts of COVID-19 from 2020-2023 was concluded. There was also a request to fund additional scope which had eventuated primarily as a result of further knowledge being gained during construction works at Britomart about the very poor state of the existing Britomart Station Building.

These combined issues resulted in a revised Project Cost of $5.493bn and a 26 November 2025 Project Practical Completion date.

Since the successful resolution of the Link Alliance commercial claims, the performance on the project has improved significantly.

6

5.0

CRL benefits

The CRL project cost benefit analysis was recalculated after the March 2023 refunding and produced a BCR of 2.0.

7

6.0

Current status

The project is currently tracking to meet its March 2023 revised Project Cost of $5.493bn and its 26 November 2025 Project Practical Completion date: • • • • • • • • • • •

Heavy civil construction of the tunnels and stations is complete.

Station architectural and mechanical service fitout has commenced and is approximately 30% complete.

Rail systems installation has commenced.

Track and Overhead line installation is approximately 60% complete.

Station energisation will commence progressively from October 2023.

Rail Systems testing will commence in early 2024 and carry on until the end of 2024.

Simple train tests will commence in July 2024.

Dynamic train operations tests will begin in late 2024 early 2025.

Full scale trial train operations tests are due to commence March 2025.

Construction completion March 2025.

Practical Completion (and handover to AT/KiwiRail) 26 Nov 2025.

Te Waihorotiu station – architectural render

Oct 23 progress

Karanga-a-Hape station – architectural render

Oct 23 progress

Maungawhau station– architectural render

Oct 23 progress

8

7.0

Systems Integration, Testing and Commissioning

Experience on other major metro rail projects has indicated that the most complex part of the project is likely to be the successful operational integration of a wide number of sub systems which make up the operational railway. Therefore, the testing and commissioning phase of the rail systems is the area of greatest uncertainty at this point in time. This uncertainty is exacerbated by the fact that no-one has ever built an underground metro system in New Zealand.

To mitigate this risk, CRLL, Auckland Transport and KiwiRail are working towards forming an informal alliance to maximise the collective skills and experience of the three “client-side” organisations.

8.0

Health and Safety

The CRL Project has set itself the goal of being an industry exemplar and aims to positively improve the Health and Safety performance of the industry. CRL works very closely with WorkSafe in the pursuit of this goal. The project has developed several initiatives that are viewed as industry leading and which have never been adopted in New Zealand before.

9.0

Sustainability

CRLL is arguably the leading project in Australasia from a sustainability/social outcomes perspective. It has won several sustainability awards from industry bodies in New Zealand and Australia. It has achieved the highest sustainability rating from the Infrastructure Sustainability Council – the first construction project in New Zealand to do so.

Sustainability highlights include: •

97% of spoil diverted from landfill, 95% site waste recycled.

•

58 % reduction in operational water use.

•

26% saving in construction energy-related greenhouse emissions.

•

15% reduction in material emissions.

•

18,000t CO2emissions saved by the time the project is completed using fly-ash as a cement substitute.

10.0

Mana Whenua Forum

In 2012, CRL established a partnership with local Mana Whenua. The partnership was established to assist and guide the project ensuring appropriate Mana Whenua input occurred. This partnership is viewed as the leading model for such a partnership in the New Zealand construction industry and has been adopted on several other projects in the last few years.

9

11.0

Social outcomes

CRLL has set and met demanding goals for Māori and Pasifika businesses’ participation in the project. In addition to this, CRLL has developed a programme which aims to provide young people (predominantly Māori and Pasifika) with a pathway and the right training to enter the workforce. The programme takes a cohort of 6 youths each year, teaches them and trains them in core life skills to enable them to hold down a fulltime job. To date this programme has had a +90% success rate in placing these young people into full time employment.

CRLL, working through the Link Alliance, has achieved 5% of its total contract spend with Māori and Pasifika owned subcontractors and suppliers.

12.0

CRLL lifespan

CRLL is a single purpose/sunset company with a defined finite lifespan. Current planning is for resourcing to be progressively wound down from construction completion in March 2025 through to Practical Completion in November 2025 with a reduced cohort staying on to manage commercial / contractual matters and the 2-year defect liability period until late 2027.

13.0

Target Hardship Fund

In 2021, a Targeted Hardship Fund (THF) of $12m was set up by the Project Sponsors (Crown/Auckland Council) to provide targeted financial assistance to businesses suffering major and sustained CRL construction disruption resulting in genuine financial hardship from 1 February 2021. The level of assistance under the THF is based on rent and opex payable by the business and the level of disruption being experienced. As at the end of September 2023, the fund had paid out just over $6.2m to affected small/medium sized businesses.

10

Appendix 1 City Rail Link Ltd Board and Executive Board Chair John Bridgman John has over 35 years’ experience in engineering and project management roles across Australasia and Asia. Up until 2023 he was Chief Executive of Ōtākaro Ltd (now Rau Paenga Ltd), the Crown company responsible for the Crown’s contribution to the rebuilding of Christchurch following the 2011 earthquakes. Previously, he has held a variety of senior leadership roles at AECOM (including as Industry Director - Civil Infrastructure in Australia and as Managing Director of the New Zealand business), as well as governance roles on major infrastructure projects in New Zealand, Australia, Asia and the United Kingdom. John is a Director of Kāinga Ora – Homes and Communities and Waka Kotahi New Zealand Transport Agency, where he chairs their Investment and Delivery Committee.

John joined the CRL Ltd Board in January 2023.

Board members Russell Black Russell has 34 years delivery experience of underground railways in Hong Kong, Singapore, London, and China. He was Project Director for the London Jubilee Line Extension; and Projects Director for the Hong Kong Airport Railway and all subsequent MTR projects in Hong Kong and China until 2010. Since Russell's return to New Zealand he has provided strategic management advice on Australian rail projects. Russell is the Independent Chair of the Melbourne High Capacity Metro Train Project Control Group. He is a former EQC Commissioner, Northpower Ltd Director, Metro Trains Melbourne Pty Ltd Director, Sydney Metro Advisory and Assurance Boards’ member. He is an International Fellow of the Royal Academy of Engineers.

Malcolm Gibson Malcolm is a civil engineer with many years of experience in designing and building underground urban railways. He has spent over 30 years in Hong Kong working on the MTR network. In 2015, Malcolm relocated to Sydney as Technical Director for the Sydney Metro Northwest project, Australia’s first driverless metro system. This project was completed in May 2019. Malcolm was then involved in the extension of the Metro under Sydney Harbour and through the CBD, extending to the southwest part of Sydney. This extension project is currently under construction and Malcolm continues in his role as Technical Director. Malcolm’s career has seen him move away from civil engineering and into the systems engineering aspects of metros, which is an area of increasing complexity for high capacity and reliable metro networks worldwide.

Brian Harrison Brian has a legal background with extensive domestic and international experience advising corporates, financiers, multilaterals and Government bodies on major projects and infrastructure in a broad range of sectors.

11

Anne Urlwin Anne is a professional Director and chartered accountant with wide-ranging governance experience, including in the infrastructure and construction sectors. Her current roles include directorships of Precinct Properties New Zealand Ltd, Vector Limited, Ventia Services Group Limited and Infratil Limited.

Anne is a former Director of Chorus Ltd, Summerset Group Holdings Limited, Queenstown Airport Corporation Limited, Tilt Renewables Ltd and Steel & Tube Holdings Ltd and she is a former Chair of commercial construction group Naylor Love. Anne has served on several central and local Government entity boards.

Executive Team Dr Sean Sweeney - CEO Dr Sean Sweeney began work as the Chief Executive Officer of City Rail Link Ltd on 2 July 2018. After graduating in engineering from the University of Auckland, Sean spent seven years working on the development of Te Papa in Wellington before heading overseas to work in the USA and Europe and then settling in Australia in 1999.

In Australia, Sean earned a PhD in construction economics from the University of Melbourne whilst delivering a programme of major public infrastructure for the Victorian State Government. After this Sean ran a top tier Australian construction firm. In 2016, before returning to New Zealand, Sean established and implemented a $2.5bn prison construction programme for New South Wales.

Patrick Brockie – Steve Brunell – Wayne Cooney – Sumi Eratne – Emma Kurtovich – Kirsten Mayne Russell McMullan – Sandip Ranchhod – Victoria Thackwray –

Chief Financial Officer Programme Performance and Controls Director Testing and Commissioning Systems Integration Director Programme Delivery Director General Counsel and Company Secretary Head of People and Capability General Manager Assurance and Integration Owner Interface Manager General Manager Corporate Relations & Communications

12