Steve Sanderson: Airport company confident in its extension estimate

The view from Truby King Park, Melrose, with an extended airport runway.

The view from Truby King Park, Melrose, with an extended airport runway.

OPINION: There has been considerable discussion and debate in the past few weeks around Wellington Airport's proposed runway extension. We accept there are a wide variety of views on this project. That's unsurprising. We're passionate about the city we live, work and play in.

Certainly, when we began this process more than three years ago, we were under no illusions as to the complexity and challenges of the project. But from the outset, we and our partners Wellington City Council have firmly believed this is the right thing to do. A runway extension allowing long-haul connections is vital infrastructure the city, the greater Wellington region and indeed Central New Zealand needs.

As the proposal moves from a council process directly to the Environment Court, Greater Wellington Regional Council is required to report a summary of the issues and evaluate possible conditions to assist the court's understanding of the application.  This report is GWRC's individual view, and the court will evaluate the application in its entirety, as well as matters raised by submitters and evidence put before it in ultimately making its decision.

Wellington Airport says that when the construction contract is let for the runway extension, we can have 100 per cent ...

Wellington Airport says that when the construction contract is let for the runway extension, we can have 100 per cent certainty as to the cost, quality and time.

So it's important for readers to remember GWRC recommends it is open to the court to grant consent to the application, subject to some of the effects undergoing further analysis or applying additional mitigation. Naturally, we will consider these matters very carefully as we move toward the court hearing. The report concludes the proposed runway extension is likely to provide a significant economic benefit to the Wellington economy.

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It also states the proposal is consistent with the purpose of the Resource Management Act and is clear that although there are a number of adverse effects created by the project, these can be appropriately remedied or mitigated. 

We have worked hard to resolve, where feasible, any concerns and we're open to talking with all stakeholders and making further changes or fine-tuning the proposal wherever we can. We will also aim to address, where appropriate, the report's suggestion that there are some uncertainties and information gaps.

However, it's fair to say we do believe there are some parts of the  council's reporting that require further scrutiny and there are areas where we do not agree with comments made or some of the conclusions reached. That is perhaps not surprising given the complexity of the application and the extensive assessment of environmental effects that was prepared to support it.

One figure, as outlined in The Dominion Post, speculates that the construction cost of the extension could be as much as $500 million. However, we're confident that we can demonstrate to Environment Court that the methodology behind that speculation is not robust. 

Cost estimating is an area where we spent considerable time and effort before committing to the consent process. The $300m construction cost calculated by engineers is already risk-adjusted and based on a conservative assumption of 110 per cent of market rates. The process also included extensive assessment of seabed to evaluate foundations, stability, and construction methodology. Our construction costs used in the benefit-cost analysis therefore already effectively assume what is called optimism bias. 

The council's reviewer has added further optimism bias on top of this, effectively ignoring our original conservative costing, and has not accounted for the risk-adjusted process that was applied to the estimating of cost. This has resulted in an arbitrary increase to the costs of another 22 per cent to $420m.

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The assessment by the council reviewer was not based on a best practice engineering analysis, nor did he consult the team that prepared these costings to ensure that he properly understood how they were derived.  Instead, he carried out a desk-top exercise. 

There will be a tender process for the extension and, as an experienced infrastructure developer, we expect there to be significant interest, ensuring the most competitive price possible. When the construction contract is let, we can have 100 per cent certainty as to the cost, quality and time.

Any contract let via tender, such as the recently concluded domestic terminal upgrade, will guarantee the delivery of a specified structure for a specified cost by a certain date.

We also remain confident in the robust cost-benefit analysis by Sapere Research Group, which shows a net economic benefit for the country of $2.3 billion with the runway extension allowing businesses better connectivity and making our educational institutions and tourism offering more accessible.

Construction will generally be within required noise guidelines, with the exception of limited night-time periods and Sundays for certain construction phases. We have also already reduced the number of truck movements in non-peak times.

A range of noise mitigation/insulation options have been proposed for affected dwellings on Moa Pt Road, including the option for homeowners to sell.

The operational noise effects of long-haul aircraft would remain within the day/night average limits set for the airport.

The runway extension's design means it is integrated with the surrounding landscape, including a promenade and shared pathway for cyclists and walkers along Moa Pt Road, enhancing Moa Point Beach, creating seating and viewing platforms and introducing habitat on the rock-armouring material placed around the edge of the reclamation.

The inshore effects on Lyall Bay are expected to be within the existing seasonal variations that occur and the runway will be resilient to the expected effects of sea level rise. Furthermore, we've consulted the surfing community over the effects and our mitigation measures, including a proposed wave-focusing structure.

However, it's up to the Environment Court to weigh up these matters, the mitigation proposed and the overall benefits of the project when it comes to consider the application.

What's abundantly clear is that there is considerable support for this proposal, with the business community, tertiary and education institutes, tourism organisations, the creative and film sector and individuals all submitting on the benefits they see for the region.

Steve Sanderson is chief executive of Wellington International Airport Ltd.


 - The Dominion Post


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