2017 WISHLIST INFRASTRUCTURE NEW ZEALAND'S - AI IN CONSTRUCTION
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YEARBOOK 2017 • VOLUME 7 NO 1 INFRASTRUCTURE NEW ZEALAND'S 2017 WISHLIST PROPERTYANDBUILD.COM AI IN CONSTRUCTION INFRASTRUCTUREBUILD.COM Benefits and implications ROUGH RIDE AHEAD FOR PETROL POWER Vehicle revolution changing fuel mix
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TOTAL PACKAGE: a fully integrated planning, governance, funding, regulation, delivery and resource management system more responsive to change is needed, says Infrastructure New Zealand CEO Stephen Selwood FIRST WORD New Zealand’s infrastructure priorities for 2017 Responding to Auckland’s growth challenge and fixing planning legislation and local government funding and structures are the top infrastructure priorities for New Zealand in 2017, says Infrastructure New Zealand CEO Stephen Selwood “Congestion in Auckland is Selwood says the East West Link government’s ability to deliver the disproportionate to the city’s is essential to enabling movement infrastructure needed to support size and is rapidly deteriorating,” between State Highways 1 and “A first principles regional development and growth. he notes. “Of greatest concern, 20 and fixing congested access review of our “A freshly elected parliament in travel times along the State into and out of Auckland’s premier 2017 provides an opportunity to governance, funding Highway 1 motorway corridor industrial zone. undertake a first principles review have increased by 30 per cent in “When the Waterview Connec- and institutional of our infrastructure and local gov- just the last three years and are tion comes on early next year, it structures should ernment, planning, governance and projected to get much worse." will be vital for resilience and effi- be a priority for funding arrangements nationwide,” Earlier this year Infrastructure ciency of the network that traffic the newly elected Selwood maintains. New Zealand produced a video of can move between the two key He believes what’s needed the already unacceptable state corridors as easily as possible,” government in 2017” is a “fully integrated planning, of congestion. he insists. governance, funding, regulation, “Major works underway on “But we mustn’t forget that delivery, and resource manage- the Central Rail Link and motor- efforts to deliver on Auckland’s ment system that is much more ways must continue at pace and transport priorities can only be responsive to change”, which will the next tranche of projects to successful if we have an aligned “Infrastructure New Zealand drive regional social and economic deal with 50,000 more people growth plan which focuses favours capturing value created by development, improve environ- per annum brought to market,” development in areas where the public investment in infrastructure mental outcomes and strengthen he maintains. transport system can accommo- and putting tolling in place to both local democracy and community Chief among these is the East date it. raise funds and manage demand,” engagement. West Link. “The Onehunga Penrose Guest speaker at Infrastruc- Selwood says. “These are among “This will require much more than manufacturing and industrial zone ture New Zealand’s Annual options that need to be explored constant tinkering with existing employs approximately 68,000 General Meeting, Deputy Mayor sooner rather than later.” legislative, governance and fund- people and contributes $4.6 billion Bill Cashmore, highlighted the Beyond Auckland, he believes ing systems,” Selwood admits. a year to New Zealand’s economy, financial constraints facing the “fragmented and unnecessarily “A first principles review of our but the current transport city and how these are impacting complex governance structures, governance, funding and insti- connections into and through the ability to fund the transport complicated and disintegrated tutional structures should be the area are either incomplete or investment needed to support planning laws and insufficient a priority for the newly elected highly congested.” Auckland’s growth. funding” are frustrating local government in 2017.” INFRASTRUCTUREBUILD.COM YEARBOOK 2017 3
Autonomous Vehicles pg 9 Cover stories Security First Word – The Auckland challenge, The vexing question of managing risk Check out the following CONTENTS planning legislation and local in a local government environment government funding top priorities for thrown into stark relief by the Best of the Best 2017 3 Kaikoura quake 24-25 AsiaPacific Infrastructure On the surface 2016 showed articles of 2016 at significant steps in infrastructure but Transport infrastructurebuild.com dig a little deeper and a year of much Autonomous vehicles are a future fact less progress emerges – Stephen of life but how they are used is the key Cities: Nelson Street Cycleway Selwood Infrastructure NZ 22-23 to their success or failure – Praveen Communication: Local Thakur KPMG 6-8 telecommunications world-class Energy Electric Vehicles may become popular Construction: Isaac Theatre rebuild project Natural gas and zero-carbon fuels are much faster than expected fuel Energy: Petroleum expected to satify 60 per cent of the distributor Z has produced a report on Conference report rise in global energy demand by 2035 – the issue 9-12 Environment: Urgent Wood Mckenzie 13 action needed to keep Water the temperature down Management Hawkes Bay District Council sets the Local government: Pipeline forecasts will drive better standard for efficient and economic Evolution or revolution procurement planning for clients and water supply for small towns 19-20 Training & Management: suppliers – Caroline Boot Plan A & Tips and tricks to avoid Kaikoura quake a sharp reminder of the tender template traps Clever Buying 14-17 need for greater pipeline resilience Transport: Electric vehicles 20-21 Water: Getting and Bayer spend $3 million on new water keeping it clean treatment station 21 Editor Art Director Managing partner Printed by Subscriptions Geoff Picken Lewis Hurst Phil Pilbrow Crucial Colour Digital editions free to 021 2 507 559 lewis@hcreative.co.nz 027 564 7778, 09 489 8663 24 Fairfax Avenue, Penrose, qualified readers. geoff@infrastructurebuild.com 021 14 66 404 phil@infrastructurebuild.com Auckland +64 9 589 1550 Annual subscription print edition Associate Editor Web development Publisher Published by $39 Overseas rates – see online Steve Best Neo Chen Mike Bishara Media Solutions Ltd 027 510 0241 neosync@icloud.com 027 564 7779 3c, 12 Tamariki Ave, Orewa 0931 www.infrastructurebuild.com mike@infrastructurebuild.com PO Box 503, Whangaparoa 0943 09 444 5140, 09 489 8663 www.propertyandbuild.com 4 YEARBOOK 2017 INFRASTRUCTUREBUILD.COM
Future cities pg 40 CONTENTS Cover Story Construction Property The need to have an established The potential efficiencies of new Corporates reap benefits of shared workplace recovery programme technologies could lead to further office space paying for what they need is greater than ever in the face of growth for a booming construction and only when they need it – JLL 28-29 unpredictable natural disaster and sector – Brian Clayton & Bruce Flexibility and global connectivity drive terrorist attacks – Regus 27-28 McClintock Chapman Tripp 32-33 office leasing solutions – Regus 29-30 Cities Engineering Whatever happened to New Zealand’s great rock venues – Bayleys Realty Legislation, planning and funding for Government restoring Kaikoura coastal Group45-46 infrastructure is needed to encourage route and Wellington buildings subject world class property development – to new targeted checks for public Connal Townsend Property Council NZ safety – IPENZ SESOC NZSEE 38-39 Relocation 40-41 Having the right building in the right Megacities, innovator and observer Local Government location is part of the puzzle but putting a deal together than works for cities of C40 rise to the Paris Review of 2016 shows the regulatory both parties makes the difference Agreement challenge to ensure and legislative burden on local – PFI 36-37 sustainable cities and economic government imposes unnecessary growth – Arup & C40 Group 42-44 costs on local communities and new national council confirmed – Lawrence Compliance & legal Yule Local Government NZ 34-36 Industry insured losses from earthquakes may reach $5.3 billion – Air Worldwide 38 Supporters Autonomous Vehicles Asia������������ 7 Iplex Pipelines������������������������������������26 Procurement & Contract Street Lighting Chapman Tripp ����������������������������������31 Kliptank ������������������������������������������������19 Management Summit ��������������������16 Conference 2017������������������������������ 8 Clever Buying��������������������������������������17 New Zealand Red Cross����������������47 Quest Apartment Hotels��������������48 Sub Surface Detection������������������25 DiveCo��������������������������������������������������21 PFI ����������������������������������������������������������37 Regus�������������������������������������������� 29-30 Thrifty Car Rental������������������������������12 Infrastructure New Zealand ���������� 2 Plan A����������������������������������������������������15 Skyscrapers Asia Summit������������39 www.infrastructurebuild.com www.propertyandbuild.com Free access to searchable archives in key categories such as Local Government, Construction, Cities, Energy, Environment, Transport, Water, Communication, Property Development, Investment & Policy, Training & Management, Technology and Innovation. Free online access to daily news features, case studies and events. Original material may be reproduced with permission and acknowledgement. mike@infrastructurebuild.com ISSN 2324-3163 (Print) ISSN 2324-3171 (Online) PROPERTYANDBUILD.COM YEARBOOK 2017 5
Road to nowhere or nirvana? Autonomous electric vehicles are no longer a science fiction and cities such as Auckland have two choices, according to Praveen Thakur TRANSPORT Two divergent futures await within 10-15 years when Scenario one: A recipe for gridlock autonomous electric vehicles The introduction of autonomous to use cars. This will lead to an In the future, with rooftop solar become the primary form of vehicles with a continuation of the increase in the number of and battery storage the cost city transport: current norm of private car own- trips taken. of running electric vehicles will • a scenario with privately ership is expected to significantly reduce even further. owned autonomous vehicles worsen congestion. Longer car trips would significantly exacerbate KPMG analysis of this scenario Today, long driving trips are More car travel in inner areas congestion in our cities estimated a 29 per cent increase associated with fatigue, boredom Today, the cost and hassle of park- • in contrast, the introduction in average trip time and 23 per and frustration. With autonomous ing is a significant disincentive to of autonomous ride-sourcing cent increase in person kilometres vehicles, people will be able to driving to inner city locations in our has the potential to ease travelled in car. sleep, read, work, watch movies or major cities. the burden of congestion. This will lead to a significant television or relax as they travel. With autonomous vehicles, this KPMG utilised its proprietary increase in demand for road infra- As a result, people will accept disincentive no longer exists. This Land Use and Transport Interac- structure and significantly worsen longer travel times, particularly will mean more road congestion tion (LUTI) model and applied it the level of congestion. on freeways where the ride will be in inner areas at the expense of to Melbourne as a case study of The reason for this is simple: smooth and comfortable. public transport and active modes. the urban form/spatial impacts of autonomous electric vehicles will Lower vehicle operating costs An autonomous vehicle will drop self-driving autonomous vehicles. make car travel cheaper, easier will further encourage long- you exactly at your destination, The analysis considered and more convenient, which will distance travel. Electric vehicles saving time to find a parking spot multiple scenarios related to lead to more and longer car trips, are far cheaper to run and maintain and walk to the destination. autonomous vehicles on a and more car travel. than petrol vehicles. The vehicle will drive to a weekday morning peak period in Even today, running an electric cheaper parking area, or even 2046 and compared them to a More car trips vehicle in Australia is estimated better, service fare-paying business-as-usual scenario. Today, only adults with a valid to be 56 per cent cheaper than a passengers, earning money for the A scenario with private driver license and access to a petrol vehicle. vehicle owner. autonomous vehicles showed car can operate vehicles. Others an increase in urban sprawl, must rely on lifts from family and while a scenario with mass friends, public transport, walking “Autonomous ride sourcing will contribute take-up of autonomous ride and cycling. sourcing showed an increase in With autonomous electric to a seven per cent reduction in average trip population density in inner and vehicles, this barrier to driving will time and nine per cent reduction in person middle-ring areas. no longer exist. Anyone will be able kilometres travelled by car” 6 YEARBOOK 2017 INFRASTRUCTUREBUILD.COM
Scenario two: A better way to move The introduction of autonomous use these services for select enough to ensure the wait times Autonomous electric vehicles provides an alter- trips, relying on the private car for are minimal, particularly in the advantages native to car ownership. most daily travel. inner city. In this scenario, people would Private car ownership involves For residents who choose rely on autonomous ride-sourcing high fixed costs such as financing, to forego car ownership in the Autonomous vehicles services for daily travel. registration and insurance, for an autonomous era, many will choose offer several major benefits These services will be like asset which is idle 96 per cent of to live in the inner suburbs to as they: today’s Uber and taxi services, but the time, rapidly depreciates in optimise autonomous ride-sourc- • communicate with each with no driver, and a much lower value and takes up valuable land ing fares. price tag. for parking. These residents will use a mix other and/or the road Using Melbourne as a case With car sharing and ride of high-quality public transport, infrastructure itself, study, KPMG analysis shows that sourcing, these fixed costs are walking, cycling and autonomous maximising vehicle autonomous ride sourcing will distributed among a large pool ride-sourcing services. speed and flow contribute to a seven per cent of users. • markedly increase the reduction in average trip time and Currently, these advantages are A smaller, more capacity and speed of nine per cent reduction in person offset by the cost of a driver (ride productive fleet long-distance freeway kilometres travelled by car. sourcing), or the inconvenience of Car ownership involves high travel, catalysing a shift This would lower the demand finding, booking and walking to a upfront costs such as financing, in how and where people for road infrastructure, ease the vehicle (car sharing). In the auton- registration, maintenance and burden of congestion in our cities omous era, these disadvantages insurance. live and how they move and make our transport systems will no longer exist. With autonomous ride sourcing, • make long-distance travel more efficient and productive. Analysis undertaken by KPMG these costs will be shared among easier, freeing drivers from suggests that an autonomous a large pool of users. As a result, having to concentrate on Inner city densification TRANSPORT ride-sourcing service would cost the vehicle fleet would be much the road for long periods The autonomous era will also $8-10 per half hour of travel. smaller and in use for most of its and encouraging some to encourage inner and middle-ring This implies that a typical Mel- economic life. In contrast, private- accept longer travel times city densification. burnian’s annual cost of vehicle ly owned cars are idle 96 per cent • are also much cheaper to Ride-sourcing services (such as travel would reduce from $11,000 of their life on average Uber and taxis) and car-sharing to $6,000-$7,000, an option that These efficiencies will reduce operate and maintain than services (such as GoGet and Flexi- will appeal to many. the cost of daily transport for con- petrol and diesel vehicles, car) have enjoyed rapid growth in If large numbers of residents sumers. KPMG estimated that an increasing the affordability our cities. use autonomous ride-sourcing autonomous riding service would of long-distance travel. Despite this, most people only services, the fleet would be large cost $8-10 per half hour of travel Register before Jan 27th and save SG$300 Autonomous Vehicles ASIA 2017 Main Conference: Pre-Conference Post-Conference Venue: Amara 21 - 22 February 2017 Workshop: Workshop & Site Tour: Sanctuary Resort 20 February 2017 23 February 2017 Sentosa, Singapore STRATEGIES AND REGULATORY ROADMAP FOR IMPLEMENTING AUTONOMOUS VEHICLES IN ASIA EXPERT SPEAKERS Peter Damen Dr. Bernhard Morys Seo-ho Choi Chair of Executive Head of Driver Assistance General Manager, Steering Committee & Chassis System Human Factors & Devices Australian Driverless Daimler Greater China Ltd. Research Team Hyundai Vehicle Initiative Motor Company James Williams Changgi Lee Niels de Boer Manager Policy Senior Deputy Director Programme Director, – Compliance & Technology Ministry of Land, Infrastructure Centre of Excellence for National Transport and Transport, Republic of Testing and Research of Commission, Australia Korea Autonomous Vehicles - NTU (Cetran) KEY TOPICS DISCUSSED 1 4 Legislation and Regulatory Latest Case Studies on the Media Partners: Roadmap for Asia Autonomous Commercialization of AVs Vehicles (AVs) 2 5 Evaluating Infrastructure Enhancing Public Readiness to Enable AV Acceptance of AVs Implementation on Public Roads Researched & Developed by: 3 Ensuring Risk Management, Safety and Reliability for AVs T: +65 6722 9388 | F: +65 6722 9397 | E: enquiry@iqpc.com.sg | W: www.autonomousvehiclesasia.com
compared to $34 for an equivalent service with a driver. How should we respond? At this price, the annual cost of Governments must begin taking • provide affordable housing in vehicles on land use – this can be car travel for a typical Melbourne action now to safeguard the the inner and middle suburbs achieved with land use trans- household would reduce from liveability and productivity of our to encourage densification and port interaction (LUTI) models $11,000 to $6,000-$7,000. cities in the autonomous era. take-up of ride-sourcing services • consider autonomous electric KPMG recommends the • assess development plans to vehicles in our infrastructure More efficient use following actions: ensure new developments are planning and investment of road space • review existing planning consistent with the implica- decision-making processes When people make the decision to schemes and controls to tions of the autonomous era – this includes the take-up purchase a car, they commit to the ensure they support urban • invest in decision-making tools of autonomous ride-sourcing high upfront costs that come with consolidation that is appropriate for understanding the impact services and the implications for car ownership. from a societal perspective of autonomous and electric travel behaviour and land use Once those costs are incurred, • implement road pricing re- the additional perceived cost Average trip time by car, weekday morning peak, 2046 form as a matter of priority of each trip is low, estimated by to manage demand for car 15 KPMG at $2.10 per half hour of +29% travel, and as a policy lever city travel. to encourage ride sharing Autonomous ride sourcing has • encourage an eventual transition no upfront costs, saving the user from private ownership to ride Average time per trip (mins) thousands of dollars per year. sourcing and car sharing for However, the cost per trip is 10 daily travel, including promoting -7% higher than if the car was privately business models that provide owned, estimated at $8-$10. these services – governments Because each individual trip must also ensure high-qual- TRANSPORT costs more, people have greater ity alternatives to car travel incentive to walk, cycle or use 5 are available, including public public transport. This will lead to a transport, walking and cycling decrease in road congestion. • address regulatory hurdles It will also increase demand to the mass adoption of for modes that use space more autonomous vehicles. efficiently than cars and promote 0 Source: KPMG analysis public health, including public Business as usual Private autonomous Autonomous ride Praveen Thakur is a director transport, walking and cycling. vehicles sourcing at KPMG award-winning conference held in australia for the first time Don’t miss your chance to be part of Australia’s premier street lighting and smart controls conference. Sponsorship and trade booth opportunities are open now, but filling quickly. Registrations open 1 December, early bird discounts apply. 14 - 17 March 2017 Brisbane Convention & Exhibition Centre South Bank, Brisbane, Qld, Australia Smart Lighting for Smart Cities www.streetlightingconference.com.au S LP STRATEGIC LIGHTING PARTNERS
Gearing up for changing transport trends How fast are electric vehicles approaching national acceptance and what does it mean for New Zealand fuel companies? One major fuel distributor has been looking at the road ahead… Electric vehicles (EVs) may become popular much faster than previously anticipated and will constitute over 33 per cent of the country’s passenger and light commercial vehicle fleet by 2030, according to Z Energy. The company’s latest research report, Electric vehicles Making a positive contribution to New Zealand, believes it’s “inevitable” that local roads will see a lot more EVs – particularly Plug-in-Hybrid ENERGY Vehicles (PHEVs) that have both an electrically driven powertrain and an ICE or internal combustion engine (ICE); although Hybrid Electric Vehicles (HEVs) that aren’t powered by an external electricity source will also be a disruptive influence given their relative energy efficiency improvement over ICE vehicles. Developed using Business NZ Energy Council scenarios, Z’s report sees two scenarios for FAST GAME: an EV fast charger can fully charge a car in 10-25 minutes, making them ideally suited for areas such as airports and EV uptake: supermarkets where people park for a lengthy period • in a Kayak future, markets drive supply chain decisions and innovation, with consumers on the back of global technology fleet each year to 64,000 vehicles making informed decisions developments. in 2021 – equivalent to the Waka based on price and quality Combined with New Zealand’s The government see scenario for EV and PHEV uptake • in a Waka future, heightened commitment to a lower carbon EVs as one of the at 2021. environmental awareness emission economy and high The 2021 target may appear am- main pathways to a drives business, consumers and renewable electricity base, this bitious, but the company believes government to make decisions promotes exponential uptake. lower carbon future there are potentially other incen- in the national interest. Actual electric powertrain and to meeting tives in the pipeline such as fringe The research indicates the Waka vehicle fleet numbers for 2015 New Zealand's benefit tax (FBT), road tolling and scenario offers the most disrup- are tracking below the Waka international COP21 ACC levy exemptions. tive potential impact to existing scenario; however, Z views this as In addition, the government sees energy businesses. “insignificant” given that potential commitments EVs as one of the main pathways The number of vehicles in the exponential uptake commences to a lower carbon future and to light duty fleet increases materi- from 2020. meeting New Zealand’s interna- ally over the period to 2050 (12.1 In addition, the government’s EV tional COP21 commitments (the per cent CAGR), driven by wide incentive scheme targets a dou- Conference of Parties that ratified availability at economic prices bling of the combined EV and PHEV the UN Framework Convention on NZ passenger and light vehicle commercial fleet numbers (Waka scenario) TYPE 2015 (A) 2015 2020 2025 2030 2035 2040 2045 2050 HEV 14,980 15,000 100,000 485,000 815,000 985,000 985,000 865,000 770,000 PHEV 474 25,000 25,000 95,000 270,000 540,000 820,000 995,000 875,000 EV 450 10,000 15,000 90,000 205,000 320,000 500,000 775,000 1,110,000 TOTAL 15,904 50,000 140,000 670,000 1,290,000 1,845,000 2,305,000 2,635,000 2,755,000 % FLEET 0% 2% 4% 18% 34% 47% 57% 64% 66% INFRASTRUCTUREBUILD.COM YEARBOOK 2017 9
Climate Change in 1992 at the NZ transport energy demand scenarios – petrol (mlpa) Earth Summit in Rio de Janeiro). The increasing uptake of electric powertrain vehicles in the light 2015 (A) 2015 2020 2025 2030 2035 2040 2045 2050 vehicle fleet will, however, mate- Kayak 3,050 3,185 3,230 3,135 2,980 2,820 2,685 2,585 2,500 rially reduce demand for existing petroleum-based fuel – particular- Waka 3,050 2,870 2,845 2,450 1,975 1,530 1,200 1,190 1,180 ly petrol. EVs are substantially more ener- rK (cum) - 135 180 85 (70) (230) (365) (465) (550) gy efficient than ICE vehicles – an equivalent journey requires less rW (cum) - (180) (205) (600) (1,075) (1,520) (1,850) (1,860) (1,870) joules of energy input. Both the Kayak and Waka sce- rMP (cum) - (20) (10) (260) (570) (875) (1,105) (1,160) (1,210) narios show efficiency improve- ments in the heavy vehicle fleet are less dramatic, with electricity not assumed to have a significant penetration other than for trains NZ transport energy demand scenarios – diesel (mlpa) and buses. Petrol consumption for transport 2015 (A) 2015 2020 2025 2030 2035 2040 2045 2050 use over the period will be driven primarily by transformation in the Kayak 2,290 2,245 2,240 2,285 2,360 2,425 2,405 2,205 1,695 light vehicle fleet and reduction in Waka 2,290 2,205 2,150 2,125 2,115 2,080 1,950 1,655 1,085 personal car usage and/or owner- ship, ranging from 0.7 CAGR under rK (cum) - (45) (50) (5) 70 135 115 (85) (595) Kayak to 2.5 per cent under the ENERGY Waka scenario. rW (cum) - (85) (140) (165) (175) (210) (340) (635) (1,205) Diesel consumption for transport use will be driven by the transfor- rMP (cum) - (65) (95) (85) (53) (38) (113) (360) (900) mation in the light vehicle fleet and the reduction in personal car use and/or ownership, offset by an increasing need for heavy vehicle transport due to economic growth. Carbon price ($ per T CO2) Both hydrogen and biofuels become viable for heavy vehicle 2015 2020 2025 2030 2035 2040 2045 2050 transport from 2040, significantly Price carbon – Waka 21 37 48 60 75 90 102 115 reducing demand later in the peri- od and impacting diesel consump- Price carbon – Kayak 7 9 12 18 26 37 49 60 tion from (0.8) per cent CAGR under Kayak to (2.0) per cent CAGR under the Waka scenario. Several input assumptions underpin the EV uptake numbers, Battery cost curve (NZ$/kWh) representing signposts to monitor in determining what scenario could 2015 2020 2025 2030 2035 2040 2045 2050 eventuate. Battery cost curve – Waka 365 310 270 240 215 195 175 160 The price of carbon has risen from under $10 to around $18 per Battery cost curve – Kayak 330 270 235 210 195 180 170 160 T CO2, following the government’s May 2016 budget announcement on changes to the Emissions in 2015 estimated to be around tious cost estimates of $160 per Autonomous vehicles Trading Scheme (ETS) that will see $400 per kWh. kWh in the 2020s. Adoption of autonomous vehicles the phasing out of the one-for-two It’s not possible to determine a The difference in price between could reduce transportation subsidy by January 2019. completely reliable projection of a conventional ICE and an EV is pri- energy demand through lower light However, the $25 price cap future battery cost – though some marily due to the cost of batteries duty vehicle ownership and re- remains in place, meaning the manufacturers such as General – as lithium-ion battery technology duced vehicle kilometres travelled. impact of the ETS on the price Motors and Tesla have more ambi- advances and battery cost comes The intersection of EV of petrol is approximately 6.6cpl, down the price premium barrier to uptake with future acceptance and 7.7cpl for diesel – levels that consumers in purchasing EVs will of self-driving technology on their own are unlikely to drive also likely reduce. could unlock an evolution of mass adoption of alternative pow- Correlated with reducing battery transportation-as-a-service ertrains for transportation. cost trends is an increase in through car sharing. Regulation is a critical uncer- Both hydrogen battery energy density (kWh/ kg), EV technology is available today, tainty as to the future price of which in turn improves EV range but the development and accep- carbon and the uptake of EVs; and biofuels capability – a key consumer con- tance of autonomous vehicles will successive governments err become viable cern with EVs. could have a greater long-term towards a more light-handed or a for heavy vehicle Several other uncertainties could horizon impact. more interventionist regime for transport from stretch the boundaries of any future Car manufacturers such as promoting uptake? scenario, including autonomous Ford and Tesla have announced Both scenarios support a con- 2040, significantly vehicles, heavy fleet technology, EV plans for a future car-sharing tinuing trend of rapidly reducing reducing demand availability and the electricity and service built around their self- battery costs, with actual cost later in the period charging infrastructure. driving vehicles. 10 YEARBOOK 2017 INFRASTRUCTUREBUILD.COM
Electric vehicle scenarios PHEV scenarios Z Energy House View: Electric vehicles 1,300,000 1,300,000 11 1,200,000 1,200,000 1,100,000 1,100,000 1,000,000 1,000,000 900,000 900,000 Appendix B 800,000 800,000 No’s No’s 700,000 700,000 600,000 600,000 500,000 500,000 400,000 400,000 300,000 300,000 200,000 200,000 Charts for petroleum demand impact 100,000 100,000 0 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Year Source: BEC NZ 2050 Scenarios and MOT data Source: BEC NZ 2050 Scenarios and MOT data EV – Actual EV – Waka PHEV – Actual PHEV – Waka EV – Kayak EV – Range PHEV – Kayak PHEV – Range Transport fuel consumption scenarios – petrol Transport fuel consumption scenarios – diesel ENERGY HEV3,500 Scenarios 3,500 3,000 3,000 1,300,000 1,200,000 2,500 2,500 mlpa mlpa 1,100,000 1,000,000 2,000 2,000 900,000 EVERYDAY OCCURRENCE: charging an electric vehicle will soon be as familiar as 1,500 800,000 filing1,500 up at a petrol pump for a third of Kiwi drivers if Z Energy’s projections pan out No’s 700,000 1,000 600,000 1,000 ments to the goal of 20 million EV with its recent public announce- 500,000 cars by 2020. ment that “the future is electric” 500 400,000 500vehicle importers con- Motor – a new strategy to roll out more 300,000 sistently report that they could electric cars and add self-driving 0 0 200,000 respond quickly to increased features faster than their rivals. 100,0002010 2015 2020 2025 2030 2035 2040 2045 2050 demand if2010 New Zealand 2015 2020 sales of 2025 2030 Z believe 2035 it 2040 is “reasonable” 2045 to as- 2050 0 Year EVs take off. sume that growth in EV adoption in Year Source: BEC NZ2020 2050 Scenarios Under theSource: WakaBEC scenario NZ 2050 Scenarios andNew MOT Zealand’s key vehicle supply 2010 2015 2025 and MOT data 2030 2035 2040 2045 2050 data ~500,000 additional HEV, PHEV markets of Japan and Europe will Year or EV vehicles enter the light duty be sufficient to support exponen- Petrol Consumption Actual Petrol – Waka (ml) Diesel Consumption Actual Diesel – Waka (ml) vehicle fleet over the five-year tial demand growth. Petrol – Kayak Source: BEC NZ(ml) 2050 Scenarios andPetrol MOT data Consumption Range period fromDiesel – Kayak 2020 (ml) to 2025. Diesel Consumption However, Range the current rate of On average ~100,000 or 35 per turnover of the New Zealand light cent of new or used imports per duty vehicle fleet makes a more HEV – Actual HEV – Waka The opportunity isn’t limited to new and used vehicles imported annum would have electric pow- aggressive EV demand growth traditional car manufacturers, HEV –with Kayak into New Zealand Transport fuel consumption scenarios –Range HEV – in 2015. petrol ertrains – a significant rise from Transport fuel consumption scenarios a scenario than – Waka dieselseem implau- giants such as Google, Apple and Japan is a member of the total of ~3,000 vehicles in 2015. sible the company believes. Uber all3,400 prominent in this develop- Electric Vehicles Initiatives (EVI), Manufacturers’ 3,400 research and de- The volume and number of EV ment space. a multi-government policy forum velopment focus is now predom- models coming to market will 3,200 representing the majority of global 3,200 inantly electric powertrains, with increase significantly, making Heavy3,000 vehicle fleet EV car stock, which has a goal some manufacturers 3,000 intending to them cheaper and thus more technology of achieving 20 million EV cars stop any further internal combus- attractive to consumers by The uncertainty 2,800 is over what alter- by 2020. tion2,800 engine R&D by 2025. increasing the number of vehicle nate technology to fossil fuels will Japan currently has 16 per cent Leading Japanese manufactur- segments and brands. mlpa mlpa 2,600 2,600 prevail, and to what extent, in the of the global car stock of EVs at ers Toyota, Nissan, Honda, Suzuki, heavy vehicle 2,400 sector – trucking. 0.13 million, with a committed tar- Mazda and Mitsubishi all have 2,400 Can the electricity sector The impact of this uncertainty get to get to one million by 2020. expansive targets and plans to meet the demand? 2,200 will occur over a longer-term hori- The Japanese government 2,200 production capacity of EV increase New Zealand is one of the most zon than for plausible EV uptake in provides financial incentives for car models. EV-ready countries in the world, 2,000 2,000 the light vehicle fleet. EV cars, including purchase price Similarly, the main European with a high base of renewable 1,800 subsidies and tax exemptions. manufacturers 1,800 that supply electricity and the necessary Can new and used France, Germany, Italy, Nether- the New Zealand car market network infrastructure to support imports meet 13 demand? lands, Norway, Portugal, Spain, (Volkswagen, 13 BMW, Mercedes- PHEV uptake – if only because of 20 4 20 4 20 20 15 15 20 7 20 7 18 18 16 16 20 9 20 9 21 20 2 20 3 20 4 20 5 20 6 27 20 8 29 30 21 20 2 20 3 20 4 20 5 20 6 27 20 8 29 30 0 0 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Asia (primarily Japan) and Europe Sweden and the UK are also Benz, Audi and Renault) have all the suburban garages with an accounted for 77 per cent and 20 Year members of EVI, with most having consistent plans. Year ordinary three-pin socket. per cent of the record 285,000 announced aspirational commit- The most prominent is BMW, Although there is some uncer- Source: BEC NZ 2050 Scenarios and MBIE data Source: BEC NZ 2050 Scenarios and MBIE data INFRASTRUCTUREBUILD.COM YEARBOOK 2017 11
COMMON SIGHT: there are currently more than 100 EV fast- charging stations strategically located throughout the country, mainly in the main centres where traffic density is highest tainty over how smart charging This backbone could then could manage electricity distri- encourage further charging infra- bution flexibility, New Zealand is structure by other businesses, uniquely placed in having planning including airports, retailers, super- consent for enough wind farms, markets, tourist destinations and hydro and geothermal power sta- other places where people park tions to cover about a 25 per cent their vehicles. increase in demand for electricity. Auckland-based private compa- ny, Charge.Net.NZ is also rolling Will EV charging out a national network of fast- infrastructure support charging stations, with over 100 EV uptake? sites already in place. International trends show charging A fast charger can fully charge infrastructure availability is posi- a car in 10-25 minutes, but while tively correlated to growth in EVs. many public AC chargers are free The Electricity Networks Associ- a fast DC charger can cost up to ation [ENA] working group of lines $40,000 to install. companies along with Contact Z concludes that charging infra- Energy, Mercury and Drive Electric structure development is “relatively are looking at a coordinated low cost” and underway to support ENERGY approach to putting in place a ‘re- future EV uptake, thereby alleviating newables highway’ that provides consumer anxiety over short range public access to charging. and long charging times. The renewables highway would Whatever the scenario, whether potentially see a network of Waka or Kayak, the electric vehicle charging locations at key stopping looks destined to become a com- points and tourism locations along mon sight on New Zealand roads – State Highway 1, expanding to and within a very, very short period regional routes over time. of time. Thrifty backs a winner in road safety An online interactive driver training programme, Fleetcoach, picked up the Thrifty Car Rental sponsored Fleet Safety Product Award at the recent 2016 Backing Safety! Brake Australasian Fleet Safety Awards. The training programme coaches drivers through multimedia modules in skills such as hazard perception and situation awareness. Fleetcoach was created by Dr Robert Isler, who also won the Outstanding Com- mitment Award for his 25 years service at the forefront of road safety research. General Manager of Thrifty Rental Emma Gardiner joined Brake’s New Zealand Director Caroline Perry in congratulating the winning awards and highly com- mended entries in a range of areas Dr Isler’s research, and his knowledge of other research worldwide, was We value your safety when used to develop the programs and ensure they use the latest behavioural you’re behind the wheel, interventions. He pioneered work on a head-mounted eye-tracker, which showed that eye that’s why we’re proud movements control to a large degree how drivers move their steering wheels. charity partners of Brake. It also showed that effective eye-scanning behaviour and hazard perception skills can be trained in both laboratory and real driving situations. The research findings lead to the development of several interactive multime- dia training programs. He founded e-Drive in 2010, an online driver training program that focuses on visual search, situation awareness, hazard perception and risk management driving skills for all drivers. Fleetcoach was created through the need for a similar driving programme for at work drivers. There is also a risk assessment element, so that managers can identify wheth- er their drivers are low-risk or high-risk and require specific training modules on various topics such as speed and distractions. “We’re proud to sponsor the Fleet Safety Product Award,” Thrifty’s Emma Gardiner says. 12 YEARBOOK 2017 INFRASTRUCTUREBUILD.COM
Welcome to a low-carbon world The next global energy transition is already under way, posing risks for some of the world’s ENERGY largest energy companies says global natural resources analyst company Wood MacKenzie Natural gas and zero-carbon a price on carbon. “As costs for renewables and money on the table from the ma- fuels will satisfy at least 60 The vast majority of the majors’ energy storage continue to fall, jors’ fossil fuels business. But too per cent of the rise in global upstream operations are not ‘subscription’-type services could slowly, and they could miss their energy demand to 2035, and yet directly impacted, with most open up new low-carbon growth window of opportunity. under some scenarios renewable policies primarily focused on the markets. For example, electric “The biggest risk for oil and gas energy could grow nearly 500 per power and industrial sectors. car sharing.” companies is to do nothing, and be cent in the next 20 years. Coal Up to 50 per cent of majors’ pro- According to the study the global left exposed to investors making and oil demand could peak well duction could be hit with carbon major oil companies are under their own minds up. before 2035. costs over the next decade – but pressure to de-risk their existing “There is notably an emergence As demand for oil slows and en- only if the countries and regions business models and diversify into of three different strategies by ergy growth shifts to lower carbon that currently price carbon extend low-carbon energies. the major oil companies – decarbo- fuels, renewables will grow rapidly their policies to the extractives However, diversification into nise, capitalise or grow. across all regions. “The majors are testing different The three main risks for global strategies to decarbonise and mit- oil majors identified in Wood Global demand shifting to lower-carbon igate risks, to capitalise by using Mackenzie’s study: Fossil fuels 5.0% existing capabilities to explore to low-carbon: The Majors’ energy Forecast opportunities in renewables and to Historic data (1995-2015) transition are: Wood Mac base case* grow a profitable and substantial • the growth in renewable energy WM carbon-constrained scenario renewables business. • intensifying carbon policy IEA 450 scenario** “Regardless of the diverging Average % YoY Growth • and increasing low- 2.5% strategies, the majors are all carbon competition. increasing their share in gas while The study investigates how also aiming to push down the cost the major oil companies are curve,” says McConnell. responding to growing pressure “Global carbon risks could 0.0% to move to a low carbon-energy depress oil prices for the long environment. term with slowing demand and an Paul McConnell, research increase in costs, making it crucial director of global trends for for the majors to push break- Wood Mackenzie, says: “As carbon Coal Oil Gas Zero-carbon fuels evens down further. -2.5% policy intensifies, the oil and gas “To facilitate the move to majors will face more regulatory low-carbon energy policies, new burden and are likely to face sectors. These are commonly out- renewables will be challenging. skills will be needed through joint increasing costs. side the scope of emissions-limit- It will be difficult to both justify ventures or acquisitions.” “Green financing could also mean ing schemes. allocating already scarce capital to While there is strong rhetoric on higher cost of capital for more “While all the major oil companies low-returning projects and trans- diversification into renewables, a carbon-intensive oil assets such put a price on carbon in their long- form existing business models. much greater proportion of capital as oil sands, as investors shift to term planning, the big question “The timing of a transition to will be needed to deliver a material alternative fuels and lower-carbon is how much risk each has taken low-carbon energy will be critical,” shift Woods MacKenzie maintains. technologies.” into account,” says McConnell. says McConnell. “Diversifying Wood Mackenzie’s study shows Assumptions vary greatly by geog- to renewable energy will be a that only 13 per cent of global raphy, timeline and on price from balancing act. emissions are currently covered by between US$6 to US$80 a tonne. “Moving too quickly could leave INFRASTRUCTUREBUILD.COM YEARBOOK 2017 13
The art of procurement prophecy: promises and pitfalls There’s plenty of good news in procurement in 2017 and it’s only going to get better MANAGEMENT Several main factors are that they’ll continue to improve, project and the long-term sustain- they can plan and put in place the combining to shape and change providing more certainty and en- ability of the assets created. partnerships, the resources, the the procurement environment abling us to minimise investment Standard sets of questions staff and the plant they’ll need to for both clients and suppliers, in wasted efforts on both sides of that are used as a template for deliver those projects efficiently according to the 15-strong Plan procurement. every tender are now openly and competitively. A team that works with suppliers In 2015 and 2016, we’ve seen acknowledged to fall short of best No longer blind-sided by massive to write, review, manage and publication of far more accurate practice. The risks and opportuni- tenders that spring on us on the edit bid responses in just about and detailed infrastructure project ties to add value are different for 23rd of December to be completed every sector pipelines from organisations such every project. by the 10th of January, supply-side Their expert views are sup- as the National Infrastructure Unit, So the tender documentation, if tenderers can put real time and ported by their experienced Infrastructure New Zealand and designed carefully to target risks careful thought into developing colleagues within Clever Buying the NZ Transport Agency. and opportunities that will deter- clever methodologies that will – the organisation that trains and They’ve served two purposes. mine project success, provides deliver sustainable benefits over mentors hundreds of procurement First, they have enabled clever the tools that lead directly to the the life of the asset. professionals and qualifies tender clients to put serious time, exper- right decisions. That’s good for This is a huge advance over the evaluators. tise and planning into their tender all of us, especially when it’s our cheap and short-term, seat-of- documents. The best tender doc- money invested in public assets the-pants bids that won the job Pipeline forecasts will uments make it clear in objective that’s at stake. but delivered a low quality flimsy drive better procurement terms what they are looking for. Secondly, and equally important- asset that didn’t last the distance. planning on both sides They incorporate ‘gates’ which ly, detailed pipelines of upcoming The forecasting tools for both effectively make it impossible for projects coming to market have Winning on quality will clients and suppliers to the an unsuitable supplier to get past given suppliers an incredibly useful demand more effort infrastructure sector have come base one; then they zero in to the forecasting tool to plan their A consequence of this, however, a long way in the past couple of factors that will make a tangible tendering activity. is that suppliers need to put years; and there’s every indication difference to the success of the Armed with that intelligence, significant effort into the 14 YEARBOOK 2017 INFRASTRUCTUREBUILD.COM
preparation of their tenders. NZQA Procurement better than before. Since the early Winning on quality is everyone’s qualification to 1990s that qualification has been goal, but it doesn’t happen without prove its worth “The NZQA the mainstay of councils and road effort and time invested. The new NZQA Procurement Certificate in controlling authorities throughout Based on experience, those qualification came online this year New Zealand as the benchmark suppliers who start planning – strengthened, updated and ex- Infrastructure in competence in best practice strategy and preparing their bids tended to all of infrastructure. Its Procurement procurement via tendering. early, engage professional help assessment tools were approved is relevant and Traditionally, it relied heavily on when needed, and are open to in November; and the first few focused, providing evidence of experience to provide independent input into their candidates are working through it. the basis of achievement of the a practical review are those who most often As an alternative to the UK-de- qualification. That proved a risky score highest. veloped procurement qualification qualification for tactic in some cases, since best Last-minute, rushed tender suite available from CIPS (the procurement practice in procurement was not preparation is never anyone’s Chartered Institute of Purchasing professionals who well defined and acceptance of ideal, but sometimes a massive and Supply), the NZQA Certificate are engaged in a variety of legacy practices was effort is needed in a short space in Infrastructure Procurement is sufficient to gain the qualification. of time. That’s why the Plan A relevant and focused, providing tendering” It was difficult for assessors team now incorporates northern a practical qualification for pro- of the old qualification to be hemisphere bid writers, who curement professionals who are confident that an individual had leverage time zone differences to engaged in tendering. the skills and competence to enable round-the-clock activity on Assessment and learning is via Progress on achieving compli- prepare RFx documents or tenders when needed. workplace activity rather than ance with those sensible rules evaluate tenders to the standard Suppliers who plan their tenders exams and reading textbooks, so has been agonisingly slow over required, since the evidence was effectively and are willing to invest the knowledge and skills are imme- the past three and a half years; largely shown via documents that in winning work will always be at diately applicable to professionals but this qualification has the were jointly prepared by teams MANAGEMENT an advantage; so using those who are working in procurement in potential to create step change in of evaluators. forward work plans to plan your New Zealand. compliance within those directly The new version of the bid programme through 2017 What’s more, the qualification is responsible for government pro- qualification requires assessment is prudent. the only one to build in a working curement activity, from ministries via observation and interviewing Full marks to those government knowledge of the New Zealand and departments, right down to to assure the assessor of that organisations who are most Government Rules of Sourcing, councils and even, for example, individual competence. Rolling active in communicating their which have been mandatory, school boards. out standard templates prepared forward work plans to tenderers expected or encouraged as best What this means for clients originally by others – with minor and using them to plan their ten- practice for New Zealand govern- is that the proven NZTA tender tweaks or edits from the individual dering activity. ment organisations since 2013. evaluator qualification is now even being assessed – will no longer WHO WON THAT TENDER? Was Plan A the wind beneath their wings? In 2016, the 15 – strong Plan A team wrote over 300 tenders across all sorts of sectors, including infrastructure, facilities management, technology, professional services and more. We helped clients respond to tenders for contracts in NZ, Australia, the Pacific, North America, the Middle East and Africa. We wrote, developed strategy, reviewed, edited, designed ISN’T IT TIME and produced tenders that won billions of dollars’ worth of work for our clients. It’s our Day Job (and sometimes YOU GOT our Night Job too!). PLAN A TO HELP WIN We know what it takes to win, and how best to support YOUR NEXT you to grow your business. TENDER? Find out more: www.planawriters.com info@planawriters.com NZ 0800 752 622 AUS 1800 661 377
be acceptable. They’ll need to should not be overlooked. Stronger and deeper demonstrate their personal Clients argue that although this alignment between understanding and involvement tips the market in favour of larger A key point of procurement agencies in decision-making to conform companies and potentially reduc- debate prompted A key point of debate prompted with well-defined best practice es the number of opportunities for by Infrastructure New Zealand standards. smaller companies, it is possible by Infrastructure earlier this year was the proposal This is excellent news for anyone to maintain a healthy market New Zealand earlier to establish a central agency involved in tendering. Suppliers will through requiring those head this year was the that would provide a centre see that with additional discipline contractors to engage a minimum proposal to provide a of excellence in procurement in procurement planning and tailor- quota or percentage of subcon- specifically targeted to assist with centre of excellence ing the RFx documents to drivers tractors for major projects. procurement of large projects. This for best value for money, there are This is a simplistic approach in procurement was widely supported, but – not more opportunities to win work which unfortunately does not specifically targeted surprisingly – the question of who based on the quality and sustain- solve some worrying issues. When to assist with large- and how are head-scratchers. ability of the solution offered. smaller companies are presented scale projects Clever Buying has been picking The price war mentality – which with a glass ceiling that prevents the best from various procurement cut costs to the quick and result- them from contracting direct, they models including NZTA and ed in so many cases with false have few or no opportunities to MBIE (among other international economies – is reducing, with the develop their own management examples) over the past five support of the requirements of systems and expertise. tunities to grow and seized them, years, and blending these into a this new version of the Infrastruc- While they are under direction with characteristic Kiwi and Aussie best practice training programme ture Procurement Qualification. from the head contractor, who is ingenuity. for procurement professionals. not bound to follow the principles As we face a promising and That’s been challenging at ‘Balanced, healthy market’ of fair procurement that applied healthy pipeline of infrastructure times, with misaligned practices debates will continue to their own engagement with projects over the next five, 10 and and no common language still MANAGEMENT There has been much debate a major government client, 20 years, prudent client organisa- evident in the methods taught among major procurers about subcontractors are often tions will provide a balance of large by those entities. Both those the merits of aggregating or squeezed on price to the point and small projects to go to market agencies provide good models bundling contracts to streamline where business growth for them is to encourage the best in every and practices, however it is quite the number of suppliers that difficult to achieve. tier of infrastructure providers to difficult to blend them into a clients interact with and reduce Let’s not forget that the giants grow and prosper. That’s insurance seamless model. administration and tendering that dominate our infrastructure for generations to come that our The past year has seen growing costs. While on the surface this landscape today grew from small infrastructure market will continue signs of increased cooperation sounds sensible, there are fish enterprising companies several to attract a range of competitive, between these two agencies, hooks in this approach which decades ago, who had real oppor- high quality suppliers. which is welcomed. 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