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Results alignment and cost–benefit appraisal

The two assessment factors that we apply as part of the IAF are results alignment and cost–benefit appraisal.

When considering results alignment, we look at the priorities in the Government Policy Statement on land transport (GPS) which are the key priorities of safety and access, supported by environment and value for money.

Government Policy Statement on land transport (GPS)(external link)

When we assess proposals, we consider results alignment for the priorities of safety, access in regions, access in liveable cities, and the environment.

We also consider the efficiency of the proposal through the application of cost–benefit appraisal.

We ensure the GPS priority of value for money, by considering the assessment of the business case, results alignment, cost–benefit appraisal and programme support.

It is this total package that provides us with the view of value for money.

For results alignment, we define criteria for ratings against the GPS priorities of safety, access and environment. We rate criteria as low, medium, high or very high.

For example, a proposal for a continuous programme may receive a low rating if it provides a higher level of service than required. A medium rating means the programme provides a fit-for-purpose level of service. A high rating demonstrates a significant gap in levels of service has been identified.

An improvements proposal may receive a low results alignment rating if it addresses a gap in required levels of service; and a medium rating if it addresses an identified gap of some significance in required levels of service.

A high rating demonstrates that the proposal addresses a significant gap in a targeted regional or national context.

For any proposal, a very high results alignment rating must be directly linked to a specific result sought in the GPS.

For cost–benefit appraisal for improvements, where costs are known and benefits are quantified, we calculate a benefit-cost ratio.

The benefit–cost ratio is the key means for providing a cost–benefit appraisal rating. However, other factors can also be considered alongside, or instead of, the benefit–cost ratio, such as end-of-life assets where benefit–cost ratio is not applicable.

For continuous programmes (programmes that maintain a level of service) we look at other ways of evaluating value for money, such as cost benchmarking.

We hope you found this information useful and please remember to take a look at our examples of how we apply the IAF.

Examples of how we apply the IAF

If you have any questions, or want to understand more about what we can invest in and how we can support your work, please contact your investment advisor, or Director Regional Relationships, or email us at nltp@nzta.govt.nz

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