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This section provides an overview of the processes and procedures in the Investment Assessment Framework (IAF) for Approved Organisations and the Transport Agency to assess and prioritise business cases, programmes, plans, projects and other activities to be submitted for funding consideration.  The IAF will be used by the Transport Agency in developing the National Land Transport Programme (NLTP) and to make investment decisions during the 2018-21 NLTP.

Investment Assessment Framework

The Transport Agency uses the IAF to gives effect to the Government Policy Statement (external link)   and determine what proposals will receive funding within the activity class funding ranges.
The IAF uses a holistic process based on the Business Case Approach. Activities and programmes are developed using business case principles before assessment with the IAF and prioritisation using two factors (results alignment and cost-benefit appraisal) to determine how well they meet the government’s investment strategy defined in the GPS and their priority for funding.
The IAF is used to support our investment partners in developing land transport activities for inclusion in their Regional Land Transport Plans (RLTP), as part of the development and delivery of the NLTP.

IAF and NLTPThe main features of the IAF are:

  • Use of the business case approach as a precursor before the IAF that ensures a consistent input into the investment decision making process and that investment proposals are assessed in a clear and transparent manner. The business case approach and the IAF are clearly linked through the assessment of the business case which seeks evidence of applied critical thinking required for a robust investment proposal.
  • Results Alignment assessment that gives effect to the results specified in the GPS, focuses on customer levels service as an outcome, provides a focus on taking an integrated approach to target the right results in the right places, and now includes a very high rating option reserved for specific results, interventions and/or approaches that are deemed necessary to deliver on the investment strategy of the GPS.
  • Cost-Benefit Appraisal considers how well the proposed solution maximises the value of what is produced from the resources used, and the timeliness of intervention. Assessment of improvement activities uses the benefit–cost as the default approach. Cost-effectiveness and performance comparisons are used for road maintenance and public transport programmes. Cost-Benefit Appraisal includes a very high rating for improvement proposal benefit-cost ratios above 10.
  • A programme support component for assessing urgency to address the problem in the timeframes of the GPS.
  • Proposals with very high Results Alignment, very high Cost Benefit Appraisal, or immediate (3 year) urgency will gain higher relative priority.
  • Continuous programmes will be assessed against the gaps in levels of service they address, particularly road maintenance which will be assessed against the One Network Road Classification (ONRC) customer levels of service.

The diagram below shows the main features within the investment decision making process: 

Investment Decision Process

The Transport Agency provides a number of tools that support activity and programme assessment, such as the Economic Evaluation Manual. Application of these tools will assist the Transport Agency and the sector to achieve the desired GPS outcomes, as well as demonstrating strategic thinking, good process, and efficient allocation of resources and effort to ensure good value for money.

Continuous programmes

For continuous programmes such as road maintenance and public transport services detailed guidance under the IAF is available in the Knowledge Base. Applying the IAF to continuous programmes will determine the cost effective level of investment to maintain an appropriate customer level of service rather give than a go/no go decision to investment in changing the levels of service.

Assessment of Business Cases

The Transport Agency requires all new proposals for funding from the NLTP to be supported by a fit-for-purpose business case that follows the principles of the Transport Agency’s business case approach. Investment proposals are expected to get a pass or to undertake a rework to achieve a pass (or a combination of pass and rework by negotiation), before a proposal progresses to the IAF phase. In the case of continuous programmes proposals may proceed provided an agreed time-bound action plan is established by the investment partner (in this context, either an Approved Organisation or the Transport Agency) to address the question requirements that will ultimately lead to achieving a pass assessment.

Assessment factors and ratings

An activity or programme has assessment ratings for Results Alignment and Cost-Benefit Appraisal as shown below:


A rating greater than Low for results alignment or a rating above 1 (Low) for cost-benefit appraisal does not guarantee funding. The combined ratings for results alignment and cost-benefit appraisal are required to get an overall ranking.

While a cost-benefit appraisal rating of 1 (Low) will be taken into account in the ranking, the Transport Agency also looks at other factors in the proposal, such as relevance to government strategy through results alignment. It may also consider a proposal with a cost-benefit appraisal below 1 only as an exception, where evidence is provided that demonstrates a wider value proposition against GPS results.

Streamlined assessment

A streamlined investment decision-making and business case approach has been introduced for low cost/low risk activities (extending the model that was historically used for ‘minor improvements’) to activities with an implementation cost of up to $1 million.

Value for money

When evaluating programmes and projects, the GPS requires Approved Organisations and the Transport Agency to consider best value for money.

Value for money is defined in a variety of ways and the Transport Agency Board has approved the following description:

“Value for money describes the optimal balance of spend and inputs in order to deliver optimal outputs and outcomes. It is about maximising the net present value of government spending, subject to other non-quantifiable constraints.”

When evaluating programmes and projects, the Transport Agency defines best value for money as:

“doing the right things in the right place at the right time for the right price in the right way to achieve the desired outcomes”.

Effectively this means: “when considering any activity the issue of value for money is always part of the discussion and questions are continually asked as to whether the activity is being undertaken in the optimal way to deliver the desired outcomes, i.e. is it being done in the most efficient, effective and appropriate manner”. This requires taking a long-term, whole of life view of the total value for money attributable to a programme or activity, not just the initial capital cost.

The Transport Agency uses the IAF to help it achieve value for money in selecting the right investments, as it:

  • Assesses the contribution that programmes and activities make against the results sought by the GPS and wider purpose of the LTMA;
  • Provides a consistent means of comparing and prioritising land transport activities based on their relative contributions to results;
  • Takes into account the potential offering of proposed activities and considers the benefits and costs of solutions in a balanced way.

Customer Levels of Service

The appropriate service level for each part of the transport system should be defined by its relevant framework or benchmarks.

A gap in the levels of service is defined as the difference between the appropriate level of service and the current level of service. Evidence is needed to support the significance of the gap. The problem and benefits should have been described in the strategic case with reference to appropriate levels of service. Evidence collected about the current performance compared to the expected performance will help define a gap, if any.

Evidence is needed to show that:

  • the right level of service framework is being used to define the gap
  • the framework is being used appropriately for the activity
  • current system performance expectations or customer levels of service are not being met
  • the benefits will deliver an improvement in levels of service or system performance
  • the benefits are significant with regards with GPS priorities

The level of service gaps are defined as follows:

  • Significant gap –Evidence shows that there is significant under performance in at least one key aspect resulting in performance lower than its classification and the gap to the appropriate service levels or system performance significantly impacts on the customer experience. This will have been robustly defined against appropriate levels of service (or other proxy) relevant for the issue.
  • Identified gap –Evidence shows that a gap in service level or system performance exists that does not meaningfully meet at least one or more aspect described in its classification, intended use or function.
  • Addresses an issue – Evidence shows that the level of service or system performance materially achieves all aspects described in its classification. The value of benefits and change to levels of service or system performance are not significant or robustly defined.

During preparation of a Business Case, there may be situations where critical thinking through the business case approach uncovers no strong evidence that a gap in levels of service or system performance exist. This is a perfectly acceptable outcome to the Transport Agency and could, in fact, suggest the system is running optimally.

Also during the preparation of the Business Case, service levels may be shown to be above expectations. This amounts to a system performance gap and further effort may be needed to assess the significance of this gap and consider system performance and optimisation.

 Customer LoS Gaps

Reviewing and updating the assessed profile

The assessment profile assigned to individual activities must be reviewed at each stage of the activity's development and updated as necessary to reflect the latest information and any changed circumstances.

An activity’s profile assessed at the time of NLTP inclusion must be confirmed prior to any investment and funding decision. This may result in a reduced profile if the Transport Agency considers the evidence to be insufficient or that the risks around delivery of the activity’s outcomes are too high.

Requirement to use the framework

The Transport Agency requires all Approved Organisations and Transport Agency groups to use the IAF to assess activities and combinations of activities they propose for inclusion in the NLTP.

Regional Transport Committees (RTCs) may choose to prioritise the activities in their Regional Land Transport Plans (RLTPs) in any way they may determine. We encourage RTCs to use the IAF to prioritise activities proposed for NLTF funding in their RLTPs, as this provides greater consistency with GPS results.

RLTPs are also required to include all other regionally significant expenditure on land transport activities to be funded from sources other than the NLTF. We encourage RTCs to apply the same assessment to these other activities to assist in the overall transparency and integrated planning of all land transport activity.

Benefit capture and reporting

For the 2018-2021 NLTP on onwards, the Transport Agency is improving the links between the Business Case Approach principle of investing for benefits and NLTP benefit capture and reporting. Investment partners must provide information on the benefits and performance measures that they are investing in and this is to be captured and reported at a regional and national level. The choice of benefits to report is linked to the Results Alignment by considering how the benefits will target a customer level of service gap for an outcome and a journey.