COVID-19 advanced entitlement payment – 4 week stand down

Waka Kotahi NZ Transport Agency is offering advance payments to roading contractors so the industry will be ready to hit the ground running to deliver vital projects and help get New Zealand moving when the country moves out of the current Level 4 COVID-19 Alert lock down.

Waka Kotahi appreciates the construction industry’s swift and well delivered shut down of all Capital Projects and non-essential work and understands the significant impact on our supply partners, their employees, labour hire staff and site-based subcontractors who were committed and in full swing delivering our important projects.

Equally we know that any significant and prolonged disruption to industry will inhibit the ability to deliver future infrastructure for New Zealand and provide economic stimulus across the supply chain.

In the current climate, the infrastructure pipeline for New Zealand is more critical than ever.

Not only does New Zealand require this infrastructure, its construction will now play a key role in New Zealand’s economic recovery.

The Advanced Entitlement Payment (or AEP) will be available to contractors who currently have National Land Transport Programme (NLTP) funded projects in construction with Waka Kotahi.

For now, Public Private Partnerships (PPPs) are excluded from the AEP as there is further work to do on these because of their unique contracts.

Waka Kotahi is continuing to progress projects in planning and design – so these are ready for when physical construction can resume.

• This AEP is an advanced payment, not a government handout or subsidy.
• It acknowledges suppliers and contractors have contractual entitlements as a result of projects being stood down and that they will seek claims. However the review and any future payment relating to these claims could take some months.
• Therefore, this AEP is an advanced payment (which will be taken off future claims) to provide financial relief through the four-week-stand-down period to enable suppliers to retain their workforces, thereby ensuring rapid remobilisation at the end of the period and an ability to respond to any future economic stimulus package.
• It is to cover associated direct, hired and site-based subcontractor labour, and overhead costs for the projects which have been stood down
• Waka Kotahi is offering a total hourly rate of $59.89 per hour based on the actual hours worked for the four-week period leading up to 15 March 2020.
• This amount is made up of an hourly rate of $49.15 per hour for labour. This is for direct, hire and site-based subcontractor. The balance is a further $10.74 per hour to cover overhead costs.
• This amount was derived through the analysis of the actual work type mix for a typical work site and associated hourly rates obtained from our open book projects.

Conditions

The following conditions are associated with the AEP and any contractors agreeing to it will be expected to:

• Retain all project resources on pay over the stand down period to enable remobilisation.
• Commit to treating those in their supply chain with regard and make efforts to minimise the stand down impact on them and their liquidity.
• Include Waka Kotahi in any major decisions with respect to the supply chain which may impact remobilisation.
• Notify Waka Kotahi when COVID-19 subsidies have been claimed as well as the AEP, so this can be deducted from the AEP.
• Ensure recommencement of the works under the Contractor’s respective contract/s as quickly and safely as practicable immediately following notice from Waka Kotahi to recommence activities onsite at the conclusion of the four-week-stand-down period.

In the process of evaluating future claims relating to COVID-19, payments made under this AEP will be taken into consideration. Waka Kotahi has full set off rights for recovery of the AEP.

It is intended for this AEP to be offered in good faith and any failure to comply will be seen as a breach of good faith and will be taken into account in the award of future projects.

Professional services are not covered by this AEP. Where capital projects engage professional services and these activities can continue under Level 4 COVID-19 conditions, these can continue to progress under existing contractual conditions.

Where not, these non-essential activities should have stopped and Waka Kotahi expects for these roles to be redeployed within home organisations.

Other impacted parties, for example material suppliers, are also not covered by the AEP. However, it is expected Contractors will treat those in their supply chain with regard and make efforts to minimise the stand down impact to them and their liquidity.

Waka Kotahi is taking its direction from the Government who has specified Level 4 for the next four weeks. ‘Non-essential’ projects will remain shut down for this period and therefore this package is to cover this specific period.

Waka Kotahi is now working to form a position based on the different scenarios which may play out beyond the current four-week stand down period.

• Instructions for capital project contractors [PDF, 184 KB]
• Advanced entitlement payment - agreement [PDF, 1.1 MB]
• Advanced entitlement payment - supporting information [XLSX, 433 KB]