2022 08 01 3.Tonkin and Taylor Letter of Engagement.pdf

23 August 2022
Job No: 1089394
River Managers Special Interest Group
C/- Greater Wellington Regional Council
PO Box 11646
Wellington

Attention: Graeme Campbell

Dear Graeme

Letter of Engagement
Business Case - National Flood Protection Funding Model
Following our recent discussions and as you requested, we are pleased to confirm the basis on which
we will support you in the preparation of a Business Case for a National Flood Protection model for
you as our client.
The Business Case will be prepared in accordance with the Better Business Case framework and in
close collaboration with key stakeholders including regional Councils, the Department of Internal
Affairs (DIA) and Treasury. Put simply, the process provides a framework to agree aims and
objectives for a potential national funding model with Treasury and DIA (likely also MBIE). This is the
Strategic Case. The aims and objectives are then used to guide a ‘co-design process’ to confirm the
best value for money approach to achieving the aims and objectives in the Economic Case.
Implementation Planning is address through the Management Case (how the model will be
delivered), the Financial Case (how the model will be funded) and the Commercial Case (how
activities will be procured).
From our discussions with you, our support will include working with you to:
•
Draft a Strategic Case for a national flood risk infrastructure funding model.
•
Complete an Economic Case set out analysis to identify the best value for money option for
flood protection infrastructure funding at a national level.
•
Drafting Management, Financial and Commercial Cases to support the implementation of the
best value for money option identified in the Economic Case.
We note that Tonkin & Taylor Limited (T+T) is already working with the Rivers Group to update
analysis on flood protection issues and opportunities, i.e.: additional follow on work recommended
in the “Hiding in Plain Sight” report. We anticipate that the update of information (not covered by
this Letter of Engagement) will take place in parallel with the development of the Strategic Case.
Scope of work
Strategic Case
The Strategic Case sets out the reason for planned investment and provides an opportunity to clearly
define the problem(s) to be addressed, measures of success and ‘critical success factors’. For this

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2
case developing a clear Strategic Case provides an opportunity to discuss and agree key drivers for,
and objectives of, a national funding model. This is a critical component of the Business Case drafting
and provides a medium to ensure that key central government stakeholders are aligned with
Regional Councils on the need for funding and the way that success will be measured.
Key tasks during the development of the Strategic Case will be:
•
Confirm with Regional Council CEOs key people (5-8) to be involved in framing the Strategic
Case (Investment Logic Mapping (ILM) process)
•
Engage with key decision makers in DIA, Treasury and MBIE (Shovel Ready team) as part of the
preparation for the ILM process. This will include discussion on the framing of the Strategic
Case and the anticipated level of analysis of options developed and evaluated in the Economic
Case. We would also proactively engage with the Treasury IQA team during preparation so
there are no surprises at that later stage of review.
•
Complete an Investment Logic Mapping process.
−
Draft a Briefing Paper for ILM participants
−
Complete an ILM process, anticipated to comprise 2 x 2-hour workshops with key
stakeholder representatives (5-8 people)
•
Draft an Outline Strategic Case – to be ‘socialised’ with DIA, Treasury, MBIE and Regional
Councils
•
Finalise the Strategic Case
Once the Strategic Case is largely complete, we will confirm the scope and timeline for developing
the Economic Case. Our current view on the scope is outlined below.
Economic Case
The economic case will make use of existing information, updates that will be completed in parallel
with developing the Strategic Case and potentially additional information identified through the
Strategic Case development. The purpose of the Economic Case is to use the Investment Objectives
and Critical Success Factors developed agreed with stakeholders and documented in the Strategic
Case to identify the best value for money option.
Key tasks in preparation of the Economic Case will comprise:
•
Identifying information gaps (if any) based on the Strategic Case
•
Developing funding model options (Do Nothing through to ‘protect everything’)
•
Completing a preliminary evaluation of options making use of the Investment Objectives and
Critical Success Factors set out in the Strategic Case
•
Workshop with key project team members to confirm the evaluation
•
Document the option development and evaluation process, and preferred option, in the
Economic Case.
Once the Economic Case is largely complete and the preferred option identified, we will confirm the
scope of the Financial, Management and Commercial Cases that will make up the remainder of the
full Business Case. Our current view on the scope for each case is outlined below.
Financial Case
The Financial Case sets out funding arrangements including providing a forward view on likely costs.
For flood protection infrastructure it is expected that the Financial Case will draw on various
engineering studies and Asset Management Plans to provide a high-level view of annual and total

Tonkin & Taylor Ltd
23 August 2022
Business Case - National Flood Protection Funding Model
Job No: 1089394
River Managers Special Interest Group

3
spend. In light of current uncertainties regarding cost, related to design, construction and materials
supply challenges, we would expect any funding model to provide significant contingency while
looking to leverage scale and long term funding to deliver the programme outcomes as efficiently as
possible.
Key tasks in preparation of the Financial Case will comprise:
•
Developing funding options, in close collaboration with River Managers, DIA and Treasury. We
anticipate that this will involve drawing on information in Asset Management Plans and Long
Terms Plans across Regional Councils (currently being collated by T+T) as well as linking to
Central Government Budget cycles and departmental allocations existing and planned.
•
Consideration of how to most effectively link a 10+ year programme with Central Government
(1 year cycle) and Local Government (3-10 year cycle) funding processes.
•
Given the ideal programme of work is likely to significantly exceed available funding, the
Financial Case will need to draw on insights from the Strategic and Economic Cases to reflect
the need for prioritisation of spend across New Zealand.
Management Case
The Management Case sets out arrangements for managing the delivery of the preferred approach
for the flood protection infrastructure maintenance and upgrade programme of work. This links to
the Financial Case including providing a forward view on likely activity with cost set out in the
Financial Case.
For flood protection infrastructure it is expected that the Management Case will draw on insights
from the delivery of projects under the ‘shovel ready’ programme of work as well as individual
Council activities under their Asset Management and Long Term Plan arrangements. In light of
current uncertainties regarding availability of people and resources for design and construction, we
would expect the delivery approach to provide significant flexibility while again looking to leverage
scale and long term funding to secure resources to deliver the programme outcomes as effectively
as possible.
Key tasks in preparation of the Management Case will comprise:
•
Review and compile delivery approaches adopted by Regional Councils and the Shovel Ready
programme.
•
Work with River Managers, DIA and Treasury to set out a national level governance
framework to oversee the long term programme.
•
Preliminary workforce and construction programming, to establish a programme of work that
is achievable in real world conditions, i.e.: strike a balance between aspirations and available
people and materials to complete the proposed programme of work.
Commercial Case
The Commercial Case sets out arrangements for procurement associated with the delivery of the
preferred approach. This links to the Management and Financial Cases with a focus on
understanding the market including potential providers and other activity.
For flood protection infrastructure programme of work it is expected that the Commercial Case will
focus on strategic level procurement considerations. This includes the availability of design and
construction suppliers, the respective benefits of long term contracts for programmes of work vs
procurement discrete packages and any need to grow capability and capacity in the market.

Tonkin & Taylor Ltd
23 August 2022
Business Case - National Flood Protection Funding Model
Job No: 1089394
River Managers Special Interest Group

4
Similar to Financial and Management Cases, we would expect the procurement approach to provide
significant flexibility while looking to leverage scale and long term funding to secure resources to
deliver the programme outcomes as efficiently and effectively as possible.
Track Record
As previously shared with you, we have extensive experience working on the development of
Business Cases for central and local government. Our focus is on combining robust technical
knowhow with an understanding of business case process (Better Business Case) and a record of
getting things done with central government.
Two examples that illustrate this approach are our current work on addressing Acid Mine Drainage
(AMD) at the Stockton Mine and a completed project developing a National Resilience Programme
Business Case for Waka Kotahi.
The Stockton Mine project is being completed for Treasury with a view to establishing long term
funding (150+ years) for the ongoing management of AMD produced at the Stockton Mine. T+T is
working with Tregaskis Brown to develop a Strategic Case (90% complete, waiting on final Mana
Whenua input) and complete an evaluation of options i.e.: the Economic Case.
This project provides us with current experience navigating the Treasury assurance process as well
as insights relating to long term programmes of activity and working with multiple stakeholders.
The Waka Kotahi Resilience Programme Business Case developed a Strategic Case for incorporating
resilience into decision making across the Waka Kotahi spending programme. The project involved
working with multiple stakeholders across New Zealand and identifying and articulating cross
linkages with other programmes of work. It is particularly satisfying for our team to see the
Programme Business Case now guiding decision making on individual Waka Kotahi projects with
resilience becoming a key driver of investment decision making.
This project was the winner of the Excellence in Strategic Planning award in the Institution of Public
Works Engineering Australasia (IPWEA) NZ Excellence Awards 2020. The land page for the
Programme Business Case is at https://www.nzta.govt.nz/roads-and-rail/highways-information-
portal/technical-disciplines/resilience/national-resilience-programme-business-case/.
For this project, identifying links with other ‘interventions’ is an important similarity with DIA’s
current focus on planning (current and strategic/spatial) mechanisms potentially linking very well
with infrastructure investment. The project provides us with directly relevant experience addressing
natural hazards, developing approaches that integrate multiple objectives and working with multiple
stakeholders across central and local government. The figure overleaf is from the Case and illustrates
the links to other aspects of Waka Kotahi’s work relating the resilience of the land transport
network.
Key lessons learnt during preparation of the Waka Kotahi Programme Business Case were:
•
Getting agreement on what the stakeholders want to achieve (in the Strategic Case), is critical
to the success of the Business Case.
•
Working with stakeholders to define options is valuable, but time consuming.
•
Starting discussions with the reviewers early (IQA) adds value to the Business Case
preparation and avoids late changes to the approach or document. This was a significant
factor in the success of the project.
•
Making clear links to complimentary activities or initiatives is critical, no programme or activity
can exist in isolation. Identifying linkages, and avoiding conflicts, will be critical for the flood
protection infrastructure work as it was for the Waka Kotahi work.

Tonkin & Taylor Ltd
23 August 2022
Business Case - National Flood Protection Funding Model
Job No: 1089394
River Managers Special Interest Group

5

Figure 1: Preferred package – Waka Kotahi National Reslience Programme Business Case
Covid-19
We will use all reasonable endeavours to meet our responsibilities to you, however we cannot be
responsible for any delay, event or circumstance outside our reasonable control due to the impact of
COVID-19 (including travel disruptions, quarantine or self-isolation requirements, ill health or other
delay or inability of our staff or subcontractors to perform or access a site for any reason). If any of
these circumstances do arise, we may seek to negotiate with you a variation to this proposal which
enables us to complete our work for you on mutually acceptable terms, failing which either party
may terminate our engagement.
Programme
We have attached an indicative programme. We anticipate discussion specific items and timeline
with you prior to commencement, and as the project progresses.

Tonkin & Taylor Ltd
23 August 2022
Business Case - National Flood Protection Funding Model
Job No: 1089394
River Managers Special Interest Group

7
Terms and conditions
We will carry out the work in accordance with our attached Conditions of Engagement. These terms
place certain limitations on our liability and, unless agreed otherwise, they will apply instead of any
terms and conditions in any purchase order or other confirming document that you may issue to us.
We provide our reports and other deliverables for your benefit only and they cannot be relied upon
by any third parties. However, if you want us to, we may allow a third party to rely on them after
signing an appropriate reliance statement with us (so that they acknowledge and accept the
limitations of our work and the terms and conditions of our engagement with you).
We understand and agree that you will submit the Business Case to support a Budget Bid and that
government as the responsible agency will use the Business Case for the purpose of compiling that
Budget Bid.
This offer is valid for three months from the date of this letter.
Closing remarks
We trust that this satisfactorily meets your needs. We look forward to receiving your instruction to
proceed and to working with you on this project. You can confirm your acceptance by returning the
attached signatory form. Alternatively, we will take your instruction to proceed as confirmation that
you accept this proposal.
Please contact
at
or +64 27 536 0951 if you would like to
discuss anything about this project.

Yours sincerely

Project Director

Attached:
1
Signatory page
2
ACENZ Short Form Agreement Feb 2019
3
Indicative Programme

Tonkin & Taylor Ltd
23 August 2022
Business Case - National Flood Protection Funding Model
Job No: 1089394
River Managers Special Interest Group

8
Signatory form
T+T Ref:
1089394
Date:
23 August 2022
Contract:
Business Case - National Flood Protection Funding Model

Confirmation by Client:  I/we acknowledge that I/we have read the proposal for the above contract
and the attached Conditions of Engagement, (including the Limitations of Liability), and I/we accept
those terms and authorise the above.
Client name:  River Managers Special Interest Group
Client
C/- Greater Wellington Regional Council
address:
PO Box 11646
Wellington
Attention:
Graeme Campbell

Signature:

Name:

Date:

Please provide the following information if different:
Client Name and Address
Invoicing Entity Name* and Address (if different to Client)
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
* Invoicing entity to also give the “Confirmation by Client” above by signing below

Signature:
______________________________________________
Name:
______________________________________________
Date:
______________________________________________

Please return one signed copy to
of T+T at email
z or +64
27 536 0951 or to the address on the letterhead.

Privacy Notice
In your dealings with us, we will collect, use, disclose and hold personal information in accordance with our Privacy
Statement (https://www.tonkintaylor.co.nz/about-us/tonkin-plus-taylor-privacy-statement/). Unless you advise us
otherwise, we will assume that you consent for your information to be used for the purposes outlined in our Privacy
Statement. If at any time you wish us to stop using your information for any of the purposes outlined in our Privacy
Statement, please email us at [email address] or use the “unsubscribe” facility in the relevant email message.

23-Aug-22
t:\wellington\tt projects\1089394\contractual\20220823.gwrc-rivers group flood protection funding bc loe.1089394.docx


Tonkin & Taylor Ltd
23 August 2022
Business Case - National Flood Protection Funding Model
Job No: 1089394
River Managers Special Interest Group

9
SHORT FORM MODEL CONDITIONS OF ENGAGEMENT
1.
The Consultant shall perform the Services as described in the attached documents.
2.
The Client and the Consultant agree that where all or any of, the Services are acquired for the purposes of a business the pr ovisions
of the Consumer Guarantees Act 1993 are excluded in relation to those Services. However, nothing in this Agreement shall restrict,
negate, modify or limit any of the Client’s rights under the Consumer Guarantees Act 1993 where the Services acquired are of a kind
ordinarily acquired for personal, domestic or household use or consumption and the Client is not acquiring the Services for the
purpose of a business.
3.
In providing the Services, the Consultant must use the degree of skill, care and diligence reasonably expected of a professional
consultant providing services similar to the Services.
4.
The Client shall provide to the Consultant, free of cost, as soon as practicable following any request for information, all i nformation in
the Client’s power to obtain which may relate to the Services.  The Consultant shall not, without the Client’s prior consent, use
information provided by the Client for purposes unrelated to the Services.  In providing the information to the Consultant, t he Client
shall ensure compliance with the Copyright Act 1994 and shall identify any proprietary rights that any other person may have in any
information provided.
5.
As soon as either Party becomes aware of anything that will materially affect the scope or timing of the Services, the Party must
notify the other Party in writing and where the Consultant considers a direction from the Client or any other circumstance is a
variation the Consultant shall notify the Client accordingly.
6.
The Client may order variations to the Services in writing or may request the Consultant to submit proposals for variations to the
Services.
7.
The Client shall pay the Consultant for the Services the fees and expenses at the times and in the manner set out in the attached
documents.  Where this Agreement has been entered by an agent (or a person purporting to act as agent) on behalf of the Clien t, the
agent and Client shall be jointly and severally liable for payment of all fees and expenses due to the Consultant under this
Agreement.
8.
All amounts payable by the Client shall be due on the 20th of the month following the month of issue of each GST Invoice or a t such
other timing as stated elsewhere in this Agreement. If the Client fails to make the payment that is due and payable and that default
continues for 14 days, the Consultant may provide written notice to the Client specifying the default and requiring payment w ithin 7
days from the date of the notice. Unless payment has been made by the Client in full, the Consultant may suspend performance of
the Services any time after expiration of the notice period. The Consultant must promptly lift the suspension after the Client has
made the payment. Regardless of whether or not the Consultant suspends the performance of the Services in accordance with this
clause, the Consultant may charge interest on overdue amounts from the date payment falls due to the date of payment at the rate
of the Consultant’s overdraft rate plus 2% and in addition the costs of any actions taken by the Consultant to recover the debt.
9.
Where the nature of the Services is such that it is covered by the Construction Contracts Act 2002 (CCA) and the Consultant has
issued a payment claim in accordance with the CCA, the provisions of the CCA shall apply. In all other cases, if the Client, acting
reasonably, disputes an invoice, or part of an invoice, the Client must promptly give the reasons for withholding the disputed amount
and pay any undisputed amount in accordance with clause 8.
10.  Where Services are carried out on a time charge basis, the Consultant may purchase such incidental goods and/or Services as are
reasonably required for the Consultant to perform the Services.  The cost of obtaining such incidental goods and/or Services shall be
payable by the Client.  The Consultant shall maintain records which clearly identify time and expenses incurred.
11.  Where the Consultant breaches this Agreement, the Consultant is liable to the Client for reasonably foreseeable claims, damages,
liabilities, losses or expenses caused directly by the breach. The Consultant shall not be liable to the Client under this Agreement for
the Client’s indirect, consequential or special loss, or loss of profit, however arising, whether under contract, in tort or otherwise.
12.  The maximum aggregate amount payable, whether in contract, tort or otherwise, in relation to claims, damages, liabilities, losses or
expenses, shall be five times the fee (exclusive of GST and disbursements) with a minimum of $100,000 and a maximum limit of
$NZ500,000.
13.  Without limiting any defences a Party may have under the Limitation Act 2010, neither Party shall be considered liable for any loss or
damage resulting from any occurrence unless a claim is formally made on a Party within 6 years from completion of the Services.
14.  The Consultant shall take out and maintain for the duration of the Services a policy of Professional Indemnity insurance for  the
amount of liability under clause 12. The Consultant undertakes to use all reasonable endeavours to maintain  a similar policy of
insurance for six years after the completion of the Services.
15.  If either Party is found liable to the other (whether in contract, tort or otherwise), and the claiming Party and/or a Third Party has
contributed to the loss or damage, the liable Party shall only be liable to the proportional extent of its own contribution.
16.  Intellectual property prepared or created by the Consultant in carrying out the Services, and provided to the Client as a del iverable,
(“New Intellectual Property”) shall be jointly owned by the Client and the Consultant. The Client and Consultant hereby grant to the
other an unrestricted royalty-free license in perpetuity to copy or use New Intellectual Property. The Clients’ rights in relation to this
New Intellectual Property are conditional upon the Client having paid all amounts due and owing to the Consultant in accordance
with clauses 7 and 8.  Intellectual property owned by a Party prior to the commencement of this Agreement (Pre-existing Intellectual
Property) and intellectual property created by a Party independently of this Agreement remains the property of that Party. The
Consultant accepts no liability for the use of New Intellectual Property or Pre-existing Intellectual Property other than to the extent
reasonably required for the intended purposes.
17.  The Consultant has not and will not assume any duty imposed on the Client pursuant to the Health and Safety at Work Act 2015
(“the Act”) in connection with the Agreement.
18.  The Client may suspend all or part of the Services by notice to the Consultant who shall immediately make arrangements to stop the
Services and minimise further expenditure. The Client and the Consultant may (in the event the other Party is in material default that
has not been remedied within 14 days of receiving the other Party’s notice of breach) either suspend or terminate the Agreement by
notice to the other Party. If the suspension has not been lifted after 2 months the Consultant has the right to terminate the
Agreement and claim reasonable costs as a result of the suspension.   Suspension or termination shall not prejudice or affect the
accrued rights or claims and liabilities of the Parties.
19.  The Parties shall attempt in good faith to settle any dispute by mediation.
20.  This Agreement is governed by the New Zealand law, the New Zealand courts have jurisdiction in respect of this Agreement, and all
amounts are payable in New Zealand dollars.
February 2019

Tonkin & Taylor Ltd
23 August 2022
Business Case - National Flood Protection Funding Model
Job No: 1089394
River Managers Special Interest Group