TIE, the Edinburgh City Council-owned company overseeing the project, has lost three of the four independent adjudications which have been decided following its decision last August to escalate a row with the consortium (BSC) headed by Bilfinger Berger into a contractual dispute.
Despite claims from Bilfinger that this would add at least £100 million to the cost of the project, TIE has pushed more issues into the formal dispute process in the hope that future adjudications would be favourable and help drive down costs. Critics yesterday compared the approach to a “gambler who doesn’t know he’s on a losing streak”.
TIE is now poised to escalate more issues into formal dispute, though it is feared a clearer idea of the overall cost of the project – which is set to breach its £545m funding – may not be known until after the summer. An update was promised to councillors by January, but has been repeatedly deferred.
A senior source overseeing the troubled project said the two latest rulings by independent adjudicators, relating to the construction of Carrick Knowe and Gogarburn bridges, were felt to be “unreasonable”. But he said there were not strong enough grounds to mount a legal challenge against either decision.
“The two latest judgments gave more weight to the consortium’s proposition than was thought reasonable. But there were not felt to be strong grounds for challenging them in court.”
The dispute, which has seen track laying put on hold for more than half a year, raised questions over whether the full route between Newhaven and Edinburgh Airport will be built and threatened to push back the completion date by a further two years to 2014.
It centres on more than 550 formal change notices lodged by the BSC consortium, many relating to design changes brought on by late-running utility diversions. Of those, 135 have been resolved through negotiation, around 90 have been withdrawn and 14 have proceeded to formal dispute resolution, though two more issues are likely to enter the process imminently.
An early adjudication over £90,000 for extra work at the Hilton hotel at Edinburgh Airport was won by TIE, while the next, over £1.8m additional costs for a retaining wall near Haymarket, saw around 80% awarded to the consortium, together with legal fees.
John Carson, a former head of maintenance at Network Rail and critic of the tram project, called TIE’s stance “bizarre”. He said: “It’s the double or quits mentality. There are only three, very simple principles that Tie can win or lose on and with the risk of utility overruns, changes in design and changes in ground conditions, the risk has all fallen to TIE. Any further adjudications will simply reinforce that.”
Shirley-Anne Somerville, SNP MSP for the Lothians, said: “The project is already years behind schedule and to rely on the lawyers to solve these problems is not a place any of us want to be put.”
