German construction giant Bilfinger Berger said the tram developers were “in denial” about the budget shortfall facing Scotland’s biggest transport project and had misled Edinburgh City Council about the potential delay of more than two years it now faces.
The scale of the crisis was laid out in a letter from Bilfinger UK’s managing director, Richard Walker, to senior executive members of the council ahead of a crunch meeting of the Tram Project Board yesterday.
Following the meeting, the council and its arms’-length company overseeing the tram project, Transport Initiatives Edinburgh (Tie), announced they would keep pursuing a contractual dispute with Bilfinger and consortium partner Siemens in a bid to have the project completed by 2012.
However, it was unclear what proposals were in place to progress work east of Haymarket, where track-laying on all roads except Princes Street has been on hold for more than six months, with one member of the board claiming that no decision had been made on the “nuclear option” of removing Bilfinger from the project.
In his letter of March 8, a copy of which has been seen by The Herald, Mr Walker claims that:
Three contractual disputes with Tie on the wording of the trams contract have been decided in favour of Bilfinger.
A “conservative” estimate of the cost of these disputes would see more than £100m awarded to Bilfinger, with a revised completion date of November 2013.
Tie has refused to engage with suggestions made by the construction consortium aimed at resolving the dispute, instead tying it down with an “ever increasing number of legal disputes”. l Work to divert utility mains ahead of track laying is facing further delays and may not be completed until December 2010. Mr Walker said Bilfinger would defend itself “with vigour” against any attempt to remove it from the project and would instigate counter legal actions, claiming such a move would have “no valid legal basis”. He added: “The consortium regrets that Tie appears to be increasingly entrenched in its own position, unable and/or unwilling to address the realities of the situation in a constructive manner, and in apparent denial of the severe budget overrun that this project must face and resolve.” The Scottish Government, which failed in its attempt to have the tram project ditched, has insisted it will receive “not a penny” more than £500m. The council has to find the remainder of the £545m budget as well as meeting the cost of the dispute with Bilfinger. Speaking after the meeting of the Tram Project Board, Gordon MacKenzie, the council’s transport convenor, said it had been decided to “crank up” the dispute with Bilfinger. He said: “We acknowledge delays with utility diversions. But there are other areas of delay that Bilfinger are responsible for. They have requested a further 30 months to carry out the work whereas we have had external auditors look at the project who say it can be completed by 2012.”
