Funding row puts trams project at risk

Published on Sunday 22 February 2009 11:18

A MULTI-million-pound contract for Edinburgh's tram works could be torn up if the company in charge of it refuses to drop demands for an extra £80m.

As parts of Edinburgh continue to suffer gridlock because of road closures, council sources suggested they were ready to bring in a new company to finish the work if the current contractors – German construction company Bilfinger Berger – refuses to do so within the agreed budget of 512m.

But with negotiations between the parties remaining deadlocked, fears were raised that the entire project was now facing delays of a year or longer, to the anger of Edinburgh traders and residents.

Politicians and retailers accused the company of "holding the city to ransom", and urged the council to stick to the original cost and timetable of the four-year-long works.

Bilfinger Berger agreed to the 512m contract in May last year, but last week said it needed an extra 40m to 80m to complete the works. The demand came on Thursday, 48 hours before Edinburgh's Princes Street was closed for a scheduled nine months for the tram rails to be laid.

The company claimed it needed the extra money because of expensive delays to tram works at Leith Walk and Gogarburn, caused by utilities companies failing to lay cables and pipes on time.

The closure of Princes Street went ahead as planned on Friday, but without any construction workers, as the two sides failed to reach agreement.

From Waverley Bridge to Lothian Road, the street was barricaded by traffic cones, forcing buses and taxis along George Street.

Police officers, traffic wardens and council officials turned out in force to advise people of the changes in the centre and try to help them find new routes.

A source close to the council said Transport Initiatives Edinburgh (TIE), the branch of the council in charge of the tram works, would not bow to the contractors' demands.

He said: "What is the point of having a signed contract and an agreed budget and then paying more? Does that mean if there is a new contract in six months they will want more money?"

He insisted that other companies could finish the tram work project, saying: "We are aware that there are other contractors in the UK who would be available to continue the work. It's not something that's going to happen this month or next month, but clearly, if you continue not to reach any resolution it's something that has to be looked at."

Scottish Tory chief whip David McLetchie yesterday handed out 2,000 leaflets on Princes Street urging the council not to be "held for ransom" by Bilfinger Berger. He said: "It's going to be a significant delay. We have got to pull out all the legal stops to make sure the contract we have is honoured."

A spokesman for Bilfinger Berger said: "As the client failed to meet contractually agreed conditions, and as no agreement has been reached, construction work in Princes Street cannot yet commence.

"Contrary to reports, additional costs of 80m have never been requested as a pre-condition for the start of works in Princes Street."

A senior source within Bilfinger Berger later added: "Bilfinger Berger alerted TIE to the fact that given the level of change to the original contract and the enormous delay, it's more money for more work.

"It's irrelevant if the council says it could get other contractors in, because they would come up against the same costs."